ACIT Vs Nitin Dwarkadas Nyati (ITAT Pune)
No Nexus, No Excess Disallowance—14A Restricted Again- ₹3.05 Cr 14A Disallowance Cut to ₹10 Lakh-Reasonable Disallowance Wins:
The Pune ITAT dismissed the Revenue’s appeal and upheld restriction of disallowance u/s 14A to ₹10 lakh, noting that the very issue stood concluded in Assessee’s own case for the same AY. The AO had made a huge disallowance of ₹3.05 crore u/s 14A r.w. Rule 8D on exempt income comprising share of profit from firm, dividend & PPF interest. The CIT(A) had directed recomputation @ 1% of only those investments yielding exempt income.
The Tribunal recorded that in the Assessee’s earlier appeal for AY 2020-21, it had already examined the nature of administrative expenses, segregation of business expenses of proprietary concerns with no investments, items having no nexus with exempt income (education cess, depreciation, property insurance, property tax, etc.), and absence of proper AO satisfaction. Adopting a balanced and reasonable approach, the Tribunal had restricted the disallowance to ₹10 lakh on ad-hoc basis.
Since the disallowance already stood capped at ₹10 lakh by the Tribunal, the Revenue’s challenge to the CIT(A)’s directions was held academic and meritless, and the appeal was dismissed.
FULL TEXT OF THE ORDER OF ITAT PUNE
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