Case Law Details
ITO Vs Mission Holding Pvt. Ltd. (ITAT Delhi)
Introduction In a recent pivotal decision by the Income Tax Appellate Tribunal (ITAT) of Delhi, the case between ITO and Mission Holding Pvt. Ltd. highlighted the intricacies of disallowance under section 14A of the Income Tax Act. The crux of the verdict revolves around the treatment of revenue expenses, especially when they aren’t claimed in Profit and Loss accounts.
Detailed Analysis:
1. Background of the Case The appeal for the assessment years 2013-14 and 2014-15 revolved around the disallowance under section 14A. These appeals were heard together due to the similarity of issues and were given a consolidated order.
2. Financials and AO’s Stance In the AY 2013-14, receipts from dividend income were shown to be Rs. 1,34,69,000/-. Against this, there was a finance cost of Rs. 1,14,59,958/-, and other expenses amounting to Rs. 5,93,858/-. The Assessing Officer noted that the interest expenses, instead of being claimed as revenue expenditure, had been capitalized. As a result, a hefty disallowance under section 14A amounting to Rs. 37,29,54,271/- was computed.
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