The Income Tax Appellate Tribunal (ITAT), Mumbai bench has deleted an addition against Bollywood actress Shilpa Shetty Kundra and co-owner of IPL Team Rajasthan Royals.
The assessee is a film actor. During assessment proceedings, it transpired that the assessee earned exempt dividend income of Rs.9,08,198/- against the investment of Rs.16.87 Crores. The Ld. AO, noticing that no disallowance against the same was offered by the assessee, computed expense disallowance as per Rule 8D(2)(iii) for Rs.8.95 Lacs computed as 0.5% of average investments of Rs.17.90 Crores. Accordingly, the same was added to the income of the assessee.
Granting relief to the assessee, the Tribunal noted that the assessee has already offered suo-moto disallowance of Rs.2.34 Lacs u/s 14A in her computation of income, which has been overlooked by the lower authorities. Another undisputed fact that emerges is that disallowance against average investments which have actually yielded exempt income during the impugned AY works out to Rs.0.84 Lacs which is less than suo-moto disallowance as offered by the assessee.
“It is further noted that the assessee has debited various expenditure aggregating to Rs.59.53 Lacs in the profit & loss account. The expenditure under the head commission & depreciation aggregate to Rs.54.24 Lacs whereas the balance expenditure under other heads aggregate to Rs.5.29 Lacs. The commission and depreciation have no nexus with earning of exempt income whereas out of balance expenditure of Rs.5.29 Lacs, the assessee has already offered suo-moto expenditure of Rs.2.34 Lacs. The same, in our opinion, was more than sufficient to cover up the requisite disallowance. Therefore, on the facts and circumstances of the case, the additional disallowance of Rs.8.95 Lacs as made by Ld. AO could not be sustained. By deleting the same, we allow the appeal,” the Tribunal said.
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