KOTAK MAHINDRA INVESTMENTS LTD,MUMBAI vs. ACIT, OSD, RANGE 3(2), MUMBAI

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘the CIT(A)’) dated 31.03.2023, for the Assessment Year 2011-12. The assessee in appeal has raised four grounds assailing the impugned order, viz: Ground No.1: Violation of Principle of Natural Justice.

Sh. Madhur Agrawal appearing on behalf of the assessee submitted at the outset that he is not pressing Ground No.1 of appeal. 2.1 In respect of Ground No.2 assailing disallowance under section 14A r.w.r. 8D, the ld. counsel submits that during the period relevant to AY under appeal, the assessee has earned dividend income of Rs. 22,24,714/-. The assessee has made suo-moto disallowance under section 14A of Rs. 23,31,308/-. The Assessing Officer (AO) invoked Rule 8D and made disallowance of Rs. 98,40,228/-. The ld. Counsel submits that it is a settled legal position now that disallowance under section 14A of the Act cannot exceed exempt income earned during the relevant period. The assessee has itself made suo-moto disallowance of more than the exempt income. He further stated that de-hors the fact that no further disallowance is required to be made, there is no interest expenditure involved as assessee’s own interest free funds are much more than the investments made. Where the assessee is having mixed bag of funds comprising of own interest free funds nad interest bearing funds, it shall be presumed that own interest free funds are utilized for the purpose of investments. 2.2 The Ld. Counsel submits that in ground No.3 & 4, assessee has assailed levy of interest under section 234B & 234C of the Act. The short prayer of the assessee is, the AO while computing interest has made wrong calculations, a direction may be given to the AO for re-computation of interest under the aforesaid sections.