M/S STARLIGHT SYSTEMS PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-3(4), MUMBAI

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ITA 1495/MUM/2023Status: DisposedITAT Mumbai26 July 2023AY 2017-20183 pages
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What did the Tribunal hold?

The Tribunal held that for computing disallowance under Section 14A, only investments yielding exempt income should be considered for calculating the average value of investments. The issue was restored to the Assessing Officer for fresh computation.

What were the facts?

The assessee earned dividend income which was claimed as exempt. The Assessing Officer disallowed expenses under Section 14A read with Rule 8D, restricting the disallowance to the exempt income. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the disallowance under Section 14A should be computed based on all investments or only those yielding exempt income. The correct method for calculating the average value of investment for disallowance.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Hearing: 13.07.2023Pronounced: 26.07.2023

M/s Starlight Systems Vs. DCIT, CC-3(4) Private Limited, 5th Floor, Room No. 1923, 19th Suntech Centre, 37-40 Floor, Air India Building Subhash Road, Nariman Point Vile Parle (East), Mumbai - 400021 Mumbai – 400 057 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAFCS7733L Appellant .. Respondent [ Appellant by : Gaurav Kabra Respondent by : Suresh D. Gaikwad Date of Hearing 13.07.2023 Date of Pronouncement 26.07.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A)-51, Mumbai, dated 14.12.2022 for A.Y. 2017- 18. The assessee has raised the following grounds before us: “1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in disallowing expenses of Rs.30,00,355/- u/s.14A of the Income Tax Act, 1961, without considering the facts and circumstances of the case.

2. The appellant craves leave to add, amend, alter or delete the said ground of appeal.”

2. The assessment u/s 143(3) of the Act in the case of the assessee was finalised on 14.10.2019. During the course of assessment the assessing officer noticed that assesse has earned dividend income of

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