DCIT CIRCLE 1(1)(1), MUMBAI, MUMBAI vs. AEGIS LOGISTICS LIMITED, MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT () & SHRI RAJ KUMAR CHAUHAN () Assessment Year: 2016-17
PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated
23.05.2025 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2016-17, raising following grounds:
Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs.
1,73,60,930/- made u/s 14A read with Rule 8D?
At the thresho (DR) brought to our n of six days in the reference was made t by the Assessing Of delay occurred on ac assessment work pen and submission of s Taxes (CBDT); (c) eng to complete orders gi Scheme, 2020; and income-tax portal, p password (OTP) on received on the mobile verification. 2.1 Having regard t satisfied that the d beyond the control prevented by suffici prescribed period. In laid down by the H Acquisition v. Mst. was held that a libe applications for cond old, the learned Departmental notice that the Registry has poin filing of the present appeal. to the application for condonati fficer, wherein it has been exp ccount of, inter alia: (a) substan nding with the Assessing Officer tatistical reports to the Central agement in a special drive initia iving effect to the Direct Tax Viv (d) technical difficulties enco particularly the non-receipt of the registered e-mail, though e device, which delayed the proc o the reasons set out in the app delay was occasioned due to of the Assessing Officer, an ient cause from filing the app n this context, it is apposite to r Hon’ble Supreme Court in C Katiji [(1987) 167 ITR 471 ( eral approach is to be adopted donation of delay, and that su Aegis Logistics Ltd. 2 Representative nted out a delay In this regard, ion of delay filed plained that the ntial time-barring r; (b) preparation Board of Direct ted by the CBDT vad Se Vishwas ountered on the of the one-time the same was cess of filing and plication, we are circumstances d that he was peal within the refer to the ratio Collector, Land (SC)], wherein it d in considering ubstantial justice should prevail over principle, we are of offered constitutes su 2.3 Accordingly, in filing the appeal is adjudication on merit 3. Briefly stated, t its return of income ₹70,29,82,290/–. Th 143(1) of the Inco Subsequently, the ca statutory notices und 3.1 During the cour Officer noticed that income of ₹92,84,00 funds. It was further motu disallowance o When called upon to explanation did not Assessing Officer ac Rules, 1962 (in short ₹1,85,39,631/–. Afte offered by the assesse r technical considerations. G the considered opinion that t ufficient cause. the interests of justice, the dela condoned, and the appeal i ts. the facts of the case are that th e on 17.10.2016 declaring a he said return was processed ome-tax Act, 1961 (in sho ase was selected for scrutiny a der the Act were duly issued and rse of assessment proceedings t the assessee had earned ex 00/– from investments in shar r observed that the assessee h f ₹11,78,751/– under Section o justify the said disallowance find favour with the Assessi cordingly invoked Rule 8D of t, “the Rules”) and computed a r adjusting the suo-motu disall ee, a net addition of ₹1,73,60,93 Aegis Logistics Ltd. 3 Guided by this the explanation ay of six days in is admitted for he assessee filed total income of under Section ort, “the Act”). assessment and d complied with. , the Assessing xempt dividend res and mutual ad made a suo- 14A of the Act. , the assessee’s ing Officer. The the Income-tax disallowance of lowance already 30/– was made.
2 On appeal, the possessed of sufficien been utilised for the Accordingly, the CIT 8D(2)(ii) relating to conclusion, the C ₹1,73,60,930/– made 4. Before us, the supported the action submitted that the applicability of Rule expenditure incurred urged that the disall restricted to the a 8D(2)(iii). 5. Per contra, the attention to pages 78 the assessee had alre 8D(2)(iii) in respect o computation to inve income during the ye on 31.03.2016 (Paper reserves and surpl investments of ₹9,52
learned CIT(A) observed that th nt own funds and that no borro purpose of making the impugn
(A) deleted the disallowance m interest expenditure. Howeve
CIT(A) deleted the entire d e by the Assessing Officer.
e learned Departmental Repr of the Assessing Officer. Witho learned CIT(A) has not adjudi
8D(2)(iii) of the Rules relating to d in relation to earning exempt i lowance, at the minimum, ough amount computed in accorda e learned counsel for the asse
8 and 79 of the Paper Book, po eady made a suo-motu disallowa of administrative expenditure by estments which had actually ear. He further referred to the b r Book page 5) to submit that th lus of ₹38,860.51 lakhs as 3 lakhs. Thus, the availability o
Aegis Logistics Ltd.
4
he assessee was owed funds had ned investments.
made under Rule er, in the final disallowance of esentative (DR) ut prejudice, he cated upon the o administrative income. He thus ht to have been ance with Rule essee drew our ointing out that ance under Rule y restricting the yielded exempt balance sheet as he assessee had s against total of own funds far in excess of the inves funds were utilised, under Rule 8D(2)(ii) w
5.1 The Ld. counsel under Rule 8D(2)(iii) investment for co disallowance under exempted dividend i
Bench in the case taxmann.com 415 ( investments which h relevant year were to of investments for th attention to the orde own case for Assessm applied the said Sp
Investment Pvt. Ltd.
restrict the disallowa
6. We have heard the relevant materia confined to the quan
14A of the Act read itself had invoked Ru the question of the A stments clearly demonstrated th and consequently, no disallow was warranted.
l further submitted that as far is concerned, the assessee has omputing average investme rule 8D(2)(iii) as the amount income, following the decision of Vireet Investment Pvt. L
Delhi Trib) wherein it was held had actually yielded exempt inc be considered for computing th he purpose of Rule 8D(2)(iii). H er of the Co-ordinate Bench in ment Year 2011-12, wherein th pecial Bench decision in the (supra) and directed the Asse ance accordingly rival submissions of the parti als on record. The issue for ntum of disallowance to be mad with Rule 8D of the Rules. Sin ule 8D while computing suo-mo
Assessing Officer recording diss
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hat no borrowed wance of interest as disallowance s considered the ent liable for t which yielded n of the Special
Ltd. (2017) 82
d that only those come during the he average value e also drew our n the assessee’s he Tribunal had case of Vireet essing Officer to ies and perused adjudication is de under Section nce the assessee tu disallowance, satisfaction with such computation l restricted to the qua
Rule 8D(2)(iii).
6.1 In so far as proportionate interes examination of the finding that the asse cover the investment
Paper Book and has Hon’ble Bombay Hig
Ltd. [(2009) 313 ITR funds available with a presumption arise interest-free funds.
infirmity in the orde made under Rule 8D
6.2 Coming to disal the contention of the actually yielded exem considered. We find following the same R
Officer considered t exempted income w investment which h loses significance. The disput antum of disallowance under Ru disallowance under Rule 8D st expenditure is concerned, th balance sheet, has categorica essee’s own funds were more th ts. This factual assertion is su s not been controverted by the gh Court in CIT v. Reliance Util
R 340 (Bom)] has held that whe an assessee are sufficient to cov es that such investments wer
Following this binding precede er of the CIT(A) in deleting th
(2)(ii).
llowance under Rule 8D(2)(iii), w e assessee that only those inv mpt income during the relevant d that assessee itself has mad
Rule. The only difference is tha the entire investment in the whereas the assessee has take as yielded exempted income d
Aegis Logistics Ltd.
6
te is, therefore, ule 8D(2)(ii) and D(2)(ii) towards he CIT(A), upon ally recorded a han sufficient to upported by the e Revenue. The lities and Power ere interest-free ver investments, re made out of ent, we find no he disallowance we find merit in estments which t year are to be de disallowance at the Assessing assets earning en value of the during the year under consideration.
Investment Pvt. Ltd.
Co-ordinate Bench in No. 1945/Mum/2016
finding of the Tribuna
“7. On appra the CIT(A) ha expenses to investment to of controversy case of ACIT,
(2017) 82 tax held that onl computing av income during of the view th judiciously an at this stage.
the assessee
6.3 Thus, while the under Rule 8D(2)(iii) the matter requires ascertain whether th investments which yi
6.4 In view of the fo disallowance under However, in respect o the matter to the file of verification of th
Assessing Officer sh
The Special Bench of the Tr
(supra) has categorically held to n the assessee’s own case for AY
6 has also applied the said rat al is reproduced as under:
aisal of the above mentioned finding, we as restricted the AO to re compute the ad the extent of Rs.118.17 lacs whic o earn the dividend income. In this regard y has been adjudicated by the Hon'ble
Circle 17(1) New Delhi Vs. Vireet Invest xmann.com 415 (Delhi Trib.) in which i ly those investment are liable to be co verage value of investment which yiel g the year. In view of the said circumstan hat the CIT(A) has decided the matter of nd incorrectly which is not liable to be in Accordingly, this issue is being decided against the revenue.”
e suo-motu disallowance made appears prima facie in accord factual verification by the Asse he assessee has indeed consid ielded exempt income..
foregoing discussion, we uphold
Rule 8D(2)(ii) as directed of disallowance under Rule 8D(2
of the Assessing Officer for the he computation made by the hall confine the disallowance,
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ribunal in Vireet o this effect. The Y 2011-12 in ITA tio. The relevant noticed that dministrative ch was the d, the matter
ITAT in the tment P. Ltd.
t specifically onsidered for lded exempt nces, we are f controversy nterfere with d in favour of by the assessee dance with law, essing Officer to ered only those d the deletion of by the CIT(A).
2)(iii), we restore limited purpose assessee. The if any, to the extent of investments in line with the ratio
6.5 The ground of a statistical purposes.
7. In the result, th statistical purposes.
Order pronoun (RAJ KUMAR C
JUDICIAL M
Mumbai;
Dated: 26/09/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
////
s which yielded exempt income laid down in Vireet Investment P appeal of the Revenue is accordi he appeal of the Revenue is all ced in the open Court on 26/0
/-
S
CHAUHAN)
(OM PRAK
MEMBER
ACCOUNTA ded to :
BY ORDER
(Assistant Re
ITAT, Mu
Aegis Logistics Ltd.
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during the year,
Pvt. Ltd. (supra).
ingly allowed for lowed partly for 09/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai