MIRCHANDANI & COMPANY PVT LTD,MUMBAI vs. ACIT CIRCLE-5(2)(2), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER:

20.12.2024 for Assessment Year 2013-14. The assessee has raised

following grounds of appeal:

i. The Additional Commissioner of Income-tax (Appeals) (hereinafter referred to as the Addl. CIT(A)) erred in upholding the action of the Assistant Commissioner of Income-tax 5(2)(1), Mumbai (hereinafter referred to as the Assessing Officer) in making a disallowance of a sum of Rs 21,13,919 on account of expenses incurred for earning income which does not form part of the total income by invoking the provisions of section 14A of the Act.

ii. The appellants contend that on the facts and in the circumstances of the case and in law, the Addi CIT(A) ought not to have upheld the disallowance made by the Assessing Officer of the impugned sum of Rs 21,13,919 as there is no expenditure incurred in relation to earning income which does not form part of the total income and as such, no disallowance ought to be made under section 14A.

before Tribunal. The assessee has filed an application for condonation of delay which is supported with the affidavit of the assessee. The learned

authorised representative (ld. AR) of the assessee submits that delay in

filing appeal is not intentional or deliberate. The order passed by the ld.

CIT(A) on 20.12.2024 was sent on email ID “info@embros.in”. Perhaps

the email communication went to spam folder and remain unnoticed.

When completing the audit of current Assessment Year in September

2025, it was enquired about the status of order of appeal for AY 2013-14

pending before ld. CIT(A) and in enquiry of Income Tax Business Appeal

(ITBA) Portal and realise about the dismissal of appeal on 2012.2024. The

assessee immediately filed present appeal on 25.09.2025. The ld. AR of

the assessee submits that assessee has good case on merit and likely to

succeeding if her case considered on merit. The ld AR of the assessee

prayed for condoning the delay in filing appeal.

DR) of the Revenue submits that he left the issue of condonation of delay

on the discretion of the bench.

contents of application for condonation of delay which is supported by the

affidavit of assessee. Considering the overall facts and the material

available on record, we find that delay is not intentional rather the

assessee is interested in perusing appeal in merit. Thus, considering the

principle of law on limitation that when technical consideration and cause

of substantial justice are kept against each other, cause of substantial justice may be prescribed. Hence, the delay in filing appeal before Triubnal

is condoned. Now adverting to the merit of the case.

income for AY 2013-14 on 30.09.2013. This was selected for scrutiny,

during assessment the Assessing Officer noted that assessee has shown

investment of Rs. 4.41 crores and have earn dividend income of Rs.

16,710/-. The dividend income was claimed as exempt under section

10(34) of the Income Tax Act (Act). The AO issued show cause notice as

to why disallowance under section 14A read with rule 8D should not be

made in case of assessee. In response to such show cause notice the

assessee furnished their working. The working of disallowance under

section 14A was not accepted by Assessing Officer. The Assessing Officer

invoked the provision of Rule 8D and computed disallowance under

section 14A read with Rule 8D of Rs. 21,13,919/-. Aggrieved by the

additions/disallowance under section 14A the assessee filed appeal before

CIT(A). The ld. CIT (A) upheld the action of the Assessing Officer. Further

aggrieved the assessee has filed present appeal before Tribunal.

through the orders of the lower authorities carefully. The ld. AR of the

assessee submits that assessee has earned exempted income of Rs.

16,782/- the Assessing Officer made disallowance of Rs. 21,13,919/-. The

ld. AR submits that there are series of decision of various Hon’ble High

Courts wherein it has been held that disallowance under section 14A

should not be exceed to the exempted income.

AO/CIT(A).

gone through order of lower authorities carefully. We find that there is no

such dispute on fact as about investment made by assessee and

exempted income earned by the assessee. Admittedly the assessee has

earned exempted income of Rs. 16,710. We find that Hon’ble Jurisdictional

High Court in PCIT Vs HSBC Invest Direct (India) Ltd.(2020) 421 ITR 125

(Bom) held disallowance of expenditure under Section 14A read with Rule

8D cannot exceed the actual exempt income earned by the assessee

during the relevant financial year. The similar view was taken by

in CIT Vs Cham Investment v. CIT 378 ITR 33 (Delhi) Thus, following the

decisions of Bombay High Court and Delhi High Court, we direct the

Assessing Officer to restrict disallowance under section 14A to the

exempted income.

Order was pronounced on 14/05 /2026 in open Court.

Sd/- Sd/-

MAKARAND VASANT MAHADEOKAR PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated: 14/05/2026 Ankit, P.S.

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai