DAI-ICHI KARKARIA LIMITED,MUMBAI vs. DCIT, CIRCLE-1(1)(1), MUMBAI

ITA 1588/MUM/2025Status: DisposedITAT Mumbai30 June 2025AY 2017-18Bench: SHRI PAWAN SINGH (Judicial Member), SHRI PRABHASH SHANKAR (Accountant Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the AO to re-work the disallowance under Section 14A considering only investments that yielded exempt income. It also allowed the provision for employee costs as a business expenditure, holding it was an ascertained liability. The AO was directed to verify and correct the book profit computation.

What were the facts?

The assessee company, engaged in manufacturing, made a suo-moto disallowance under Section 14A. The Assessing Officer (AO) recomputed the disallowance as per Rule 8D, considering investments in shares and mutual funds. The AO also disallowed a provision for employee costs payable to workmen, treating it as a contingent liability.

What were the issues?

Whether disallowance under Section 14A should be computed on all investments or only those yielding exempt income, and whether a provision for employee costs pending litigation is a deductible business expense.

Which sections of the Income-tax Act were involved?

Section 14A,Section 37,Section 115JB,Section 145

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IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER (Physical hearing) Dai-ichi Karkaria Limited Mumbai-400020. M.K. Road, Mumbai-400020. PAN: AAACD0548F (Appellant) .. (Respondent) Assessee by Ms. Priyanka Jain CA /AR Revenue by Shri. Annavaram Kosuri, Sr. DR Date of Hearing 25/06/2025 Date of Pronouncement 30/06/2025

Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER:

1.

This appeal by the assessee is directed against the order of ADDL/JCIT(A), Agra dated 17.01.2025 for A.Y. 2017-18. The assessee has raised the following grounds of appeal:

“ 1. On the facts and the circumstances of the case and in law, the Ld. JCIT(A) has erred in upholding the additional disallowance of Rs. 5,29,448 made by the Ld. AO under section 14A read with Rule 8D.

2.

Without prejudice, on the facts and circumstances of the case and in law, the Ld. JCIT(A) erred in upholding the view taken by the Ld. AO that the Mutual Funds (Growth Option) are also covered under secti

The order continues below.

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