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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
O R D E R
Per Amit Shukla, Judicial Member:
The aforesaid appeal has been filed by the assessee against order dated 23.06.2022, passed by passed by NFAC Delhi, for the quantum of assessment passed u/s 143(3), for the assessment year 2017-18.
Sonal share & stock brokers ltd.
In the grounds Appeal Assessee has raised following two issues, firstly, disallowance of Rs.3,95,470/-made u/s, 14 A; secondly, taxing the interest income of Rs 60,370/- received on income tax refunds. The briefs facts are that the Assessee company is engaged in the business of trading and investment shares & securities. The Ld. AO noted that Assessee has made investment in shares & securities at Rs. 3,69,61,357/- and has shown dividend income of Rs. 3,33,824/-. The Assessee had offered suo-moto disallowance of Rs. 25,000/- u/s. 14A. The Ld. AO computed the disallowance under rule 8D (2)(iii) at Rs. 3,95,470/- by taking 1% of average investment. However, the Ld. Assessing Officer did not allowed suo disallowance of Rs. 25,000/- on the ground that Assessee has not offered any disallowance. The CIT (A) in his ex-parte order has confirmed the disallowance u/s 14 A.
Further, the Ld. Assessing Officer also noted that the Assessee has received interest on income tax refund of Rs. 60,370/- which according to the AO, Assessee has not offered the same in the computation of income. Accordingly, he added the amount of Rs.
Sonal share & stock brokers ltd. 60,370/- income of Assessee. The same has been dismissed by the Ld. CIT(A).
Before us, the Ld. Counsel submitted that, firstly, Assessing Officer was incorrect in observing that no disallowance for the offered as Assessee has suo-moto disallowance Rs. 25000/- which is evident from the computation of income filed along with return of income. The copy on which is appearing at page 2 & 3 of paper book. Secondly, he submitted that while calculating the disallowance Assessing Officer has taken the total investment instead he should have taken only those investments which have yielded exempt income; and if disallowance is to be calculated on the investment which has yielded exempt income, that will work out of Rs.1,07,165/-.
On the other hand, Ld. DR, submitted that Assessing Officer asked for the details which Assessee has not furnished and also did not give any explanation before us Ld. CIT (A). Therefore, disallowance made by the Assessing Officer should be confirmed.
After hearing the, submission and perusal of the order and the material place before me, I find that, Assessing Officer has included
Sonal share & stock brokers ltd. the investment which has not yielded exempt income. Therefore, the disallowance cannot be made on those investments which have not yielded exempt income. If, disallowance is to be made u/s 14 A r.w rule 8BD, restricting to the investment which has yielded exempt income, same would be Rs.1,32,165/- and after reducing the suo- moto disallowance of Rs. 25,000/- the net amount for disallowance u/s, 14A will work out of Rs. 1,07,165/-. The working is given under.
Investment Month Opening Balance Closing Balance Average Apr-16 1,34,41,693 1,34,41,693 1,34,41,693 May-16 1,34,41,693 1,34,41,693 1,34,41,693 1,34,41,693 1,34,41,693 1,34,41,693 Jun-16 1,34,41,693 1,34,41,693 1,34,41,693 Jul-16 Aug-16 1,34,41,693 1,34,41,693 1,34,41,693 Sep-16 1,34,41,693 1,34,41,693 1,34,41,693 1,34,41,693 1,34,41,693 1,34,41,693 Oct-16 1,34,41,693 1,34,41,693 1,34,41,693 Nov-16 1,34,41,693 1,34,41,693 1,34,41,693 Dec-16 Jan-17 1,34,41,693 1,16,40,511 1,25,41,102 Feb-17 1,34,41,693 1,16,40,511 1,25,41,102
Sonal share & stock brokers ltd. Mar-17 1,34,41,693 1,16,40,511 1,25,41,102 15,85,98,545 Average of Monthly Investment 1,32,16,545
1% of the above Less: Suo-Moto Disallowance Net amount as per 14A r.w.r 8D(ii) 1,32,165 25,000 1,07,165 Accordingly, the disallowance under 14A is restricted to Rs. 1,07,165/-. Thus, ground no. 3,2,5 is partly allowed.
In so far as, taxing of interest income of Rs. 60,370/- received on income tax refund, the Ld. Counsel pointed out that, the Assessee has already offered this income to tax in this year itself which is evident from the details of interest received during the year, the detail of which is appearing page at 60. The detail of interest offered for income for the year ending 31.03.2017 is as under.
Particulars Amount(Rs.) TDS UTI Bank 23,99,356 2,39,936 SBIN 1,36,18,772 13,61,908 Sonal share & stock brokers ltd. Other IT Interest 60,370 1,60,78,498 16,01,844
He further, submitted that Assessing Officer has wrongly inferred that Assessee has not offered is interest income is incorrect.
From the perusal of the details furnished and the computation income, I find that Assessee had offered interest of income of Rs. 1,60,74,98/-, which included interest on income tax refund of Rs. 60,370/-. Further, from the perusal of the profit & loss account under the head ‘other income’, Assessee has shown interest received at Rs. 1,60,78,498/- as noted above, also includes the interest of income tax refund. Therefore, Assessing Officer was incorrect in adding the same in the computation of income which amount to double taxation accordingly, the double addition made by the Assessing Officer is deleted.