VIKAS JHUNJHUNWALA ,MUMBAI vs. ITO WARD 3(1)(4), MUMBAI

This appeal by the assessee is directed against the order of Commissioner of Income Tax(Appeals)-8, Mumbai [ in short ‘the CIT(A)’] dated 13/02/2020 for the Assessment Year 2015-16.

Shri Sunil Hirawat appearing on behalf of the assessee submitted that the solitary issue raised by assessee in this appeal is against disallowance of interest expenditure Rs.2,72,101/- u/s 14A r.w.r 8D(2)(ii) of the Income Tax Act, 1961 ( in short ‘the Act’). The ld. Authorized Representative for the assessee submitted that during the period relevant to the assessment year under appeal, the assessee has income from salary, income from business or profession and income from other soruces. The assessee has received dividend income of Rs.13,74,518/-. The assessee made suo-motu disallowance of Rs.5,951/-. The ld. Authorized Representative for the assessee pointed that while computing disallowance u/s 14A r.w.r. 8D(2)(ii) the Assessing Officer has disallowed interest expenditure of Rs.2,72,101/-. The ld. Authorized Representative for the assessee referring to the Balance Sheet as on 31/01/2015 pointed that the assessee is having own interest free funds much more than the investments. Placing reliance on the decision in the case of CIT vs. HDFC Bank Ltd., 356 ITR 505 (Bom), the ld. Authorized Representative for the assessee prayed for deleting the disallowance made under Rule 8D(2)(ii).

On the other hand, Ms. Smita Verma representing the Department vehemently defended the order of CIT(A) and prayed for dismissing the appeal of assessee.

Both sides heard, orders of authorities below examined. The primary issue raised in the present appeal is disallowance of Rs.2,72,101/- made by Assessing Officer under rule 8D(2)(ii) and confirmed by the CIT(A). The ld. Authorized Representative for the assessee pointed that assessee is having sufficient own interest free funds to cover the investments made. As per the Balance Sheet as on 31/03/2015 ( at page 5 of the Paper Book) as against investment of Rs.1.54 crores the assessee is having capital of Rs. 3.92 crores. This fact has not been disputed by the Revenue. Since, assessee’s own interest free funds are much more than the investments made, in the light of decision of Hon'ble Jurisdictional High Court in the case of HDFC Bank Ltd.(supra) no disallowance in respect of interest expenditure is warranted u/s.14A r.w.r. 8D(2)(ii). Consequently, ground No.1 to 3 of assessee’s appeal are allowed.

In ground No.4 of appeal, the assessee has assailed charging of interest u/s 234C of the Act . The assessee has worked out interest of Rs.8,006/- u/s. 234C of the Act as against Rs.28,488/- computed by the Assessing Officer. I deem it appropriate to restore this issue to the file of Assessing Officer for recomputation of interest u/s 234C of the Act, in accordance with law. Hence, ground No.4 of appeal is allowed for statistical purpose.

Ground No.5 of the appeal is general in nature, hence, requires no adjudication.