KOTAK MAHINDRA ASSET MANAGEMENT CO LTD.,MUMBAI vs. DCIT RANGE 14(2)1, MUMBAI

The Ld. Sr. Counsel, at the outset, drawing attention to ground no.11, sought exclusion of those investments which have yielded exempt income during the year. For this, reliance has been placed on Tribunal’s order in assessee’s own case for AYs 2001-12 to 2013-14. The copies of the orders have been placed on record. The Ld. Sr. DR, on the other hand, submitted that the fact that the dominant object of the investments has lost relevance in the light of decision of Hon’ble Supreme Court in Maxopp Investment Ltd. (402 ITR 640). Having heard rival submissions, our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.

The material facts in AY 2014-15 are that the assessee earned exempt income of Rs.212.65 Lacs but did not offer any suo-moto disallowance. The Ld. AO, applying Rule 8D(2)(iii), computed indirect expense disallowance of Rs.13.40 Lacs which was confirmed by learned first appellate authority. The quantum of disallowance in AY 2015-16 was Rs.13.45 Lacs. Aggrieved, the assessee is in further appeal before us.

We find that this issue has been adjudicated by coordinate bench of Tribunal in assessee’s own case for various years. The bench, in para-9 of its order for AY 2011-12, dated 19/09/2019, has directed Ld. AO to consider only those investments which has yielded exempt income during the year while computing the disallowance. Similar are the facts in both the years before us. Therefore, we issue similar directions to Ld. AO. Accordingly, Ld. AO is directed to consider only those investments which have yielded exempt income during the year while computing the disallowance. The quantum of disallowance for both the years may be recomputed by Ld. AO. The decision of Hon’ble Supreme Court in Maxopp Investment Ltd. (supra) as referred to by Ld. Sr. DR for the submissions that theory of dominant object has lost relevance, has not been disputed by Ld. Sr. Counsel rather what Ld. Sr. Counsel has pleaded before us is the exclusion of non-exempt income yielding investment while computing the disallowance u/s 14A as held by Tribunal in earlier years. Therefore, the plea raised by Ld. Sr. DR is not of much relevance here. This ground stand allowed in both the years. No other grounds have been urged before us and accordingly, all the other grounds stands dismissed.

Both the appeals stand partly allowed.