MAHARASHTRA SCOOTERS LIMITED,PUNE vs. INCOME-TAX OFFICER, WARD 9(5), PUNE

This assessee’s appeal for assessment year 2015-16 arises against the CIT(A)-6, Pune’s order dated 03-02-2020 passed in case No. PN/CIT(A)- 6/ITO, Ward-9(5), Pune/10379/2017-18, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short “the Act”.

Coming to the assessee’s sole substantive ground challenging both the lower authorities’ action invoking section 14A r.w. Rule 8D disallowance of Rs.78,21,239/-; representing 0.5% of average value of investment under Rule 8D(2)(iii) of the Income Tax Rules, we find that the same is no more res integra as the tribunal’s recent Co-ordinate Bench order its own case in assessment years 2013-14 and 2014-15 involving and 182/PUN/2018, respectively dated 17-09-2021, has directed the Assessing Officer for his afresh adjudication as follows :

From the above extracted portions of the assessment order, it is manifest seen that the ratio of dividend income to the total revenue was 69.15%. The AO noted the assessee’s explanation that the “company had not incurred any expense in relation to earning exempt income and found the same to be unacceptable” by finding that maintaining portfolios do require constant monitoring and control and incidental expenses are incurred. Thereafter, the AO observed that there was no “one to one correlation with regard to the expenditure vis-a-vis the exempt income, i.e. dividend”. In view of the above overwhelming satisfaction recorded by the AO as to the correctness of the assessee’s claim in this regard, we are not impressed with the ld. AR’s submission that the AO did not record satisfaction in terms of section 14A(2) of the Act.

Now coming to the merits of the addition, it has been brought to our notice that similar issue came up for consideration before the Tribunal in the assessee’s own case for the immediately preceding assessment year 2012- 13. Vide order dated 15-11-2018, the Tribunal in has restored the matter of section 14A disallowance to the file of AO with certain directions. In reaching this conclusion, the Tribunal relied upon its order in the assessee’s own case for the assessment years 2008-09 to 2011- 12. A copy of such order for the four assessment years has also been placed on record. Relevant directions have been given in para 10 of the Tribunal order, that have been adopted by the Tribunal in its order for the immediately preceding assessment year. Nothing has been brought to our notice for demonstrating that the Tribunal orders have been reversed or modified by the Hon’ble High Court in any manner. Respectfully following the consistent view of the Tribunal on this issue, we set-aside the impugned order and remit the matter to the file of the AO for deciding this issue afresh as per law after complying with the afore referred directions given by it in the earlier orders. Needless to say, the assessee will be allowed adequate opportunity of hearing.

In the result, the appeal is partly allowed for statistical purposes. A.Y. 2014-15 : 9. In this appeal, the assessee is aggrieved by the confirmation of addition of Rs.77,66,770/- made by the AO u/s.14A of the Act read with rule 8D(2)(iii). Both the sides are in agreement that the facts and circumstances of this appeal are mutatis mutandis similar to those of the immediately preceding assessment year 2013-14.

We have gone through the assessment order passed by the AO. In this year, the assessee earned exempt dividend income of Rs.42,35,59,740/-. In the same manner as for the preceding year, the AO required the assessee to explain the reasons as to why part of the expenses should not be disallowed. The assessee tendered explanation on similar lines by stating that it made suo motu disallowance of Rs.5,558/- and further that the disallowance of Rs.1.00 lakh was upheld by the Tribunal u/s.14A for the assessment year 2000-01. The assessee further urged that the disallowance for the instant year should also be restricted to the same level. The AO recorded his satisfaction in para nos. 5.3 and 5.4 in the same manner as done in his order for the assessment year 2013-14, reproduced above. Following the raison d`etre assigned hereinabove for the preceding year, we hold that the AO recorded proper satisfaction before making disallowance u/s.14A.

On merits, we set-aside the impugned order and remit the matter to the file of AO for computing the disallowance u/s.14A in the hue of the directions given by the Tribunal in its order for the assessment years 2008-09 to 2011- 12.”

Suffice to say, both the learned representatives have vehemently reiterated the rival stands against and in support of the impugned disallowance. The fact however remains that the very issue in the above immediate preceding assessment years is already pending before the learned Assessing Officer. We therefore adopt judicial consistency to direct him to adjudicate the impugned section 14A r.w. Rule 8D issue afresh as per law in the light of his findings in preceding assessment years. Ordered accordingly.

No other ground has been pressed before us.

This assessee’s appeal is allowed for statistical purpose in above terms.