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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
आयकर अपीलीय अधिकरण “SMC” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI श्री शक्तिजीि डे,न्याययक सदस्य एवं श्री एस रिफ़ौि िहमान, लेखा सदस्य के समक्ष । BEFORE SRI SAKTIJIT DEY, JM AND SRI S RIFAUR RAHMAN, AM आयकर अपील सुं./ (यनर्ाािण वर्ा / Assessment Year 2012-13) M/s Print Services The Asst. Commissioner of 212, Shah and Nahar Indl Income, Circle-21(2)(5) Estate, Sitaram Jadhav Marg, Room No. 116, 1 st Floor, बनाम/ Lower Parel, Mumbai-400 013 Piramal Chambers, Vs. Mumbai-400 012 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा सुं./PAN No. AAIFP0754G अपीलार्थी की ओि से / Appellant by : Dr. P Daniel, AR प्रत्यर्थी की ओि से / Respondent by : Shri Vinay Sheel Gautam, DR सुनवाई की िािीख / Date of hearing: 16.03.2020 घोर्णा की िािीख / Date of pronouncement: 27.05.2020 आदेश / O R D E R शक्तिजीि डे, न्याययक सदस्य/ PER SAKTIJIT DEY, JM:
This is an appeal by the assessee against the order dated 29.01.2019 of learned Commissioner of Income Tax (Appeals)- 48, Mumbai for the Assessment Year 2012-13. 2. The dispute in the present appeal is confined to disallowance of `6,17,274/- under section 14A of the Income Tax Act, 1961 (in short ‘Act’) read with Rule 8D of the Income Tax Rules, 1962 (in short ‘Rules’).
2 | P a g e I TA N o. 1 47 1 /M um/ 2 0 19 Pri nt S er vi c es 3. Briefly stated facts are, the assessee, a partnership firm filed its return of income for the year under consideration on 14.09.2012 declared total income of `17,83,411/-. During the assessment proceedings, the Assessing Officer noticed that in the year under consideration, though, the assessee had earned exempt income by way of dividend amounting to `99,375/-, however, it has not made any disallowance under section 14A of the Act. After calling upon the assessee to explain as to why disallowance under 14A of the Act should not be computed by applying Rule 8D, the Assessing Officer proceeded to disallow an amount of `6,17,274/- comprising of disallowance of interest expenditure under Rule 8D(2)(ii) amounting to `6,04,642/- and administrative expenditure under Rule 8D(2)(iii) amounting to `12,633/-. The assessee contested the aforesaid disallowance before learned Commissioner (Appeals). After considering the submissions of the assessee, learned Commissioner (Appeals) sustained the disallowance made by the Assessing Officer.
The learned Authorized Representative (AR) submitted, no disallowance of interest expenditure under Rule 8D(2)(ii) can be made as no interest bearing fund was invested in exempt income yielding asset. The learned AR submitted, the assessee had sufficient surplus fund available to make the investment. Therefore, disallowance made under Rule 8D(2)(ii) should be deleted. Further, he submitted, even no disallowance under Rule 8D(2)(iii) can be made as the Assessing Officer before computing disallowance under Rule 8D read with section 14A has failed to record any satisfaction as required under section 14A(2) of the Act. Without prejudice, the learned AR submitted, 3 | P a g e I TA N o. 1 47 1 /M um/ 2 0 19 Pri nt S er vi c es under no circumstances disallowance under section 14A read with Rule 8D can exceed the exempt income earned during the year. In support of his contention, the learned authorized representative relied upon the following decisions: -
(i) M/s Pest Control India Pvt. Ltd. Vs. DCIT in for AY 2012-13
(ii) M/s Daga Global Chemicals Pvt. Ltd. in for AY 2009-10
The learned Departmental Representative strongly opposed the contentions of the assessee and relied upon the observations of Assessing Officer and learned Commissioner (Appeals).
We have considered rival submissions and perused the material available on record. The first issue raised by learned AR is regarding non-recording of satisfaction by the Assessing Officer. Uundisputedly, the assessee has not disallowed any expenditure under section 14A read with Rule 8D in the return of income filed for the year under consideration. That being the case, there is no need for the Assessing Officer to record satisfaction under section 14A(2) of the Act regarding correctness of assessee’s computation of disallowance under section 14A of the Act. Therefore, we are unable to accept the above said contention of the assessee. As regards the merits of the issue, the learned AR has submitted before us, assessee has sufficient interest free funds available with it to make the investment. In our view, the aforesaid claim of the assessee requires factual verification, in case it is found that the assessee