MULTIPLEX CAPITAL LTD.,DELHI vs. ITO, WARD-17(2), NEW DELHI

The assessee, in the various grounds of appeal has challenged the order of the CIT(A) sustaining the addition of Rs.1,66,506/- out of disallowance of Rs.6,49,130/- made by the Assessing Officer u/s 14A read with Rule 8D of the IT Rules, 1962.

Facts of the case, in brief, are that the assessee company is a stock exchange and depository member dealing in shares. It filed its return of income on 29th September, 2013 declaring loss of Rs.42,327/-. During the course of assessment proceedings, the Assessing Officer noted that the assessee company has claimed dividend of Rs.9,65,247/- as exempt. On being questioned by the Assessing Officer, it was explained that the assessee has suo motu disallowed an amount of Rs.4,82,624/- being 50% of the exempt dividend income and no further disallowance is called for. However, the Assessing Officer was not satisfied with the explanation given by the assessee. Relying on the provisions of section 14A read with Rule 8D of the IT Rules, the Assessing Officer made a disallowance of Rs.6,49,130/-. In appeal, the ld.CIT(A) restricted such disallowance to Rs.1,66,506/- being the difference between the amount computed by the Assessing Officer u/s 14A read with Rule 8D and the disallowance suo motu made by the assessee.

Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.

The ld. counsel for the assessee submitted that under identical circumstances, the disallowance made by the Assessing Officer and sustained by the CIT(A) were deleted by the Tribunal for assessment year 2009-10 and 2010-11. He submitted that the facts of the instant case being similar to that of the earlier assessment years, no disallowance is called for.

The ld. DR, on the other hand, heavily relied on the order of the CIT(A).

I have considered the rival arguments made by both the sides and perused the orders of the authorities below. I find the Assessing Officer made disallowance of Rs.6,49,130/- u/s 14A read with Rule 8D which has been restricted to Rs.1,66,506/- by the CIT(A). I find under identical circumstances, the Tribunal in assessee’s own case, vide order dated 25th March, 2015 for assessment year 2009-10, has deleted the disallowance made by the Assessing Officer and sustained by the CIT(A) at Rs.60,09,848/- wherein the assessee had received dividend income of Rs.9,12,563/- which was claimed as exempt. Similarly, the Tribunal, in assessee’s own case for assessment year 2010-11, vide ITA No.1618/Del/2015, order dated 20th July, 2016 had deleted the disallowance of Rs.3,25,236/- sustained by the CIT(A) out of the disallowance of Rs.5,47,189/- made by the Assessing Officer u/s 14A r.w. Rule 8D by following the order of the Tribunal in assessee’s own case in the preceding assessment year. Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in assessee’s own case for the two preceding assessment years, therefore, in absence of any contrary material brought to my notice and considering the fact that the assessee has suo motu disallowed 50% of such exempt income, no further disallowance is called for. I, therefore, set aside the order of the CIT(A) and direct the Assessing Officer to delete the disallowance. The order of the CIT(A) is accordingly set aside and the grounds raised by the assessee are allowed.

In the result, the appeal filed by the assessee is allowed. The decision was pronounced in the open court on 21.08.2019.