SMT USHA SAMANI,MUMBAI vs. ITO 17(3)(5), MUMBAI

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ITA 6554/MUM/2018Status: DisposedITAT Mumbai25 February 2020AY 2013-143 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that investments on which no exempt income was earned should be excluded when computing the disallowance under Section 14A. The matter was restored to the AO for recalculation.

What were the facts?

The assessee claimed dividend income as exempt but did not make any disallowance for expenses incurred in earning it. The AO disallowed Rs. 11,06,965/- under Section 14A read with Rule 8D.

What were the issues?

Whether investments not yielding exempt income should be included in the computation of disallowance under Section 14A.

Which sections of the Income-tax Act were involved?

Section 14A,Section 10(34)

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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI R.C. SHARMA & SHRI PAWAN SINGH

For Appellant: Shri Navin Mishra
For Respondent: Shri Sarish Chandra Rajore
Hearing: 24/02/2020Pronounced: 25/02/2020

Assessee by : Shri Navin Mishra Revenue by : Shri Sarish Chandra Rajore Date of Hearing : 24/02/2020 Date of Pronouncement : 25/02/2020 O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER

This is an appeal filed by the assessee against the order of the CIT(A)-28, Mumbai dated 14/09/2018 for A.Y.2013-14 in the matter of order passed u/s.143(3) of the Income Tax Act.

2.

In this appeal assessee is aggrieved for disallowance of Rs.11,06,965/- made u/s.14A r.w.r. 8D of the IT Act.

3.

Facts in brief are that assessee is engaged in trading in shares and securities, investment in mutual funds etc., During the year assessee claimed exemption in respect of dividend income. During the course of scrutiny proceedings, AO found that the assessee has shown dividend income of Rs.20,61,345/- and has claimed the same as exempt u/s. 10(34) of the Act. However, the assessee has not made any disallowance on account of expenses incurred towards earning such exempt income, in view of section 14A of the l.T. Act, 1961. Accordingly AO computed disallowance u/s.14A r.w.r. 8D at Rs.11,06,965/-. By the impugned order CIT(A) confirmed the disallowance. As per the ld. AR, the AO has not excluded the investment on which assessee has not earned any exempt income, while applying rule 8D. Ld. AR also placed on record the order of the Tribunal in assessee’s own case for the immediately preceding A.Y.2012-13 dated 13/06/2019, wherein exactly similar issue was decided by the Tribunal and AO was directed to exclude the investment on which assessee did not yield any exempt income. The precise observation of the Tribunal in its order dated 13/06/2019 was as under:-

“ Upon careful consideration, I note that claim of the assessee in this case is that the assessee has also not earned dividend income on some of investment and it is the plea of the assessee that the same should not be considered for disallowance u/s. 14A. 1 find that this proposition is duly supported by the order of Special bench of the ITAT in the case of Vireet Investment Pvt. Ltd. (58 ITR 313). Hence I direct that investment which had not yield any dividend income should not be taken into account for the purpose of computation of disallowance.”

4.

As the facts and circumstances during the year under consideration are same, we restore the matter back to the file of the AO for excluding investment on which the assessee has not received any exempt income, while computing disallowance u/s.14A.

5.

In the result, appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on this 25/02/2020

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