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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI RAMIT KOCHAR, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 04.12.2017 passed by the Commissioner of Income Tax (Appeals) -47, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2007- 08.
The revenue has raised the following grounds: - “
(i) Whether on the facts and circumstances of the case and in law, the Id. CIT(A) was justified in restricting the disallowance to Rs.1,04,34,232/- under the provision of section 14A of the Act read with Rule SD of the Income Tax Rules, 1962." A.Y.2007-08 (ii) "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) was justified in restricting the disallowance to Rs.1,04,34,232/- under the provision of section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 without appreciating the fact that SLP has been filed in the Hon 'ble Supreme Court in the assesses group case i.e. JSW Energy Limited for A. Y.2006-07 wherein similar addition was made by AO and the Ld. CIT(A) has deleted the said addition following the decision of the Hon'ble High Court in the case of Godrej and Boyce Mfg. Co. Ltd." The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the AO be restored. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary".
3. The brief facts of the case are that the assessee filed its return of income on 10.10.2007 declaring total income to the tune of Rs.3,52,40,576/- for the A.Y. 2007-08. The return was processed u/s 143(1) of the I.T. Act, 1961 on 19.03.2009. Thereafter, the case was selected for scrutiny under CASS. Notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee company was engaged in the business of Investment in securities, lending & providing consultancy services. On verification, it was found that the assessee had shown the exempt income of Rs.69,74,09,441/- which was claimed as exempt u/s 10(34) of the Act. No expenses in respect of this exempt income were disallowed by the assessee in view of the provisions of Section 14A of the Act r.w. Rule 8D of the Rules and assessed the expenditure to earn the exempt income in sum of Rs.3,46,60,480/-. After some more scrutiny, the total income of the assessee was assessed in sum of Rs.14,91,54,590/- and book profit u/s 115JB of the Act in sum of Rs.1,49,94,582/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who restricted the claim of the assessee to the extent of Rs.1,40,34,232/-. Feeling aggrieved, the revenue has filed the present appeal before us.
2 A.Y.2007-08 ISSUE NOS. 1 & 2:-
Both the issues are in connection with the restriction of the addition to the extent of 1,40,34,232/- u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules 1962. The Ld. Representative of the revenue has argued that the AO has rightly applied the provisions u/s 14A r.w. Rule 8D of the I.T. Rules, 1962 and assessed the expenditure to earn the exempt income in sum of Rs. 3,46,60,480/- in accordance with law but the CIT(A) has wrongly restricted the same to the extent of 1,40,34,232/-, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside in the interest of justice. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record: -