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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal of the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-2, Mumbai [in short CIT(A)], in Appeal No CIT(A)-2/IT/28/2016-17 vide order dated 01.01.2018. The Assessment was framed by the Income Tax Officer, Ward-1(2)(3) Mumbai 2 (in short ‘ITO/ AO’) for the A.Y. 2013-14 vide order dated 03.03.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of Revenue is against the order of CIT(A) deleting the disallowance made by AO in regard to expenses relatable to exempt income and restricting the same to the extent of exempt income i.e. dividend income by invoking the provisions of section 14A of the Act read with Rule 8D(2)(iii) of the Rules. For this Revenue has raised the following ground: - “Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in concluding that disallowance under section 14A r.w.r 8D(2)(iii) of the Act may be restricted to the extent of dividend income?.”
3. Briefly stated facts are that the assessee received dividend income of ₹ 926/- which is claimed as exempt. This is admitted fact that the AO invoked the provisions of section 14A of the Act read with Rule 8D(2) and thereby disallowed under Rule 8D(2)(iii) being 0.5% of average value of investment at ₹ 10,99,44,725/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) restricted the disallowance to the extent of exempt income following the decision of Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Delhi). Aggrieved, Revenue came in appeal before Tribunal.