DOSHI HOLDINGS PVT LTD.,MUMBAI vs. ITO 3(1)(2), MUMBAI

AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:

This appeal of the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-8, Mumbai [in short CIT(A)], in Appeal No CIT(A)-8/IT-70/17-18 vide order dated 10.06.2019. The Assessment was framed by the Income Tax Officer, Ward 3(1)(2) Mumbai (in short ‘ITO/ACIT/ AO’) for the A.Y. 2015-16 vide order dated 22.12.2017 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2 2. The only issue in this appeal of assessee is against the order of CIT(A) in confirming the action of the AO in disallowing expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Rules. For this Assessee has raised the following ground: - “The ld. CIT(A) has erred in law and on the facts of the case in confirming the action of assessing officer in disallowing ₹ 25,15,000/- under section 14A of the Income Tax Act. The action is unjustified and unwarranted.”

3. Briefly stated facts are that the assessee is an investors and trading in shares and securities. The AO during the course of assessment proceedings noted that the assessee company has earned dividend income of ₹ 4,08,38,106/- from its investment in shares of Premier Limited and claimed the same as exempt under Section 10(34) of the Act. The AO required the assessee to explain as to why the expenses relatable to exempt income should not be disallowed. The assessee explained that in the computation of income the assessee on its own disallowed a sum of ₹ 1,00,73,716/- and this amount is more than 0.5% of the average value of investment as per Rule 8D(2)(iii) of the Rules. But the AO computed the disallowance, apart from the disallowance made by the assessee, at ₹ 25,15,001/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) also confirmed the action of the Assessing Officer. Aggrieved, assessee is in appeal before Tribunal.