DOSHI HOLDINGS PVT LTD.,MUMBAI vs. ITO 3(1)(2), MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that since the assessee had suo motu disallowed an amount exceeding 0.5% of the average investment value, there was no scope for further disallowance under Section 14A. Therefore, the disallowance made by the AO and confirmed by the CIT(A) was deleted.
What were the facts?
The assessee earned substantial dividend income which was claimed as exempt. The Assessing Officer disallowed expenses relatable to this exempt income under Section 14A, adding to the disallowance already made by the assessee. The CIT(A) confirmed the AO's action.
What were the issues?
Whether expenses relatable to exempt income can be disallowed under Section 14A when the assessee has already made a suo motu disallowance exceeding the prescribed limit.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
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 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.
More judgments on Section 14A
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- The Dy DIT (It) 1(2), Mumbai vs M/S Citi Bank N.A, MumbaiITA 4981/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
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- M/S American Express Bank Ltd., Mumbai vs The Jt DIT (It)1(1), MumbaiITA 9414/MUM/2004[2000-2001]Status: Disposed8 Oct 2026AY 2000-2001
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