DCIT 1(3)(1), MUMBAI vs. PAYONE ENTERPRISES (P) LTD. , MUMBAI

M/s. Payone Enterprises P. Ltd 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the disallowance made u/s.14A of the Act read with rule 8D(2)(iii) of the rules to the extent of dividend income.

We have heard rival submissions. We find that assessee had earned dividend income of Rs.81,372/- and claimed the same as exempt in the return of income. Assessee made suomoto disallowance of administrative expenses u/s.14A of the Act read with rule 8D(2)(iii) of the rules in the sum of Rs.49,542/-. The ld. AO proceeded to compute the disallowance under third limb of rule 8D(2) and arrived at the disallowance figure of Rs.1,21,84,586/- after reducing the amount disallowed already by the assessee in the sum of Rs.49,452/-. The ld. CIT(A) by placing reliance on the decision of the Hon’ble Delhi High Court in the case of Joint Investments reported in 372 ITR 694 restricted the disallowance made u/s.14A of the Act to the extent of dividend income. The ld. CIT(A) directed the ld. AO to disallow only the remaining sum of Rs.31,920/- (Rs.81,372 – Rs.49,452/-) u/s.14A of the Act. We find no infirmity in the said order of the ld. CIT(A) as the same has been rendered by following the decision of the Hon’ble Delhi High Court and this issue is also now settled by the Hon’ble Supreme Court in the case of Maxopp Investments reported in 402 ITR 640. Accordingly, the ground raised