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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
आयकर अपीलीय अधिकरण “C” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI श्री महावीर स िंह, न्याययक दस्य एविं श्री राजेश कुमार लेखा दस्य के मक्ष। BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM Aayakr ApIla saM./ ITAs No. 310/Mum/2018 (inaQa-arNa baYa- / Assessment Year 2012-13) Aayakr ApIla saM./ ITAs No. 311/Mum/2018 (inaQa-arNa baYa- / Assessment Year 2013-14) D.C.I.T, 14(1)(2) M/s. Crest Logistics & Engineers Room No. 475, 4th Fl., Private Limited Aaykar Bhavan, Maharshi (Erstwhile REL Utility Engineers Ltd., Karve Road, Mumbai-400 Formerly Known as Sonata Investments Vs.
Ltd.) Unit No. 306, 3rd Fl., Magnus Opus, Kalina, Santacruz (E), Mumbai-400055 .. (ApIlaaqaI- / Appellant) (p`%yaqaaI- / Respondent) स्थायी लेखा िं./PAN No. AACCR7266A अपीलाथी की ओर े / Appellant by : Shri N.S. Jing Ping, DR प्रत्यथी की ओर े / Respondent by : s/shri Deepak Jain Amit Khatiwala, ARs’ ुनवाई की तारीख / Date of hearing: 26.06.2019 घोषणा की तारीख / Date of pronouncement : 19.07.2019 AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM: These two appeals by the Revenue are arising out of the separate orders of the Commissioner of Income Tax (Appeals)], 22, Mumbai in appeal Nos. CIT(A)22/IT/172/2015-16 and 2 ITAs No.310 & 311/Mum/2018 CIT(A)22/IT/577/2015-16, both dated 30-10-2017. The Assessments were framed by the Deputy Commissioner of Income Tax, 14(1)(2), Mumbai (in short DCIT/ITO/ AO) for the A.Ys. 2012- 13 and 2013-14 vide orders dated 3.03.2015 and 15.02.2016, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only common issue involved in these appeals of the revenue is as regard to the orders of the CIT(A) restricting the disallowance of expenses in relatable to exempt income to the extent of exempt income on investments which are giving rise to exempt income only u/s. 14A of the Act r.w.r. 8D of the I.T Rules, 1962. For this, the Revenue has raised following grounds in for the A.Y 2012-13: -
1. Whether in law and on the facts of the instant case, was the CIT(A) right in excluding those investments which did not yield exempt income in the said A.Y 2012-13 from the calculation of disallowance s u/s. 14A r.w.r 8D.
2. Whether on law and in the facts of the instant case, was the CIT(A) right in restricting the disallowance u/s. 14A to the extent of exempt income earned by the Assessee Company?”
Briefly stated the facts are that the assessee has claimed exempt income u/s. 10A of the Act amounted to Rs. 6,85,83,096/-. The assessee has shown suo moto disallowance of 3 ITAs No.310 & 311/Mum/2018 expenses relating to exempt income u/s. 14A of the Act at Rs. 57,66,54,012/-. The assessee considered the investments, which have actually yield exempt income excluding stock-in-trade. According to assessee, it has considered the disallowance of expenses u/s. 14A of the Act r.w.r 8D of the Rules considering of investments, which yielded tax free income, of Rs.164,01,61,676/- . The Assessing Officer after considering the submissions of the assessee considered the interest expenditure for making disallowance under Rule 8D(2)(ii) of the Rules at Rs. 149,87,33,902/-. The Assessing Officer also computed the disallowance of expenses on account administrative expenses by computing the amount equal to 1½ % on average value of investments at Rs. 14,14,27,774/-. Thereby, the Assessing Officer considered the total disallowance at Rs. 164,01,61,676/-. The Assessing Officer also considered the suo moto disallowance by the assessee at Rs.74,75,30,920/- and thereby disallowed balance amount of Rs. 89,26,30,756/-. Aggrieved, the assessee preferred an appeal before the CIT(A).
The CIT(A) after considering the facts and circumstances of the case and provisions of law restricted the disallowance to the extent of income as shown by the assessee. The CIT(A) gave his findings in para 7. 2 as under:-
““7.2 I have considered the facts of the case and the appellant’s submissions. On the issue of jurisdiction for considering claims not made in the return of income by appellate authorities, there are various judgements of the Hon’ble Apex Court and 4 ITAs No.310 & 311/Mum/2018 also other Courts holding that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims which were not made in the return filed by it and that the appellate authorities have jurisdiction to entertain the same. The Hon’ble jurisdictional High Court in the case of CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd [2012] (23 taxmann.com 23) had discussed some of these judgements at length and held that the appellate authorities have jurisdiction to consider additional claims even though not claimed in the return of income. In view of this judgement of the Hon’ble jurisdictional High Court (supra) and the decision of the Hon’ble Tribunal in the appellant’s own case for A.Y 2009-10 in dated 14.07.2017, the additional ground of appeal is being admitted. The Hon’ble Tribunal (supra) in the appellant’s own case has also held that disallowance under section 14A is to be restricted to the exempt income earned by the assessee. Respectfully following the decision of the Hon’ble Tribunal in the appellant’s own case, the Assessing Officer is directed to restrict the disallowance u/s. 14A to the extent of the exempt income only.
5 ITAs No.310 & 311/Mum/2018 The appellant’s additional ground of appeal is allowed.”
Aggrieved, now the Revenue is in appeal before this Tribunal.