MADRAS SECURITY PRINTERS (P) LTD.,CHENNAI vs. ACIT, CHENNAI

M/s. Madras Security Printers Pvt. Ltd., is engaged in the business of manufacturing and exporting security forms, computer forms, postal envelops, labels, plastic and smart cards. While making the assessment for the assessment year 2016-17, the Assessing Officer invoked the jurisdiction U/s.14A r.w.r. 8D and made disallowance of Rs.8,67,057/- under Rule 8D(ii) & (iii), respectively. Aggrieved against that order, the assessee filed an appeal before the CIT(A). The ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal.

The ld.AR pleaded that the assessee earned an exempt income of Rs.10,200/- only, on which the ld.AO made a disallowance of Rs.8,67,057/- which has been upheld by the ld.CIT(A). It was pleaded that the disallowance be restricted to the extent of dividend income earned by the assessee. Per contra, the ld.DR supported the orders of the lower authorities.

We heard the rival submissions and find merit in the assessee’s claim that the restriction of disallowance be restricted to the extent of dividend income as held by the Hon’ble Delhi High Court in the case of M/s. Joint Investments (P.) Ltd. vs. CIT (2015) 372 ITR 694 (Delhi). Therefore, we direct the Assessing Officer to restrict the disallowance to the extent of exempt income, in accordance with the above decision.

In the result, the assessee’s appeal is treated as partly allowed for statistical purposes.