ACIT CIR 2(3)(1), MUMBAI vs. VARUN CORPORATION P.LTD, MUMBAI

This appeal by revenue is directed against the order of Commissioner (Appeals)-6 Mumbai dated 21st of October 2016 for assessment year 2010- 11, which in turn arises from assessment order passed by assessing officer under section 143(3) read with section 147 dated 26th February 2016. The revenue has raised following grounds of appeal: (1) Whether on the facts and in the circumstances of the case learned Commissioner (Appeals) erred in restricting disallowance under section 14A to the extent of amount suo moto disallowed by the M/s. Varun Corporation Pvt. Ltd.

Brief facts of the case are that the assessing officer while passing the assessment order under section 143(3) read with section 147 on 26th February 2016, disallowed a sum of Rs. 17,66,49,965/ -under section 14A against the exempt income of Rs. 2.05 Crore (Aprox) . On appeal before learned Commissioner (Appeals), the assessee besides challenging the reopening under section 147 also challenged the disallowance made by assessing officer and urged that disallowance under section 14 A cannot exceed the exempt income earned by the assessee during the relevant period. During the relevant period the assessee has earned exempt income of Rs. 2,05,50,820/- whereas the assessee voluntarily disallowed a sum of Rs. 15,36,20,152/- under section 14A. The learned Commissioner (Appeals) after considering the submission of assessee granted partial relief to the assessee in restricting the addition/disallowance under section 14A, to the voluntary disallowance made by assessee. However, the learned Commissioner (Appeals) on the issue of reopening held that the assessee is granted relief, thus, the issue of reopening has become

We have heard the submission of learned DR of the revenue and learned and DR for revenue and perused the material available on record. On our specific quarry it was disclosed that the ld AR appearing on behalf of the assessee, that the assessee has not filed any further appeal before this tribunal against partial disallowance under section 14A. The learned DR for the revenue supported the order of assessing officer. The learned DR further submits that the learned Commissioner (Appeals) instead of confirming the disallowance in accordance with the Rule 8D, restricted the same to the extent of voluntary disallowances made by assessing and prayed to reverse the order and to restore the order passed by assessing officer.

On the other hand the learned AR for the assessee submits that though the disallowance under section 14A should not exceed the exempt income as law laid down by various superior courts and the tribunals. As the assessee has not filed any appeal against the disallowances restricted by assessing officer. The appeal filed by the venue should be dismissed at threshold.

We have considered the rival submission of the parties and have gone through the orders of authorities below. There is no dispute that during the relevant period the assessee has earned exempt income of 3

As we have already recorded that the assessee has not filed any further appeal against the order of learned Commissioner (Appeals) against restricting the disallowance to Rs. 15.36 crore, nor was any Cross Objections filed. Therefore, in view of the above discussion we do not 4

Order pronounced in the open court at the time of hearing of the appeal.