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ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by revenue under section 253 of Income-tax Act (‘Act’) is directed against the order of ld. Commissioner of Income-tax (Appeals)- 8, Mumbai [hereinafter referred as ld. CIT(A)] dated 15.02.2018 for Assessment Year 2011-12. The revenue has raised the following grounds of appeal:
1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs.54,34,825/- u/s 14A r.w.r. 8D without appreciating the fact that the amount of disallowance u/s 14A of the I. T. Act, 1961 has to be computed as per rule 8D of I.T. rules, 1962 as held in the order of the Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd.? 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs.54,34,825/- u/s 14A r.w.r. 8D and upholding the suo moto disallowance made by the assessee at Rs.8,03,496/- holding that the onus was upon the AO to prove that interest expenditure was incurred for making investments capable of earning exempt 1 Mum 2018-M/s Indian Express Newspaper (Mumbai) P. Ltd.
income when infact the onus of establishing its claim of deduction lies on the Assessee? 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs.54,34,825/- u/s 14A r.w.r. 8D by accepting the claim of the assessee that investments were made from own funds without actually verifying the sources of such investments, without appreciating that the assessee had not proved it before the Assessing Officer or in appeal proceedings that investments were actually made from own funds? 4. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowance of Rs.1,94,648/- being claim of Land revenue Tax against income from House Property without appreciating the fact that no such deductions is allowable as per the provisions of I. T. Act, 1961 in the computation of income from House Property? 5. The appellant prays that for this and other reasons it is submitted that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer be restored.
At the outset of hearing, the ld. Authorized Representative (AR) of the assessee submits that all the grounds of appeal
raised by revenue are covered in favour of assessee and against the revenue by the order of the Tribunal in assessee’s own case for assessment year (AY) 2010-11 and 2011-12 . The ld. AR of the assessee further submits that ground no. 1 to 3 relates to disallowance under section 14A r.w. Rule 8D are covered by the decision of Tribunal in assessee’s own case for Assessment Year 2010-11 in dated 22.06.2016. And the ground no.4 which relates to deduction of land revenue while computing the income under the head “Income from House Property” is also covered by the decision of Tribunal in assessee’s own case for Assessment Year 2012-13 in ITA No. 3664/Mum/2016 dated 31.03.2018. The ld. AR of the assessee submits that the copy of decision ITA No. 2536 Mum 2018-M/s Indian Express Newspaper (Mumbai) P. Ltd. of Tribunal in Assessment Year 2010-11 & 2011-12 in assessee’s own case as referred above.
3. On the other hand, the ld. Departmental Representative (DR) for the revenue after going through the grounds of appeal and on comparison of grounds of appeal in assessee’s own case for Assessment Year 2010-11 & 2012-13 submits that he strongly relied upon the order of Assessing Officer.
4. We have considered the rival submission of the parties and have gone through the orders of authorities below. Ground No.1 to 3 relates to disallowance under section 14A r.w. Rule 8D. We have noted that while passing the assessment order, the Assessing Officer noted that assessee has shown the exempt income of Rs. 1.2 Crore and no suo-moto disallowance. When the assessee was confronted the assessee contended that they have not incurred any expenses to earn the exempt income. The Assessing Officer was not satisfied with the correctness of the claim of assessee. The Assessing Officer invoked the provision of section 14A r.w. Rule 8D made disallowance of Rs. 54,34,825/- on account of interest expenditure as well as .5% of average value of investment i.e. Rs. 8,03,496/-. Thus, made a total disallowance of Rs. 62,38,321/-.
Before ld CIT (A) the assessee have shown that Share Capital and Reserve and in far excess than the investment made by the assessee during the relevant financial year as recorded in para 3.1 of his order. 3 Mum 2018-M/s Indian Express Newspaper (Mumbai) P. Ltd. The assessee also relied on the decision of Bombay High Court in HDFC Bank (383 ITR 529 Bom) and Reliance Utilities and Power Ltd (313 ITR 340 Bom) on the ratio of law that if the reserve funds are in far excess of the investment, the assumption is that the investments are made out of own funds and no borrowed funds are utilized. The ld. CIT(A), deleted the interest disallowance of Rs. 54,34,825/- by following the decision of Tribunal in assessee’s own case for Assessment Year 2010-11 and remaining disallowance of Rs. 8,03,496/- was sustained. We have noted that the ld. CIT(A) by following the decision of Tribunal for AY 2010-11 and deleted the disallowance of interest expenses and sustained the administrative expenses to the extent of .5% of the average value of investment.
No contrary fact or law is brought to our notice to take other view, therefore, respectfully following the decision of Tribunal in assessee’s own case for Assessment Year 2010-1, the ground nos. 1 to 3 of the appeal are dismissed.
Ground No.4 related to deleting the disallowance of Rs. 1,94,648/- on account of land revenue. We have noted that similar disallowance was made for Assessment Year 2012-13, however, on appeal before the ld. CIT(A), the same was deleted by following the decision of Assessment Year 2010-11. We have further noted that the ld. CIT(A) by following ITA No. 2536 Mum 2018-M/s Indian Express Newspaper (Mumbai) P. Ltd. the decision of Assessment Year 2012-13 deleted the disallowance by passing the following order:
2. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the CIT(A) in AY 2010-11 has deleted the disallowance on the grounds that the Municipal tax are liable for deduction. The CIT(A) in this year following the order of his predecessor in assessee’s own case for AY 2010-11 allowed the claim by observing Para 5.2.1 as under: -
“5.2.1 This ground pertains to disallowance of Rs. 194,548/- being the Land Revenue Tax paid by the appellant. This issue has also come up in appeal before my learned predecessor in appellants own case for assessment year 2010-11. At para 5.3.2, CIT(A) held that undisputedly. the said payments are in the nature of taxes paid and akin to municipal taxes and therefore, an allowable deduction. I do not find any reason to depart from the decision of my learned predecessor and therefore the disallowance of Rs 1,94,648/-on this account is deleted. This ground of appeal is allowed.”
3. We find no infirmity in the order of CIT(A). Hence, this issue of Revenue’s appeal is also dismissed.
7. Considering the decision of Tribunal on identical facts, we do not find any infirmity in the order passed by ld. CIT(A).
In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 23/04/2019.
Sd/- Sd/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER Mumbai, Date: 23.04.2019 SK 5 Mum 2018-M/s Indian Express Newspaper (Mumbai) P. Ltd. Copy of the Order forwarded to : 1. Assessee 2. Respondent 3. The concerned CIT(A) 4. The concerned CIT 5. DR “C” Bench, ITAT, Mumbai 6. Guard File