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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Niraj Seth (AR) Department by: Shri M. K. Singh (DR) Date of Hearing: 27.03.2019 Date of Pronouncement: 29.03.2019 O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the above mentioned appeals against the order dated 30.06.2017 passed by the Commissioner of Income Tax (Appeals)-2, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment years2012-13 & 2013-14.
The assessee has filed the present appeal against the order dated 30.06.2017 passed by the Commissioner of Income Tax (Appeals)-2, 5520/Mum/2017 A.Y. 2012-13& 2013-14 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2012-13.
The assessee has raised the following grounds: - “ 1. That on the facts and in the circumstances of the case, the learned Commissioner of income Tax (Appeal) - 2 (hereinafter referred to as "the Ld. CIT(A)") erred in not deleting the disallowance of Rs. 2,34,17,801 made as expenses incurred towards earning exempt income u/s 14A r.w.r 8D and remitting the matter back to the AO to re-compute the disallowance, without appreciating the fact that no expenditure was actually incurred by the appellant for earning such income.
2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming disallowance as per Rule 8D(2)(iii), without appreciating the fact that substantial investments were made by the appellant in its own Mutual Funds as per central business policy, which did not require any separate complex analysis or incurrence of any expenditure.
3. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal.”
4. The brief facts of the case are that the assessee filed its return of income showing income of Rs.343,54,39,230/- on 22.11.2012. The case was selected for scrutiny, therefore, notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee company engaged in the business of acting as the investment manager to HDFC Mutual Fund. It is also providing portfolio manager services (PMS) to other clients. During the year under consideration, the assessee earned dividend income in sum of Rs.28,60,40,387/- on mutual fund and interest income to the tune of Rs.22,05,729/- earned A.Y. 2012-13& 2013-14 from investment in the tax-free secured redeemable non-convertible bonds issued by National Highway Authority of India (NHAI) & Indian Railway Finance Corporation (IRFC). The same has been exempt under I.T. Act, 1961. The assessee did not make any disallowance u/s 14A r.w. Rule 8D of the Act, therefore, the AO applied the provision u/s 14A r.w. Rule 8D of the Act and raised the addition in view of the provisions u/s 8D(iii) in sum of Rs.2,34,17,801/-. Accordingly, the income of the assessee was assessed in sum of Rs.345,88,57,040/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the addition, therefore, the assessee has filed the present appeal before us. ISSUE Nos. 1 to 2:- 5. Under these issues the assessee has challenged the confirmation of the addition in sum of Rs.2,34,17,801/- raised u/s 14A r.w. Rule 8D(iii) of the Act. At the very outset, the Ld. Representative of the assessee has argued that the issue has been restored before the AO in earlier A.Ys.2010-11 & 2011-12 by the Hon’ble ITAT in the assessee’s own case in & 3058/M/2017, therefore, the issue is liable to be restored before the AO under the same directions in the interest of justice. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The copy of order dated 29.03.2017 in the assessee’s own case in ITA. Nos. 3057 & 3058/M/2017 for the A.Ys.2010-11 & 2011-12. is on the A.Y. 2012-13& 2013-14 file in which the relevant finding has been given in para nos. 5, 6 & 7 which is hereby reproduced as under.:-