BAPA ESTATE P.LTD,MUMBAI vs. ACIT CEN CIR 38, MUMBAI

Bapa Real Estate Pvt.Ltd. Assessment Year-2010-11 2. The registry has noted that the appeal has been filed with a delay of 255 days, the condonation of which has been sought by the assessee on the strength of condonation petition & affidavit dated 21/07/2017 executed by one of the director of the assessee company. The same is supported by the affidavit dated 10/03/2015 executed by staff member of the assessee. The delay has been attributed to the lapse on the part of the office staff to hand over the impugned order in time to the head of the accounts department. Since the circumstances are being supported by two duly sworn affidavits, we condone the delay and proceed to dispose-off the appeal on merits as argued before us.

The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax, Central Circle-38, Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on 15/03/2013 wherein the income of the assessee has been assessed at Rs.911.11 Lacs under normal provisions after certain adjustments as against returned income of Rs.871.38 Lacs e-filed by the assessee on 26/09/2010. The ‘book profits’ for the purpose of computing Minimum Alternative Tax [MAT] u/s 115JB has been computed at Rs.911.11 Lacs as against Rs.864.44 Lacs computed by the assessee. During impugned AY, the assessee being resident corporate entity was engaged in Real Estate & Finance Activities. The sole subject matter of the present appeal is disallowance u/s 14A. Bapa Real Estate Pvt.Ltd. Assessment Year-2010-11 4. During assessment proceedings, it was noted that the assessee earned exempt income by way of profit from partnership firms amounting to Rs.852.68 Lacs and against the same, offered suo-moto disallowance u/s 14A for Rs.6,93,277/-. This disallowance comprised- off of interest disallowance u/r 8D(2)(ii) for Rs.3.68 Lacs & expense disallowance u/r 8D(2)(iii) for Rs.3.25 Lacs. The computation of income as placed on record reveal that the said disallowance has been worked out by considering only those investments which has yielded exempt income during impugned AY i.e. capital contribution in the partnership firms. However, disregarding the same, Ld. AO worked out aggregate disallowance of Rs.46.66 Lacs which comprised-off of interest disallowance u/r 8D(2)(ii) for Rs.25.25 Lacs and expense disallowance u/r 8D(2)(iii) for Rs.21.41 Lacs. After adjusting suo-moto disallowance of Rs.6.93 Lacs, the net disallowance worked out to be Rs.39.73 Lacs which was added to the income of the assessee under normal provisions as well as while computing Book Profits for the purpose of MAT u/s 115JB. It is pertinent to note that difference in calculations as made by the assessee and as made by Ld. AO stem from the fact that Ld. AO has considered the gross figures of investments irrespective of the fact that whether the same has yielded any exempt income or not whereas the assessee has considered only those investments which have yielded exempt income during impugned AY. Bapa Real Estate Pvt.Ltd. Assessment Year-2010-11 5. Aggrieved, the assessee agitated the same without any success before first appellate authority vide impugned order dated 28/03/2014 wherein the stand of Ld. AO got confirmed, inter-alia, on the premise that the assessee did not maintain separate accounts for the purposes of earning exempt income and also could not provided co-relation between funds available and funds deployed. Aggrieved, the assessee is in further appeal before us.