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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI JOGINDER SINGH & SHRI N.K. PRADHAN
ORDER
PER N.K. PRADHAN, AM
This is an appeal filed by the assessee. The relevant assessment year is 2012-13. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-17, Mumbai [in short ‘CIT(A)’]and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).
The grounds of appeal
s filed by the assessee read as under:
1. The CIT(A) ought to have held that the Appellant had disclaimed deduction by way of depreciation under section 32(1) of the Act in the earlier years and, therefore, the written down value on which depreciation was to be allowed for the year under consideration should have been higher to that extent.
2. The CIT(A) ought to have held that the appellant had already disallowed Rs.32,341 as being allocable under section 14A and no further expenditure by way of administrative cost had been incurred in relation to earning of exempt income and, hence, no such additional expenditure could not be the subject matter of disallowance under section 14A of the Act.
3. The Ld. counsel of the assessee fairly agrees that the 1st ground of appeal has been decided against the assessee by the decision of the Hon’ble Supreme Court in assessee’s own case i.e. Plastiblends India Ltd. v. Additional CIT (2017) 86 taxmann.com 137 (SC). The Ld. DR relies on the above decision.
4. We have heard the rival submissions and perused the relevant materials on record. In the above decision, it has been held that quantum of deduction under section 80-IA is not dependent upon assessee claiming or not claiming depreciation, because under section 80-IA quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under sections 30 to 43D of the Act. Following the above decision, we uphold the order of the Ld. CIT(A).
Now we turn to the 2nd ground of appeal
. In the profit and loss account, the assessee has credited Rs.22,74,670/- as dividend income and claimed the same as exempt u/s 10(34) in the computation of income. The assessee has offered Rs.32,341/- as disallowance u/s 14A in respect of the exempt income. The Assessing Officer (AO) made a disallowance of Rs.9,02,519/- under Rule 8D(2)(ii) and Rs.1,92,535 under Rule 8D(2)(iii) of the Income Tax Rules, 1962. The AO thus made a disallowance of Rs.10,62,713/- after giving credit of Rs.32,341/- offered by the assessee.
6. In appeal, the Ld. CIT(A) restricted the disallowance to Rs.1,60,194/- [Rs.1,92,535/- disallowed by the AO under Rule 8D(2)(iii) minus Rs.32,341/- offered by the assessee].
7. We find that the ITAT ‘C’ Bench, Mumbai in assessee’s own case for the AY 2008-09 (ITA No. 4080/Mum/2012) has upheld similar disallowance under Rule 8D(2)(iii). The Tribunal held: “However, coming to the disallowance of other direct or indirect expenditure, the assessee has computed the disallowance at Rs. 24,304/- by allocating the salary paid to junior accountant. We do not agree with this computation of disallowance by the assessee. It is an undisputed fact that investment is a policy decision taken by the Board of Directors at the highest level which requires lot of consultancy from various experts. Therefore, the disallowance u/s. 14A r.w. Rule 8D(2)(iii) becomes imperative, as the disallowance have been computed by the AO as per the applicable provisions of law. We do not find any reason to interfere with the disallowance.”