ACIT CIR 6(3)(2), MUMBAI vs. KREDENCE MULTI TRADING CO., MUMBAI

आदेश / O R D E R Per Joginder Singh(Judicial Member) The Revenue is aggrieved by the impugned order dated 30/11/2016 of the Ld. First Appellate Authority, Mumbai, restricting the disallowance of Rs.57,94,173/- made under section 14A of the Income Tax Act, 1961 (hereinafter the Act) read with Rule-8D of the rules, to the extent of exempt income of Rs.2,49,084/-, claimed by the assessee, ignoring the CBDT Circular No. 5/2014 dated 11/02/2014.

2.1. We have considered the submissions of Ld. DR and perused the material available on record. The facts, in brief, are that the assessee is a limited company engaged in trading of iron and steel and shares/securities, declared income of Rs.3,54,65,793/- in its return, filed on Kredence Multi Trading Ltd. 28/09/2012, which was processed under section 143(1) of the Act, subsequently, the case of the assessee was selected for scrutiny, therefore, notice under section 143(2) and 142(1) were served upon the assessee. The assessee attended the proceedings from time to time and furnished necessary details. During the concerned year, the assessee earned dividend income of Rs.7,49,805/- on old share investment, which was claimed exempt under section 10(34) of the Act.

The assessee earned profit of Rs.10,72,550/- on sale of mutual fund and also incurred loss of Rs.15,73,271/-, aggregating net loss of Rs.5,00,721/- on sale of mutual fund.

Before the ld. Assessing Officer, the assessee claimed that it did not incur any expenditure for earning dividend income on shares except of Rs.73,614/- as direct expenses, which were disallowed by the assessee itself in its computation. It was claimed by the assessee that exempt income of Rs.2,49,084/- is covered by the decision in the case of Daga Global Chemicals, wherein, it was held that disallowance under section 14A r.w.r.8D should not exceed the exempt income.