DCIT, CENTRAL CIRCLE-13, NEW DELHI vs. UNO MINDA LTD, NEW DELHI

Since issues are common and connected and the appeals were heard together, these are being consolidated and disposed off together by this order. For the sake of convenience, we are referring to Assessment Year 2017-18, since facts are similar.

The assessee is a company engaged in the business of manufacturing of automobile and auto parts. During the course of assessment proceedings, AO made addition of Rs.7,02,37,609/- on account of disallowance under section 14A of the Act. In the appellate proceeding, learned CIT(A) granted some relief. & 1733/Del/2023 DCIT vs. UNO Minda Ltd. 2 4. Against this order, Revenue has filed appeal before us.

Although, various grounds have been raised. The sole controversy is with respect to the disallowance of deduction under section 14A of the Act, which has been reduced by the learned CIT(A). After the disallowance made by Assessing Officer under section 14A of the Act, the matter was carried to the learned CIT(A). The CIT(A) held that AO is justified in making the disallowance under section 14A of the Act. But however, he noted that disallowance needs to be worked out considering the investment which have yielded the exempt income. He thereafter, on the basis of investments in shares which yielded exempt income worked out the total disallowance under section 14A at Rs.16,10,892/-. As the assessee has already made disallowance of Rs.4,06,140/- in the return of income, learned CIT(A) sustained the remaining amount of Rs.12,04,752/-.

We have heard both the parties and perused the records. Learned DR supported order of assessing officer.

Learned AR on the other hand reiterated the submissions made before lower authorities and further submitted that only those investments which yielded exempt income should be considered for working out disallowance u/s 14A r.w.r 8D as also held by Hon’ble Delhi High Court in the case of Caraf Builders & Constructions (P.) Ltd. [2019] 101 taxmann.com 167 (Delhi). He therefore submitted that no interference to the order of CIT(A) is called for. He further submitted that to the extent, the disallowance has been upheld by CIT(A) assessee is not in appeal.