ALLANA COLD STORAGE P.LTD,MUMBAI vs. ADDL CIT RG 1(1), MUMBAI

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ITA 1887/MUM/2015Status: DisposedITAT Mumbai09 March 2018AY 2009-103 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal followed its co-ordinate bench's decision in the assessee's own case for subsequent assessment years. It directed the Assessing Officer to compute the disallowance under Rule 8D(2)(iii) considering only investments that yielded exempt income during the year.

What were the facts?

The assessee challenged a disallowance under Section 14A, confirmed by the CIT(A), arguing that Rule 8D was wrongly applied to investments yielding no dividend or strategic investments. The Revenue conceded that the case was covered by subsequent assessment years.

What were the issues?

Whether Rule 8D can be applied to investments that did not yield exempt income during the year, and whether the disallowance should be restricted to such investments.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENCH “A”, MUMBAI

Before: SHRI G.S. PANNU & SHRI PAWAN SINGHShri Apurva Shah (AR) Shri Rajesh Kumar Yadav (DR) PER PAWAN SINGH:

For Appellant: Shri Apurva Shah (AR)
For Respondent: Shri Rajesh Kumar Yadav (DR)
Hearing: 15.01.2018Pronounced: 09.03.2018

Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of Income Tax Act is directed against the order of Ld. Commissioner of Income-Tax (Appeals)-2, Mumbai, [for short the ld. CIT(A)] dated 23.12.2014 for Assessment Year 2009-2010. The assessee has raised the following grounds of appeal:

1.

The Commissioner of Income Tax (Appeals) - 1, Mumbai erred:- 1.1 in confirming a disallowance u/s 14A of Rs.21,51,645/- by invoking the provisions of Rule 8D although on facts, there was no case for applying said Rule. 1.1.1 In applying Rule 8D without giving adequate reasons as to how he is not satisfied with the correctness of the claim of the expenditure shown by the Appellant. 1.1.2 in applying Rule 8D even in case of investments where no dividend had been received during the year. 1.1.3 In applying Rule 8D even in case of long term strategic investments.

1.1.4 Without prejudice, in not considering that the Hon'ble ITAT had already estimated Rs. 1,00,000/- as disallowable for AY 2007-08 for the same investments and that hence no further disallowance was warranted for. 1.1.5 in confirming the disallowance based on presumptions and surmises.

2.

At the outset of hearing, the Ld. Authorised Representative (AR) of the assessee submits that the grounds of appeal raised by assessee is covered in favour of assessee’s own case for Assessment Year 2011-12 & 2010-11 in & 2367/Mum/2015. The Ld. AR of the assessee further submits that the disallowance under section 14A may be restricted only to the investments which yielded the exempt income during the year. The Ld. Departmental Representative (DR) for the Revenue conceded that the case of covered by the decision of subsequent Assessment Year.

3.

We have considered the submission of the parties and find that in assessee’s own case, the co-ordinate bench of Tribunal in assessee’s own case in subsequent Assessment Year has passed the following order:

“4. We have heard the rival submissions, perused the orders of the authorities below and the decision of the Delhi Special Bench in the case of ACIT v. Vireet Investments Private Limited (supra). We observe that the Special Bench of the Delhi Tribunal held that only those investments are to be considered for computing average value of investments which yielded exempt income during the year. Therefore, respectfully following the said decision, we direct the Assessing Officer to compute the disallowance under Rule 8D(2)(iii) by considering only those investments which yielded exempt income during the year and recompute the income accordingly. Needless to say that the Assessing Officer shall give adequate opportunity of being heard to the assessee. Since we followed ITA.NO.2366 & 2367/MUM/2015 (A.Y.2011-12) Allana Cold Storage Private Limited the order of the Special Bench Tribunal and held that 2 the only the investments yielding dividend income should be considered for disallowance under Rule 8D(2)(iii) the other contentions raised by the assessee need not gone into as they are not relevant as submitted by Ld.A.R.” 4. Considering the decision of Tribunal in assessee’s own case for subsequent Assessment Year in & 2367/Mum/2015 dated 20.12.2017, this appeal is also restored to the file of Assessing Officer. The assessing officer is directed to follow the decision of Special Bench of Delhi Tribunal in Vireet Investment Private Ltd (Supra) and assessee’s own case for for assessment year 2010-11 and 2011-12 in ITA No.2376 & 2366/M/2015 dated 20.12.2017. Needless to say that before passing the order, the Assessing Officer shall grant adequate opportunity to the assessee.

5.

In the result, appeal filed by assessee is allowed for statistical purpose. Order pronounced in the open court on 9th day of March 2018.

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