CHANDULAL MONJI HURBADA,MUMBAI vs. JCIT RG 13(2), MUMBAI

The captioned appeal by assessee for Assessment Year [AY] 2010-11 assails the order of the Ld. Commissioner of Income-Tax (Appeals)-28 [CIT(A)], Mumbai, Appeal No. CIT(A)-28/JCIT-13(2)/IT- 11/2013-14 dated 23/12/2015 qua confirmation of certain disallowances ITA.No.1533/Mum/2016 Chandulal Monji Harbada Assessment Year-2010-11 out of which Ld. Counsel for Assessee [AR] has contested only for disallowance u/s 14A. The assessment for impugned AY was framed by Ld. Joint Commissioner Of Income Tax Range 13(2), Mumbai [AO] u/s 143(3) of the Income Tax Act on 05/03/2013. 2.1 Briefly stated, the assessee being resident individual engaged in exports of onions under proprietorship concern namely S.M.Trading Company was assessed u/s 143(3) at Rs.159.96 Lacs after certain disallowances as against returned income of Rs.150.61 Lacs filed by the assessee on 30/09/2010. The solitary issue involved under the appeal is disallowance u/s 14A. 2.2 During assessment proceedings, it was noted that the assessee earned exempt interest income from Tax Free Bonds, Dividends etc. aggregating in all to Rs.34.44 Lacs, which called for disallowance u/s 14A. Since the assessee did not make any suo-moto disallowance, Ld. AO, applying Rule 8D computed the same at Rs.8,26,013/- which comprised of interest disallowance u/r 8D(2)(ii) for Rs.4,91,998/- & expense disallowance u/r 8D(2)(iii) for Rs,3,34,015/-. 3. Aggrieved, the assessee contested the same with partial success before Ld.CIT(A) vide impugned order dated 23/12/2015 where Ld.CIT(A) deleted interest disallowance by noticing that there was no incremental investment during the impugned AY but confirmed expenses disallowance of Rs.3,34,015/-. Aggrieved, the assessee is in further appeal before us. 4. The Ld. AR drew attention to the fact that no major investments were made by the assessee during impugned AY and therefore, the ITA.No.1533/Mum/2016 Chandulal Monji Harbada Assessment Year-2010-11 disallowance was on higher side. Per Contra, Ld. DR contended that the disallowance has to be computed as per the prescribed formula only. 5. Heard the rival contentions and perused relevant material on record. Upon perusal of factual matrix, we note that it is admitted fact that the assessee has not made any major investment during impugned AY and majority of the investments have been made in earlier years. The assessee has contended that it has not incurred any expenses towards the same but Ld. AO has, without rebutting the same, straightway computed the said disallowance. Therefore, on the facts of the case, we restrict the impugned disallowance to Rs.50,000/- and delete the balance additions. 6. Resultantly, the assessee’s appeal stands partly allowed. Order pronounced in the open court on 10th January,2018