SHRI. DEEPEN A. PAREKH,MUMBAI vs. ACIT-CENTRSL CIR.-20, MUMBAI

Learned Counsel for the assessee at the outset submits that in the Profit and Loss Account assessee has claimed expenditure of ₹.65,643/-

Learned Counsel for the assessee further referring to the Coordinate Bench decision in assessee’s own case for the Assessment Year 2009-10 in ITA.No.3308/MUM/2013 dated 27.05.2015 submits that the Hon'ble Tribunal noticed that assessee had debited total expenditure of ₹.1,94,511/- and Assessing Officer disallowed 25% of the dividend income as well as disallowance under Rule 8D2(iii) and it was held that in no case the disallowance can be more than the expenditure debited and claimed by the assessee. However, the Learned Counsel for the assessee submits that since none appeared before the Tribunal when the appeal for Assessment Year 2009-10 came up for hearing, the Tribunal restored the matter back to the file of the Assessing Officer for deciding the same afresh. The Learned Counsel for the assessee further submits

The Ld.DR supported the orders of the authorities below.

We have heard rival submissions, perused the material placed before us and the decisions of the Coordinate Bench for the Assessment Year 2009-10 and 2010-11 in assessee’s own case. On a perusal of the Profit and Loss Account for Assessment Year 2011-12 the assessee claimed various expenditures towards bank charges, salary, depreciation, professional fee paid, club and gym expenses, Demat charges and share expenses for speculative business. The expenditure towards depreciation and share expenses for speculative business can never be said to be incurred for earing exempt income. If this expenditure is excluded what has been debited to Profit and Loss Account is only ₹.65,643/-. Therefore, the disallowance made by the Assessing Officer at ½% of average investments at ₹.9,68,381/- under Rule 8D2(iii) is not correct. The disallowance should not exceed the expenditure debited to Profit and Loss Account. In view of the submissions of the Learned Counsel for the (A.Y: 2011-12) Shri Deepen A. Parekh assessee that assessee is satisfied if the disallowance is restricted to the expenditure debited to Profit and Loss Account other than depreciation and share expenses for speculative business, we are of the view that it would be appropriate to give direction to the Assessing Officer to restrict the disallowance only to the expenditure debited to Profit and Loss Account other than the depreciation and share expenses for speculative business for the Assessment Year under appeal. Thus, we direct the Assessing Officer to restrict the disallowance to ₹.65,643/- and recompute the disallowance u/s. 14A r.w. Rule 8D of I.T. Rules.

In the result appeal of the assessee is partly allowed.