LUXITE INDUSTRIES LTD,MUMBAI vs. ASST CIT CIR 6(3), MUMBAI

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ITA 805/MUM/2014Status: DisposedITAT Mumbai16 November 2017AY 2009-103 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee did not provide sufficient details regarding capital, reserves, or surplus funds for investment. Therefore, the matter was remanded back to the AO for fresh adjudication.

What were the facts?

The assessee claimed dividend income as exempt but argued no expenditure was incurred for it. The AO disallowed expenses under Section 14A read with Rule 8D, which was confirmed by the CIT(A).

What were the issues?

The primary issue was the disallowance of expenses relatable to exempt income under Section 14A and Rule 8D, due to lack of supporting documentation from the assessee.

Which sections of the Income-tax Act were involved?

Section 14A,Section 10(34)

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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

This appeal by the Assessee is arising out of the order of Commissioner of Income Tax (Appeals)-12, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-12/ACIT.6(3)/IT-78/11-12 dated 25.11.2013. The Assessment was framed by the Assistant Commissioner of Income Tax, Circle 6(3), Mumbai (in short ACIT) for the assessment year 2009-10 vide order dated 08-12-2011 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).

3.

The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the expenses relatable to exempt income under section 14A of the Act read with Rule

Luxite Industries Ltd. (A.Y. 2009 -10) 8D of the Income Tax Rules (hereinafter the Rules 1962) amounting to Rs. 7,47,874/-.

4.

Briefly stated facts are that the assessee has claimed amount of Rs. 31,36,816/- has exempt under section 10(34) of the Act being dividend Income. But the assessee before the AO contended that it has not incurred any expenditure in relation to its exempt income and hence, no disallowance under section 14A read with rule 8D of the Rules is called for. The AO disallowed the interest component under rule 8D(2)(ii) at Rs. 3,13,366/- and under Rule 8D(2)(iii) at Rs. 4,34,508/- being 0.5% on average value of investment respectively. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the AO. Aggrieved, assessee preferred the appeal before Tribunal. Despite serving of notice, none is present from assessee’s side.

5.

We have heard the rival contentions and gone through the facts and circumstances of the case. We find that none of the details regarding capital or reserve and surplus fund available for investment and also filed no details before us. In such circumstances, we have no alternative except to remand the matter back to the file of the AO for deciding afresh in the light of recent decision on Hon’ble Bombay High Court in the case of CIT vs. HDFC Ltd. (2014) 366 ITR 505 (Bom). Accordingly, the orders of the lower authorities are set aside and the matter is remanded back to the file of the AO for fresh adjudication. The appeal of assessee is allowed for statistical purposes.

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