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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI D.T. GARASIA, JM & SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2012-13 assails the order of the Ld. Commissioner of Income-Tax (Appeals)-16 [CIT(A)], Mumbai, Appeal No.CIT(A)-16/IT-11/DCIT 9(3)(1)/2015-16 dated 15/06/2016. The assessment for impugned AY was framed by Ld. Deputy Commissioner Of Income Tax Central Circle 9(3)(1) u/s 143(3) of the Income Tax Act, 1961 on 11/03/2015. The solitary issue involved in the appeal is disallowance u/s 14A. 2.1 Briefly stated the assessee being resident corporate assessee engaged in the business of manufacturing of jewellery and dealing in diamonds, gold & others was assessed for impugned AY u/s 143(3) on 11/03/2015 at Rs.2,25,69,340/- as against returned income of Rs.2,00,57,928/- e-filed by the assessee on 24/09/2012. The assessee has suffered disallowance u/s 14A for Rs.10,81,461/- and the same is the subject matter of this appeal. 2.2 During assessment proceedings, it was noted that the assessee earned exempt dividend income of Rs.1,57,500/- whereas it did not make any suo-moto disallowance u/s 14A against the same. The Ld. AO, applying Rule 8D, computed the same at Rs.10,81,461/- which comprised of interest disallowance as per Rule 8D(2)(ii) for Rs.7,84,161/- and expenses disallowance u/r 8D(2)(iii) @0.5% of average investment, which came to Rs.2,97,300/-.
ITA.No.5202/Mum/2016 Diatrends Jewellery Private Limited Assessment Years-2012-13 3. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 15/06/2016 where interest disallowance was deleted upon noticing that the investments were made by the assessee out of own interest free funds held in the shape of Share Capital & Reserves & Surplus. The expense disallowance was restricted to Rs.1,57,500/-, being exempt income earned by the assessee, by placing reliance on the judgment of Hon’ble Delhi High Court rendered in the case of Cheminvest Ltd. Vs. CIT [2015 94 CCH 2]. Aggrieved, the assessee is in further appeal before us.
The Ld. Counsel for assessee pleaded for further relief on the ground that the assessee did not incur any expenses to earn the dividend income. Per contra, Ld. Departmental representative contended that the stand of Ld. CIT was quite fair and reasonable and therefore, no further relief could be granted to the assessee.
We have carefully heard the rival contentions and perused relevant material on record. We find that disallowance u/r 8D(2)(iii) was computed by Ld. AO by applying the prescribed formula. The disallowance, thus worked out, came to Rs.2,97,300/-. The Ld. CIT(A) restricted the same to exempt income earned by assessee i.e. Rs.1,57,500/-. We find the stand of Ld. CIT(A) quite fair and reasonable since the disallowance had to be worked out only as per the prescribed formula only. Therefore, no further relief could be granted to the assessee on the given facts.
Resultantly, the assessee’s appeal stands dismissed.
ITA.No.5202/Mum/2016 Diatrends Jewellery Private Limited Assessment Years-2012-13 Order pronounced in the open court on 01st November, 2017.
Sd/- Sd/- (D.T. Garasia) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 01.11 .2017 Sr.PS:- Thirumalesh आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent 2. आयकर आयु�(अपील) / The CIT(A) 3. आयकर आयु� / CIT – concerned 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6.