COPPER ROLLERS PRIVATE LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX - 15(1)(2), MUMBAI

The only dispute in the present appeal relates to disallowance made of ` 3,02,051, under section 14A of the Income Tax Act, 1961 (for short “the Act”) r/w rule 8D of the I.T. Rules, 1962.

Brief facts are, the assessee a company is engaged in the business of shares and securities and letting out of properties. For the assessment year under dispute, the assessee filed its return of income on 27th December 2012, declaring total income of ` 1,79,90,320. During the assessment proceedings, the Assessing Officer noticing that in the relevant previous year the assessee has earned exempt income of ` 1,42,052, called upon the assessee to explain why disallowance under section 14A r/w rule 8D should not be made. Though, the assessee objected to the proposed disallowance, however, the Assessing Officer rejecting the objections of the assessee proceeded to disallow an amount of ` 3,02,051 under section 14A r/w rule 8D.

Though, the assessee challenged the disallowance before the first appellate authority, however, it was unsuccessful.

The learned Authorised Representative drawing MY attention to the Profit & Loss account, computation of income and notes to the audit report submitted that the entire expenditure debited to the Profit & Loss account was disallowed by the assessee itself in the computation of income. Thus, he submitted, when the assessee itself has disallowed the entire expenditure and has not claimed any expenditure, there is no justification in making further disallowance under section 14A r/w rule 8D.

The learned Departmental Representative relied upon the observations of the learned Commissioner (Appeals).

I have considered rival submissions and perused material on record. Though, it is a fact that the assessee has debited expenditure of ` 61,69,442=70 to the Profit & Loss account, however, in the computation of income, the assessee itself has disallowed the entire expenditure, meaning thereby, the assessee has not claimed any expenditure at all. In fact, in Col. 17 of the audit report itself, a copy of which is at Page–2 of the paper book, it has been specifically stated that all expenses debited to the Profit & Loss account have been disallowed. In view of the aforesaid fact, no further disallowance under section 14A r/w rule 8D could have been made by the Departmental Authorities. Accordingly, I delete the disallowance of ` 3,02,501. Grounds raised are allowed.

In the result, assessee’s appeal is allowed. Order pronounced in the open Court on 19.09.2018