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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
Order of the Commissioner of Income Tax (Appeals)-8, Chennai, in dated 21.11.2016 for the AY 2012-13.
Mr.M.Palanichamy, JCIT, represented on behalf of the Revenue and Mr.Saroj Kumar Parida, Adv. represented on behalf of the assessee.
ITA No.331/Mds/2017 :- 2 -:
It was submitted by the Ld.DR that the only issue in the Revenue’s appeal was against the action of the Ld.CIT(A) in directing the AO to re- compute the disallowance u/s.14A r.w.r.8D and to consider 0.5% of the average of the value of the investment, the income from which does not or shall not form part of the total income. It was a submission that Ld.CIT(A)’s direction to re-compute the disallowance u/s.14A r.w.r.8D(2)(iii) was erroneous. It was a submission that the order of the Ld.CIT(A) was liable to be reversed.
In reply, the Ld.AR submitted that the issue was squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of M/s.Computer Age Management Services (P) Ltd., in to 1261/Mds/2014 dated 28.11.2014 wherein Para No.11 & 12 which has been held as follows:
The Kolkata Bench of this Tribunal in REI Agro Ltd. Vs. DCIT (supra) held that disallowance under section 14A read with Rule 8D can be made only by taking into consideration the investments which has given rise to such income which does not form part of the total income. While holding so, the Tribunal observed as under:-
“8. In respect of provisions of Rule 8D(2) (iii) which is the subject matter of the assessee’s appeal in the assessee’s hand, a perusal of the said provision shows that what is disallowable under Rule 8D (2) (iii) is the amount equal to ½ percentage of the average value of the investment the income from which does not or shall not form part of the total income. Thus, under sub-clause (iii) what is disallowed is ½ percentage of the numerator B in Rule 8D(2)(ii). Again this is to be calculated in the same line as mentioned earlier in respect of Numerator B in Rule 8D (2) (ii) of the Act. 8.1 Thus, not all investments become the subject matter of consideration when computing disallowance under section 14A read with rule 8D. The disallowance under section 14A read with rule 8D is to be in relation to the income which does not form part of the total income and this can be done only by taking into consideration the investment which has given rise to this income which does not form part of the total income. Under the circumstances, the computation of the disallowance under section 14A read with rule 8D(2) (iii) which is issue in the assessee’s appeal is restored to the file of the Assessing Officer for re-computation
ITA No.331/Mds/2017 :- 3 -: in line with the direction given above. No disallowance under section 14A read with rule 8D(2)(ii) and (ii) can be made in this case. 12. Following the said decision, we direct the Assessing Officer to re-compute the disallowance under Rule 8D(2)(iii) by taking the amount equal to ½ percentage of the average value of the investment which has given rise to the income which does not form part of total income.
We have considered the rival submissions. As it is noticed that the issue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in the case of M/s.Computer Age Management Services (P) Ltd., referred to supra which has been extracted, respectfully following the decision of the Co-ordinate Bench of this Tribunal, the findings of the Ld.CIT(A) on this issue stands confirmed.
In the result, the appeal filed by the Revenue stands dismissed.
Order pronounced in the Open Court on October 09, 2017, at Chennai.