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Income Tax Appellate Tribunal, “SMC, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM Shri Vineet P Mehta
आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A)- 45, Mumbai dated 29/11/2016 for the A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act.
Only grievance of assessee relates to disallowance of Rs.9,26,045/- u/s.14A r.w.r.8D of the IT Act.
Rival contentions have been heard and record perused.
During the course of scrutiny proceedings, the AO noticed from the records that the assessee has invested in shares and earned dividend of Rs.43,731/ - and LTCG of Rs.1,65,040/ - which was claimed u/s 10(34) and u/s 10(38) of the IT. Act respectively. The investment activity was found by AO as substantially high and there was no demarcation of Shri Vineet P Mehta expenses attributable to table income and exempt income either in the return or in the details on record. The AO show-caused the assessee as to why such expenses should not be disallowed. To this, the AR of the assessee filed reply vide letter dated 18.3.2015 which was not accepted by the AO. The worked out the disallowance u/ s 14A and made addition of Rs.9,26,045/ - u/ s 14A r.w. Rule 8D of the I.T.Act.
By the impugned order, CIT(A) confirmed the disallowance against which assessee is in further appeal before us.
I have considered rival contentions and found from record that during the year assessee earned exempt income on account of dividend of Rs.43,731/- , PPF interest of Rs.16,885/- and long term gain of Rs.1,65,040/-. In view of the following judicial pronouncements, disallowance u/s.14A r.w.r.8D should not exceed the exempt income earned by the assessee during the year. 1) Joint Investments v. CIT [372 ITR 694 (Del)] 2) Indus Valley Investments v. DCIT being ITA NO: 3763/De1/2013 for AY. 2009-10 dated 29.04.2015 3) Essar Properties Ltd v. DCIT (ITA No: 423/Mum/2015) for AY. 2009-10 dated 19.07.2016 4) M/s Slyvex Cable Co. Pvt. Ltd. v Dy.CIT being ITA No: 8581/Mum/2011 for AY. 2008-09 dated 24.02.2016 5) M/s Global Capital Ltd v ACIT being ITA No: 6586/Del/2013 for AY. 2009-10 dated 27.11.2015 6) DCIT v. DCM Ltd being ITA No: 4467/Del/2012 for AY. 2009-10 dated 01.09.2015
Shri Vineet P Mehta 7) M/s Daga Global Chemicals v. Asst. CIT being ITA No: 5592/Mum/2012 dated 01.01.2015
In view of the above, I direct the AO to restrict the disallowance of expenditure to the extent of exempt income earned by the assessee during the year under consideration. I direct accordingly.
In the result, appeal of the assessee is allowed in part.