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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI A.K. GARODIA
Per Sunil Kumar Yadav, Judicial Member
This is an appeal preferred by the assessee against the order of the CIT(Appeals)-III, Bangalore dated 16.07.2013 on the solitary ground that the CIT(Appeals) has erred in upholding the disallowance of Rs.32,31,799 u/s. 14A of the Income-tax Act, 1961 [“the Act”], without establishing nexus between the funds and investments.
During the course of hearing, the ld. counsel for the assessee has candidly admitted that mixed funds were invested in shares and mutual funds. While making the disallowance, the Assessing Officer has not made computation as per Rule 8D of the I.T. Rules. Therefore, the matter may be restored back to the AO for computation of disallowance as per Rule 8D of the I.T. Rules.
The ld. DR did not object to this contention of the assessee.
Having heard the rival submissions, we are of the view that there is no dispute with respect to disallowance u/s. 14A of the Act, but the sole controversy revolves around the application of the provisions of Rule 8D of the I.T. Rules. We, therefore, set aside the order of the CIT(Appeals) and restore the matter to the Assessing Officer, with a direction to recompute the disallowance u/s. 14A of the Act as per the provisions of Rule 8D of the I.T. Rules.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 12th day of August, 2016.