AIR INDIA LTD,MUMBAI vs. DCIT 5(1), MUMBAI

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ITA 1767/MUM/2015Status: DisposedITAT Mumbai11 April 2017AY 2005-062 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the investment in CIAL was made out of own funds for earning dividend income. Since no contrary material was available and no expenses were claimed, the disallowance under Section 14A was not justified.

What were the facts?

The assessee, Air India Ltd., declared nil income for AY 2005-06. The Assessing Officer made an addition of Rs. 44.33 crores, including an interest disallowance under Section 14A. The issue of disallowance under Section 14A for investment in Cochin International Airport Ltd. (CIAL) was set aside and decided afresh.

What were the issues?

Whether the disallowance made under Section 14A of the Income Tax Act for investment in shares of CIAL is justified when the investment was made from own funds and no expenses were claimed.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dated 12.12.2014 of CIT(A)-10 Mumbai the assessee has filed the present appeal.Assessee-company, engaged in the business of air transportation of passengers and cargo,filed its return of income on 29.10.2005, declaring total income at Rs.Nil.The Assessing Officer(AO)completed assessment u/s. 143(3) of the Act on 26/12/2007 determin - ing its income at Rs.44 . 33 crores,wherein, interest disallowance,u/s. 14A of the Act,was made at Rs.12.83lakhs. Matter travelled upto the Tribunal and issue was set aside to the file of AO to decide the issue afresh.He completed assessment on 30.03.2013 u/s.143(3) r.w.s. 254 of the Act,determining the income of the assessee at Rs.33.19 crores.

2.Effective Ground of appeal is about disallowance made u/s. 14A of the Act, for the investment made in shares of Cochin International Airport Ltd. (CIAL). It was brought to our notice that identical issue was deliberated upon and decided by the Tribunal for AY. 2007 -08 on 01.01.2016 (ITA/5204/Mum/2011). We are reproducing paragraphs 2.1 to 2.3 of the said order and same read as under: “2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a public sector corporation wholly owned by Government of India and is a national carrier, engaged in national/international air transportation of passengers and cargo. The assessee in its revised return declared loss of Rs.660,50,85,118/-. The assessee showed dividend income, during Financial Year 2006-07, amounting to Rs.3,06,00,000/- and out of which dividend income of Rs.2,56,00,000/- was offered as taxable as income from other sources as the same was received from foreign investment. The balance amount of Rs.50 lakhs was received from Cochin International Airport Ltd. (in short CIAL) and was claimed as exempt u/s 10(34) of the Act on the ground that CIAL is an Indian company in which Air India holds equity shares. The ld. Assessing Officer asked the assessee as to why the expenses should not be disallowed by applying rule-8D of the Income Tax Rules. The assessee vide communication dated 30/12/2009 read as under:-

1767/M/15-Air India

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