STANDARD GREASES & SPECIALITIES P. LTD,MUMBAI vs. DCIT 10(2), MUMBAI

This appeal filed by the assessee on 5.10.2011 is against the order of the CIT (A)-22, Mumbai dated 19.04.2011 for the assessment year 2009-2010.

The only issue raised in the grounds revolves around the disallowance u/s 14A amounting to Rs. 45,72,840/-. In this regard, Ld Counsel for the assessee briefly narrated the facts of the case and submitted that the said disallowance exceeded the entire exempt income and also mentioning the matter is required to be set aside to the file of the AO for deciding the issue afresh considering the various binding judgments on the subject. It is further submitted that during the assessment proceedings, AO / CIT (A) may be directed to consider the binding judgment of the Hon’ble jurisdictional High Court in the case of HDFC Bank Ltd vs. DCIT [2016] 383 ITR 529 (Bombay) as well as the decision of the ITAT in the caseof Garware Wall Ropes Ltd vs. Addl. CIT in and others dated 15.01.2014 for the proposition that the exempt income relatable to the investment in the sister concern is required to be exempt while calculating the average investment for the purpose of clause (iii) of Rule 8D(2) of the IT Rules, 1962. 3. On hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the relevant material placed before the Tribunal, we find that the Assessing Officers made disallowance u/s clause (ii) and (iii) of the Rule 8D(2) of the IT Rules, 1962 read with section 14A of the IT Act, 1961. Considering the same, we are of the opinion that the matter is required to be remanded to the file of the AO for deciding the issue afresh in the light of the above cited decisions on the subject. AO shall grant a reasonable opportunity of being heard to the assessee. Accordingly, grounds raised