M/S LAVGAN DOCKYARD PVT. LTD,MUMBAI vs. THE INCOME TAX OFFICER WAR9(2)(2), MUMBAI

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ITA 3123/MUM/2016Status: DisposedITAT Mumbai24 March 2017AY 2008-092 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's arguments regarding the calculation of average investments. The matter was remanded to the AO to reconsider the issue after providing the assessee with an opportunity to be heard.

What were the facts?

The assessee earned exempt dividend income and did not make any disallowance under Section 14A. The Assessing Officer (AO) quantified a disallowance by applying 0.5% on average investments. The assessee argued that ineligible investments were wrongly included in the average investment calculation.

What were the issues?

Whether the AO erred in including ineligible investments in the average investment calculation for disallowance under Section 14A read with Rule 8D(2)(iii).

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO

For Appellant: Shri Ruturaj Gurjar
Hearing: 23.03.2017Pronounced: 24.03.2017

अऩीराथी की ओय से / Appellant by : Shri Ruturaj Gurjar प्रत्मथी की ओय से/ Respondent by : Ms. Beena Santosh, DR सुनवाई की तायीख / Date of Hearing : 23.03.2017 घोषणा की तायीख /Date of Pronouncement : 24.03.2017 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:

This appeal filed by the assessee on 3.5.2016 is against the order of the CIT (A)20, Mumbai dated 27.1.2016 for the assessment year 2008-2009.

2.

In this appeal, assessee raised the various argumentative grounds and submitted that all of them relate to the disallowance u/s 14A read with Rule 8D(2)(iii) of the Income Tax Rules, 1962.

3.

Briefly stated relevant facts of the case are that during the year assessee earned exempt dividend income of Rs. 41,19,050/-. Assessee did not make any disallowance u/s 14A of the Act. However, in the assessment proceedings, AO quantified the disallowance of Rs. 4,24,975/- applying 0.5% on the average investments. Bringing my attention to the average investment, Ld Counsel for the assessee submitted that the Assessing Officer / CIT (A) erred in including the new ineligible investments in the said average investment calculations thereby excess amount was disallowed under clause (iii) of Rule 8D(2) of the IT Rules. Ld Counsel for the assessee found mistake in considering the average investment of Rs. 8.42 Crs (rounded of) and mentioned that around Rs. 6.50 Crs should be the correct average investments.

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