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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM (A.Y:2009-10) Korn Ferry International P Ltd., Dy. Commissioner of Income Tax, Piramal Tower, 02nd Floor, 3(2), Mumbai Vs. Peninsula Corporate Park, Lower Parel, Mumbai-400013 PAN No.AAACW0577B .. Appellant Respondent Assessee by .. Shri. M.D. Thakore, AR .. Shri. B.S. Bist, DR Revenue by Date of hearing .. 10-01-2017 .. Date of pronouncement 10-01-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT(A)-4, Mumbai, in appeal No. CIT(A)-4/IT-68/DCIT3(2)/2011-12 dated 08-10-2012. The Assessment was framed by DCIT Circle-3(2), Mumbai for the A.Y. 2009-10 vide order dated 15-12-2011 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the expenses relatable to exempted income by invoking the provision of Section 14A of the Act r. w. Rule 8D of the Income Tax Rules, 1962 (herein after ‘the rules’).
Briefly stated facts are that the AO noticed that the assessee has earned dividend income of Rs.27,17,521/- and claim the same as exempt u/s 10(33) of the Act. But has not disallowed any relatable expense to this dividend income. Hence, the AO disallowed an amount of Rs.5,89,333/- being half percent of the average value of investment by invoking the provision of Section 14A r. w. R 8D of the Rules. The CIT(A) also confirmed the action of the AO on identical reasoning.
At the outset, the learned Counsel for the assessee filed tribunals order in assessee’s own case for A.Y. 2008-09 in dated 31-03-2016, for A.Y. 2010- 11 in ITA No.6269/Mum/2013 dated 22-04-2016 and for A.Y. 2011-12 in ITA No.7367/Mum/2014 dated 27-07-2016. We have gone through the Tribunals order in A.Y. 2008-09, wherein Tribunal has recorded the following finding in Para 5: -
5. We have heard the rival submissions and perused the material before us. We find that the AO had not mentioned as to how much expenditure was incurred by the assessee for earning tax free income. We are of the opinion that, if the assessee had not incurred any expenditure to earn tax free income. then. the AO cannot invoke the provisions of section 14A r.w. Rule 8D of the Rules. First of all, the AO has to record his satisfaction about invoking the provisions and has to decide the issue after obtaining the explanation of the assessee We also do not endorse the view of the FAA that investment out of the own funds has no relevance for making the disallowance. We find that in the case of Om Prakasli Khaitan(supra), the Hon'ble Delhi High Court has held that in order to disallow the expenditure there must be a nexus between the expenditure incurred and the income not forming the part of the total income. Considering the above, we reverse the order of the FAA. Ground No.] is decided in favour of the assessee.
We confronted the learned Sr. DR he could not point out any factual difference in this year as compared to the A.Y. 2008-09. As the facts are identical and investment is same, respectfully following co-ordinate Bench decision in assessee’s own case for earlier years, we allow the appeal of the assessee.
In the result, the appeal of assessee is allowed. Order pronounced in the open court on 10-01-2017.