RANGJI REALTIES P.LTD,MUMBAI vs. ITO 1(3)(1), MUMBAI

We have heard the parties and perused the record. The assessee- company is having income from investment in shares and securities and rental income from immovable properties.

The first issue relates to disallowance u/s. 14A of the Act. The Ld A.R submitted that the assessee did not receive any exempt income during the year under consideration. The assessee also did not claim any expenditure and hence did not make any disallowance u/s. 14A of the Act. The Assessing Officer, however, computed the disallowance u/s. 14A of the Act as per Rule 8D of the I.T. Rules at ` 3,57,551/- and added the same to the total income of the assessee. The learned CIT(A) also confirmed the same.

At the time of hearing learned AR appearing for the assessee invited out attention to the copy of return of income filed for the year under consideration and submitted that the assessee has claimed a sum of ` 6,07,131/- as expenditure in the profit and loss account and entire expenses has been disallowed while computing the business income of the assessee. He submitted that the assessee, in effect, did not claim any expenditure against the income. Accordingly, he submitted that there is no requirement to make any disallowance u/s. 14A of the Act, as the assessee did not claim any expenditure.

Learned Departmental Representative, on the contrary supported the orders passed by the tax authorities.

Having heard the rival submissions, we find merit in the contentions put forth by the assessee. The question of making disallowance u/s. 14A would arise only if the assessee has claimed any expenditure against gross income disclosed. In the instant case, entire amount of expenditure debited to the profit and loss account has been disallowed by the assessee while computing business income, meaning thereby, the assessee did not claim any expenditure. Hence, question of making any disallowance u/s. 14A shall not arise. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the disallowance made u/s. 14A of the Act.

Next ground relates to non-granting of credit for MAT while computing tax u/s. 115JAA of the Act. Learned AR submitted that the assessee has raised a specific ground on this issue, vide ground No. 3 raised before the learned CIT(A), but the learned CIT(A) has not disposed of the same. Under these set of facts, we are of the view that this issue needs to be restored to the file of the learned CIT(A) . Accordingly, we restore this issue to the file of the learned CIT(A) with the direction to adjudicate the same after hearing the assessee.

In the result, appeal filed by the assessee is treated as allowed.