DCIT, CHENNAI vs. TAFE MOTORS & TRACTORS LTD., CHENNAI

Both the appeals of the revenue are directed against the common order of CIT(A) dated 17.03.2016 for the assessment years 2011-12 and 2012-13. Therefore, we heard the same together and disposing off the same by this common order.

The only issue arises for consideration is disallowance of expenditure under Section 14A read with rule 8D of the Income Tax Rules. Shri A.V.Sreekanth, the learned department representative submitted that the CIT(A), by applying Rule 8D(2) (iii) found that the assessing officer has wrongly included the investment yielded taxable income. Therefore, he directed the assessing officer to examine the appellant’s submission and recompute the disallowance. In respect of disallowance made by the assessing officer under Rule 8D(2)(ii), this Tribunal confirmed the disallowance made by the assessing officer in assessee’s own case by an order dated 23.09.2016 in 1403 & 1404/Mds/2016. According to the learned representative, the assessing officer has correctly computed the income and the expenditure by strictly applying the provisions of Rule 8D(2). Therefore, the CIT(A) is not justified in directing the assessing officer to exclude the investment which resulted taxable income.

We heard Shri Saroj Kumar Parida, the learned counsel for the assessee also. The assessee has filed the appeal against the very same order of CIT(A) in 1403 & 1404/Mds/2016. This Tribunal by an order dated 23.09.2016 examined the issue and found that the assessing officer has rightly computed the expenditure under Rule 8D(2)(ii). Referring to Rule 8D(2)(iii), 0.5% of the average investment which resulted exempted income has to be considered for disallowance.

In the result, both the appeals of the revenue stands dismissed.