SHREEPATI HOLDING & FINANCE PVT. LTD.,MUMBAI vs. ACIT RANGE 4(2), MUMBAI

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ITA 6577/MUM/2013Status: DisposedITAT Mumbai02 November 2016AY 2010-114 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO's disallowance was not justified as the dividend-yielding shares were stock-in-trade. Relying on jurisdictional High Court and ITAT precedents, the Tribunal found merit in the assessee's arguments.

What were the facts?

The assessee earned dividend income and suo moto disallowed a small amount. The AO, however, applied Rule 8D(2) and made a significant disallowance under Section 14A. The assessee argued that the dividend-yielding shares were stock-in-trade, not investments, and thus Section 14A was not applicable.

What were the issues?

Whether Section 14A read with Rule 8D is applicable to dividend income earned from shares held as stock-in-trade.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI MAHAVIR SINGH & SHRI D. KARUNAKARA RAO

For Appellant: Shri Dharmesh Shah
For Respondent: Shri Akhilendra Yadav, DR
Hearing: 02.11.2016Pronounced: 02.11.2016

सुनवाई की तायीख / Date of Hearing : 02.11.2016 घोषणा की तायीख /Date of Pronouncement : 02.11.2016 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:

This appeal filed by the assessee on 8.11.2013 is against the order of the CIT (A)-8, Mumbai dated 23.10.2013 for the assessment year 2010-2011.

2.

The only issue raised in this appeal relates to the disallowance u/s 14A of the Act. Brief facts relevant for adjudication of the said issue includes that the assessee earned dividend income of Rs. 6,08,318/-. Assessee suo moto disallowed sum of Rs.30,000/- as expenditure disallowable u/s 14A of the Act. However, in the assessment made u/s 143(3) of the Act, AO mechanically applied the formula laid down in Rule 8D(2) of the IT Rules, 1962 (the Rules) read with section 14A of the Act. Accordingly, AO disallowed sum of Rs. 24,83,628/- under Rule 8D(2)(ii) and Rs. 4,53,425/- under Rule 8D(iii) of the Rules. Thus, net disallowance, after reducing Rs. 30,000/- (supra), works out to Rs. 29,37,054/- and the same is the subject matter of adjudication before us.

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