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Income Tax Appellate Tribunal, “E” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)& Ramlal Negi (JM)
O R D E R Per B.R. Baskaran (AM) :-
The appeal filed by the assessee is directed against the order dated 26.12.2014 passed by learned CIT(A)-6, Mumbai and it relates to A.Y. 2011-12.
The solitary issue urged in this appeal relates to disallowance made u/s. 14A of the Act.
Learned AR submitted that the Assessing Officer has made disallowance of ` 1.09 crores under Rule 8D(2)(iii) of the I.T. Rules as against disallowance of ` 16.51 lakhs made by the assessee. Learned AR submitted that the Assessing Officer has included manufacturing expenses also for the purpose of computing disallowance under Rule 8D(2)(iii) of the I.T. Rules. He further submitted that an identical issue was considered by the Coordinate Bench in assessee’s own case relating to A.Y. 2008-09 to 2010-11 (ITA No. 544/Mum/2012 and others dated 21.2.2014) and the Tribunal has restored the matter to the file of the Assessing Officer with certain directions. Learned AR further submitted that investment made by the assessee includes strategic
2 Tata Projects Limited investments only and certain investments did not yield dividend income. He further submitted that views are being expressed to the effect that the dividend income cannot be considered as exempted income, since the same has suffered taxation in the hands of company. Accordingly, learned AR submitted that he does not have any objection in setting aside this matter to the file of the AO and further prayed that suitable direction may be issued to the Assessing Officer to consider various contentions of the assessee.
On the contrary, learned Departmental Representative submitted that the income earned by the assessee by way of dividend is exempt in his hands and the fact that the company had paid dividend distribution tax cannot have any bearing in the hands of the assessee. He submitted that the provisions of section 14A of the Act has been well explained by Hon'ble Jurisdictional High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. (328 ITR 81).
We have heard the rival contentions and perused the record. We noticed that an identical issue has been restored to the file of the Assessing Officer in assessee’s own case by the Coordinate Bench in A.Y. 2008-09 to 2010-11 (referred above) with following directions:
'It is to be noted that Rule 8D is applicable for the year under consideration therefore, the disallowance of administrative expenses has to be computed as per the formula provided in Rule 8D. However, the disallowance worked out under Rule 8D cannot exceed the total expenditure claimed by the assessee which can be apportioned to the exempt income. Thus we set aside this issue to the record of AO for the limited purpose of computing the total expenditure incurred by the assessee for the composite/indivisible activities in which taxable and non-taxable income is received and if the disallowance work out under Rule 8D on account of administrative expenses exceeds the total claim of expenditure incurred for the composite activities resulting taxable or non-taxable income then the disallowance should be restricted to the said actual total claim of expenditure."
Consistent with the view taken by the coordinate bench, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for considering the issue afresh by duly considering
3 Tata Projects Limited all the types of contentions that may be raised and all the materials that may be produced by the assessee.
In the result, appeal filed by the assessee is treated as allowed for statistical purposes. Order has been pronounced in the Court on 17.10.2016