SHAILA J PARIKH,MUMBAI vs. ASST CIT CIR 12(3), MUMBAI

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ITA 3185/MUM/2013Status: DisposedITAT Mumbai06 October 2016AY 2009-103 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 since the assessee did not claim any expenditure while computing total income, and certain expenses like PMS charges were not claimed as deductions, no further disallowance under Section 14A was warranted.

What were the facts?

The assessee earned significant exempt income and the Assessing Officer disallowed expenses under Rule 8D(2)(iii) as no disallowance was made by the assessee under Section 14A. The CIT(A) confirmed this disallowance.

What were the issues?

Whether disallowance under Section 14A is required when the assessee has not claimed any expenses related to exempt income while computing total income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)& Ramlal Negi (JM)

For Appellant: Smt. Arti Vissanji
For Respondent: Shri J. Saravanan
Hearing: 6.10.2016Pronounced: 6.10.2016

O R D E R Per B.R. Baskaran (AM) :-

The appeal filed by the assessee is directed against the order dated 1.1.2013 passed by learned CIT(A)-23, Mumbai and it relates to A.Y. 2009-10.

2.

The only issue urged in this appeal is with regard to disallowance of ` 12.33 lakhs made by the Assessing Officer under rule 8D(2)(iii) of the I.T. Rules.

3.

We have heard the parties and perused the record. The assessee had earned following exempted income during the year under consideration:-

Dividend ` 83,96,021 Interest of PPF ` 3,10,208 Interest of tax free bonds ` 9,68,500 Share of profit ` 4,29,677 The assessee did not make any disallowance of expenses u/s. 14A of the Act and hence Assessing Officer computed disallowance u/r. 8D(2)(iii) of the Rules

2 Mrs. Shaila J. Parikh at 0.5% of average value of investment which worked out to ` 12,33,044/-. Learned CIT(A) also confirmed the same and hence the assessee has filed this appeal before us.

4.

At the time of hearing, the assessee took us to the copies of the income and expenditure account and also the statement of total income. Learned AR submitted that though the assessee has shown expenses of ` 39.52 lakhs in income and expenditure account, the same has not been claimed as deduction while computing total income. She submitted that the expenses incurred by the assessee included PMS charges of ` 10.56 lakhs. Hence the same should be deemed to have been disallowed u/s. 14A of the Act. Accordingly, learned AR submitted that no further disallowance is required to be made since the assessee did not claim any expenditure while computing total income.

5.

On the contrary, learned Departmental Representative placed reliance on the order passed by learned CIT(A).

6.

Having heard the rival submissions, we are of the view that there is merit in the contentions of the assessee. The assessee has not claimed any expenditure while computing total income. Further, the expenses shown in the income and expenses account has not been claimed as deduction while computing total income. The above said expenses include PMS charges of ` 10.56 lakhs which was not claimed the assessee, meaning thereby the same shall constitute disallowance u/s. 14A of the Act. Under these set of facts, we are of the view that no disallowance u/s. 14A is called for. Accordingly, we set aside the order passed by learned CIT(A) on this issue and direct the Assessing Officer to delete this disallowance.

3 Mrs. Shaila J. Parikh

7.

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

Order has been pronounced in the Court on 6.10.2016

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