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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A), Mumbai, for the assessment year 2012-2013.
The only grievance of the assessee relates to disallowance made u/s.14A of the I.T.Act.
Rival contentions have been heard and record perused. Facts in brief are that assessee is engaged in borrowing and lending and investment in securities. During the year assessee has received tax free dividend income of Rs.70,87,815/-. The AO computed disallowance u/s.14A read with rule 8D at Rs.46,81,151/- under rule 8D(iii). It was contended by ld. AR that disallowance has also been made in respect of 2 shares held as stock in trade as well as investment in subsidiary/group companies. As per ld. AR shares held as stock in trade should be excluded for the purpose of disallowance u/s.14A of the Act. For this purpose reliance was placed on the following judicial pronouncements :- i)CIT vs. India Advantage Securities, ITA No.1131/2013, dated 17.3.2015 (Bombay High Court); ii)CCI Ltd. Vs. Jt.CIT, 250 CTR 291 (Kar) iii)HDFC Bank Ltd. Vs. DCIT, 383 ITR 529 (Bom) In support of the proposition that no disallowance u/s.14A is warranted in respect of investment in the subsidiary/group companies, reliance was placed on the following decisions :- i)Cheminvest Ltd. v CIT [378 ITR 33 (Del)/ 281 CTR 447 (Del)] ii) Garware Wall Ropes Limited v Addl. CIT (ITA No. 5408/Mum/2012) iii)M/s JM Financial Limited v Add!. CIT (ITA No: 4521/Mum/2012) iv)CIT v Oriental Structural Engineers Pvt. Ltd (Delhi High Court) v)M/s Provogue India Ltd v. DCIT 8(2), Mumbai being ITA No: 2155/Mum/2013 for AY. 2009-10 dated 21.01.2015; It was also contended by ld. AR that no disallowance u/s.14A was warranted in respect of investment, which does not earn any exempt income and for this purpose reliance was placed on the following decisions :- i)ACB India v ACIT [374 ITR 108 (Del)] ii)CIT v. Interglobe Enterprises Ltd. (Delhi High Court) (copy enclosed) M/s Slyvex Cable Co. Pvt. Ltd. v Dy.CIT being ITA No: 8581/Mum/2011 for AY. 2008-09 dated 24.02.2016 4. We have considered rival contentions and found from the record that while computing disallowance under rule 8D(iii), the AO has not excluded investment in shares held as stock in trade, investment in subsidiary/group concerns. The AO has also not excluded the investment which do not earn any tax free income.
In view of the above judicial pronouncements as referred above, we direct the AO to exclude investment made in shares held as stock in trade, investment in subsidiary/group companies and also investment which do not earn any exempt income. We direct accordingly.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 23/09/ 2016.