VAIBHAV P. SHAH,MUMBAI vs. ACIT 21(2), MUMBAI

Vaibhav P. Shah 2 2. During the course of hearing, arguments were made by Shri Neel Khandelwal, Authorised Representatives (AR) on behalf of the Assessee and by Shri Asghar Zain, Departmental Representative (DR) on behalf of the Revenue.

The only issue raised in this appeal is with regard to disallowance made u/s 14A. The main argument of the assessee during the course of hearing was that entire investment has been made in the group companies, and therefore, the investment was for strategic reasons and therefore, the said investment cannot be considered for making disallowance u/s 14A in view of various judgments. It was further submitted that though the assessee has made suo moto disallowance u/s 14A in the return of income for Rs.1,01,347/- but the same has not been considered by the lower authorities for making impugned disallowance nor the same can be considered in view of the latest position of law. 3.1. Per contra, ld. DR relied upon the orders of the lower authorities. 3.2. We have gone through the orders of the lower authorities and heard both the parties. We find force in the arguments of the Ld. Counsel that this issue deserves to be go back to the file of the AO for deciding it afresh in view of the legal development that has taken place. The assessee is free to raise any legal and factual issue before the AO including the argument that investment made in the group companies should not be considered for making disallowance u/s 14A. The AO shall give adequate opportunity of hearing to the Vaibhav P. Shah 3 assessee to submit requisite details and documentary evidences and shall make the disallowance strictly within four corners of law. With these directions, this issue is sent back to the file of the AO for fresh adjudication. 4. In the result, the appeal filed by the Assessee may be treated as allowed for statistical purposes.