RAJEEV S RENIWAL,MUMBAI vs. ACIT CEN CIR 38, MUMBAI

सुनवाई क" तार"ख / Date of Hearing 09/08/2016 09/08/2016 आदेश क" तार"ख /Date of Order: आदेश / O R D E R These three appeals are by the different assessee, aggrieved by the impugned orders all dated 14/11/2014 of the Ld. First Appellate Authority, Mumbai.

2.1. During hearing, the ld. counsel for the assessee, Shri Reepal G. Tralashwala, took me to various pages of the paper book, while explaining, the claim of the assessee. It was explained that the assessee (Assessment year 2009-10) made suo-moto disallowance of Rs.1,05,271/- and further Rs.6,47,197/- u/s 14A of the Act (page-2 of the paper book). My attention was invited to the computation of total income and the finding contained in para 4.3.3 of the Ld. Commissioner of Income Tax (Appeal). It was explained that the Assessing Officer has taken the total investment while making the disallowance, whereas, the assessee has made much more disallowance Rakesh S. Reniwal & Ors. than which was needed. The ld. DR, Shri S. K. Mishra, though defended the addition but did not controvert the factual matrix available on record.

2.2. I have considered the rival submissions and perused the material available on record. The facts, in brief, in the case of Mr. Sanjeev S. Reniwal, (Assessment year 2009-10) are that the assessee an individual, deriving income from letting out of house property and also income from business and profession/capital gain. The business income is in the nature of interest income on loans, declared income of Rs.35,57,665/- in e-return filed on 28/08/2009. It is noted that while calculating disallowance u/s 14A, the assessee worked out the average value of investment of those shares on which dividend was earned. The investment held by the assessee are quoted/unquoted investment and also other investment. The other investment mainly includes LIC premium, Gold jewellery, etc. During the year, the assessee received dividend only from quoted investment and the unquoted investment was held mainly in group companies with an intention of controlling interest. It is noted that the assessee duly furnished the details before the Assessing Officer as well as before the Ld. Commissioner of Income Tax (Appeal). The ld. Assessing Officer completed the assessment by recalculating the disallowance and made further addition/disallowance (over and above disallowance suo-moto made by the Rakesh S. Reniwal & Ors. assessee amounting to Rs.1,89,064/-) of Rs.9,50,556/- u/s 14A of the Act r.w.r. 8D(2)(iii) of the Rules. I find that the assessee has already made voluntary disallowance of Rs.6,47,197/- and suo-moto disallowed administrative expenses of Rs.1,05,271/-. Out of the total expenses claimed in Profit & Loss Account of Rs.2,25,510/- (page- 10 of the balance sheet) thus there remains no further scope of further disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) of the Rules. Further it is noted that in para 3.3.3 of the impugned order, the Ld. Commissioner of Income Tax (Appeal) has noted that the assessee was having own interest free funds, which were sufficient to meet the investment. From perusal of the balance sheet, it is observed that the assessee was having own funds of Rs.9.74 crores besides borrowed funds of Rs.1.54 lakhs, whereas, the investment is Rs.2.42 crores, meaning thereby, interest free funds available with the assessee were 9.74 crores, which are sufficient to cover the investment of 2.42 crores in shares yielding tax free income and hence no part of the interest can be said to be attributable to the earning of exempt income over and above but has already been disallowed by the assessee in computation of income. Thus, there is a merit in the appeal of the assessee, therefore, considering the totality of uncontroverted facts, no further disallowance was required to be made. This appeal of the assessee is, therefore, allowed. Rakesh S. Reniwal & Ors.