TICKERPLANT LTD,MUMBAI vs. DCIT CEN CIR 46, MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order,dt.11.12.13,of the CIT(A)-38 the assessee has filed the present appeal raising various grounds. However the effective ground of appeal is about confirming the disallowance of Rs.4.40 lakhs u/s.14A of the Act r.w r. 8D of the Income tax Rules, 1962. Assessee -company, engaged in the business of data dissemination service,filed its return of income on 18.9.2010 declaring loss of Rs.26.71 crores.The Assessing Officer(AO) completed the assessment on 31.1.2003 u/s. 143(3) of the Act determining the income at Rs. (-)26.64 lakhs.

2.During the assessment proceedings,the AO found that the assessee had earned exempt income in the form of dividend,amounting to Rs.16.62 lakhs. He directed the assessee to furnish the details of expenses incurred to earn the exempt income and to furnish the working for determining the amount of expenditure in relation to the income which was not includible in the total income. He worked out the disallowance u/s. 14A r.w.r 8D of the Rules at Rs.7.76 lakhs.Since the assessee had already disallowed sum of Rs.3.36 lakhs, the difference of Rs.4.40 lakhs was disallowed and was added to the total income of the assessee.

3.Aggrieved by the order of the AO, assessee preferred an appeal before the First Appellate Authority(FAA). Before him, it was argued that it had made investment into various schemes of mutual funds and had earned dividend income, that the entire investment was made out of 1

251/Mum/2014(Tickerplant) own funds,that no interest was paid for any loan to earn exempt income, that there was no investment held as on 31.03.10, that the question of investment out of borrowed funds would not arise,that it had not paid any interest except the interest for specific purposes, that no disallowance could be made when the investments were made from own funds, that the assessee had applied the provisions of section 14A(2) r.w.r 8D without considering the fact that the assessee itself had disallowed indirect expenses to the extent of Rs.3.36 lakhs, that the AO did not record any reason for not accepting the claim of the assessee, that the assessee had disallowed rent, salary, electricity expenses, repairs etc. While making the disallowance as per section 14A(1) of the Act, that it had made the disallowance on pro-rata basis, that the working was produced before the AO. After considering the submission of the assessee and the assessment order, he held that disallowance for common administrative expense was necessary, that the submission of the assessee that after voluntary disallowance made by it, no addition should have been made was not a valid argument, that the Hon'ble Bombay High Court had, in the case of Godrej & Boyce(328ITR81) had held that Rule 8D was applicable for the AY 2008-09 onwards, that assessee had availed the services of mutual fund distributors, that to carry out such work staff support was necessary, that role of assessee would always be there in investment decisions, that it required maintenance and monitoring of such activities by its own staff. Finally, he upheld the order of the AO.

4.During the course of hearing before us, the Authorised Representative (AR) stated that the AO had made disallowance of Rs.4.76 lakhs under the head interest expenditure, that the disallowance under the head administrative and managerial expenses was Rs.2.99 lakhs, that the assessee had sufficient funds to make investments, that AO had not assigned the reason for rejecting the disallowance made by the assessee. The Departmental Representative (DR) supported the order of the FAA.

5.We have heard the rival submissions and perused the material before us. We find that the AO had made a disallowance of Rs.7.76 lakhs, that he disallowed an amount of Rs.4.4lakhs on account of interest payment, that the assessee had made a suo moto disallowance of Rs.3. 36 lakhs on prorata basis, that while making the disallowance the AO had not mentioned as to why the disallowance made by the assessee, amounting to Rs.3,36,454/- was not acceptable . Without expressing any dissatisfaction over the method followed by the assessee for the 251/Mum/2014(Tickerplant)