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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri D.V.Lakhani Department by: Shri N. P. Singh सुनवाई क" तार"ख / Date of Hearing: 01.04.2016 घोषणा क" तार"ख /Date of Pronouncement:24.06.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:
This is an appeal against the order dated 30.11.2012 passed by the Commissioner of Income Tax (Appeals) 5, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2009-10. 2. The assessee has raised the following grounds:-
A.Y. 2009-10 “1. On the facts & circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of Rs.5,20,150/- u/s.14A read with Rule 8D. The appellant prays that the addition confirmed by the Commissioner of Income Tax (Appeals) may be deleted.
2. On the facts & circumstances of the case the appellant prays that as the appellant has not incurred any expenditure in earning exempt income no disallowance should be made u/s.14A. The addition confirmed by the Learned Commissioner of Income Tax (Appeals) may be added.
The assessee filed the return of income declaring total income to the tune of Rs.30,75,79,929/- on 16.09.2009. The case was selected for scrutiny and notice u/s.143(2) of the Income Tax Act, 1961 (in short “the Act”) was issued 24.08.2010 and served upon the assessee on 03.09.2010. The notice u/s.142(1) of the Act was issued on 14.02.2011 by the Dy. CIT, Cir. 2(2), Mumbai along with the questionnaire. Thereafter the notice was issued on 18.07.2011. The Assessing Officer disallowed the expenditure to the tune of Rs.6,24,119/- incurred to earn the exempt income to the tune of Rs.91,42,234/- and the said expenditure to earn the exempt income was confirmed by the CIT(A), therefore, the assessee has filed the appeal before us.
ISSUE NO.1&2:-
2 A.Y. 2009-10
We have heard the arguments advanced by the learned representative of the parties and perused the record carefully. The sole contention of the assessee is that the CIT(A) has wrongly confirmed the disallowance of Rs.5,20,150/- u/s.14A read with Rule 8D of the Act. The learned representative of the assessee has argued that the issue has duly been covered by the assessee’s own case decided by the Income Tax Appellate Tribunal, Mumbai bench in ITA No.7095.M.2011 for the A.Y.2008-09. The finding of the Hon’ble Tribunal is hereby reproduced below for ready reference:-
6. Considering the facts of the case, we do not agree with ld. A.R. that no expense said to have been incurred by the assessee for earning the dividend income from Mutual Fund scheme particularly when assessee has put substantial amount in Mutual Fund and admittedly had undertaken 12 transactions from which dividend income has been earned. Therefore, some administrative expenses is said to have been incurred by the assessee in earning the dividend income which is exempt from tax. We consider it prudent to restrict the disallowance under section 14A r.w.Rule 8D to 2% of exempt income i.e.2% of Rs.41,54,959/- which comes to Rs.83,100/-. Hence, ground is allowed in part by restricting the disallowance 3 A.Y. 2009-10 to Rs.83,100/- as against Rs.3,61,977/- sustained by ld CIT(A).
In the assessment year under consideration there is no change of circumstances in connection with the investment to earn the exempt income. No distinguishable facts were placed on record. In the similar circumstances the co-ordinate bench of Mumbai has already taken the view in connection with the disallowance of expenses to earn the exempt income in the assessee’s own case decided by the Income Tax Appellate Tribunal, Mumbai bench in ITA No.7095.M.2011 for the A.Y.2008-09. We does not find any ground to differ with the opinion taken by the Tribunal. Therefore, in view of the observations made above we also find proper to restrict the disallowance u/s.14A read with Rule 8D to the extent of 2% of exempt income i.e.6,11,947/- which come to the tune of Rs.12,240/-.
In the result, the appeal filed by the assessee is hereby allowed in part.
Order pronounced in the open court on 24th June, 2016. (R.C.SHARMA) (AMARJIT SINGH) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 24th June, 2016 MP MP MP MP