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Income Tax Appellate Tribunal, “H” Bench, Mumbai
O R D E R Per B.R. Baskaran, AM :-
The appeal filed by the Revenue is directed against the order dated 25.8.2014 passed by learned CIT(A)-17, Mumbai for A.Y. 2005-06.
The Revenue is aggrieved by the observations made by learned CIT(A) that the disallowance u/s. 14A should be made by taking into account the disallowance sustained by him in earlier years @ 10% of the dividend.
We have heard the parties and perused the record. This is the second round of proceeding. In the first round of proceeding, the Tribunal passed the order on 31.1.2012 in & 4062/Mum/2011, wherein vide para 16 of the order, the Tribunal restored the matter relating to disallowance u/s 14A of the Act to the file of the Assessing Officer for examining the same afresh on the basis of evidences that may be furnished before him by the assessee. However, while giving effect to the order passed by the Tribunal, the Assessing
2 M/s. Hinduja Ventures Ltd.
Officer did not examine the issue relating to disallowance u/s 14A of the Act afresh as directed in the order. In effect, addition originally made by the Assessing Officer came to be sustained again without examining the same afresh. The assessee challenged the assessment order dated 28.3.2013 passed by the Assessing Officer to give effect to the order of the Tribunal by filing appeal before Ld CIT(A), wherein the assessee contended that the Assessing Officer should have examined the disallowance u/s. 14A of the Act afresh.
Learned CIT(A) directed the Assessing Officer to give effect to the order of the Tribunal with the following observations :-
3.3.1 I have carefully considered the submissions and contention of the Ld. AR of the appellant and also carefully gone through the facts and explanation given by the Ld. AR of the appellant as well as the Ld. AO. The Ld. AO it seems has not given appeal effect to the order of the appellate authorities and thus taken the figure of total income as computed by his predecessor in the order/s 143(3) of the Act. The jurisdictional Bombay High Court in the case of Godrej & Boyce Ltd, held that the provisions S. 14A and Rule 8D do not apply to Asst. Year 2005-06 and hence the AO erred in applying the provisions of this section. It is also a matter of fact that my learned predecessors in appellant's own case for AY 2001-02 and for AY 2004-05 has held that 10% of dividend income is held to reasonable to be disallowed as expenditure incurred for earning exempt income vide order dated 29th November 2012 for both the years. The Ld. AO is thus directed to give appeal effect to the order in question and while doing so take cognizance of the orders of the Ld. CIT (A) on this issues in the earlier years. This ground of appeal is thus allowed for statistical proposes.
Since learned CIT(A) observed that disallowance u/s. 14A of the Act was made @ 10% dividend income in A.Y. 2001-02 and 2004-05, both the assessee as well as the Department filed appeal challenging the said observations. The assessee’s contention was that the Tribunal, having made open remand of the matter in the first round of proceeding, the learned CIT(A) should not have directed the Assessing Officer to consider the decision taken by him in A.Y. 2001-02 and 2004-05. The Revenue filed the appeal under the impression that learned CIT(A) has directed the Assessing Officer to restrict the disallowance @ 10% of the dividend income.
3 M/s. Hinduja Ventures Ltd.
At the time of hearing, learned AR submitted that the appeal filed by the assessee was disposed of by the Tribunal on 21.1.2015 in wherein the Tribunal directed the Assessing Officer to consider the matter relating to the disallowance u/s. 14A afresh with the following observations :-
After considering the rival contentions, we direct the Assessing Officer to compute the disallowance u/s. 14A, in terms of directions issued by the Tribunal in assessee’s own case vide order dated 31.1.2012, wherein the Tribunal has directed the Assessing Officer to consider all the materials placed by the assessee before it while computing disallowance u/s. 14A of the Act. We direct accordingly.
Accordingly learned AR submitted that the issue, having been restored back to the file of the Assessing Officer to consider the same afresh, the appeal of the revenue would also stand covered by the said direction.
We have heard learned Departmental Representative and perused the record. Since the Tribunal has restored the issue relating to disallowance u/s. 14A to the file of the Assessing Officer with the direction to examine the same afresh, said order would cover the grounds urged by the Revenue.
Accordingly the appeal filed by the Revenue is treated as allowed for statistical purposes.
Order has been pronounced in the Open Court on 01.6.2016.