HINCON FINANCE LTD,MUMBAI vs. DCIT 10(1), MUMBAI

The only issue to be decided in this appeal relates to disallowance made u/s 14A of the Act.

The Ld. AR submitted that the AO has computed disallowance made u/s 14A of the Act by following Rule 8D of the I.T Rules. The disallowance was made under Rule 8D(2)(iii) for administrative expenses computed @ 0.5% of the average value of investment.

The Ld. AR submitted that the inadmissible portfolio Management fees of the assessee includes strategic investment made in the group companies. He submitted that the co-ordinate bench of the Tribunal, in the case of M/s. J.M.Financial Ltd. (ITA No. 4521/M/2012) and Gareware Wall Ropes Ltd. (ITA No. 5408/M/2012), has held that the strategic investment is to be excluded for computing of average value of investment.

The Ld. AR further, submitted that the identical issue has been considered by the co-ordinate bench of the Tribunal, in assessee’s own case relating to Asst. year 2009-10 and the Tribunal, vide its order dt. 17/10/2014 passed in has restored the matter to the file of the Assessing Officer for re-computing the disallowance.

We heard the Ld. DR and perused the record, we notice that the identical issue has been restored to the file of the AO for considering the plea of the assessee that the investment made in the shares of Hindustan Construction Company is a strategic investment and also to recompute disallowance u/s 14A in the light of the decision rendered by the Tribunal (supra).

Consistent with the view taken by the co-ordinate bench in the A.Y. 2009- 10, we set aside the order of the Ld. CIT(A) and restore this issue to the file of the AO with the direction to examine the same afresh in accordance with the directions issued by the co-ordinate bench in A.Y. 2009-10.

In the result the appeal of the assessee for the A.Y. 2010-11 is treated as allowed for statistical purpose.