DCIT 3(2), MUMBAI vs. ICAN INVESTMENTS ADVISORS P.LTD, MUMBAI

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ITA 940/MUM/2014Status: DisposedITAT Mumbai24 November 2015AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, agreeing that the disallowance under Section 14A should not exceed the actual expenditure debited to the Profit and Loss account, following precedents from co-ordinate benches.

What were the facts?

The assessee made investments and earned exempt income, disallowing a portion under Section 14A. The AO increased the disallowance based on Rule 8D, but the CIT(A) restricted it to the actual expenditure debited to the Profit and Loss account.

What were the issues?

Whether the disallowance under Section 14A should be restricted to the actual expenditure debited to the Profit and Loss account or calculated as per Rule 8D.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

For Respondent: Shri Anil Singhvi
Hearing: 24.11.2015Pronounced: 24.11.2015

PER B.R. BASKARAN (AM)

The appeal filed by the revenue and the cross objection filed by the assessee are directed against the order dated 18-12-2013 passed by Ld CIT(A)-4, Mumbai and they relate to the assessment year 2010-11. The revenue is aggrieved by the decision of Ld CIT(A) in reducing the disallowance made by the AO u/s 14A of the Act. The assessee has filed the cross objection by stating that the tax effect on the issues contested by the revenue is less than Rs.4.00 lakhs.

2.

We heard the parties and perused the record. The assessee company is engaged in the business of providing consultancy services and leasing out of immovable properties. During the year under consideration, the assessee had made investments of Rs.47.94 crores and earned exempt income of Rs.98.41 lakhs. The assessee had disallowed a sum of Rs.7,15,375/- u/s 14A of the Act. The AO worked out the disallowance as per Rule 8D of the Act and accordingly 0.5% of the average value of investments, which worked out to Rs.21,33,298/-, was held to be disallowable by him. Accordingly, the AO added the difference amount of Rs.14,71,925/- to the total income of the assessee.

3.

The Ld CIT(A) noticed that the assessee has actually debited expenditure to the tune of Rs.11,48,427/- only in the Profit and Loss account. He further noticed that the Delhi bench of ITAT has held in the case of Gillette Group India (P) Ltd (ITA No.267/Del/2012 relating to AY 2008-09 – order dated 23.3.2012) that the disallowance u/s 14A r.w.r 8D of the IT rules should be restricted to the actual expenditure debited to Profit and Loss account. Identical view was also expressed by the Kolkatta

3 CO158/M/2015 No.1277/Kol/2011 dated 30.3.2012 relating to AY 2008-09). Accordingly he directed the AO to restrict the disallowance u/s 14A of the Act to the amount of expenditure debited to the Profit and loss account.

4.

Thus, we notice that the Ld CIT(A) has followed the decisions rendered by the co-ordinate bench of Tribunal, wherein it has been held that the disallowance u/s 14A should not exceed the actual amount of expenditure debited to the Profit and Loss account. The Ld D.R could not bring out any other decision to show that the decision rendered by the co- ordinate benches is not correct proposition of law. Since the Ld CIT(A) has followed the decision rendered by the Tribunal on an identical issue, we do not find it necessary to interfere with his order.

5.

Since we have rejected the appeal of the revenue, the cross objection filed by the assessee has become infructuous.

6.

In the result, the appeal filed by the revenue and the cross objection filed by the assessee are dismissed.

Pronounced accordingly on 24th Nov, 2015. घोषणध खुरे न्मधमधरम भें ददनधंकः 24th Nov, 2015 को की गई । (अमित शुक्ऱा / AMIT SHUKLA) (बी.आर.बास्करन / B.R. BASKARAN) न्याययक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai: 24th Nov 2015. व.नन.स./ SRL , Sr. PS

4 CO158/M/2015

आदेश की प्रयिलऱपप अग्रेपिि/Copy of the Order forwarded to : अऩीरधथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned 3. आमकय आमुक्त / CIT concerned 4. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई /

5.

DR, ITAT, Mumbai concerned गधर्ा पधईर / Guard file. 6. आदेशधनुसधय/ BY ORDER,सहधमक ऩंजीकधय (Asstt.

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