PIEM HOTELS LTD,MUMBAI vs. ADDL CIT RG 3(2), MUMBAI

The aforesaid appeal filed by the assessee is against impugned order dated 06.12.2013, passed by CIT(A)-4, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2010-11, vide which following grounds have been raised :

Brief facts are that, the assessee company is engaged in business of Hotel & Catering services. The AO noted that assessee company has shown investment to the extent of Rs. 102,25,71,000/- from which a dividend income earned has not been included in the total income of the assessee. The assessee received tax free dividend income of Rs. 1,63,06,763/-, which has been claimed as exempt. In response to the show cause notice, assessee submitted that it has estimated Rs. 34,309/- for the purpose of disallowance u/s 14A and no further disallowance is called for. However, the AO rejected the assessee’s explanation with regard disallowance offered in the return of income and held that same is to be calculated as per Rule 8D only and accordingly, disallowance of Rs. 31,41,129/- was worked out as per the formula laid down under Rule 8D.

Before the CIT(A), assessee submitted that, it has disallowed salary and administrative expenses of staff of two persons of Rs. 31,000/- and Demat Charges at Rs. 3,309/-. Later on, the assessee had revised its computation and had offered the disallowance of Rs. 5,71,600/-. The AO, after filing of the revised computation has not given any satisfactory reasons, as to why such a disallowance offered by the assessee is not appropriate. The assessee’s submissions in this regard has been dealt by the CIT(A)

Before us, it has been admitted that, this issue stands covered in favour of the assessee by the order of the Tribunal in assessee’s own case for the assessment year 2009-10 and also AY 2008-09, wherein the Tribunal has set aside the matter to the file of the AO. After considering the impugned order and also orders of the Tribunal for the AYs 2008-09 & 2009-10, we find that this issue of disallowance u/s 14A has been set aside to the file of the CIT(A) to analyse the investment pattern and accordingly to decide the issue afresh in accordance with the law. However, we are of the opinion that this matter required fresh consideration from the AO. Therefore, we set aside this matter to the file of the AO and direct him to deal and decide the issue afresh and an opportunity should be afforded to the assessee to raise all its arguments, including legal issues as culled out from judicial pronouncements in support of its contentions. Accordingly, the ground raised by of the assessee is treated as allowed for statistical purposes.

In the result, appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open court on 30th October, 2015.