RAYMOND APPAREL LIMITED,MUMBAI vs. ACIT 2(3), MUMBAI
What did the Tribunal hold?
The Tribunal followed its own previous decisions, stating that strategic investments should be excluded when computing average investment for disallowance under Section 14A.
What were the facts?
The Assessing Officer disallowed Rs. 24,58,000/- under Section 14A read with Rule 8D for exempt income. The assessee argued that investments were strategic, citing previous tribunal decisions.
What were the issues?
Whether investments made for strategic purposes should be excluded from the computation of disallowance under Section 14A.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI N.K. BILLAIYA & SHRI AMARJIT SINGH
आदेश / O R D E R
PER N.K. BILLAIYA, AM:
This appeal by the assessee is preferred against the order of the Ld. CIT(A)-6, Mumbai dated 23.10.2013 pertaining to Assessment year 2007-08.
The grievance of the assessee revolves around the disallowance made u/s. 14A of the Act r.w. Rule 8D.
While scrutinizing the return of income for the year under consideration, the Assessing Officer found that the assessee has shown certain income which are exempt from tax. Invoking the provisions of Sec. 14A r.w. Rule 8D, the Assessing Officer computed the disallowance at Rs. 24,58,000/-
The assessee carried the matter before the Ld. CIT(A) but without any success.
Before us, the Ld. Counsel for the assessee drew our attention to the decision of the Tribunal in assessee’s own case for A.Y. 2008- 09 in & 720/M/2012. It is the say of the Ld. Counsel that the Tribunal has considered the claim of the assessee and has accepted that the investments were of strategic in nature. It is the say of the Ld. Counsel that this decision of the Tribunal given for A.Y. 2008-09 was followed by the Tribunal in A.Y 2009-10 in ITA No. 7530/M/2012. The Ld. Counsel concluded by stating that a similar view should be followed for the year under consideration also.
The Ld. Departmental Representative fairly conceded to this.
We have carefully perused the orders of the authorities below and the decision of the Tribunal in assessee’s own case as referred to hereinabove. We find force in the contention of the Ld. Counsel. We find that in A.Y. 2007-08, the Tribunal has restricted disallowance by applying principle of law laid down in the cases of Garware Wall Ropes in dated 15.1.2014 and J.M. Financial Ltd in ITA No. 4521/M/2012 order dated 26.3.2014 to the effect that investments made for strategic investment should be excluded while computing average investment. This decision of the Tribunal for A.Y. 2008-09 was followed by the Tribunal in A.Y. 2009-10. Respectfully following the decisions of the Co-ordinate Bench in assessee’s own case, we restore the matter to the file of the AO with a direction to recompute the disallowance u/s. 14A by excluding strategic investments made by the assessee while computing average investment.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 19th October, 2015
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