ACIT CIR 6(3), MUMBAI vs. MORARJEE TEXTILES LTD, MUMBAI

(अपीलाथ� /Appellant) (��यथ� / Respondent) िनधा�रती िनधा�रती ओर ओर सेसेसेसे/Assessee by : Shri Samir Tekriwal िनधा�रती िनधा�रती ओर ओर राज�व क� ओर से/ Revenue by : Shri Ronak Doshi सुनवाई सुनवाई क� क� तारीख तारीख / Date of Hearing : 08-10-2015 सुनवाई सुनवाई क� क� तारीख तारीख घोषणा क� तारीख / Date of Pronouncement : 08 -10-2015 आयकर आयकर अिधिनयम अिधिनयम,1961 1961 क� क� धारा धारा 254 254(1)केकेकेके अ�तग�त अ�तग�त आदेश आदेश 1961 1961 254 254 आयकर आयकर अिधिनयम अिधिनयम क� क� धारा धारा अ�तग�त अ�तग�त आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य सद�य राजे�� राजे�� केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 01.08.2013 of CIT(A)-12,Mumbai,the Assessing Officer(AO) has filed the present appeal. Assessee-company filed its return of income on 26.09.2009.A revised return was filed on 16.03. 2011,declaring total income of Rs.(-)31.91 Crores under the normal provisions and book loss of Rs.30.03 Crores u/s.115JB of the Act.The AO completed the assessment u/s.143(3) of the Act on 30.12.2011,determining the income of the assessee at Rs.(-)30.17 Crores.He calculated the income under the MAT provisions at Rs.(-)28.30 Crores. 2.Effective Ground of appeal deals with the value of current liabilities and provisions with regard to calculation of the disallowance u/s.14A of the Act r.w.Rule 8D of the Income tax Rules, 1962(Rules).During the assessment proceedings,the AO found that the assessee had voluntarily made a disallowance of Rs.1.87 Crores u/s.14A of the Act.However,the AO was of the opinion that same was not in accordance with the provisions of Rule 8D of the Rules.After recording his dissatisfac -tion about the correctness of the computation made by the assessee,the AO recomputed the disallowance at Rs.3.61 Crores. 3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA).Before him it was contented that the AO had erroneously included the foreign investments while calculating the average value of investment for 14A purposes,that income from such investments was taxable in the hands of the assessee,that he had mistakenly took figure of Rs.1.41 Crores being 0.5% of average value of investment instead of the actual figure of Rs 14. 19 lakhs,that the AO had added back the amount of current liabilities and provisions while calculating the average value of total assets.After considering the submissions of the ITA/6200/13 morarjee T ,AY.0 9-10- assessee and the assessment order,he held that the AO should verify the claim made by the it about the taxable income arising from foreign investment and to work out the average value of investment for the purpose of disallowance to be made u/s.14A of the Act.He further directed the AO to verify the other claims made by the assessee,especially about the amount of current liabilities and provisions.He further directed the AO to verify the claim of the about adopting a wrong figure of Rs.1.41 crores for making disallowance. 4.Before us,the Departmental Representative(DR)supported the order of the AO.The Authorised Representative relied upon the order of the FAA and stated that the AO had made an unjustified addition u/s.14A of the Act.He relied upon the cases of Shitanshu Bipin Vora(ITA//2585/Mum/ 2013-AY.2009-10,dated 26.09.2014) and KSM securities and Finance Pvt.ltd.(ITA/3632/Mum/ 2013-AY.08-09.dtd.11.09.2015). 5.We have heard the rival submissions and perused the material before us.We find that the FAA had directed the AO make certain verification.He has not deleted any addition.He has asked the AO to adopt correct figures for making disallowance u/s.14A of the Act.If the assessee is following net current asset method for preparing the balance sheet then the fact has to be considered for deciding the issue of disallowance.In our opinion none of his directions suffer from any legal infirmity.So,confirming his order,we decide effective ground of appeal against the AO.