ASIA INVESTMENTS PVT.. LTD.,MUMBAI V. DCIT ,CIRCLE 2 (1)(1), MUMBAI

MA 355/MUM/2025

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The case involves Asia Investments Pvt. Ltd. seeking recall/rectification of the Tribunal's earlier order concerning disallowances under Section 14A read with Rule 8D of the Income-tax Rules, 1962, for the assessment years 2012-13, 2013-14, and 2014-15. The Tribunal had previously computed disallowances without restricting them to investments that yielded exempt income, contrary to the precedent set by the Special Bench in Vireet Investment Pvt. Ltd. The Tribunal acknowledged the oversight and corrected the application of Rule 8D(2)(ii) and 8D(2)(iii) to include only those investments which actually generated exempt income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 849325 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2014-2015
• Appeal Filed On: 23-12-2025
• Other Referred Cases: Vireet Investment Pvt. Ltd. vs. ITAT, PCIT vs. Caraf Builders & Constructions (P.) Ltd., Tata Sons Ltd. vs. ITAT, Sicom Ltd. vs. DCIT, REI Agro Ltd. vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: KRISHNA KUMAR
• Assessee Lawyers: KALPESH UNADKAT; HASMUKH RAVARIA
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER) MA Nos. 353 to 355/Mum/2025 (Arising out of ITA Nos. 4529, 6353/MUM/2017, 6209/MUM/2019) Assessment Year: 2012-13, 2013-14, 2014-15 Asia Investments Pvt. Ltd., 10, Prasad Chambers, Opera House, Mumbai-400004. Vs. Asst. CIT Circle 2(1)(1), Dy. CIT Circle 2(1)(1), Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN NO. AAACA 4539 K Appellant Respondent Assessee by : Mr. Kalpesh Unadkat & Mr. Hasmukh Ravaria Revenue by : Mr. Krishna Kumar, Sr. DR Date of Hearing : 06/02/2026 Date of pronouncement : 25/03/2026 ORDER PER OM PRAKASH KANT, AM By way of these Miscellaneous Applications, the assessee is seeking recall/rectification of the order of the Tribunal dated 27.11.2025 passed in ITA No. 4529, 6353 and 6209/Mum/2019 for assessment years 2012-13, 2013-14 and 2014-15 respectively. Printed from counselvise.com 2. The Ld. counsel for the assessee referred to the Miscellaneous Application and submitted that while adjudicating the ground No. 5 of the appeal for assessment year 2012 disallowance u/s 14A r.w.s. 8D in paragraph 9.22 impugned order, the Tribunal of the Tribunal in the case of Vireet Investment Pvt. Ltd. only in relation to Rule 8D(2)(iii) Rules ) and not in respect of Rule 8D(2)(ii) of Rules paragraph of the impugned order are reproduced as under: “9.22 As regards Ground No. 5, the assessee has contended that the Assessing Officer failed to apply the law as enunciated by the Hon’ble Special Bench of the Tribunal in (supra). The grievance of the assessee is that, while computing the disallowance under Rule 8D(2)(iii), the Assessing Officer adopted the value of the entire investment portfolio, without restricting the computation to those investments which actually income during the relevant previous year. This approach is in clear departure from the ratio of holds that only income the purposes of Rule 8D(2)(iii). has been consistently followed by the Coordinate Bench in the assessee’s own case for assessment year 2010 9.23 In light of the foregoing discussion, and applying the binding ratio of the Special Bench decision, we re-compute the disallowance under Rule 8D(2)(iii) by taking into account only such investments as have actually generated exempt income during the relevant previous year. Accordingly, Ground No. 5 of the assessee’s appeal i 2.1 In the course of hearing of before the Tribunal, , the Ld. counsel for the assessee relied on the decision in the case of the assessee for assessment year 2010 ITA No. 5129/Mum/2015 where this contention of the assessee was Asia MA Nos. 353 to 355/Mum/2025 . counsel for the assessee referred to the Miscellaneous Application and submitted that while adjudicating the ground No. 5 of the appeal for assessment year 2012-13 in relation to disallowance u/s 14A r.w.s. 8D in paragraph 9.22 der, the Tribunal considered the ratio of Special Bench of the Tribunal in the case of Vireet Investment Pvt. Ltd. only in 8D(2)(iii) of Income-tax Rules,. 1962( in short the and not in respect of Rule 8D(2)(ii) of Rules paragraph of the impugned order are reproduced as under: As regards Ground No. 5, the assessee has contended that the Assessing Officer failed to apply the law as enunciated by the Hon’ble Special Bench of the Tribunal in Vireet Investment (P.) (supra). The grievance of the assessee is that, while computing the disallowance under Rule 8D(2)(iii), the Assessing Officer adopted the value of the entire investment portfolio, without restricting the computation to those investments which actually yielded exempt income during the relevant previous year. This approach is in clear departure from the ratio of Vireet Investment (P.) Ltd. holds that only income-yielding investments are to be considered for the purposes of Rule 8D(2)(iii). We also note that the said principle has been consistently followed by the Coordinate Bench in the assessee’s own case for assessment year 2010–11. In light of the foregoing discussion, and applying the binding ratio of the Special Bench decision, we direct the Assessing Officer to compute the disallowance under Rule 8D(2)(iii) by taking into account only such investments as have actually generated exempt income during the relevant previous year. Accordingly, Ground No. 5 of the assessee’s appeal is allowed for statistical purposes. In the course of hearing of appellate proceedings of the case , the Ld. counsel for the assessee relied on the decision in the case of the assessee for assessment year 2010 ITA No. 5129/Mum/2015 where this contention of the assessee was Asia Investments Pvt. Ltd. 2 MA Nos. 353 to 355/Mum/2025 . counsel for the assessee referred to the Miscellaneous Application and submitted that while adjudicating the ground No. 5 13 in relation to disallowance u/s 14A r.w.s. 8D in paragraph 9.22 to 9.23 of the of Special Bench of the Tribunal in the case of Vireet Investment Pvt. Ltd. only in tax Rules,. 1962( in short the and not in respect of Rule 8D(2)(ii) of Rules . The relevant paragraph of the impugned order are reproduced as under: As regards Ground No. 5, the assessee has contended that the Assessing Officer failed to apply the law as enunciated by the Vireet Investment (P.) Ltd. (supra). The grievance of the assessee is that, while computing the disallowance under Rule 8D(2)(iii), the Assessing Officer adopted the value of the entire investment portfolio, without restricting the yielded exempt income during the relevant previous year. This approach is in clear Vireet Investment (P.) Ltd. (supra), which yielding investments are to be considered for We also note that the said principle has been consistently followed by the Coordinate Bench in the In light of the foregoing discussion, and applying the binding direct the Assessing Officer to compute the disallowance under Rule 8D(2)(iii) by taking into account only such investments as have actually generated exempt income during the relevant previous year. Accordingly, Ground No. 5 s allowed for statistical purposes.” appellate proceedings of the case , the Ld. counsel for the assessee relied on the decision in the case of the assessee for assessment year 2010-11 in ITA No. 5129/Mum/2015 where this contention of the assessee was Printed from counselvise.com accepted and disallowance Rule 8D(2) were directed to be computed with reference to those investment which has earned exempt income during the year under consideration in consonance Special Bench in the case of Vireet Investment Pvt. Ltd. Ld. counsel also referred to the various decisions on this issue which were referred during the course of hearing i. PCIT v. Caraf Builders & Constructions (P.) Ltd. [2019] 101 taxmann.com 167 (Delhi HC) by Apex Court reported in [2019] 112 taxmann.com 322 (SC) ii. Tata Sons Ltd. [TS August 7, 2020 iii. Sicom Ltd. v. DCIT [2025] 173 taxmann.com 927 (Mumbai ITAT) 2023) iv. REI Agro Ltd. v. DCIT [201 (Kolkata ITAT) High Court has been also dismissed 3. We have heard rival submissions of the parties and perused the relevant materials on record ltd (supra) has been followed in the case of the assessee itself in assessment year 2010 rules 8D(2)(iii) of Rules , therefore consideration of the 8D(2)(ii) for the year under consideration, Accordingly, we rectify the para the Tribunal and include Rule 8D(2)(ii) along with Rule 8D(2)(iii) Asia MA Nos. 353 to 355/Mum/2025 accepted and disallowance of both under Sub-Rule (ii) and (iii) of 2) were directed to be computed with reference to those investment which has earned exempt income during the year under consideration in consonance follwing the decision of the Hon’ble Special Bench in the case of Vireet Investment Pvt. Ltd. . counsel also referred to the various decisions on this issue referred during the course of hearing of the appeals i. PCIT v. Caraf Builders & Constructions (P.) Ltd. [2019] 101 taxmann.com 167 (Delhi HC) - Revenue's SLP dismissed urt reported in [2019] 112 taxmann.com 322 ii. Tata Sons Ltd. [TS-418-ITAT-2020(Mumbai)], dated August 7, 2020 iii. Sicom Ltd. v. DCIT [2025] 173 taxmann.com 927 (Mumbai ITAT) – AY 2013-14 (rendered on November 20, iv. REI Agro Ltd. v. DCIT [2013] 35 taxmann.com 404 (Kolkata ITAT)- Further, revenue appeal to the Calcutta High Court has been also dismissed We have heard rival submissions of the parties and perused the relevant materials on record. The decision of Vireet Investment as been followed in the case of the assessee itself in assessment year 2010-11 while considering disallowance under rules 8D(2)(iii) of Rules , therefore being a binding precedent , consideration of the same in relation to disallowance under for the year under consideration, is an advertent error , we rectify the paragraphs 9.22 to 9.23 of the order of include Rule 8D(2)(ii) along with Rule 8D(2)(iii) Asia Investments Pvt. Ltd. 3 MA Nos. 353 to 355/Mum/2025 Rule (ii) and (iii) of 2) were directed to be computed with reference to those investment which has earned exempt income during the year under the decision of the Hon’ble Special Bench in the case of Vireet Investment Pvt. Ltd.(supra). The . counsel also referred to the various decisions on this issue , of the appeals: i. PCIT v. Caraf Builders & Constructions (P.) Ltd. [2019] Revenue's SLP dismissed urt reported in [2019] 112 taxmann.com 322 2020(Mumbai)], dated iii. Sicom Ltd. v. DCIT [2025] 173 taxmann.com 927 14 (rendered on November 20, 3] 35 taxmann.com 404 Further, revenue appeal to the Calcutta We have heard rival submissions of the parties and perused decision of Vireet Investment as been followed in the case of the assessee itself in 11 while considering disallowance under being a binding precedent , non- disallowance under Rule advertent error. 9.22 to 9.23 of the order of include Rule 8D(2)(ii) along with Rule 8D(2)(iii) of Printed from counselvise.com Rules for considering computation of disallowance u/s Act. The Paragraphs be read as under: “9.22 As regards Ground No. 5, the assessee has contended that the Assessing Officer failed to apply the law as enunciated by the Hon’ble Special Bench of the Tr (supra). The grievance of the assessee is that, while computing the disallowance under Rule 8D(2)(ii) and 8D(2)(iii), the Assessing Officer adopted the value of the entire investment portfolio, without restricting the yielded exempt income during the relevant previous year. This approach is in clear departure from the ratio of Ltd. (supra), which holds that only income be considered for the purposes of Rule 8D(2)(ii) and 8D(2)(iii). We also note that the said principle has been consistently followed by the Coordinate Bench in the assessee’s own case for assessment year 2010–11. 9.23 In light of the foregoing discussion, and ratio of the Special Bench decision, we direct the Assessing Officer to re-compute the disallowance under Rule 8D(2)(ii) and 8D(2)(iii) taking into account only such investments as have actually generated exempt income during the r Ground No. 5 of the assessee’s appeal is allowed for statistical purposes.” 3.1 The grounds raised in the Miscellaneous Application for assessment year 2012 3.2 As far as assessment year concerned, the disallowance u/s 14A has been made in the impugned order mutatis mutandis to para assessment year 2012 in the case of Miscellaneous Application for as 13, the respective paragraph Asia MA Nos. 353 to 355/Mum/2025 Rules for considering computation of disallowance u/s 9.22 and 9.23 of the impugned order shall now As regards Ground No. 5, the assessee has contended that the Assessing Officer failed to apply the law as enunciated by the Hon’ble Special Bench of the Tribunal in Vireet Investment (P.) Ltd. (supra). The grievance of the assessee is that, while computing the disallowance under Rule 8D(2)(ii) and 8D(2)(iii), the Assessing Officer adopted the value of the entire investment portfolio, without restricting the computation to those investments which actually yielded exempt income during the relevant previous year. This approach is in clear departure from the ratio of Vireet Investment (P.) (supra), which holds that only income-yielding investments are to considered for the purposes of Rule 8D(2)(ii) and 8D(2)(iii). We also note that the said principle has been consistently followed by the Coordinate Bench in the assessee’s own case for assessment year In light of the foregoing discussion, and applying the binding ratio of the Special Bench decision, we direct the Assessing Officer to compute the disallowance under Rule 8D(2)(ii) and 8D(2)(iii) taking into account only such investments as have actually generated exempt income during the relevant previous year. Accordingly, Ground No. 5 of the assessee’s appeal is allowed for statistical The grounds raised in the Miscellaneous Application for assessment year 2012-13 are accordingly allowed. As far as assessment years 2013-14 and 2014 the disallowance u/s 14A has been made in the impugned order mutatis mutandis to paragraphs 9.22 and 9.23 for assessment year 2012-13. Therefore, following our finding in Miscellaneous Application for assessment year 2012 13, the respective paragraphs in relation to assessment year Asia Investments Pvt. Ltd. 4 MA Nos. 353 to 355/Mum/2025 Rules for considering computation of disallowance u/s 14A of the 9.22 and 9.23 of the impugned order shall now As regards Ground No. 5, the assessee has contended that the Assessing Officer failed to apply the law as enunciated by the Vireet Investment (P.) Ltd. (supra). The grievance of the assessee is that, while computing the disallowance under Rule 8D(2)(ii) and 8D(2)(iii), the Assessing Officer adopted the value of the entire investment portfolio, without computation to those investments which actually yielded exempt income during the relevant previous year. This Vireet Investment (P.) yielding investments are to considered for the purposes of Rule 8D(2)(ii) and 8D(2)(iii). We also note that the said principle has been consistently followed by the Coordinate Bench in the assessee’s own case for assessment year applying the binding ratio of the Special Bench decision, we direct the Assessing Officer to compute the disallowance under Rule 8D(2)(ii) and 8D(2)(iii) by taking into account only such investments as have actually generated elevant previous year. Accordingly, Ground No. 5 of the assessee’s appeal is allowed for statistical The grounds raised in the Miscellaneous Application for 14 and 2014-15 are the disallowance u/s 14A has been made in the 9.22 and 9.23 for 13. Therefore, following our finding in order sessment year 2012- in relation to assessment years 2013- Printed from counselvise.com 14 and 2014-15 of the impugned order are rectified mutatis mutandis. 4. In the result, all the three Miscellaneous Applications of the assessee are allowed. Order pronounced in the open Court on Sd/- (ANIKESH BANERJEE JUDICIAL MEMBER Mumbai; Dated: 25/03/2026 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Asia MA Nos. 353 to 355/Mum/2025 15 of the impugned order are rectified mutatis In the result, all the three Miscellaneous Applications of the assessee are allowed. unced in the open Court on 25/03/2026 Sd/ (ANIKESH BANERJEE) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Asia Investments Pvt. Ltd. 5 MA Nos. 353 to 355/Mum/2025 15 of the impugned order are rectified mutatis In the result, all the three Miscellaneous Applications of the /03/2026. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "