KOTAK SECURITIES LTD, MUMBAI V. ADDL CIT RANGE 4(3), MUMBAI

ITA 1126/MUM/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9380 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FAROOK IRANI
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “एच” , मुंबई Įी ǒवकास अवèथी, Ûयाियक सदèय एवं Įी मनोज कुमार अĒवाल, लेखा सदèय के सम¢ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आअसं. 1126/मुं/2020 (िन.व.2009-10) ITA NO.1126/MUM/2020 (A.Y.2009-10) Kotak Securities Limited. 27, BKC, Bandra Kurla Complex, Bandra East, Mumbai-400051. PAN: AAACK3436F ...... अपीलाथȸ /Appellant बनाम Vs. ACIT Range-4(3), Room No. 635, 6 th Floor, Aayakar Bhavan, M.K. Road, Mumbai-400020 ..... Ĥितवादȣ/Respondent अपीलाथȸ Ʈारा/ Appellant by : Sh. Farook Irani Ĥितवादȣ Ʈारा/Respondent by : Sh. Ashish Heliwal सुनवाई कȧ ितिथ/ Date of hearing : 25/08/2021 घोषणा कȧ ितिथ/ Date of pronouncement : 04/10/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-9, Mumbai [hereinafter referred to as ‘the Act’] dated 06.12.2019 for the Assessment Year (AY) 2009-10. 2 आअसं. 1126/मुं/2020 (िन.व.2009-10) ITA NO.1126/MUM/2020 (A.Y.2009-10) 2. Sh. Farook Irani appearing on behalf of the assessee submitted that the short ground in the present appeal is against disallowance made under section 14A read with Rule 8D of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’]. The ld. counsel for the assessee submitted that during the period relevant to AY under appeal, the assessee has earned dividend income exempt from tax Rs. 20,14,878/-. The assessee suo-moto made disallowance of Rs. 22,43,198/- for earning exempt income. The AO re-computed disallowance of Rs. 2,18,76,510/- under section 14A read with Rule 8D of the Act. Aggrieved by disallowance computed by the AO, the assessee carried the issue in appeal before the CIT(A). The CIT(A) directed the AO to re-work disallowance under section 14A read with Rule 8D of the Act by considering average value of only those investments that have yielded exempt income during the relevant period. Thus, part relief was allowed by the First Appellate Authority. The ld. counsel submitted that the assessee is now seeking to restrict disallowance under section 14A read with Rule 8D to the extent exempt income earned. 3. Sh. Ashish Heliwal representing the Department vehemently defended the impugned order. The ld. DR submitted that the CIT(A) has granted relief to the assessee in accordance with settled law. The assessee has raised afresh plea before the Tribunal in restricting disallowance to the extent of exempt income earned. 4. Both sides head, orders of the authorities below examined. It is an undisputed fact that the assessee has earned income exempt from tax to the tune of Rs. 20,14,878/- during the period relevant to AY under appeal. The assessee has made suo-moto disallowance of Rs. 22,43,198/-. The disallowance 3 आअसं. 1126/मुं/2020 (िन.व.2009-10) ITA NO.1126/MUM/2020 (A.Y.2009-10) made by the AO has been rejected by the AO and has thereafter re-worked disallowance under section 14A read with Rule 8D enhancing the disallowance by Rs. 1,96,33,312/-. 5. It is no more res integra that disallowance under section 14A read with Rule 8D cannot exceed the exempt income earned by the assessee [Re: PCIT Vs. State Bank of Patiala, 99 taxmann.com 286 (SC)]. Thus, in view of the well- settled law, the AO is directed to restrict disallowance under section 14A to the extent exempt income earned by the assessee during the relevant period. 6. Ground No.2 raised by the assessee in appeal is thus, allowed. 7. The ld. counsel for the assessee stated at Bar that he is not pressing ground no.1. In view of the statement made by ld. counsel for the assessee, ground no.1 is dismissed as not pressed. 8. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on Monday, the 04 th day of October, 2021. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (VIKAS AWASTHY) लेखा सदèय / ACCOUNTANT MEMBER Ûयाियक सदèय / JUDICIAL MEMBER मुंबई/Mumbai, Ǒदनांक/Dated: 04/10/2021 SK, PS 4 आअसं. 1126/मुं/2020 (िन.व.2009-10) ITA NO.1126/MUM/2020 (A.Y.2009-10) Ĥितिलǒप अĒेǒषतCopy of the Order forwarded to : 1. अपीलाथȸ/The Appellant , 2. Ĥितवादȣ/ The Respondent. 3. आयकर आयुƠ(अ)/ The CIT(A)- 4. आयकर आयुƠ CIT 5. ǒवभागीय Ĥितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड[ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai