KOTAK MAHINDRA INVESTMENTS LTD, MUMBAI V. ACIT, OSD, RANGE 3(2), MUMBAI

ITA 1712/MUM/2023

AI Insights

The case involves Kotak Mahindra Bank Ltd. appealing against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the Assessment Year 2011-12. The appeal raised four grounds, primarily contesting the disallowance under section 14A read with rule 8D, and the levies of interest under sections 234B and 234C of the Income Tax Act, 1961. The Tribunal found that the disallowance under section 14A should not exceed the exempt income, which was adhered to by the assessee's suo-moto disallowance. The Tribunal also acknowledged the need for recalculation of interest under sections 234B and 234C due to alleged miscalculations by the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133791 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: H
• Next Hearing Date: 02-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 15-05-2023
• Other Referred Cases: Daga Global Chemicals P. Ltd. Vs. ACIT 82 taxmann.com 254 (Mum. Trib.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH KISHINCHANDANI
• Keywords: Principle of natural justice; Earning of tax free income; Rule 8D
• Section: 234B; 14A

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “एच”, मुंबई ŵी िवकास अव̾थी,Ɋाियक सद˟ एवं सुŵी पȧावती एस,लेखाकार सद˟ के समƗ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & MS. PADMAVATHY S, ACCOUNTANT MEMBER आअसं. 1712/मुं/2023 (िन.व. 2011-12) ITA NO.1712/MUM/2023 (A.Y.2011-12) Kotak Mahindra Bank Ltd. 27 BKC, Bandra Kurla Complex, Bandra East, Mumbai-400051. PAN: AAACH1075K ...... अपीलाथŎ /Appellant बनाम Vs. ACIT (OSD)-3(2), Room No. 555, Aayakar Bhavan, M.K. Road, Mumbai-400020. ..... Ůितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : Sh. Madhur Agrawal, Advocate Ůितवादी Ȫारा/Respondent by : Sh. Prakash Kishinchandani, Sr. DR सुनवाई की ितिथ/ Date of hearing : 03/08/2023 घोषणा की ितिथ/ Date of pronouncement : 04/08/2023 आदेश/ ORDER PER VIKAS AWASTHY, JM This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘the CIT(A)’) dated 31.03.2023, for the Assessment Year 2011-12. The assessee in appeal has raised four grounds assailing the impugned order, viz: Ground No.1: Violation of Principle of Natural Justice. 2 आअसं. 1712/मुं/2023(िन.व. 2011-12) ITA Nos. 1712/M/2023 (AY 2011-12) Ground No.2: Disallowance under section 14A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) r.w.r. 8D. Ground No.3: Levy of interest under section 234B of the Act. Ground No.4: Levy of interest under section 234C of the Act. 2. Sh. Madhur Agrawal appearing on behalf of the assessee submitted at the outset that he is not pressing Ground No.1 of appeal. 2.1 In respect of Ground No.2 assailing disallowance under section 14A r.w.r. 8D, the ld. counsel submits that during the period relevant to AY under appeal, the assessee has earned dividend income of Rs. 22,24,714/-. The assessee has made suo-moto disallowance under section 14A of Rs. 23,31,308/-. The Assessing Officer (AO) invoked Rule 8D and made disallowance of Rs. 98,40,228/-. The ld. Counsel submits that it is a settled legal position now that disallowance under section 14A of the Act cannot exceed exempt income earned during the relevant period. The assessee has itself made suo-moto disallowance of more than the exempt income. He further stated that de-hors the fact that no further disallowance is required to be made, there is no interest expenditure involved as assessee’s own interest free funds are much more than the investments made. Where the assessee is having mixed bag of funds comprising of own interest free funds nad interest bearing funds, it shall be presumed that own interest free funds are utilized for the purpose of investments. 2.2 The Ld. Counsel submits that in ground No.3 & 4, assessee has assailed levy of interest under section 234B & 234C of the Act. The short prayer of the assessee is, the AO while computing interest has made wrong calculations, a direction may be given to the AO for re-computation of interest under the aforesaid sections. 3 आअसं. 1712/मुं/2023(िन.व. 2011-12) ITA Nos. 1712/M/2023 (AY 2011-12) 3. Per contra, Sh. Prakash Kishinchandani representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of assessee. 4. We have heard the submissions made by rival sides and have examined the orders of authorities below. Insofar as Ground No.1 is concerned, the ld. Counsel for the assessee has stated at Bar that he is not pressing Ground No.1. In view of the statement made by ld. Counsel, Ground No. 1 (including sub-ground) of appeal is dismissed as not pressed. 5. Ground No.2 of appeal is against disallowance made under section 14A r.w.r. 8D. Undisputedly, the assessee has earned dividend income of Rs. 22,24,714/- and the assessee has made suo-moto disallowance of Rs. 23,31,308/- under section 14A of the Act, for earning tax free income. It is now a well accepted position that disallowance under section 14A cannot exceed exempt income earned during the relevant period. [Re: Daga Global Chemicals P. Ltd. Vs. ACIT 82 taxmann.com 254 (Mum. Trib.)]. Thus, in the light of undisputed facts, we are of considered view that no further disallowance u/s 14A is warranted. The ld. Counsel made a statement that the assessee is committed to the suo-moto disallowance already made. Consequently, the AO is directed to delete the additional disallowance made under Rule 8D. The assessee succeeds on ground no.2 of appeal. 6. In ground No. 3 & 4 of appeal, the assessee has assailed levy of interest under section 234B and 234C of the Act. The ld. Counsel for the assessee has submitted that while computing interest under the aforesaid sections, the AO has miscalculated the interest. Charging of interest under section 234B and 234C is mandatory and consequential. We deem it appropriate to restore these grounds 4 आअसं. 1712/मुं/2023(िन.व. 2011-12) ITA Nos. 1712/M/2023 (AY 2011-12) back to the file of AO for re-computation of interest, in accordance with law. Ground No.3 & 4 of appeal are thus, allowed for statistical purposes. 7. In the result, appeal of assessee is partly allowed. Order pronounced in the open court on Friday, the 04 th day of August, 2023. Sd/- Sd/- (MS. PADMAVATHY S) (VIKAS AWASTHY) लेखाकार सद˟/ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER मुंबई/Mumbai, िदनांक/Dated: 04/08/2023 SK, Sr. PS Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकर आयुƅ(अ)/ The CIT(A)- 4. िवभागीय Ůितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 5. गाडŊ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai