M.S GAURI AVINASH BHOSALE, MUMBAI V. DY CIT CENTRAL CIRCLE-2(3), MUMBAI

ITA 2013/MUM/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8121 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 20-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “G”, MUMBAI BEFORE SHRI G. S. PANNU, HON’BLE PRESIDENT AND SHRI SAKTIJIT DEY, HON’BLE JUDICIAL MEMBER ITA No. 2013/MUM/2020 Assessment Year: 2015-16 Mrs. Gauri Avinash Bhosale, 2, ABIL House, Ganesh Khind Road, Range Hill, Corner, Pune - 411007 PAN: AAIPB7421J Vs. DCIT- Central Circle 2(3), 8 th Floor, Room No. 803, Old CGO Bldg., Pratishtha Bhavan, M.K. Road, Mumbai - 400020 (Appellant) (Respondent) Assessee by : Shri Vijay Mehta (AR) Revenue by : Shri Rajneesh Yadav (DR) Date of Hearing : 21/10/2021 Date of Pronouncement: 18/11/2021 O R D E R PER BENCH This is an appeal by the assessee against order dated 30.09.2020 of learned Commissioner of Income Tax (Appeals)-48, Mumbai for the assessment year 2015-16. 2. The dispute in the present appeal is confined to disallowance of expenditure under section 14A of the Income Tax Act, 1961, read with rule 8D. 3. Briefly the facts are, the assessee is an individual. For the assessment year under dispute, the assessee filed his return of income on 28.08.2015 declaring total income of Rs. 1,34,61,140/-. In course of assessment proceedings, the assessing officer (AO) noticed that during the year under 2 ITA No. 2013/MUM/2020 Assessment Year: 2015-16 consideration, the assessee had earned exempt income of Rs. 5,26,509/-. Since, the assessee had not disallowed any expenditure attributable to earning of exempt income, the AO called upon the assessee to explain why such expenses should not be disallowed as per rule 8D. In reply, assessee objected to the proposed disallowance by stating that no expenditure has been incurred for earning the exempt income by way of dividend and Provident Fund (PF) interest. The AO however, was not convinced with the submissions of the assessee and proceeded to disallow an amount of Rs. 5,84,461/- under rule 8D(2)(iii) towards administrative expenditure. Though, the assessee contested the aforesaid disallowance before learned Commissioner (Appeals), however, she was unsuccessful. 4. We have heard the parties and perused the materials on record. The limited submissions made by learned counsel for the assessee before us is, disallowance under rule 8D should be computed by considering only those investments that yielded exempt income during the year. We find substantial merit in the aforesaid submission of the assessee. In case of ACIT vs. Vireet Investment Pvt. Ltd. (2017) 165 ITD 27 (Del) (SB), the learned Special Bench of the Tribunal has held that while computing disallowance under section 14A r.w.r. 8D(2)(iii), only those investments which yielded exempt income during the year under consideration can be included in the average value of investment. In view of the ratio laid down by the learned Special Bench, as aforesaid, we direct the AO to compute the disallowance under rule 8D(2)(iii) by considering only those investments which have yielded exempt income during the year. 3 ITA No. 2013/MUM/2020 Assessment Year: 2015-16 5. In the result, appeal is partly allowed as indicated above. Order pronounced in the open court on 18 th November, 2021. Sd/- Sd/- (G.S. PANNU) PRESIDENT (SAKTIJIT DEY) JUDICIAL MEMBER म ुंबई Mumbai; दिन ुंक Dated: 18/11/2021 Alindra, PS आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, सत्य दपि प्रदि //True Copy// उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण, म ुंबई / ITAT, Mumbai