KOTAK MAHINDRA ASSET MANAGEMENT CO LTD. , MUMBAI V. DCIT RANGE 14(2)1 , MUMBAI

ITA 825/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7114 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2014-2015
• Appeal Filed On: 31-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHISH HELIWAL LD
• Assessee Lawyers: F AROOK H IRANI LD SR
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI VIKAS AWASTHY, JM AND HONBLE SHRI MANO J KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 8 25 /MUM/20 20 ( / ASSESSMENT YEAR : 2014 - 15 ) & ./ I.T.A. NO. 824 /MUM/2020 ( / ASSESSMENT YEAR : 2015 - 16 ) KOTAK MAHINDRA ASSET MANAGEME NT CO. LTD. 27 BKC, BANDRA KURL A COMPLEX, BANDRA EAST, MUMBAI - 4 00 051 / VS. D C IT RANGE - 14(2)(1), AAYKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO . A A ACK - 5576 - C ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI F AROOK H IRANI, LD. SR. COUNSEL REVENUE BY : SHRI ASHISH HELIWAL LD. SR. DR / DATE OF HEARING : 24 /08 /2021 / DATE OF PRONOUNCEMENT : 25/08/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE SOLE GRIEVANCE OF THE ASSESSEE IN CAPTIONED APPEALS FOR ASSESSMENT YEARS (AY) 2014 - 15 & 2015 - 16 IS DISALLOWANCE U/S 14A. THE ASSESSMENT FOR AY 2014 - 15 HAS BEEN FRAMED ON 30/11/2016 WHEREAS THE ASSESSMENT FOR AY 2015 - 16 HAS BEEN FRAMED ON 29/12/2018. THE APPELLATE ORDERS HAVE B EEN PASSED ON 25/11/2019. 2 2. THE LD. SR. COUNSEL, AT THE OUTSET, DRAWING ATTENTION TO GROUND NO.11, SOUGHT EXCLUSION OF THOSE INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME DURING THE YEAR. FOR THIS, RELIANCE HAS BEEN PLACED ON TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR AYS 2001 - 12 TO 2013 - 14. THE COPIES OF THE ORDERS HAVE BEEN PLACED ON RECORD. THE LD. SR. DR, ON THE OTHER HAND, SUBMITTED THAT THE FACT THAT THE DOMINANT OBJECT OF THE INVESTMENTS HA S LOST RELEVANCE IN THE LIGHT OF DECISION OF HONBLE SUPREM E COURT IN MAXOPP INVESTMENT LTD. (402 ITR 640). HAVING HEARD RIVAL SUBMISSIONS, OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. THE MATERIAL FACTS IN AY 2014 - 15 ARE THAT THE ASSESSEE EARNED EXEMPT INCOME OF RS.212.65 LACS BUT DID NOT OFFER ANY SUO - MOTO DISALLOWANCE. THE LD. AO, APPLYING RULE 8D(2)(III), COMPUTED INDIRECT EXPENSE DISALLOWANCE OF RS.13.40 LACS WHICH WAS CONFIRMED BY LEARNED FIRST APPELLATE AUTHORITY. THE QUANTUM OF DISALLOWANCE IN AY 2015 - 16 W AS RS.13.45 LACS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY COORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR VARIOUS YEARS. THE BENCH, IN PARA - 9 OF ITS ORDER FOR AY 2011 - 12, ITA NO.342 4/MUM/2016 DATED 19/09/2019, HAS DIRECTED LD. AO TO CONSIDER ONLY THOSE INVESTMENTS WHICH HAS YIELDED EXEMPT INCOME DURING THE YEAR WHILE COMPUTING THE DISALLOWANCE. SIMILAR ARE THE FACTS IN BOTH THE YEARS BEFORE US. THEREFORE, WE ISSUE SIMILAR DIRECTIONS TO LD. AO. ACCORDINGLY, LD. AO IS DIRECTED TO CONSIDER ONLY THOSE INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME DURING THE YEAR WHILE COMPUTING THE DISALLOWANCE . THE QUANTUM OF DISALLOWANCE FOR BOTH THE YEARS MAY BE RECOMPUTED BY LD. AO. THE DECISION OF HON BLE SUPREME COURT IN MAXOPP INVESTMENT LTD. (SUPRA) 3 AS REFERRED TO BY LD. SR. DR FOR THE SUBMISSIONS THAT THEORY OF DOMINANT OBJECT HAS LOST RELE VANCE, HAS NOT BEEN DISPUTED BY LD. SR. COUNSEL RATHER WHAT LD. SR. COUNSEL HAS PLEADED BEFORE US IS THE EXCLU SION OF NON - EXEMPT INCOME YIELDING INVESTMENT WHILE COMPUTING THE DISALLOWANCE U/S 14A AS HELD BY TRIBUNAL IN EARLIER YEARS. THEREFORE, THE PLEA RAISED BY LD. SR. DR IS NOT OF MUCH RELEVANCE HERE. THIS GROUND STAND ALLOWED IN BOTH THE YEARS . NO OTHER GROUN DS HAVE BEEN URGED BEFORE US AND ACCORDINGLY, ALL THE OTHER GROUNDS STANDS DISMISSED. 5. BOTH THE APPEALS STAND PARTLY ALLOWED. ORDER PRONOUNCED ON 25 TH AUGUST, 2021. SD/ - SD/ - ( VIKAS AWASTHY ) (MANOJ KUMAR AGGARWAL) / JU DICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 25/08/2021 SR.PS, DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT( A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.