KREDENCE MULTI TRADING LIMITED ,MUMBAI V. DCIT 6(1)(2), MUMBAI

ITA 2595/MUM/2025

AI Insights

The case involves Kredence Multi Trading Ltd, which appealed against the order of the National Faceless Appeal Centre (NFAC) that upheld a disallowance made by the AO under Section 14A read with Rule 8D of the Income Tax Rules. The disallowance amounted to Rs. 64,12,623, which was contested by the assessee. The Tribunal considered previous rulings in the assessee's own cases for different assessment years and a relevant decision by the Bombay High Court, which supported the view that disallowances should be restricted to the amount of exempt income. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to adjust the disallowance to match the exempt income reported by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712188 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Pr. CIT Vs. Tata Industries Ltd, assessee's own case for A.Y 2012-13 in ITA No. 780/Mum/2017, assessee's own case for A.Ys 2015-16 & 2016-17 in ITA No. 569 & 570/Mum/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: K. SHIVRAM AW RAHUL HAKANI
• Keywords: Set aside; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & HON’BLE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER ITA No. 2595/Mum/2025 (Assessment Year: 2018-19) Kredence Multi Trading Ltd 105-106, 1st Floor, Uttam House, 69 PD Mello Road, Carnac Bunder, Mumbai – 400009. Vs. DCIT, Circle – 6(1)(2) Aayakar Bhavan Mumbai – 400020. PAN/GIR No. AAACS0778A (Applicant) (Respondent) Assessee by Dr. K. Shivram a/w Shri Rahul Hakani Revenue by Shri Hemanshu Joshi, Sr. DR Date of Hearing 23.06.2025 Date of Pronouncement 24.07.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order dt. 24.03.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2018-19. 2. The only ground raised by the assessee in the present appeal relates to challenging the order of Ld. CIT(A) in Printed from counselvise.com 2 ITA No. 2595/Mum/2025 Kredence Multi Trading Ltd., Mumbai upholding the disallowance made by AO u/s 14A by invoking the Rule 8D of Income Tax Rules. 3. We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. 4. From the records, we noticed that the assessment order was passed on 09.08.2021, wherein the AO computed disallowance u/s 14A r.w.r 8D of Rs. 64,12,623/- and the said order was also upheld by Ld. CIT(A). 5. At the very outset, it was brought to our notice that the issue in question is covered by the decision of the Coordinate bench of ITAT in assessee’s own case for A.Ys 2015-16 & 2016-17 in ITA No. 569 & 570/Mum/2024 dated 07.06.2024, wherein Coordinate Bench of ITAT has restricted the disallowance to the exempt income. 6. From the facts we also noticed that during the year under consideration the assessee had earned exempt income of Rs. 2,97,345/- only and in its return had made suo-moto disallowance of Rs. 2,97,345/- u/s 14A of the Printed from counselvise.com 3 ITA No. 2595/Mum/2025 Kredence Multi Trading Ltd., Mumbai Act itself. The computation of income has been placed on record at page 125 of paper book. 7. Apart from the above, we also noticed that the Jurisdictional Bombay High Court in the case of Pr. CIT Vs. Tata Industries Ltd in Income Tax Appeal No. 661 of 2018 dated 08.01.2025 has also held that the disallowance u/s 14A r.w.r 8D has to be ‘restricted to exempt income’. Moreover in assesees own case for A.Y 2012-13 in ITA No. 780/Mum/2017 the Coordinate Bench of ITAT had restricted disallowance to exempt income earned by the assessee. 8. Therefore taking into consideration the above facts and circumstances of the present case and also the decisions of the Coordinate Bench of ITAT in assessee’s own case, we are also of the view that the disallowance u/s 14A r.w.r 8D cannot exceed the exempt income. Therefore we set aside the order of Ld. CIT(A) and direct the AO to restrict the disallowance to the extent of exempt income earned by the assessee and also to take into consideration the suo-moto disallowance made by the assessee. Hence we allow this ground raised by the assessee and order accordingly. Printed from counselvise.com 4 ITA No. 2595/Mum/2025 Kredence Multi Trading Ltd., Mumbai 9. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 24.07.2025. Sd/- Sd/- (OM PRAKASH KANT) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 24/07/2025 KRK, Sr. PS आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u000eथ / The Respondent. 3. संबंिधत आयकर आयु\u0019 / The CIT(A) 4. आयकर आयु\u0019(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मु\u0003बई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, स\u000eािपत ित //True Copy// 1. उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु\u0003बई मु\u0003बई मु\u0003बई मु\u0003बई / ITAT, Mumbai Printed from counselvise.com "