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2016 (3) TMI 1351 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - dividend income - allocation of expenditure to be attributed to the income - HELD THAT - As decided in assessee's own case 2014 (1) TMI 1183 - ITAT MUMBAI a reasonable allocation of expenditure has to be made which can be attributed to the income which is chargeable to tax particularly bank interest income as against dividend income. Thus expenditure as worked out by assessee is reasonable to make disallowance u/s 14A read with Rule 8D. Thus remand the matter to the file of AO and direct the AO to apply the said ratio to the facts of the present case and other decisions, if any, in force and decided the issue in accordance with law. - Decided in favour of assessee for statistical purposes.
Issues: Disallowance u/s 14A read with Rule 8D of the Income Tax Act for the assessment year 2009-2010.
Analysis: - The appeals under consideration are cross appeals against the order of the CIT (A)-4, Mumbai dated 28.8.2012, both related to the disallowance u/s 14A read with Rule 8D of the Act for the assessment year 2009-2010. The issues raised in these appeals are interconnected and are clubbed together for convenience. - The main issue raised in both appeals pertains to the disallowance u/s 14A read with Rule 8D of the Act. The Counsel for the assessee argued that the disallowance made by the AO exceeded the total claim of expenditure in the Profit & Loss Account. Reference was made to a Tribunal order in the assessee's own case for the AY 2008-2009 where relief was granted. The Counsel suggested that the issue may be remanded to the AO for further consideration based on previous judgments and the Tribunal's decision in the AY 2008-2009 case. - After hearing both parties, the Tribunal found the para 5 of the Tribunal's order in the assessee's own case for the AY 2008-2009 to be relevant. The Tribunal agreed with the Counsel's argument and decided to remand the matter to the AO. The AO was directed to apply the same ratio as in the AY 2008-2009 case and other relevant decisions, if any, to decide the issue in accordance with the law. The AO was instructed to provide a reasonable opportunity for the assessee to be heard as per the principles of natural justice. - Based on the above analysis, the Tribunal allowed all grounds raised in both cross appeals for statistical purposes, and both cross appeals were allowed. The order was pronounced in the open court on 31st March 2016.
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