2016 (3) TMI 1387 - AT - Income Tax

Disallowance u/s 14A read with Rule 8D - assessee submitted that the disallowance made by the AO has far exceeded the total claim of expenditure in the P L Account - HELD THAT - As decided in assessee's own case for the AY 2008-2009 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. We agree with the Ld Counsel s argument and remand the matter to the file of the AO. We 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.

Summary

Issues:
Appeals against the order of the CIT (A)-4, Mumbai for the assessment year 2011-2012 regarding disallowance u/s 14A read with Rule 8D of the Act.

Analysis:
The judgment by the Appellate Tribunal ITAT Mumbai involved two cross appeals concerning the disallowance u/s 14A read with Rule 8D of the Act for the assessment year 2011-2012. The appeals were raised against the order of the CIT (A)-4, Mumbai dated 23.6.2014. Since the issues raised in both appeals were interconnected, they were clubbed, heard together, and disposed of in a consolidated order. The only issue raised in both appeals related to the disallowance u/s 14A read with Rule 8D of the Act. The Ld Counsel for the assessee argued that the disallowance made by the AO exceeded the total claim of expenditure in the P & L Account. Referring to a previous Tribunal order in the assessee's own case for the AY 2008-2009, the Counsel requested the issue to be remanded to the AO for consideration based on the previous judgment and other relevant decisions.

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 ratio from the previous case and other relevant decisions to the present case and 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. Consequently, all grounds raised in both cross appeals were allowed for statistical purposes.

In conclusion, both cross appeals were allowed for statistical purposes, and the order was pronounced in the open court on 17th March 2016.