TMI Blog2017 (10) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... I C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR, HON'BLE ACCOUNTANT MEMBER Assessee by : Shri G.S. Pikale Department by : Ms. Arju Garodia O R D E R PER C.N. PRASAD (JM) 1. These appeals are filed by the assessee as well as the Revenue against the order of the Learned Commissioner of Income Tax (Appeals) 52, Mumbai dated 08.06.2016 for the Assessment Year 2012-13. 2. The assessee in its appeal is challenging order of the Ld.CIT(A) in not deleting the entire disallowance made under section 14A r.w. Rule 8D by the Assessing Officer and the Revenue in its appeal is challenging the order of the Ld.CIT(A) in restricting the disallowance u/s. 14A r.w. Rule 8D to ₹.5,10,610/- as against ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure is incurred by the assessee is not correct and he invoked the provisions of section 14A r.w. Rule 8D and computed the disallowance Rule 8D(2)(i) at ₹.26,98,662/- and Rule 8D(2)(ii) at ₹.8,09,793/- and Rule 8D(2)(iii) at ₹.3,35,463/-. 4. On appeal, the Ld.CIT(A) after considering various submissions of the assessee and taking note of the fact that the interest debited to Profit and Loss Account is towards regular banking transactions and not towards the borrowed funds for investments, Ld.CIT(A) recomputed the disallowance under section 14A at ₹.5,10,601/- i.e., u/s. Rule 8D(2)(i) at Nill, Rule 8D(2)(ii) at ₹.3,42,870/- and Rule 8D(2)(iii) at ₹.1,67,731/- agreeing with the contention of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the Ld.CIT(A) appears to be proper and justified. 8. Further, it has been held in various cases that the disallowance u/s. 14A r.w. Rule 8D cannot exceed the exempt income. The Hon'ble Punjab and Haryana High Court in the case of Principal Commissioner of Income Tax-I v. M/s Empire Package Pvt. Ltd in ITA.No. 415 of 2015 dated 12.01.2016, dismissed the appeal of the Revenue holding that there is no substantial question of law arise in the appeal on the following question raised by the Revenue: - Whether in the facts and circumstances of the case, the Hon'ble ITAT is justified in law to hold that the disallowance made under section 14A read with Rule 8D cannot exceed the exempt income, in the absence of any such restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of PCIT v. Empire Package Private Limited in ITA.No. 415/2015 held that disallowance should not exceed exempt income. In the case on hand since the assessee received dividend income of ₹ 1,70,000/- as recorded in the Assessment Order the disallowance should not be more than ₹ 1,70,000/-. Thus we direct the Assessing Officer to restrict the disallowance to the extent of dividend income i.e. ₹ 1,70,000/- and delete the balance amount and compute the incomes accordingly. 11. Thus, respectively following the said decisions, we direct the Assessing Officer to restrict the disallowance u/s. 14A r.w. Rule 8D to the extent of dividend income of ₹.1,83,000/- received for the Assessment Year 2012-13 and compute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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