INCOME TAX APPELLATE TRIBUNAL,MUMBAI "B" BENCH
Before S/Sh. Rajendra,Accountant Member & Saktijit Dey,Judicial Member
/.ITA No. 6200/Mum/2013, /Assessment Year-2009-10
ACIT, Circle-6(3) M/s.Morarjee Textiles Ltd.
R.No.522, 5 Floor 2nd floor, Peninsula Spenta
Aayakar Bhavan, M.K. Road Vs MAthuradas Mills Compound
Mumbai-400 020. Senapati Bapat Marg, Lower Parel
PAN:AAACM 2725 R
( /Appellant) ( / Respondent)
/Assessee by : Shri Samir Tekriwal
/ Revenue by : Shri Ronak Doshi
/ Date of Hearing : 08-10 -2015
/ Date of Pronouncement : 08 -10-2015
, 1961 254( 254 ( 1 )
Order u/s.254(1)of the Inco me-tax Act,1961(Act)
PER RAJENDRA, AM-
Challenging the order dated 01.08.2013 of CIT(A)-12,Mumbai,the Assessing Officer(AO) has
filed the present appeal.
Assessee-company filed its return of income on 26.09.2009.A revised return was filed on 16.03.
2011,declaring total income of Rs.(-)31.91 Crores under the normal provisions and book loss of
Rs.30.03 Crores u/s.115JB of the Act.The AO completed the assessment u/s.143(3) of the Act on
30.12.2011,determining the income of the assessee at Rs.(-)30.17 Crores.He calculated the
income under the MAT provisions at Rs.(-)28.30 Crores.
2.Effective Ground of appeal deals with the value of current liabilities and provisions with regard
to calculation of the disallowance u/s.14A of the Act r.w.Rule 8D of the Income tax Rules,
1962(Rules).During the assessment proceedings,the AO found that the assessee had voluntarily
made a disallowance of Rs.1.87 Crores u/s.14A of the Act.However,the AO was of the opinion
that same was not in accordance with the provisions of Rule 8D of the Rules.After recording his
dissatisfac -tion about the correctness of the computation made by the assessee,the AO
recomputed the disallowance at Rs.3.61 Crores.
3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate
Authority (FAA).Before him it was contented that the AO had erroneously included the foreign
investments while calculating the average value of investment for 14A purposes,that income
from such investments was taxable in the hands of the assessee,that he had mistakenly took
figure of Rs.1.41 Crores being 0.5% of average value of investment instead of the actual figure
of Rs 14. 19 lakhs,that the AO had added back the amount of current liabilities and provisions
while calculating the average value of total assets.After considering the submissions of the
ITA/6200/13 morarjee T ,AY.0 9-10-
assessee and the assessment order,he held that the AO should verify the claim made by the
it about the taxable income arising from foreign investment and to work out the average
value of investment for the purpose of disallowance to be made u/s.14A of the Act.He
further directed the AO to verify the other claims made by the assessee,especially about the
amount of current liabilities and provisions.He further directed the AO to verify the claim
of the about adopting a wrong figure of Rs.1.41 crores for making disallowance.
4.Before us,the Departmental Representative(DR)supported the order of the AO.The Authorised
Representative relied upon the order of the FAA and stated that the AO had made an unjustified
addition u/s.14A of the Act.He relied upon the cases of Shitanshu Bipin Vora(ITA//2585/Mum/
2013-AY.2009-10,dated 26.09.2014) and KSM securities and Finance Pvt.ltd.(ITA/3632/Mum/
5. We have heard the rival submissions and perused the material before us.We find that the
FAA had directed the AO make certain verification.He has not deleted any addition.He has asked
the AO to adopt correct figures for making disallowance u/s.14A of the Act.If the assessee is
following net current asset method for preparing the balance sheet then the fact has to be
considered for deciding the issue of disallowance.In our opinion none of his directions suffer
from any legal infirmity.So,confirming his order,we decide effective ground of appeal against
As a result,appeal filed by the AO stands dismissed.
Order pronounced in the open court on 8th,October,2015.
( / Shaktijit Dey) ( / RAJENDRA)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
/Mumbai,/Date: 8.10. 2015
/Copy of the Order forwarded to :
1.Appellant / 2. Respondent /
3.The concerned CIT(A)/ , 4.The concerned CIT /
5.DR A Bench, ITAT, Mumbai / , ,...
/ BY ORDER,
/ Dy./Asst. Registrar
, /ITAT, Mumbai.