INCOME TAX APPELLATE TRIBUNAL,MUMBAI - `I' BENCH.
Before S/Sh.I.P.Bansal, Judicial Member & Rajendra,Accountant Member
/.ITA No.1168/Mum/2011,[ [/Assessment Year-2007-08
India Infrastructure Developers Ltd., DCIT Cir 2(2), R.No.577,
Taxation Department, L&T House, 5th Floor, Aayakar Bhavan,
N.M.Marg, Ballard Estate, Vs M.K.Marg,Mumbai-400020
(/ Appellant) (× / Respondent)
[ / Assessee by : Ms. Heena Doshi
/ Revenue by : Shri Ashok Suri
/ Date of Hearing : 01-04-2014
/ Date of Pronouncement : 01-04-2014
, 1961 ( 1 ) 254 Û[
Order u/s.254(1)of the Income-tax Act,1961(Act)
Per Rajendra,AM Û] :
Challenging the order dt. 02.11.2010 of the CIT(A)-5,Mumbai, assessee-company has filed
following Grounds of Appeal :
1.On the facts and in the circumstances of the case and in law, the learned Commissioner of
Income Tax (Appeals) erred in confirming the disallowance under section 14A of the Act even
though income claimed as exempt during the year is NIL.
2.The appellant company craves leave to add to, alter or modify any of the above grounds of
2.Assessee-company,engaged in the business of leasing and investment,filed its return of income
on 06.01.2007 declaring total income of Rs. 54.75 Crores.Assessing Officer (AO) finalised the
assessment on 30.11.2009 determining the total income of the assessee at Rs. 56.49 Crores.
During the assessment proceedings, AO found that assessee had shown investment of Rs. 66.68
Crores in tax-free-bonds and shares of companies, that income from said investments was not
includible in the total income as per the provisions of chapter III of the Act. He asked the assessee
to claim as to why the expenses should not be disallowed u/s. 14A of the Act r.w.Rule 8D of
Income Tax Rule 1962 (Rules).After considering the submissions of the assessee, he worked out
the disallowance in terms of clause (iii) of Sub-Rule 2 of Rule 8D @ half percent of the average
value of total investment .
3.In the appellant proceedings, assessee-company argued that it had not earned and claimed as
exempt and dividend income on investments,that question of disallowance u/s. 14A of the Act did
not arise at all. Reliance was placed on the decision of Hon'ble Bombay High Court in the case of
Godrej & Boyce Manufacturing Co. Ltd. After considering the submission of the assessee and the
assessment order, First Appellate Authority (FAA) held that main thrust of section 14A of the Act
was on disallowance of expenditure incurred on the value of investment that yielded exempt
income arising out of shares, bonds and mutual funds etc, that the focus of disallowance was on
expenditure on the source of investments, that the provisions of section 14A would come into play
2 ITA No.1168/Mum/2011 India Infrastructure Developers Ltd.
irrespective of the fact whether the investment yielded income or not. He relied upon the decision
of the special bench of ITAT Delhi delivered in the case of Cheminvest Ltd. (317 ITR 86-80).
Referring to the decision of Godrej & Boyce Manufacturing Co. Ltd., he held that provisions of
Rule 8D would apply from Assessment Year (AY) 2008-09 only, that prior to AY 2008-09 AO
had to adopt a reasonable basis or methods for making disallowance.
4.Before us, Authorised Representative (AR) fairly conceded that the matter is issued against the
assessee by the decision of the special bench of Delhi Tribunal. Departmental Representative
(DR) supported the order of the FAA.
5.After considering the rival submissions, we are of the opinion that FAA has followed the
decision of the said bench of Delhi ITAT as well as the judgment delivered by the Hon'ble
Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd., he had directed the
AO to work out the disallowance in terms of the directions of Hon'ble jurisdictional High Court.
Therefore, in our opinion, his order does not suffer from any legal infirmity.Respectfully,
following the above referred order of the Bombay High Court, we decide the effective ground of
appeal against the assessee.
As a result,appeal filed by the assessee-company stands dismissed.
Order pronounced in the open court on 1st April,2014.
Û 01 ,2014
(.. /I.P. Bansal) (Û]/Rajendra)
Û /JUDICIAL MEMBER /ACCOUNTANT MEMBER
/Copy of the Order forwarded to :
1. Assessee / 2. Respondent /×
3. The concerned CIT(A)/ ,4.The concerned CIT /
5. DR "I" Bench, ITAT, Mumbai / vkbZ ,..Û.
6. Guard File/[
× //True Copy//
/ BY ORDER,
/ Dy./Asst. Registrar
, /ITAT, Mumbai