Case Law Details
Union Bank of India Vs DCIT (ITAT Mumbai)
We find that AO has withdrawn, the relief granted u/s. 14A in the assessment order by mentioning that subsequently order of Hon’ble Supreme Court in Maxopp Investment Ltd. 402 ITR 640 has come. Accordingly, he has effectively made the disallowance us/.14A u/s 154 of the Act. We note that the decision of Hon’ble Supreme Court in Maxopp Investment Ltd (supra) did not overrule the proposition that when interest free funds are sufficient still disallowances u/s 8D(ii) needs to be done. Thus, the decision of Hon’ble Bombay High Court in the case of Reliance Industries and HDFC still holds the forte. Furthermore, in the said case of Maxopp Investment Ltd (supra) itself Hon’ble Supreme Court has upheld the Hon’ble Punjab and Haryana High Court decision to the extent that it was held that disallowances u/s. 14A cannot exceed the exempt income. From the above, it is apparent that said decision of Hon’ble Supreme Court in Maxopp Investment Ltd (supra) does not give a carte blanche to withdraw the relief granted u/s 14A. Or in other words that it mandates that without considering these aspects disallowances has to be done. There is no doubt that Hon’ble Supreme Court held that relief granted from disallowances u/s 14A on the plank that the investment being stock in trade cannot be upheld. Hence, no relief can be granted to assessee on this account. But, it is still deserved relief on the other issue for own interest free funds for the purpose of u/s 8D(ii) and restricting the disallowances with that extent exempt income. These cannot be said to be a subject matter of rectification u/s 154. Hence,upon careful consideration, we hold that the disallowance is not coming under the realm for rectification of mistake u/s 154 and the AO order u/s 154 cannot be presumed to have considered these aspects.
16. Hence, we agree with the submissions of the assesse that order passed by the AO is not sustainable as the issue was debatable and it was not liable for rectification of mistake u/s. 154.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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