The Commissioner Of Income Tax – 4, Mumbai v. Shri Sureshchand S. Jain, Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1324 OF 2011 The Commissioner of Income Tax – 4, Mumbai..Appellant. Versus Shri Sureshchand S. Jain, Mumbai..Respondent. Mr.Suresh Kumar i/by Ms.P.S. Cardozo for the appellant.None for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 5[th] February 2013 P.C. : 1.In this appeal by the Revenue for assessment year 2006-2007, following questions of law have been proposed for our consideration. “a)Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that in computation of disallowance under Section 14A, there is no provision in rule 8D of IT rules for reduction of current liability ?Tribunal was justified in holding that in computation of disallowance under Section 14A, there is no provision in rule 8D of IT rules for reduction of current liability ? b)Whether on the facts and circumstances of the case and in law, the Tribunal was right in deleting the disallowance of Rs.49,90,503/- being expenses incurred in earning the tax free dividend income ?Tribunal was right in deleting the disallowance of Rs.49,90,503/- being expenses incurred in earning the tax free dividend income ? c)Whether on the facts and circumstances of the case and in law, the Tribunal was right in directing the AO to exclude disallowance under Section 14A for computing income from taxable security Tribunal was right in directing the AO to exclude disallowance under Section 14A for computing income from taxable security transaction for the purpose of rebate under Section 88E without appreciating the fact that the disallowance under Section 14A is related to the expenditure incurred in relation to the income not includible in total income while income from security transaction is taxable one ?” 2.So far as questions (a) and (b) are concerned, the Tribunal by the impugned order has remitted the issue to the file of the assessing officer for fresh consideration keeping in view the decision of this Court in the matter of Godrej & Boyce Mfg. Co Limited V/s. Deputy Commissioner of Income Tax reported in (2010) 328 ITR 81 (Bom). In view of the above, no occasion to entertain questions (a) and (b) arises. 3.So far as question (c) is concerned, both the Commissioner of Income Tax (A) as well as the Tribunal have held that while computing the rebate available under Section 88E of the Act the disallowance made under Section 14A of the Act should not be taken into account. This according to the impugned order is that only expenditure incurred which does not form part of the total income has to be excluded. The disallowance under Section 14A of the Act as held by the Tribunal will have no bearing in computing income from taxable securities transactions for the purposes of rebate under Section 88E of the Act. The rebate under Section 88E of the Act is with regard to income from taxable security transaction and disregarding the expenditure disallowed under Section 14A to compute the income from taxable security transaction is appropriate. We find that the view of the Tribunal upholding the view of CIT (A) is reasonable and calls for no interference by this Court. Question (c), therefore, is not entertained. 4.The appeal is accordingly dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)