Appeal allowed in tax case under section 14A. ITAT directs fresh adjudication on actual expenditure.

The appeal was filed challenging the disallowance made under section 14A of the Income-tax Act. The Assessing Officer had disallowed a significant amount, but the ITAT Mumbai found in favor of the assessee, directing a fresh adjudication considering actual expenditure incurred. The appeal was partly allowed, with the ITAT Mumbai rendering the decision on 2nd March 2016.

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Issues:
1. Disallowance made u/s.14A of the Income-tax Act, 1961.
2. Charging of interest u/s.234 of the Act.

Analysis:
1. The appeal was filed by the assessee challenging the order of the CIT(A)-12, Mumbai regarding the disallowance made u/s.14A of the Act. The Assessing Officer (AO) had determined the income of the assessee at &8377; 4,59,08,300/-, making a disallowance of &8377; 3.12 Crores under section 14A. The assessee argued that it had not incurred any expenditure related to the exempt income except STT of &8377; 1.41 lakhs. The First Appellate Authority (FAA) upheld the AO's order, stating that the provisions of section 14A were applicable, and Rule 8D was mandatory. However, the ITAT Mumbai found that the FAA did not consider the submissions made by the assessee and decided to send the issue back to the AO for fresh adjudication, considering the actual expenditure incurred by the assessee. The first effective ground was decided in favor of the assessee, in part.

2. The next effective ground dealt with charging of interest u/s.234 of the Act, which was considered consequential in nature and not adjudicated upon. Therefore, the appeal filed by the assessee was partly allowed, with the ITAT Mumbai rendering the decision on 2nd March 2016.

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