Appellate tribunal allows Revenue's appeal, directs deletion of disallowance under Section 14A

The appellate tribunal partially allowed the Revenue's appeal for the assessment year 2009-10, directing the deletion of a disallowance of Rs. 94,40,092 under Section 14A r.w. Rule 8D. The tribunal upheld the CIT(A)'s decision based on the availability of non-interest bearing funds for exempt income investments. However, the tribunal rejected the inclusion of the disallowance in Minimum Alternate Tax (MAT) computation, citing a previous special bench decision. The appeal was partly allowed, reinstating a disallowance of Rs. 7,21,908 only.

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Issues:
1. Disallowance under Section 14A r.w. Rule 8D for assessment year 2009-10.
2. Whether disallowance under Section 14A r.w. Rule 8D is to be added in Minimum Alternate Tax (MAT) computation.

Issue 1: Disallowance under Section 14A r.w. Rule 8D for assessment year 2009-10:

The Revenue's appeal contested the CIT(A)-9, Ahmedabad's decision to reverse the Assessing Officer's disallowance of an amount under Section 14A r.w. Rule 8D of the Income Tax Rules. The Assessing Officer had disallowed an amount of Rs. 94,40,092/-, which included proportionate interest cost and administrative expenditure, in the computation of book profit under MAT provision. The CIT(A) considered the appellant's contentions and case laws, including the availability of non-interest bearing funds for investments yielding exempt income. Relying on various judgments, the CIT(A) concluded that no disallowance under Section 14A was warranted in this case, directing the Assessing Officer to delete the disallowance of Rs. 94,40,092/-.

Issue 2: Whether disallowance under Section 14A r.w. Rule 8D is to be added in MAT computation:

Regarding the inclusion of the disallowance under Section 14A r.w. Rule 8D in the MAT computation, the tribunal referred to a special bench decision in the case of ACIT vs. Vireet Investment P. Ltd., where it was held that such disallowance is not to be added in the MAT computation. Consequently, the Revenue's substantive ground on this issue was declined, and the appeal was partly allowed, reviving the disallowance to the extent of Rs. 7,21,908/- only.

In conclusion, the appellate tribunal partially allowed the Revenue's appeal concerning the disallowance under Section 14A r.w. Rule 8D for the assessment year 2009-10. The tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 94,40,092/- based on the availability of non-interest bearing funds for investments yielding exempt income. However, the tribunal declined the Revenue's request to include the disallowance in the MAT computation, following the precedent set in a special bench decision.

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