IN INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM ITA No.5417/Mum/2015 ( Assessment Year : 2012-2013) M/s Windia Infrastructure Vs. DCIT-1(3)(2), Mumbai Finance Ltd., Empire House, 214 D.N.Road, A.K.Nayak Marg, Fort, Mumbai-400001 PAN/GIR No. : AAACW 1343 B (Appellant) ( Respondent) Assessee by : Shri Vijay Mehta Revenue by : Capt. Pradeep Arya Date of Hearing : 21/09/2016 Date of Pronouncement 23/09/2016 O R D E R PER R.C.SHARMA (A.M): This is appeal filed by assessee against order of CIT(A), Mumbai, for assessment year 2012-2013. 2. only grievance of assessee relates to disallowance made u/s.14A of I.T.Act. 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is engaged in borrowing and lending and investment in securities. During year assessee has received tax free dividend income of Rs.70,87,815/-. AO computed disallowance u/s.14A read with rule 8D at Rs.46,81,151/- under rule 8D(iii). It was contended by ld. AR that disallowance has also been made in respect of 2 ITA No.5417/15 shares held as stock in trade as well as investment in subsidiary/group companies. As per ld. AR shares held as stock in trade should be excluded for purpose of disallowance u/s.14A of Act. For this purpose reliance was placed on following judicial pronouncements :- i)CIT vs. India Advantage Securities, ITA No.1131/2013, dated 17.3.2015 (Bombay High Court); ii)CCI Ltd. Vs. Jt.CIT, 250 CTR 291 (Kar) iii)HDFC Bank Ltd. Vs. DCIT, 383 ITR 529 (Bom) In support of proposition that no disallowance u/s.14A is warranted in respect of investment in subsidiary/group companies, reliance was placed on following decisions :- i)Cheminvest Ltd. v CIT [378 ITR 33 (Del)/ 281 CTR 447 (Del)] ii) Garware Wall Ropes Limited v Addl. CIT (ITA No. 5408/Mum/2012) iii)M/s JM Financial Limited v Add!. CIT (ITA No: 4521/Mum/2012) iv)CIT v Oriental Structural Engineers Pvt. Ltd (Delhi High Court) v)M/s Provogue India Ltd v. DCIT 8(2), Mumbai being ITA No: 2155/Mum/2013 for AY. 2009-10 dated 21.01.2015; It was also contended by ld. AR that no disallowance u/s.14A was warranted in respect of investment, which does not earn any exempt income and for this purpose reliance was placed on following decisions :- i)ACB India v ACIT [374 ITR 108 (Del)] ii)CIT v. Interglobe Enterprises Ltd. (Delhi High Court) (copy enclosed) M/s Slyvex Cable Co. Pvt. Ltd. v Dy.CIT being ITA No: 8581/Mum/2011 for AY. 2008-09 dated 24.02.2016 4. We have considered rival contentions and found from record that while computing disallowance under rule 8D(iii), AO has not excluded investment in shares held as stock in trade, investment in subsidiary/group concerns. AO has also not excluded investment which do not earn any tax free income. 3 ITA No.5417/15 5. In view of above judicial pronouncements as referred above, we direct AO to exclude investment made in shares held as stock in trade, investment in subsidiary/group companies and also investment which do not earn any exempt income. We direct accordingly. 6. In result, appeal of assessee is allowed for statistical purposes. Order pronounced in open court on this 23/09/ 2016. Sd/- Sd/- (AMARJIT SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 23/09/2016 .pkm, PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai BY ORDER, 6. Guard file. //True Copy// (Asstt. Registrar) ITAT, Mumbai M/s Windia Infrastructure Finance Ltd. v. DCIT-1(3)(2), Mumbai