IN INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA No.1239/PUN/2017 Assessment Year 2012-13 Avinash Nivruti Bhosale, Vs. DCIT, Circle-2, 2, ABIL House, Pune Range Hill Corner, GAnesh Khind Road, Pune 411 007 PAN ABTPB8151F Appellant Respondent Appellant by Shri Nikhil Pathak & Shri Nimit Gujrathi Respondent by Shri Pankaj Garg Date of hearing 17-09-2019 Date of pronouncement 17-09-2019 ORDER PER R.S.SYAL, VP This appeal by assessee arises out of order passed by Commissioner of Income-tax (Appeals)-3, Pune on 27.02.2017 in relation to assessment year 2012-13. 2. only issue raised in this appeal is against confirmation of disallowance of Rs.54,50,000/- u/s.14A of Income-tax Act, 1961 read with Rule 8D of Income-tax Rules, 1962. 2 ITA No.1239/PUN/2017 Avinash N. Bhosale 3. Briefly stated, facts of case are that assessee earned exempt income of Rs.80.14 lakh as share from partnership firms and Rs.25.05 lakh as dividend and PPF interest etc. No disallowance u/s.14A was offered. Assessing Officer, on getting satisfied, computed disallowance u/s.14A read with Rule 8D(2)(iii) at Rs.54,50,000/-, being 0.5% of average value of investments. ld. CIT(A) affirmed disallowance. 4. We have heard both sides and gone through relevant material on record. ld. AR fairly admitted that disallowance u/s.14A is called for. He, however, submitted that in computing such disallowance only those investments should be considered which have yielded exempt income. 5. Ordinarily disallowance is made at 0.5% of average value of investments under rule 8D(2)(iii). However, in this regard, it is relevant to note that Hon ble Delhi High Court in ACB India Ltd. vs. CIT (2015) 374 ITR 108 (Del) has held that average value of investments, for purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not total investments. Similar view has been taken by Special Bench of Tribunal in case of ACIT vs. Vireet Investments (P) Ltd. (2017) 165 ITD 27 (Del) (SB) 3 ITA No.1239/PUN/2017 Avinash N. Bhosale holding that only those investments should be considered for computing average value of investments which yield exempt income during year. Respectfully following precedents, we set-aside impugned order and remit matter to file of AO for computing disallowance under Rule 8D(2)(iii) in accordance with our above observations. 6. In result, appeal is allowed for statistical purposes. Order pronounced in Open Court on 17th September, 2019. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT Pune; Dated 17th September, 2019 Copy of Order is forwarded to1. Appellant; 2. Respondent; 3. CIT(A)-3, Pune 4. Pr. CIT-2, Pune 5. DR B , ITAT, Pune 6. Guard file. BY ORDER, Senior Private Secretary, ITAT, Pune 4 ITA No.1239/PUN/2017 Avinash N. Bhosale Date 1. Draft dictated on 17-09-2019 Sr.PS 2. Draft placed before author 17-09-2019 Sr.PS 3. Draft proposed & placed JM before second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to Bench Clerk Sr.PS 9. Date on which file goes to Head Clerk 10. Date on which file goes to A.R. 11. Date of dispatch of Order. Avinash Nivruti Bhosale v. DCIT, Circle-2, Pune