Anshul Specialty Molecules Pvt. Ltd. vs. DCIT, CENT. CIR

Parties Involved

Facts Summary

The assessee, Anshul Specialty Molecules Pvt. Ltd., is engaged in the business of manufacturing industrial and specialty chemicals, pharmaceuticals, etc. During the assessment year 2017-18, the company received a dividend of Rs. 6,47,75,961/-, which was claimed as exempt. The Assessing Officer (AO) asked the assessee to compute the disallowance under section 14A read with Rule 8D. The assessee computed the disallowance at Rs. 1,79,13,253/-, excluding investments that did not earn any dividend income. However, the AO proceeded to compute the disallowance without recording his satisfaction, which is a mandatory requirement under Section 14A(2) and Rule 8D(2). The Commissioner of Income Tax (Appeals) (CIT(A)) directed the AO to compute the disallowance by taking the average investment of only those investments that had yielded exempt income. The assessee appealed against the disallowance, and the revenue also appealed against the deletion of the disallowance.…

Legal Issues

• 1. Disallowance of expenses under section 14A r.w.r. 8D
• 2. Disallowance of 14A while computing book profit u/s.115JB

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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