Nawrosjee Wadia and Sons Ltd. vs Income Tax Officer

Parties Involved

Facts Summary

The assessee, Nawrosjee Wadia and Sons Ltd., filed its return of income on 30/09/2014 declaring a total loss of Rs.(-) 35,42,755/-. The return was selected for scrutiny assessment under CASS, and statutory notices were issued and served upon the assessee. The Assessing Officer (AO) found that the assessee earned exempt dividend income of Rs.4,38,01,950/- on which it suo moto disallowed Rs.75,00,000/- u/s 14A r.w.r 8D. The AO was not satisfied with the suo moto disallowance and invoked the provisions of Section 14A r.w.r. 8D, computing the disallowance at Rs.3,83,61,892/- and making an addition of Rs.3,08,61,892/-. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) but without success. The assessee argued that the interest expenditure should have been netted off while computing the disallowance u/s 14 r.w.r. 8D and that only actual expenditure for earning exempt income should be considered for the computation of book profits u/s 115JB.…

Legal Issues

• 1. Disallowance of Rs. 3,08,61,892/- under Section 14A r.w.r. 8D of the Act.
• 2. Addition of Rs. 3,08,61,892/- being disallowance u/s 14A r.w.r. 8D while computing the book profit u/s 115JB of the Act.

Judgment Outcome

Decided in favour of Assessee.

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