ORDER

PER BEENA A PILLAI, JUDICIAL MEMBER

Present appeal has been filed by revenue against order dated 10.06.2014 of Ld. CIT(A)-XIII, New Delhi on following grounds:

“1. On the facts and in the circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.59,14,768/ - made by the A.O. u/ s 14A.

2. On the facts and in the circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.1,25,000/ - in respect of depreciation.

3. On the facts and in the circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.3,50,000/ - on account of assets used for farm house.

4. On the facts and in the circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.5,00,000/ - on account of travelling & conveyance exp.

5. On the facts and in the circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.5,00,000/ - on account of legal and professional charges.”

2. Brief facts of the case are as under:

Assessee filed its return of income on 25/ 09/ 2009 declaring loss of Rs.5,01,052/ -. Assessee is engaged in business of mining activities located in Kerala, for extraction of raw clay matrix, used by processed clay manufacturers. Assessee is also holding shares of group companies such as Greaves Cotton Ltd., English Indian Clays Ltd., and Premium Energy Transmission Ltd. Average investments in shares of Group Companies amounted to Rs.1,90,21,05,659/ -from which dividend income earned amounted to Rs.18,59,46,489/ - during year under consideration. It was also observed by Ld.AO that assessee made suo moto disallowance of Rs.23,82,198/ -, under section 14 A of the Act.

2.1. The case was selected for scrutiny through CASS and accordingly notice u/ s 143(2) was issued. Assessing Officer invoked provisions of section 14A read with Rule 8D and disallowed expenses relating to earning exempt income amounting to Rs.1,28,58,236/ -, comprising of the following:

i. Under Rule 8D(2)(i) : Rs. 23, 82,198/ -

ii. Under Rule 8D(2)(ii) : Rs. 9,65,510/ -

iii. Under Rules 8D(2)(iii): Rs 95,10,528/ -

Total Rs.1,28,58,236/ -

Ld.AO also made following other disallowances:

i. disallowance of depreciation - Rs.1,25,000/ -

ii. disallowance of repairs and renovation expenses - Rs.3,50,000/ -

iii. disallowance of travelling and conveyance expenses - Rs.5,00,000/ -

3. Aggrieved by disallowances made by Ld.AO assessee preferred appeal before Ld.CIT(A), who deleted additions.

4. Aggrieved by order of the Ld.CIT(A), revenue is now in appeal before us.

5. At the outset, Ld. AR submitted that, ground relating to 14 A in Ground No.1 stands squarely covered in favour of assessee by order passed by this Tribunal in assessee’s own case for preceding Assessment Year. Referring to page No. 41-54 of paper book, he submitted that for Assessment Year 2008-09 and 2009-10 identical disallowance made by Ld.AO was deleted by this Tribunal and for Assessment Year 2009-10 Hon’ble High Court confirmed the order passed by this Tribunal, which is placed at page 55-56 of paper book.

5.1. The Appellant earned exempt income of Rs.18,59,46,489/ - as dividend income and had voluntarily disallowed Rs.23,82,198/ - under section 14A of the Act.

5.2. Ld. AR submitted that expenses that is attributable for earning exempt income for disallowance u/ s 14A are identifiable from books of accounts. The division wise Profit and Loss account was submitted before both ld. AO as well as the ld. CIT(A). He further submitted that the ld. AO applied Rule 8D and disallowed Rs.59,14,768/ - over and above voluntary disallowance made by the appellant u/ s 14A amounting to Rs.23,82,198/ - against dividend earned by assessee during the year.

5.3. The Ld.AR submitted that Ld.AO disregarded computation of taxable income, books of accounts and division wise Profit and Loss account furnished by assessee and proceeded mechanically to apply Rule 8D of the Income Tax Rules, 1962. The Ld.AR further submitted that the Ld.AO neither expressed his dissatisfaction