IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 1089/MUM/2022 Assessment Year: 2006-07 National Stock Exchange of Deputy Commissioner of India Ltd., Income-tax, Exchange Plaza, Circle – 7(1)(1), Bandra Kurla Complex, Vs. Mumbai Bandra(East), Mumbai – 400051 (PAN : AAACN1797L)

(Appellant) (Respondent)

ITA No. 1467/MUM/2022 Assessment Year: 2006-07 Deputy Commissioner of National Stock Exchange of India Income-tax, Ltd., Circle – 7(1)(1), Exchange Plaza, Mumbai Vs. Bandra Kurla Complex, Bandra(East), Mumbai – 400051 (PAN : AAACN1797L)

(Appellant) (Respondent)

Present for:

Assessee : Shri J.D.Mistry, Sr. Advocate and Shri Harsh Kapadia Revenue : Shri Kailash C. Kanojiya, CIT DR and Ms Monika H. Pande, Sr.AR Date of Hearing : 09.12.2024 Date of Pronouncement : 28.02.2025 Assessment Years: 2010-11, 2011-12, 2012-13 and 2015-16 Present for:

Assessee : Shri J.D.Mistry, Sr. Advocate and Shri Harsh Kapadia Revenue : Ms Monika H. Pande, Sr.AR Date of Hearing : 10.12.2024 Date of Pronouncement : 28.02.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

All these captioned six appeals filed by both, assessee and revenue are against the orders of Ld. CIT(A) passed against the assessment orders passed by Addl.CIT/DCIT, Mumbai. Consolidated details of these appeals are tabulated below:

2. In this bunch of six appeals Revenue is in appeal only for Assessment Year 2006-07, rest all being by the assessee.

3. Issues involved in all these six appeals are mostly common. We will first take up appeal for Assessment Year 2006-07 as the lead case whereby our observations and findings on the common grounds shall apply mutatis mutandis to other assessment years. In respect of disallowance made u/s.14A r.w.r. 8D, the issue is common to all the Assessment Years in appeal before us. However, this issue has to be dealt vis-à-vis period prior to introduction of Rule 8D and in Assessment Years post its introduction. Thus, we will take up Assessment Year 2006-07 relating to period prior to Rule 8D and all other four years being period after introduction of Rule 8D. Further, within this post period of introduction of Rule 8D, in Assessment Year 2015-16, assessee pointed out factual aspects of inadvertent mistake committed by it while making suo moto disallowance, which shall be dealt specific to this Assessment Year. Summary of all the issues to be dealt in this set of six appeals is tabulated below vis-à-vis their respective grounds in each of the assessment years.

4. General facts, common for dealing with these appeals are that the assessee is in the business of running a stock exchange. The main object of the assessee is to facilitate, promote, assist, regulate and manage in public interest, dealings in securities of all kinds and to provide specialized advanced, automated and modern facilities for trading, clearing and settlement of securities and to ensure trading in a transparent, fair and open manner.

5. Grounds raised by assessee and Revenue in their respective appeals for Assessment Year 2006-07 are taken up for adjudication seriatim. We first take up the appeal by the assessee in ITA No. 1089/Mum/2022. Ground No.1 is in respect of disallowance made u/s. 14A r.w.r. 8D. Assessee has earned Rs.13,91,29,296/- exempt income during the year which includes interest on tax free bonds of Rs.6,86,47,061/- and dividend of Rs.7,04,82,235/-. Assessee has suo moto allocated 0.1% of this exempt income as expense attributable to earning of this exempt income for making disallowance u/s.14A. Assessee claimed that in order to take care of possible administrative overheads, it has itself made disallowance u/s.14A. However, ld. Assessing Officer applied Rule 8D for computing the disallowance u/s.

14A as under:

a) Component u/r. 8D(2)(i) – Rs.1,39,129/-

b) Component u/r. 8D(2)(ii) - Nil c) Component u/r. 8D(2)(iii) - Rs.1,70,21,055/-

5.1. Thus, ld. Assessing Officer made a disallo