IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP &

MS PADMAVATHY S, AM I.T.A. No.479/Mum/2025 (Assessment Year: 2016-17)

I.T.A. No.480/Mum/2025 (Assessment Year: 2018-19)

Nuvama Wealth Management Ltd., DCIT-4(1)(1), 801 to 804 Wing A, Building No.3, CGO Building, M.K. Road, BKC, G Block, Bandra (East), Vs. New Marine Lines, Mumbai-400051. M umbai-400020.

PAN: AAACK3792N Appellant) : Respondent Appellant /Assessee by : Shri Ravikant S. Pathak, AR Revenue / Respondent by : Shri Leyaqat Ali Aafaqui- Sr. DR Date of Hearing : 22.04.2025 Date of Pronouncement : 28.04.2025 O R D E R Per Padmavathy S, AM:

These appeals by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-47, Mumbai [In short 'CIT(A)'] both dated 25.11.2024 for AY 2016-17 & 2018-19. The common issues contended by the assessee through various grounds in both the AYs pertain to (i) Disallowance under section 14A of the Income Tax Act, 1961 (the Act)

r.w.r. 8D of the Income Tax Rules, 1962 (the Rules).

(ii) Addition made to the book profit under section 115JB of the Act towards the disallowance made under section 14A of the Act.

2. For the purpose of adjudication we will consider the facts pertaining to AY 2018-19 as the lead case. The assessee is a company and registered as a trading and clearing member with National Stock Exchange of India Ltd. (NSEIL), Bombay Stock Exchange Ltd. (BSE) and Metropolitan Stock Exchange of India Ltd. (MSEI) and is engaged in providing broking services to its clients. The assessee filed the return of income for AY 2018-19 on 30.11.2018 and a revised return on 29.03.2019 admitting a total loss of Rs. 62,16,09,839/- and a book profit of Rs. 9,49,48,746/-. The case was selected for scrutiny and statutory notices were duly served on the assessee. The Assessing Officer (AO) during the course of assessment noticed that the assessee has earned exempt income to the tune of Rs. 30,16,99,896/-. The AO further noticed that the assessee has made a suo-moto disallowance of Rs. 50,91,063/- under section 14A of the Act. The AO was of the view that the suo- moto disallowance made by the assessee is not commensurate with the exempt income and called on the assessee to show-cause as to why the disallowance under section 14A r.w.r. 8D cannot be invoked in assessee's case. The assessee in reply furnished the workings of the suo-moto disallowance and also placed reliance on various judicial pronouncements. The assessee submitted a without prejudice working for making disallowance as per Rule 8D(2)(ii) to the tune of Rs. 1,71,55,213/-. The AO concluded the assessment by making disallowance under section 14A r.w.r. 8D as per the workings submitted by the assessee. The AO also added the disallowance made under section 14A to the book profits of the assessee computed under section 115JB of the Act. On further appeal, the CIT(A) confirmed the disallowance made by the AO and also the addition made to book profit. The assessee is in appeal before the Tribunal against the order of the CIT(A).

3. The main contention of the ld. AR is that the AO has invoked Rule 8D without recording his dissatisfaction towards the suo-motu disallowance made by the assessee with respect to the books of accounts of the assessee. The ld. AR submitted in this regard that the assessee has made the disallowance based on a detailed working which was submitted before the AO and that the AO has not recorded any specific dissatisfaction with regard to the same. The ld. AR further submitted that as per the provisions of section 14A before invoking Rule 8D the AO is required to record why he is not satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to the exempt income. The ld. AR also submitted that the workings of disallowance under section 14A r.w.r 8D(2)(ii) was submitted by the assessee as a without prejudice contention and that the AO without recording why his not satisfied with the