IN THE INCOME TAX APPELLATE TRIBUNAL, ‘H (SMC)’ BENCH MUMBAI BEFORE: SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 3117/MUM/2025(AY: 2013–14)

Akshaya Holdings Pvt ltd. Vs Income Tax officer Ward 3(1)(1), C-9, Elder House, Dalia Mumbai, Aayakar Ind Estate, Andheri (W) Bhawan,Mumbai- 400020 off Veera Desai Road, Mumbai- 400053 PAN: AABCA 0224 E (Appellant) .. (Respondent ITA No. 3369/MUM/2025(AY: 2013–14)

Income Tax officer Ward Vs. Akshaya Holdings Pvt ltd.

3(1)(1), Aayakar Bhawan, C-9, Elder House, Dalia

6^th Floor, Room No. 666, IND. Estate, Andheri (W)

M.K. Road, Churchgate, off Veera Desai Road, Mumbai- 400020 Mumbai- 400053 PAN: AABCA 0224 E (Appellant) .. (Respondent Assessee by Shri. Prateek Jain CA Revenue by Shri. Pravin Salunkhe, Sr. DR Date of Hearing 07/10/2025 Date of Pronouncement 08/10/2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER:

1. These two cross appeal by the assessee as well as revenue are directed against the order of Learned Commissioner of Income Tax (Ld. CIT(A)) dated

30.03.2025. The assessee in its appeal has raised following ground of appeal:-

“The following grounds of appeal are without prejudice to each other:-

1. On the facts and circumstances of the appellant's case in law the Ld. CIT(A) erred in confirming the action of Ld. AO in making disallowance u/s 14A r.w.r 8D of Rs. 1,22,89,690/- as per the grounds stated in the order or otherwise.

2. The appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds of appeal on or before the hearing.

The appellant prays Your Honour to direct the Learned Assessing Officer to delete the additions/disallowance made in the impugned order.”

2. Revenue in its cross-objection has raised following grounds of appeal.

“i) "On the facts and circumstances of the case and law, whether the Ld. Addl./JCIT (A) was justified in deleting the enhancement of book profit computed u/s 115JB by an amount of Rs. 4,57,00,370/-, being disallowance made u/s 14A r.w.Rule 8D of the I.T. Act, 1961, without appreciating the facts that Explanation (1) of clause (f) specifically provides for such adjustment being disallowance of expenditure related to exempt income."

3. Rival submissions of both the parties have been heard and record perused. The learned Authorized Representative (Ld.AR) of the assessee submits that during the relevant financial year the assessee earned dividend income of Rs. 23,79,600/-only. The assessee received such exempt income in the form of dividend from investment in Mutual Funds. Such dividend is exempt under section 10(35) of Income Tax Act. During the assessment proceedings the assessing officer invoked the provisions of Rule 8D of Income Tax Rules 1962 and computed disallowance under section 14A of Rs. 4.57 crore, such disallowances consist of disallowances under Rule 80D(i)of Rs. 4.54 crore and disallowances in Rule 8D(iii) of Rs. 2.39 Lakhs. The assessee disallowed interest paid of Rs. 3.34 crore in its computation of income. The assessing officer allowed set off of such interest disallowances and worked out the figure of disallowance in 14A of Rs. 1.22 crore and also added to the book profit under section 115JB. On appeal the Ld. CIT(A) upheld the action of assessing officer on disallowances of 14A, however, allowed relief for making adjustment of such addition in book profit under section 115JB. Now, the assessee has challenged the order of Ld. CIT(A) in confirming the disallowances under section 14A. On the other hand, revenue has challenged the action of Ld. CIT(A) in allowing relief for deleting such addition to book profit under section 115JB. The ld.AR of the assessee further submits that in the series of decision various benches of Tribunal as well as Higher Courts have taken a consistent view that disallowance under section 14A cannot be exceed to the figure of exempt income. Thus, the disallowance under section 14A may be restricted to the exemption income. To su