Disallowance made by Assessing Officer against Coffeeday deleted by ITAT


The Income Tax Appellate Tribunal (ITAT) Bangalore Bench while setting aside the order passed by the Assessing Officer deleted the disallowance against the Coffeeday Enterprises.

Facts of the case:

The assessee, M/s Coffeeday Enterprises Ltd. is engaged in the business of managing hotels and resorts. The assessee had earned dividend income of Rs.8.47 crores and claimed the same as exempt. The assessee disallowed a sum of Rs.28.56 crores under section 14A of the Act while computing total income.

Interpretation of law:

The AO took the view that the assessee has not computed disallowance as per Rule 8D. Accordingly, he computed the disallowance as per Rule 8D at Rs.84.56 crores and accordingly made additional disallowance of Rs.55.99 crores. The same was confirmed by CIT(A) and hence the assessee filed this appeal before the tribunal.


The two-member bench of a Judicial Member, George George K. and Accountant Member B.R. Baskaran observed that the dividend income was received from one group company named M/s Mindtree Limited and the long term capital gain was also earned on the sale of shares of M/s Mindtree limited. Hence the tribunal was of the view that the disallowance voluntarily made by the assessee would meet the requirements of section 14A of the Act. Accordingly, following the order passed in Assessment Year 2013-14, the tribunal said that further disallowance made by the AO and confirmed by CIT(A) is not warranted in the facts and circumstances of the case. Therefore, the tribunal directed the AO to delete further addition made by him under section 14A of the Act.

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