GVN FUELS LIMITED,HOWRAH V. DCIT, CIRCLE 13(1), , KOLKATA

ITA 402/KOL/2025

AI Insights

GVN Fuels Limited appealed against the order of the National Faceless Appeal Centre, Delhi, which upheld the assessment order disallowing \\u20b953,53,375/- under section 14A of the Income Tax Act, 1961. The disallowance was related to expenses incurred in earning exempt dividend income. The Tribunal found that the Assessing Officer did not record any satisfaction regarding the incorrectness of the assessee's calculation, which necessitated the application of section 14A read with Rule 8D. Citing precedents from the Calcutta High Court and the Delhi High Court, the Tribunal ruled that in the absence of such satisfaction, the provisions of section 14A could not be invoked, leading to the partial allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712884 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: TIL Ltd. Vs. DCIT, REI Agro Ltd. in GA No. 3581 of 2013, ACB India Ltd. Vs. ACIT (2015) 374 ITR 0108
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDIP SARKARD
• Assessee Lawyers: SUNIL SURANA
• Keywords: Set aside; Rule 8D
• Section: 143(3); 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.402/KOL/2025 (Assessment Year:2016-17) GVN Fuels Limited 251, Jindal Mansion, G.T. Road Liluah, Howrah-711204, West Bengal Vs. DCIT, Cir-13(1) Aayakar Bhavan, 110, Shantipally, E.M. Bypass, Kolkata-700107 West Bengal (Appellant) (Respondent) PAN No. AAACG9200D Assessee by : Shri Sunil Surana, AR Revenue by : Shri Sandip Sarkard, DR Date of hearing: 16.07.2025 Date of pronouncement: 29.07.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 21.01.2025 for the AY 2016-17. 02. The only issue raised by the assessee is against the order of ld. CIT (A) upholding the assessment order framed u/s 143(3) dated 24.12.2018, wherein disallowance u/s 14A was made to the tune of ₹53,53,375/-. 03. The facts in brief are that during the course of assessment proceedings, the ld. AO observed that during the year the assessee has earned dividend income of ₹76,30,220/- and claimed the same as exempt. The ld. AO further noted that the assessee has invested in the quoted and unquoted shares to the tune of ₹107,47,12,502/- as on 31.03.2016. the ld. Counsel for the assessee further noted that the investment has potential to fetch the dividend income in future. It is Printed from counselvise.com Page | 2 ITA No. 402/KOL/2025 GVN Fuels Limited; A.Y. 2016-17 further noted that the assessee has offered ₹1,96,311/- for disallowance vide submission dated 21.12.2018. However, the ld. AO was of the view that the disallowance has to be quantified u/s 14A read with Rule 8D of the Rules and accordingly, computed the disallowance at ₹53,53,375/- and added the same to the income , which was affirmed by the ld. CIT (A). 04. Now, after perusing the order of the ld. AO, we find that the ld. AO has not recorded any satisfaction as to how the calculation furnished by the assessee is wrong necessitating the calculation of disallowance u/s 14A read with Rule 8D of the Rules. Therefore, in absence of any satisfaction the provisions of section 14A can not be invoked and no disallowance can be made u/s 14A read with section 8D of the Rules. The case find support from the decision of the co-ordinate bench in case of TIL Ltd. Vs. DCIT in ITA No. 558/KOL/2022 vide order dated 23.12.2022, in which the Tribunal has followed the Calcutta High Court decision in case of REI Agro Ltd. in GA No. 3581 of 2013 and Hon'ble Delhi HC in case of ACB India Ltd. Vs. ACIT (2015) 374 ITR 0108. Accordingly, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. However, as disallowance offered by the ld. assessee suo moto ₹1,96,311/- has to be made. Consequently, the appeal of the assessee is partly allowed. 05. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 29.07.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 29.07.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 3 ITA No. 402/KOL/2025 GVN Fuels Limited; A.Y. 2016-17 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata Printed from counselvise.com "