ITO,WD-9(3), KOLKATA, Kolkata V. M/s Compact Finstock Pvt. Ltd., Kolkata

ITA 1141/KOL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5139 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 31-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILOY BARAN SOM
• Assessee Lawyers: VINAY KUMAR GUPTA C A NAT
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

I.T.A. NO. 1141/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1141/KOL/ 2015 ASSESSMENT YEAR: 2011-2012 INCOME TAX OFFICER,................................ ..................................APPELLANT WARD-9(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 5 TH FLOOR, ROOM NO. 14, KOLKATA-700 069 -VS.- M/S. COMPACT FINSTOCK PVT. LIMITED,................ ......................RESPONDENT ROOM NO. 53, 1 ST FLOOR, 3, DIGAMBER JAIN TEMPLE ROAD, KOLKATA-700 007 [PAN : AACCC 0765 H] APPEARANCES BY: SHRI NILOY BARAN SOM, JCIT, SR. D.R., FOR THE DEPAR TMENT SHRI VINAY KUMAR GUPTA, C.A., FOR THE ASSESSEE NATE OF CONCLUDING THE HEARING : DECEMBER 17, 2015 DATE OF PRONOUNCING THE ORDER : JANUARY 06, 2016 O R D E R THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 26.06.2015, WHEREBY HE DELETED THE DISALLOWANCE OF RS.3,13,904/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF DEALING IN SHARES AND SECURITIES. T HE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 26. 09.2011 DECLARING TOTAL INCOME OF RS.2,33,831/-. ALTHOUGH THE ASSESSEE-COMP ANY IN THE YEAR I.T.A. NO. 1141/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 2 OF 3 UNDER CONSIDERATION HAD MADE SOME INVESTMENT IN SHA RES, NO DISALLOWANCE ON ACCOUNT OF EXPENSES INCURRED IN REL ATION TO THE SAID INVESTMENT WAS OFFERED BY IT AS REQUIRED BY THE PRO VISIONS OF SECTION 14A ON THE GROUND THAT NO EXEMPT INCOME IN THE FORM OF DIVIDEND, ETC. WAS RECEIVED BY IT IN THE YEAR UNDER CONSIDERATION. THI S CLAIM OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER A ND RELYING ON THE CBDTS CIRCULAR DATED 11.02.2014 HE MADE A DISALLOW ANCE OF RS.3,13,904/- UNDER SECTION 14A OF THE ACT READ WIT H RULE 8D OF THE INCOME TAX RULES. 3. ON APPEAL, THE LD. CIT(APPEALS) DELETED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER RELYING ON THE VARIOUS JUD ICIAL PRONOUNCEMENTS, WHEREIN IT WAS HELD THAT THE DISALLOWANCE UNDER SEC TION 14A COULD BE MADE ONLY WHEN THERE WAS ANY EXEMPT INCOME EARNED B Y THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. D.R. HAS RELIED ON THE SAME CBDTS CIRCULAR, WHICH WAS RELIED UPON BY THE ASSESSING OFFICER TO MAKE A DISALLOWANCE UNDER SECTION 14A, IT IS OBS ERVED THAT THE POSITION OF LAW AS SETTLED IN THE VARIOUS JUDICIAL PRONOUNCE MENTS IS THAT NO DISALLOWANCE UNDER SECTION 14A CAN BE MADE IN THE Y EAR WHERE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. IN ONE O F SUCH DECISIONS RENDERED IN THE CASE OF CHEMINVEST LIMITED VS.- CI T (ITA NO. 749 OF 2014 DATED 02.09.2015), HONBLE DELHI HIGH COURT HA S HELD THAT SECTION 14A ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIP T OF INCOME WHICH IS NOT INCLUDIBLE IN TOTAL INCOME AND THE SAID SECTION WILL NOT APPLY WHERE NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING T HE RELEVANT YEAR. IT IS ALSO WELL SETTLED THAT THE CIRCULARS ISSUED BY THE CBDT ARE BINDING ON THE REVENUE AUTHORITIES AND NOT ON THE COURTS. I, THERE FORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE DISALLOWANCE MADE I.T.A. NO. 1141/KOL./2015 ASSESSMENT YEAR: 2011-2012 PAGE 3 OF 3 BY THE ASSESSING OFFICER UNDER SECTION 14A AND DISM ISS THIS APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 06, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 6 TH DAY OF JANUARY, 2016 COPIES TO : (1) INCOME TAX OFFICER, WARD-9(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 5 TH FLOOR, ROOM NO. 14, KOLKATA-700 069 (2) M/S. COMPACT FINSTOCK PVT. LIMITED, ROOM NO. 53, 1 ST FLOOR, 3, DIGAMBER JAIN TEMPLE ROAD, KOLKATA-700 007 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-2, KOLKAT A (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.