M/s. Welknown Financial Services Pvt. Ltd., Kolkata V. ITO, Ward - 6(4), Kolkata, Kolkata

ITA 1366/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4778 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO. 1366/KOL/2018 ASSESSMENT YEAR: 2012-2013 M/S. WELKN OWN FINANCIAL SERVICES PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 1366/KOL/2018 ASSESSMENT YEAR: 2012-2013 M/S. WELKNOWN FINANCIAL SERVICES PVT. LIMITED,..... ................APPELLANT 38, ARMENIAN STREET, KOLKATA-700 001 [PAN: AAACW 4790 J] -VS.- INCOME TAX OFFICER,................................ ......................................RESPONDENT WARD-6(4), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI MIRAJ D. SHAH, A.R., FOR THE APPELLANT SMT. RANU BISWAS, JCIT , SR. D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : FEBRUARY 12, 2019 DATE OF PRONOUNCING THE ORDER : FEBRUARY 12, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 11.04.2018, WHEREBY HE CONFIRMED THE DISALLOWANCE OF RS.9,32,13 6/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A READ WITH RULE 8D. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 29.09.2012 DECLARING A LOSS OF RS.15,03,454/-. IN THE SAID RET URN, DIVIDEND INCOME OF RS.2,83,320/- ON INVESTMENT IN SHARES WAS CLAIMED T O BE EXEMPT BY THE ASSESSEE UNDER SECTION 10(34) OF THE ACT AND DISALL OWANCE OF RS.1,62,928/- WAS OFFERED BY THE ASSESSEE UNDER SEC TION 14A ON ACCOUNT OF EXPENSES INCURRED FOR EARNING THE EXEMPT DIVIDEN D INCOME. THE ITA NO. 1366/KOL/2018 ASSESSMENT YEAR: 2012-2013 M/S. WELKN OWN FINANCIAL SERVICES PVT. LIMITED 2 ASSESSING OFFICER WAS NOT SATISFIED WITH THE QUANTU M OF DISALLOWANCE OFFERED BY THE ASSESSEE UNDER SECTION 14A. HE INVOK ED RULE 8D AND WORKED OUT THE EXPENSES INCURRED BY THE ASSESSEE FO R EARNING THE EXEMPT DIVIDEND INCOME AT RS.9,32,136/- AND MADE A DISALLO WANCE TO THAT EXTENT UNDER SECTION 14A IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 16.02.2015. ON APPEAL, THE LD. CIT(A PPEALS) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 14A READ WITH RULE 8D. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPE ALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LIMITED CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE DISALL OWANCE UNDER SECTION 14A CANNOT EXCEED THE EXEMPT INCOME IN THE FORM OF DIVIDEND ACTUALLY EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION. HE HAS CONTENDED THAT SINCE THE EXEMPT INCOME IN THE FORM OF DIVIDEND ACTUALLY EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION WAS ONLY OF RS.2,88,320/-, THE DISALLOWANCE UNDER SECTION 14A C ANNOT EXCEED RS.2,83,320/-. SINCE THIS CONTENTION OF THE LD. COU NSEL FOR THE ASSESSEE IS DULY SUPPORTED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LIMITED VS.- CIT [372 IT R 694] AND THE LD. D.R. HAS ALSO NOT DISPUTED THIS POSITION, WE RESTRICT TH E DISALLOWANCE OF RS.9,32,136/- MADE BY THE ASSESSING OFFICER UNDER S ECTION 14A AND CONFIRMED BY THE LD. CIT(APPEALS) TO RS.2,83,320/- AND ALLOW THIS APPEAL OF THE ASSESSEE PARTLY. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 12, 2019. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 12 TH DAY OF FEBRUARY, 2019 ITA NO. 1366/KOL/2018 ASSESSMENT YEAR: 2012-2013 M/S. WELKN OWN FINANCIAL SERVICES PVT. LIMITED 3 COPIES TO : (1) M/S. WELKNOWN FINANCIAL SERVICES PVT. LIMITED, 38, ARMENIAN STREET, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-6(4), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA , (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.