Shri Sagarmal Mall, Kolkata V. ACIT, Circle - 32, Kolkata, Kolkata

ITA 1476/KOL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5056 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2011
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Earning of tax free income
• Section: 14A; 194C

Judgement Text

I.T.A. NO. 1476/KOL./2011 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1476/KOL/ 2011 ASSESSMENT YEAR: 2008-2009 SHRI SAGARMAL MALL,................................ ......................................APPELLANT 8/1A, MIDDLETON ROW (SIR W.J. SARANI), 2 ND FLOOR, (ROOM NO. 8), KOLKATA-700 071 [PAN : AFBPM 5218 C] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. .....................RESPONDENT CIRCLE-32, KOLKATA, 10B, MIDDLETON ROW, KOLKATA-700 071 APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE., FOR THE ASSESSEE SHRI RAJAT KR. KUREEL, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MARCH 15 , 2016 DATE OF PRONOUNCING THE ORDER : APRIL 06, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIX, KOLKA TA DATED 29.07.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APPE AL IS GENERAL IN NATURE, WHICH DOES NOT CALL FOR ANY SPECIFIC ADJUDI CATION. 3. THE ISSUE INVOLVED IN GROUND NO. 2 RELATES TO TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I A), WHICH IS SUSTAINED BY THE LD. CIT(APPEALS) TO THE EXTENT OF RS.9,181/- . I.T.A. NO. 1476/KOL./2011 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 4. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING AND INVESTMENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 30.09.2008 DECLARING TOTAL INCOME OF RS.91,82,760/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE TAX DEDUCTED A T SOURCE AMOUNTING TO RS.9,181/- FROM COMMISSION PAYMENT WAS NOT DEPOSITE D BY THE ASSESSEE INTO THE GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED T IME LIMIT. HE, THEREFORE, MADE A DISALLOWANCE OF RS.9,181/- UNDER SECTION 40(A)(IA). ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DIS ALLOWANCE. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF THE RELEVANT CHALLAN PLACED AT PAGE NO. 15 OF THE PAPER BOOK TO SHOW THA T THE AMOUNT OF TDS IN QUESTION WAS DEPOSITED BY THE ASSESSEE ON 27.09.200 8, I.E. BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE YEAR UND ER CONSIDERATION UNDER SECTION 194C AND, THEREFORE, THERE IS NO CASE OF MA KING DISALLOWANCE UNDER SECTION 40(A)(IA) AS PER THE RELEVANT AMENDME NT MADE IN THE SAID PROVISIONS, WHICH IS HELD TO BE APPLICABLE RETROSPE CTIVELY. THE LD. D.R. HAS SUBMITTED THAT THIS STAND TAKEN BY THE ASSESESE FOR THE FIRST TIME BEFORE THE TRIBUNAL REQUIRES VERIFICATION BY THE ASSESSING OFFICER AND SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS NO OBJECTION IN TH IS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER VERIFYING THE NEW STAND TAKEN BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL. GROUND NO. 2 IS ACCORDINGLY TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. THE COMMON ISSUE INVOLVED IN GROUNDS NO. 3 & 4 R ELATES TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE LD. I.T.A. NO. 1476/KOL./2011 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 CIT(APPEALS) UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE SUBSTA NTIAL INVESTMENT IN SHARES AND HAS ALSO EARNED DIVIDEND INCOME THEREON, WHICH IS EXEMPT FROM TAX. HE ALSO FOUND THAT THERE WERE CERTAIN DIR ECT EXPENSES INCURRED BY THE ASSESSEE IN RELATION TO THE EARNING OF THE E XEMPT DIVIDEND INCOME AND THERE WERE ALSO SOME INDIRECT EXPENSES INCURRED BY THE ASSESSEE, WHICH WERE PARTLY ATTRIBUTABLE TO THE EARNING OF TH E SAID INCOME. HE ALSO NOTED THAT THE INVESTMENT IN SHARES WAS PARTLY MADE BY THE ASSESSEE OUT OF INTEREST BEARING BORROWED FUNDS. HE, THEREFORE, WORKED OUT THE EXPENSES ATTRIBUTABLE TO THE EARNING OF EXEMPT DIVI DEND INCOME BY APPLYING RULE 8D AT RS.89,51,423/- AND MADE A DISAL LOWANCE TO THAT EXTENT UNDER SECTION 14A. THE ASSESSEE FOUND CERTAI N MISTAKES IN THE DISALLOWANCE SO WORKED OUT BY THE ASSESSING OFFICER AND WHILE DISPOSING OF THE APPLICATION FILED BY THE ASSESSEE UNDER SECT ION 154, THE DISALLOWANCE UNDER SECTION 14A WAS RECOMPUTED BY TH E ASSESSING OFFICER AT RS.64,10,457/-. ON APPEAL, THE LD. CIT(APPALS) C ONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 14A READ WITH RULE 8D. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY CONTENTION TO DISPU TE THE APPLICABILITY OF SECTION 14A AS WELL AS RULE 8D IN THE CASE OF THE A SSESSEE. HE, HOWEVER, HAS RELIED, INTER ALIA, ON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF REI AGRO LIMITED VS.- DCIT VIDE ITS ORDER DATED 19.06.2013 PASSED IN ITA NOS. 1331 & 14 23/KOL/2011, WHEREIN IT WAS HELD THAT NOT ALL INVESTMENTS BECOME THE SUBJECT MATTER OF CONSIDERATION WHILE COMPUTING DISALLOWANCE UNDER SE CTION 14A READ WITH I.T.A. NO. 1476/KOL./2011 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 RULE 8D. IT WAS HELD THAT THE DISALLOWANCE UNDER SE CTION 14A READ WITH RULE 8D HAS TO BE IN RELATION TO THE INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THIS CAN BE DONE ONLY BY TAKIN G INTO CONSIDERATION THE INVESTMENT, WHICH HAS GIVEN RISE TO THIS INCOME , WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE LD. COUNSEL FOR THE A SSESSEE HAS ALSO RELIED ON THE DECISION OF THE CHENNAI BENCH OF ITAT IN THE CASE OF SUNDARAM ASSET MANAGEMENT CO. LIMITED VS.- DCIT RENDERED VI DE ITS ORDER DATED 19.07.2013 PASSED IN ITA NO. 1774/MAD./2012, WHEREI N IT WAS HELD THAT THE PROVISIONS OF RULE 8D WOULD NOT APPLY TO SHORT- TERM INVESTMENTS MADE BY THE ASSESSEE ON WHICH CAPITAL GAIN TAX IS P AYABLE ON SALE. THE ASSESSING OFFICER ACCORDINGLY WAS DIRECTED BY THE T RIBUNAL TO RE-COMPUTE THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8 D AFTER EXCLUDING SHORT-TERM INVESTMENTS. 9. KEEPING IN VIEW THE DECISIONS OF THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE CASE OF REI AGRO LIMITED (SUPRA) AN D SUNDARAM ASSET MANAGEMENT CO. LIMITED (SUPRA), WE RESTORE THIS MAT TER TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF RE-COM PUTING THE DISALLOWANCE UNDER SECTION 14A BY APPLYING RULE 8D BY EXCLUDING THE INVESTMENT ON WHICH NO EXEMPT INCOME WAS ACTUALLY R ECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS WEL L AS THE SHORT-TERM INVESTMENT ON WHICH CAPITAL GAIN TAX WAS PAID BY TH E ASSESSEE ON SALE DURING THE YEAR UNDER CONSIDERATION. GROUNDS NO. 3 & 4 OF THE ASSESSEES APPEAL ARE ACCORDINGLY TREATED AS PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 06, 201 6. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 6 TH DAY OF APRIL, 2016 I.T.A. NO. 1476/KOL./2011 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 COPIES TO : (1) SHRI SAGARMAL MALL, C/O. V.N. PUROHIT & CO., CHARTERED ACCOUNTANTS, DIAMOND CHAMBER, SUIT NO. 4G, 4 TH FLOOR, 4, CHOWRINGHEE LANE, KOLKATA-700 016 (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-32, KOLKATA, 10B, MIDDLETON ROW, KOLKATA-700 071 (3) COMMISSIONER OF INCOME-TAX, KOLKATA; (4) CIT(APPEALS)- , (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.