Right Aid Consultants Pvt. Ltd., , Kolkata V. ITO, Ward - 4(1), Kolkata , Kolkata

ITA 1608/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6630 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-04-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 26-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: YASH VARDHAN BAID
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (SMC), KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT, KZ] I.T.A. NO. 1608/KOL/2018 ASSESSMENT YEAR: 2013-14 RIGHT AID CONSULTANTS PVT. LTD.........................................................APPELLANT 313, TODI CHAMBERS, 2, LAL BAZAR STREET, KOLKATA 700 001. [PAN: AACCR 3937 Q] ITO, WARD 4(1) KOLKATA...............................RESPONDENT P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. APPEARANCES BY: SHRI YASHVARDHAN BAID, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI BAIJ NATH SINGH, JCIT, SR. DR APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : APRIL 25, 2019 DATE OF PRONOUNCING THE ORDER : MAY 01, 2019 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 2, KOLKATA DATED 06.06.2018. 2. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS. 2,40,467/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) U/S 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF INCOME TAX RULES. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND OTHER FINANCIAL ACTIVITY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 04.09.2013 DECLARING A TOTAL INCOME OF RS. 5,596/-. IN THE SAID RETURN, DIVIDEND INCOME OF RS. 3,95,960/- RECEIVED DURING THE YEAR UNDER CONSIDERATION WAS CLAIMED TO BE EXEMPT FROM TAX BY THE ASSESSEE AND 2 I.T.A. NO. 1608/KOL/2018 ASSESSMENT YEAR: 2013-14 RIGHT AID CONSULTANTS PVT. LTD. DISALLOWANCE OF RS. 50,881/- WAS OFFERED BY THE ASSESSEE ON ACCOUNT OF EXPENSES INCURRED IN RELATION TO THE EXEMPT INCOME AS REQUIRED BY SECTION 14A. THE AO HOWEVER APPLIED RULE 8D TO WORK OUT THE EXPENSES INCURRED BY THE ASSESSEE IN RELATION TO THE EXEMPT INCOME AT RS. 2,91,348/- AND A FURTHER DISALLOWANCE OF RS. 2,40,467/- WAS MADE BY HIM U/S 14A READ WITH RULE 8D IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 20.02.2016. ON APPEAL, THE LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, WHEN DISALLOWANCE ON ACCOUNT OF EXPENSES INCURRED IN RELATION TO THE EXEMPT INCOME WAS SUO MOTO OFFERED BY THE ASSESSEE U/S 14A OF THE ACT, THE AO CANNOT RECOMPUTE SUCH DISALLOWANCE BY APPLYING RULE 8D UNLESS HE RECORDS HIS DISSATISFACTION REGARDING THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE IN RELATION TO EXPENDITURE INCURRED IN RELATION TO THE EXEMPT INCOME. IN THE PRESENT CASE, SUCH DISSATISFACTION WAS NOT RECORDED BY THE AO AND EVEN THE LEARNED DR HAS NOT BEEN ABLE TO REBUT OR CONTROVERT THIS POSITION WHICH IS CLEARLY EVIDENT FROM THE ASSESSMENT ORDER. I, THEREFORE, DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) U/S 14A READ WITH RULE 8D AND ALLOW GROUND NO. 1 OF THE ASSESSEES APPEAL. 5. GROUND NO. 2 RELATING TO THE DISALLOWANCE OF RS. 84,617/- MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES IS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 3 I.T.A. NO. 1608/KOL/2018 ASSESSMENT YEAR: 2013-14 RIGHT AID CONSULTANTS PVT. LTD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MAY, 2019. SD/- (P.M. JAGTAP) VICE PRESIDENT DATED: 01/05/2019 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. RIGHT AID CONSULTANTS PVT. LTD., 313, TODI CHAMBERS, 2, LAL BAZAR STREET, KOLKATA 700 001. 2. ITO, WARD-4(1), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA