Udaipuria Commercial Pvt. Ltd., , Kolkata V. ITO, Ward - 6(4), Kolkata , Kolkata

ITA 1610/KOL/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9518 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 26-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: YASH BAID
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 ITA NO. 1610/KOL/2018 UDAIPURIA COMMERCIAL PVT. LTD. AY 2013-14 , B(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH: KOLKATA ( ) BEFORE . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1610/KOL/2018 ASSESSMENT YEAR: 2013-14 UDAIPURIA COMMERCIAL PVT. LTD. (PAN: AAACU3162E) VS. INCOME-TAX OFFICER, WD-6(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 19.12.2018 DATE OF PRONOUNCEMENT .12.2018 FOR THE APPELLANT SHRI YASH BAID, FCA FOR THE RESPONDENT SHRI BAIJNATH SINGH, ADDL. CIT ORDER THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-2, KOLKATA DATED 08.06.2018 FOR AY 2013-14. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE SEC. 14A DISALLOWANCE MADE BY THE AO . 3. WE NOTE THAT ASSESSEE WAS IN RECEIPT OF DIVIDEND INCOME. THE AO TAKING NOTE THAT THE ASSESSEE HAD ONLY SUO MOTU DISALLOWED RS.4130/- APPLIED RULE 8D OF THE I. T. RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) AND M ADE AN ADDITION OF RS.1,78,076/-. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF AO. AGGRIEVED, ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS GIVEN ABOVE ARE NOT REITERATED FOR THE SAKE OF BREVITY. WE NOTE THAT THE AO HAS MADE DISALLOWANCE APPLYING RULE 8D(2)(II) AND 8 D(2)(III) OF THE RULES. ACCORDING TO LD. AR, THE ASSESSEE HAD ENOUGH OWN FUNDS SINCE THE INVESTMENT WAS LESS THAN THE OWN FUNDS SO RULE 8D(2)(II) DISALLOWANCE SHOULD NOT BE COMPUTED. FOR THAT, HE DREW OUR ATTENTION TO THE BALANCE SHEET AT PAGE 30 OF THE PA PER BOOK FROM WHERE WE NOTE THAT ASSESSEE HAS ITS OWN FUND COMPRISING OF SHARE CAPIT AL AND RESERVE AND SURPLUS OF MORE THAN RS. 15 CR. AND THE INVESTMENT IS ONLY TO THE TUNE O F RS.81 LACS. SINCE THE ASSESSEE IS IN 2 ITA NO. 1610/KOL/2018 UDAIPURIA COMMERCIAL PVT. LTD. AY 2013-14 POSSESSION OF MIXED FUNDS WHICH INCLUDES ITS OWN FU ND WITH SUFFICIENT QUANTITY A PRESUMPTION THAT ITS OWN FUND WERE UTILIZED FOR THE INVESTMENT IS TO BE DRAWN. FOR THAT, WE RELY ON THE DECISION OF THE HONBLE BOMBAY HIGH COU RT IN RELIANCE UTILITY & POWER LTD. VS. CIT 313 ITR 340 (BOM.) AND, THEREFORE, NO DISAL LOWANCE UNDER RULE 8D(2)(II) WAS WARRANTED AND, THEREFORE, DISALLOWANCE COMPUTED APP LYING RULE 8D(2)(II) IS DELETED. 5. COMING TO THE DISALLOWANCE MADE BY THE AO UNDER RULE 8D(2)(III) OF THE RULES, THIS TRIBUNAL HAS CONSISTENTLY HELD BY APPLYING THE RATI O OF THE DECISION OF REI AGRO LTD. 144 ITD 141 IN WHICH THE TRIBUNAL HELD THAT ONLY INVEST MENT WHICH HAS GIVEN RISE TO THE EXEMPT INCOME SHOULD BE TAKEN INTO CONSIDERATION WHILE COM PUTING DISALLOWANCE UNDER RULE 8D(2)(III) OF THE RULES. THEREFORE, WE DIRECT THE AO TO CONSIDER ONLY INVESTMENT WHICH YIELDED EXEMPT INCOME AND EXCLUDE THOSE INVESTMENT WHICH HAVE NOT YIELDED ANY EXEMPT INCOME DURING THIS YEAR WHILE COMPUTING DISALLOWANC E UNDER RULE 8D(2)(III) OF THE RULES. WITH THE AFORESAID OBSERVATION, WE SET ASIDE THE OR DER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO FOR GIVING EFFECT TO THE AFO RESAID DIRECTION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 19TH DECE MBER, 2018. SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 19TH DECEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT UDAIPURIA COMMERCIAL PVT. LTD., EASTERN BUILDING, 2 ND FLOOR, ROOM NO. 211, 19, R. N. MUKHERJEE ROAD, KOLKATA-700 001. 2 RESPONDENT ITO, WARD-6(4), KOLKATA. 3 4 5 CIT(A)-2, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR