Gemini Overseas Limited , Kolkata V. DCIT, Circle - 6(1), Kolkata , Kolkata

ITA 1651/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5992 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHERJEE
• Keywords: Earning of tax free income; Proportionate interest
• Section: 143(3); 142(1); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1651/KOL/2017 ASSESSMENT YEAR:2012-13 GEMINI OVERSEAS LTD., 19, R.N. MUKHERJEE ROAD, KOLKATA-001 [ PAN NO.AABCG 0658 E ] / V/S . DCIT, CIRCLE-6(1), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT NONE /BY RESPONDENT SHRI A. BHATTACHERJEE, ADDL. CIT-DR /DATE OF HEARING 24-07-2-18 /DATE OF PRONOUNCEMENT 31-07-2018 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATAS O RDER DATED 05.05.2017 PASSED IN CASE NO.1671/CIT(A)-2/14-15 UPHOLDING ASSESSING OFFICERS ACTION INTER ALIA DISALLOWING / ADDING AN AMOUNT OF 2,15,912/- U/S 14A R.W. RULE 8D AS WELL AS REPAIR AND MAINTENANCE DISALLOWANCE OF 48,284/-; RESPECTIVELY IN ASSESSMENT ORDER DATED 31.03.2014, INVOLVING PROCEEDINGS U/S. 143(3) OF TH E INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. WE COME TO THE FORMER ISSUE OF SECTION 14A R.W. 8D DISALLOWANCE OF 2,155,912/-MADE IN ASSESSMENT AS UPHELD IN LOWER AP PELLATE PROCEEDINGS TO THE TUNE OF 2,15,912/-. THERE IS NO DISPUTE ABOUT THE ASSESSEE HAVING DERIVED EXEMPT INCOME ITA NO.1651/KOL/2017 A.Y. 2012-13 GEMINI OVERSEAS LTD. VS. DCIT, CIR-6(1) KOL. PAGE 2 FROM DIVIDENDS AMOUNTING TO 1,576/- IN THE RELEVANT PREVIOUS YEAR. IT HAD SUO MOTU DISALLOWED ADMINISTRATIVE EXPENDITURE OF 1,35,585/- @ 0.5% OF AVERAGE VALUE OF INVESTMENTS UNDER RULE 8D(2)(III). THE ASSESSING OF FICER INCREASED THE SAME TO THE EXTENT PROPORTIONATE INTEREST EXPENDITURE DISALLOWA NCE UNDER RULE 8D(2)(II) TO THE EXTENT OF 1,34,585/- THEREBY COMPUTING THE TOTAL DISALLOWANCE TO 2,15,912/- AS UPHELD IN THE CIT(A)S ORDER UNDER CHALLENGE. 3. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SU PPORTS BOTH THE LOWER AUTHORITIES ACTION MAKING THE IMPUGNED PROPORTIONAT E EXPENDITURE DISALLOWANCE. HE FAILS TO DISPUTE THE ASSESSEE HAVING INCURRED TOTAL INTEREST EXPENDITURE OF 19,29,949/- ON TERM LOAN AND CASH CREDIT IN CASE OF BANKS INVOL VING RESPECTIVE FIGURES OF 6,05,182/- AND 13,24,759/- NEXUS BETWEEN THE ASSESSEES INTEREST E XPENDITURE VIS-- VIS ITS EXEMPT INCOME EXISTS THEREFORE AS STIPULATE D U/S 14A(2) R.W.S RULE 8D OF THE INCOME TAX RULES. WE THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE SAID PROPORTIONATE INTEREST EXPENDITURE DISALLOWANCE OF 1,34,585/-. NEEDLESS TO SAY, THE ABOVE SUO MOTU DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE IS AFFI RMED. THIS FORMER SUBSTANTIVE GROUND IS PARTLY ACCEPTED. 4. NEXT COMES THE ASSESSEES LATTER GRIEVANCE CHALL ENGING REPAIR AND MAINTENANCE DISALLOWANCE OF 48,284/- MADE IN BOTH THE LOWER APPELLATE PROCEEDIN GS. THE ASSESSING OFFICER SIMPLY OBSERVES IN HIS ASSESSMENT ORDER THAT NO DETAILS WERE FILED DURING THE COURSE OF SCRUTINY. THE ASSESSEE STRONGL Y CONTESTED THE SAME IN LOWER APPELLATE PROCEEDINGS AND FILED WRITTEN STATEMENTS SPECIFICALLY AVERRING THEREIN THAT ASSESSING OFFICERS SHOW CAUSE NOTICE U/S 142(1) OF THE ACT DATED 14.02.2014 NOWHERE RAISED ANY SPECIFIC QUERY REGARDING THE IMP UGNED REPAIR AND MAINTENANCE. IT THEN REFERRED TO NOTE 24 OF ITS AUDITED ACCOUNTS IN DICATING THE EXPENDITURE IN QUESTION TO BE OF REVENUE NATURE SINCE INCURRED ON REPAIRS A ND MAINTENANCE, PLANT AND MACHINERY, FURNITURE, COMPUTER, VEHICLE ETC. RELEVA NT LEDGER ACCOUNTS HAD ALSO BEEN PLACED ON RECORD. WE FIND THAT CIT(A) HAS NOWHERE D ISCUSSED THE SAME IN HIS LOWER APPELLATE ADJUDICATION WHILST AFFIRMING ASSESSING O FFICERS ACTION. WE THEREFORE CONCLUDE THAT THERE IS NO MATERIAL ON RECORD SUGGES TING THE ASSESSEES REPAIR AND MAINTENANCE TO HAVE BEEN HIT BY THE SPECIFIC EMBARG O U/S 31 EXPLANATION OF THE ACT. WE REJECT LEARNED DEPARTMENTAL REPRESENTATIVES VEH EMENT CONTENTIONS SUPPORTIVE OF ITA NO.1651/KOL/2017 A.Y. 2012-13 GEMINI OVERSEAS LTD. VS. DCIT, CIR-6(1) KOL. PAGE 3 THE IMPUGNED DISALLOWANCE. IT IS MADE CLEAR THAT OU R INSTANT ADJUDICATION SHALL NOT BE TREATED AS A PRECEDENT IN ANY PRECEDING OR SUCCEEDI NG ASSESSMENT YEAR IN ASSESSEES CASE. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 31/07/2018 SD/- SD/- ( !) (#$ !) (P.M.JAGTAP) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS % - 31/07/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-GEMINI OVERSEAS LTD., 19, R.N. MUKHERJEE ROAD, KOLKATA-001 2. /RESPONDENT-DCIT, CIR-6(1), AAYKAR BHAWAN, P-7, CHO WRINGHEE SQ. KOL-69 3. ( + / CONCERNED CIT 4. + - / CIT (A) 5. , $$( , ( / DR, ITAT, KOLKATA 6. 0 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO (,