RatanSingh Jivandas Suraiy, Kolkata V. A.C.I.T, Cir-37, Kolkata

ITA 1691/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5021 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAY KUMAR SAR DAR CIT SRDR
• Assessee Lawyers: P B MUKHERJEE
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A, KOLKATA (BEFORE SHRI P. M. JAGTAP, A.M. & SHRI N.V.VASUDEVA N, J.M.) ITA NO.1691/KOL/2013 : ASSESSMENT YEAR: 2009-10 RATANSINGH JIVANDAS SURAIYA PAN: AJSPS 5665E VS A.C.I.T., CIRCLE-37 KOLKATA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B.MUKHERJEE, ADVOCATE RESPONDENT BY : SHRI UDAY KUMAR SAR DAR, ADDL.CIT, SR,DR DATE OF HEARING : 05.04.2016 DATE OF PRONOUNCEMENT :22.04.2016 ORDER SHRI P.M.JAGTAP, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT-XXIV, KOLKATA, DATED 04.03.2013 FOR THE ASS ESSMENT YEAR 2008- 09 WHEREBY HE CONFIRMED THE DISALLOWANCE OF RS.74,2 72/- MADE BY THE AO UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 RE AD WITH RULE 8D OF INCOME-TAX RULES 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 29.03.2010 DECLARING TOTAL INCOME OF RS.28,66,930/-. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO TH AT THE ASSESSEE HAS EARNED DIVIDEND INCOME ON INVESTMENT MADE AND THE S AME IS CLAIMED TO BE EXEMPT FROM TAX. NO DISALLOWANCE ON ACCOUNT OF E XPENSES INCURRED IN RELATION TO EARNING OF THE SAID EXEMPT INCOME HO WEVER WAS OFFERED BY THE ASSESSEE AS REQUIRED BY THE PROVISIONS OF SE CTION 14A OF THE ACT. 2 ITA NO.1691/KOL/2013 ASS ESSMENT YEAR 2009-10 THE AO THEREFORE, APPLIED RULE 8D AND MADE DISALLOW ANCE OF RS.74,272/- UNDER SECTION 14A COMPUTED AS UNDER: DISALLOWANCE OF % OF AVERAGE VALUE OF INVESTMENT : THE AVERAGE OF VALUE OF INVESTMENT, INCOME FROM W HICH DOES NOT FORM PART OF TOTAL INCOME, IS: INVESTMENT IN SHARES, BONDS AND MUTUAL FUNDS - RS. 1,67,28,773/- AS ON 31.03.2008 INVESTMENT IN SHARES, BONDS AND MUTUAL FUNDS - RS. 1,29,79,962/- AS ON 31.03.2009 TOTAL - RS.2,97,08,735/- AVERAGE - - RS.1,48,54,367.5/- DISALLOWANCE @0.5% - RS. 74,272/- 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOW ANCE MADE BY THE AO UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INC OME TAX RULES. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THIS TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR T HE ASSESSEE HAS NOT DISPUTED THE APPLICABILITY OF SECTION 14A READ WITH RULE 8D IN T HE FACTS OF THE ASSESSEES CASE. HE HOWEVER HAS DISPUTED THE QUANTUM OF DISALLOWANCE WO RKED OUT BY THE AO AS PER RULE 8D BY SUBMITTING THAT ONLY THE INVESTMENT ON W HICH THE EXEMPT INCOME WAS ACTUALLY EARNED BY THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION SHOULD BE TAKEN INTO CONSIDERATION AND NOT THE ENTIRE INVESTMENT AS DONE BY THE AO. IN SUPPORT OF THIS CONTENTION, HE HAS RELIED ON THE DECISION OF T HE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF REI AGRO LTD. VS- DCIT (IT A NO.1331/KOL/2011) WHEREIN IT WAS HELD THAT FOR COMPUTATION OF DISALLOWANCE SE CTION 14A BY APPLYING RULE 8D(2)(II), ONLY THOSE INVESTMENTS SHALL BE CONSIDER ED WHICH EARN EXEMPT INCOME AND NOT THE TOTAL INVESTMENT APPEARING IN THE BALANCE-S HEET. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINATE BENCH OF THIS TRIBU NAL, WE DIRECT THE AO TO 3 ITA NO.1691/KOL/2013 ASS ESSMENT YEAR 2009-10 RECOMPUTE THE DISALLOWANCE TO BE MADE UNDER SECTION 14A BY APPLYING RULE 8D AFTER TAKING INTO CONSIDERATION ONLY THE INVESTMENT WHICH ACTUALLY EARNED THE EXEMPT INCOME AND NOT THE ENTIRE INVESTMENT. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2016. SD/- SD/- (N.V.VASUDEVAN) ( P.M.JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22/04/2016 TALUKDAR/SR.PS COPY OF ORDER FORWARDED TO: 1 RATANSINGH JIVANDAS SURAIYA, SURAYA HOUSE, 9, RABIN DRA SARANI, KOLKATA 700 073 2 A.C.I.T., CIRCLE-37, KOLKATA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA