Rakesh Rathi , Kolkata V. ITO, Ward - 39(3) , Kolkata

ITA 17/KOL/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2406 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-06-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K BANDHOPADHAY J
• Assessee Lawyers: V N PUROHIT
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.17/KOL/2019 ASSESSMENT YEAR:2012-13 RAKESH RATHI 52/9B, B.B. GANGULY STREET, KOLKATA-700012 [ PAN NO.ACWPR 8840 F ] / V/S . INCOME TAX OFFICER WARD-39(1), 3, GOVERNMENT PLACE WEST, KOLKATA-700 001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI V.N. PUROHIT, FCA /BY RESPONDENT SHRI A.K. BANDHOPADHAY, JCIT-DR /DATE OF HEARING 18-06-2019 /DATE OF PRONOUNCEMENT 21-06-2019 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-25, KOLKATAS ORDER DATED 14.12.2018 PASSED IN CASE NO.331/CIT(A)-25/KOL/2018-19, INVOLVING PRO CEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. LEARNED AUTHORIZED REPRESENTATIVE STATES AT THE OUTSET THAT THE ASSESSEE NO MORE WISHES TO PRESS FOR HIS FIRST, THIRD AND FOURT H SUBSTANTIVE GROUNDS CHALLENGING VALIDITY OF RE-OPENING U/S 148 OF THE ACT AND CORRE CTNESS OF DISALLOWANCES / ADDITION(S) OF BROKERAGE AND PROFESSIONAL CHARGES INVOLVING SUM S OF 5,000/- AND 1,213/-; RESPECTIVELY. 3. I NOW PROCEED TO DEAL WITH THE ASSESSEES SECOND SUBSTANTIVE GROUND SEEKING TO DELETE SEC. 14A R.W.S. RULE 8D(2)(I)&(III) DISALLOW ANCE OF DIRECT INTEREST AND ADMINISTRATIVE EXPENDITURE INVOLVING SUMS(S) OF 3,53,173/- AND 36,094/-; TOTALING ITA NO.17/KOL/2019 A.Y. 2012-1 3 RAKESH RATHI VS. ITO WD-39(3), KO L. PAGE 2 TO 3,89,267/-. THERE IS NO DISPUTE THAT THE ASSESSEES EXEMPT INCOME COMPRISES OF HIS SHARE OF PROFIT DERIVED FROM PARTNERSHIP FIRM M/S. S.G. SALES CORPORATION AND M/S M.P. LAMINATES INVOLVING SUMS OF 8,75,924/- AND 1,858/-; TOTALING TO 8,77,782/- AS WELL AS DIVIDEND INCOME OF 165/- EXEMPT U/S10(2A) AND SEC. 10(34) OF THE ACT; RESPECTIVELY. BOTH PARTIES REITERATED THEIR RESPECT IVE STAND AGAINST AND IN SUPPORT OF IMPUGNED DISALLOWANCE MADE UNDER DIRECT AND ADMINIS TRATIVE EXPENDITURE HEAD(S). 4. COMING TO THE FORMER LIMB OF DIRECT EXPENDITURE PAID ON LOAN AMOUNTING TO 3,53,758/-. IT TRANSPIRES THAT THE ASSESSING OFFICE R HAD PROCEEDED TO COMPUTE THE SAID SUM ON THE GROUND THAT THIS TAXPAYER HAD OBTAINED L OAN FOR MAKING INVESTMENT IN THESE TWO FIRMS. LEARNED DEPARTMENTAL REPRESENTATIVE FAIL S TO DISPUTE THAT THE ASSESSEE HAS RATHER DECLARED INTEREST INCOME OF FROM THE VERY TW O FIRMS TOTALING TO 9,79,691/- AS AGAINST THE INTEREST EXPENDITURE OF 3,53,758/- AND OFFERED THE DIFFERENTIAL AMOUNT OF 6,26,518/- FOR TAXATION. THIS CLINCHING FACT SUFFIC IENTLY INDICATES THAT THE ASSESSEE HAS DERIVED NET POSITIVE INTEREST INCOME. I CONCLUDE TH AT BOTH THE LEARNED AUTHORITIES HAVE ERRED IN MAKING THE IMPUGNED DIRECT INTEREST EXPEND ITURE DISALLOWANCE AS ASSESSEE HAS NOT INCURRED ANY NET INTEREST EXPENDITURE IN ABOVE FACTS AND CIRCUMSTANCES. I THEREFORE DELETE THE FORMER DIRECT INTEREST EXPENDITURE DISAL LOWANCE UNDER RULE 8D(2)(I) R.W.S 14A OF THE ACT. 5. COMING TO ADMINISTRATIVE EXPENDITURE DISALLOWANC E IN LATTER HEAD (SUPRA), MR. PUROHIT FAIRLY STATES THAT THE ASSESSEE DOES NOT WI SH TO PRESS FOR HIS GRIEVANCE PROVIDED THAT THE SAME IS NOT TREATED AS A PRECEDENT IN ANY OTHER ASSESSMENT YEAR. I ACCORDINGLY CONFIRM THIS LATTER LIMB OF ADMINISTRATIVE DISALLOW ANCE IN FOREGOING TERMS. 6. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN OPEN COURT ON 21/06/2019 SD/- (S.S. GODARA) JUD ICIAL MEMBER KOLKATA, *DKP/SR.PS - 21/06/2019 ITA NO.17/KOL/2019 A.Y. 2012-1 3 RAKESH RATHI VS. ITO WD-39(3), KO L. PAGE 3 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-RAKESH RATHI, 52/9B, B.B.GANGULY STREET, KOLKATA-12 2. /RESPONDENT-ITO WARD-39(3), 3, GOVT. PLACE WEST, KO LKATA-001 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ ',