Laxmiwan Shoppers Private Limited , Kolkata V. ITO, Ward - 6(4), Kolkata , Kolkata

ITA 1897/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5312 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 03-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RABIN CHOUDHURY ACIT
• Assessee Lawyers: VINOD KUMAR JAIN
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

1 ITA NO.1897/KOL/2018 M/S. LAXMIWAN SHOPPERS PVT. LTD. AY- 2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, SMC AT KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1897/KOL/2018 ASSESSMENT YEAR: 2013-14 M/S. LAXMIWAN SHOPPERS PVT. LTD. [PAN: AACCL 2322 H] VS. ITO, WARD 6(4), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 20.02.2019 DATE OF PRONOUNCEMENT 15.05.2019 FOR THE APPELLANT SHRI VINOD KUMAR JAIN, FCA FOR THE RESPONDENT SHRI RABIN CHOUDHURY, ACIT, SR. DR ORDER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-2, KOLKATA DATED 11.07.2018 FOR ASSESSMENT YEAR 2013-14. 2. THE ONLY GRIEVANCE OF THE ASSESSEE AGAINST THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO OF RS. 5,80,953/- U/S 14A OF THE ACT. 3. BRIEF FACTS OF THE CASE IS THAT THE AO WHILE GOING THROUGH THE BALANCE SHEET NOTED THAT THE ASSESSEE HAS MADE INVESTMENT IN EQUITIES AND HAS FAILED TO ADD PROPORTIONATE EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME AS PER SECTION OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4. WHEN THE AO GAVE SHOW CAUSE TO THE ASSESSEE AS TO WHY DISALLOWANCE U/S 14A READ WITH RULE 8D SHOULD NOT BE RESORTED TO, THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE DID NOT EARNING ANY EXEMPT INCOME THIS YEAR AND, THEREFORE, THE SUO MOTO DISALLOWANCE OF RS. 1,46,032/- SHOULD BE ACCEPTED AND NO DISALLOWANCE BY APPLYING RULE 8D SHOULD BE MADE AGAINST THE ASSESSEE. HOWEVER, THE AO DID NOT AGREE AND HE TOOK NOTE OF THE CBDT CIRCULAR NO. 5 OF 2014 AND MADE A DISALLOWANCE OF HALF PERCENTAGE OF AVERAGE INVESTMENT WHICH COMES TO RS. 5,80,953/- WHICH WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO CONFIRM THE ACTION OF THE AO. AGGRIEVED THE ASSESSEE IS BEFORE US. 2 ITA NO.1897/KOL/2018 M/S. LAXMIWAN SHOPPERS PVT. LTD. AY- 2013-14 5. I HAVE HEARD BOTH THE SIDES AND PERUSED THE RECORDS. I NOTE THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME IN THIS ASSESSMENT YEAR, HOWEVER SUO-MOTO DISALLOWED RS 1,46,032/-AND, THEREFORE, SINCE THERE WAS NO EXEMPT INCOME, THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT RESORTED TO BY APPLYING MECHANICALLY RULE 8D FOR THAT I RELY UPON THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS CIT 378 ITR 33 AND DELETE THE DISALLOWANCE OF RS. 5,80,953/-. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 MAY, 2019 SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 15 MAY, 2019 BISWAJIT (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. LAXMIWAN SHOPPERS PRIVATE LIMITED, C/O. RSVPC & COMPANY, 41A, A.J.C. BOSE ROAD, SUITE NO. 613, 6 TH FLOOR, KOLKATA 700 017. 2 RESPONDENT ITO, WARD-6(4), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 3 . THE CIT(A), 4. 5. CIT , DR, / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR/H.O.O ITAT, KOLKATA