Pallorbund Tea Limited , Kolkata V. ITO, Ward - 4(4), , Kolkata

ITA 1988/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0286 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 17-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER
• Assessee Lawyers: A N KESHARI
• Keywords: Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1988/KOL/2018 ( / ASSESSMENT YEAR: 2013-14) PALLORBUND TEA LTD. 3-B, LAL BAZAR STREET, 2 ND FLOOR, KOLKATA-700001 VS. ITO, WARD-4(4), KOLKATA ./ ./PAN/GIR NO.: AACCP 0027 H (ASSESSEE) .. (REVENUE) ASSESSEEBY : SHRI A. N. KESHARI, FCA RESPONDENT BY : SHRI SHANKAR HALDER, JCIT, SR. DR / DATE OF HEARING : 24/04/2019 /DATE OF PRONOUNCEMENT : 28/06/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERT AINING TO ASSESSMENT YEAR 2013-14, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-2, KOLKATA, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 21/03/2016. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL)- 2, HAS ERRED ON FACTS AND IN LAW IN DISMISSING THE GROUNDS OF APPELLANT C OMPANY IN CONFIRMING THE ADDITION OF RS. 2,56,612/- MADE BY ITO, WARD-4( 4), KOLKATA BY APPLYING PROVISION OF SECTION 14A READ WITH RULE 8D , EVEN THOUGH NO SUCH ADDITION IS WARRANTED IN THE INSTANT CASE. 2. THAT THE ABOVE GROUNDS OF APPEAL WILL BE ARGUED IN DETAILS DURING THE COURSE OF HEARING AND THE APPELLANT CRAVES THE RIGH T TO PUT ADDITIONAL GROUND/S AND OR ALTER/AMEND/MODIFY PART OF THE ABOV E GROUND BEFORE OR AT THE TIME OF HEARING. PALLORBUND TEA LTD. ITA NO.1988/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 2 22 2 3. BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSEE FILE D ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 29.09.2013 DECLARING TOT AL INCOME AT RS.NIL. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 143(2 ) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY HAS INVESTMENT IN SHARES, BUT THE ASSESSEE COMPANY HAS NOT MADE DISALLOWANCEAS PER THE PROVISIONS OF SECTION 14A OF THE ACT. THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN WHY THE DISALLOWANCES U/S 14A SHALL NOT BE MADE. NOTING COULD BE OFFERED BY ASSESSEE AS AN EXPLANATION FOR NOT ATTRIBUTING A NY EXPENSE AS PER THE PROVISIONS OF SECTION 14A OF THE ACT. HENCE, AS PER CBDTS CIR CULAR NO. 5/2014 DATED 11.02.2014 THEDISALLOWANCE U/S 14A READ WITH RULE 8D WAS COMPUTED BY AO, AS UNDER: HENCE AN AMOUNT OF RS.2,56,612/- (1,70,632 + 85,980 ) WAS DISALLOWED BY AO U/S 14A OF THE ACT AND ADDED BACK TO THE TOTAL INCOME O F THE ASSESSEETREATING THE SAME AS HAVING INCURRED IN CONNECTION WITH EARNING EXEMP TED INCOME. 4. AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEECARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION MADE PALLORBUND TEA LTD. ITA NO.1988/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 3 33 3 BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED TH AT ASSESSEE HAS EARNED DIVIDEND INCOME TO THE TUNE OF RS. 2,988/- ONLY, THEREFORE T HE MAXIMUM DISALLOWANCE UNDER SECTION 14A, IF ANY, SHOULD BE RESTRICTED UP TO RS. 2,988/-.ON THE OTHER HAND, LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STA NDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADYNOTED IN OUR EARLIER P ARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. WE NOTE THAT ASSE SSEE`S CASE BELONGS TO ASSESSMENT YEAR 2013-14 THEREFORE, DISALLOWANCE IS TO BE WORKED OUT AS PER THE PROVISIONS OF RULE 8D READ WITH SECTION 14A OF THE ACT. WE NOTE THAT COORDINATE BENCH OF ITAT KOLKATA IN TH E CASE OF REI AGRO LTD. VS. DCIT 144 ITD 141 (KOL-TRIB) HAS HELD THAT IT IS ONL Y THE INVESTMENTS WHICH YIELDS DIVIDEND DURING THE PREVIOUS YEAR THAT HAS TO BE CO NSIDERED WHILE ADOPTING THE AVERAGE VALUE OF INVESTMENTS FOR THE PURPOSE OF RUL E 8D(2)(II) & (III) OF THE RULES. THE AFORESAID VIEW OF THE TRIBUNAL HAS SINCE BEEN A FFIRMED AS CORRECT BY THE HONBLE CALCUTTA HIGH COURT IN G.A.NO.3581 OF 2013 IN THE APPEAL AGAINST THE ORDER OF THE TRIBUNAL IN THE CASE OF REI AGRO LTD. (SUPRA). THEREFORE, WE DIRECT THE AO TO COMPUTE THE DISALLOWANCE UNDER RULE 8D(2)(II) AND RULE 8D(2) (III) TAKING INTO ACCOUNT DIVIDEND BEARING SECURITIES. STATISTIC AL PURPOSES THE APPEAL OF THE ASSESSEE IS TREATED TO BE ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 28.06.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 28/06/2019 ( SB, SR.PS ) PALLORBUND TEA LTD. ITA NO.1988/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 4 44 4 COPY OF THE ORDER FORWARDED TO: 1. PALLORBUND TEA LTD. 2. ITO, WARD-4(4), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES