M/s. Sri Vinayak Fincon Pvt. Ltd, Kolkata V. ITO, Ward-7(3), Kolkata

ITA 205/KOL/2023

AI Insights

The case involves appeals by M/s. Sri Vinayak Fincon Pvt. Limited against the orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, which confirmed the additions made under section 14A read with Rule 8D of the Income Tax Act for the assessment years 2013-2014 and 2014-2015. The additions were initially made by the Assessing Officer, who, despite finding no exempt income in the years in question, anticipated future tax-free income and disallowed related expenditures. The Tribunal, referencing a recent Delhi High Court decision, overturned these additions, concluding that expenditures cannot be disallowed if no tax-free income was earned in the relevant years.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129040 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2023
• Other Referred Cases: Pr. Commissioner of Income Tax \\u2013vs.- M/s. Era Infrastructure Limited in ITA No. 204 of 2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 14A; 205

Judgement Text

ITA No. 205 & 206/KOL/2023 A.Ys. 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member I.T.A. Nos. 205 & 206/KOL/2023 Assessment Years: 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited,........Appellant 39, Shakespeare Sarani, Premlata Building, 3 rd Floor, Kolkata-700017 [PAN: AALCS5858G] -Vs.- Income Tax Officer,................................Respondent Ward-7(3), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances by: Shri Saurabh Sharma, Advocate, appeared on behalf of the assesseee Shri P.P. Barman, Addl. CIT, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing : April 27, 2023 Date of pronouncing the order : May 23, 2023 O R D E R Per Shri Rajpal Yadav, Vice-President (KZ):- The present two appeals are directed at the instance of assessee against the separate orders of ld. Commissioner of Income Tax (Appeals), National Faceless ITA No. 205 & 206/KOL/2023 A.Ys. 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited 2 Appeal Centre (NFAC), Delhi both dated 19 th January, 2023 passed for assessment years 2013-14 and 2014-15. 2. In both these years, the assessee has raised two grounds of appeal. However, Ground No. 2 is a general ground of appeal, hence it does not call for recording of any finding in both the years. 3. In Ground No. 1, the grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the addition of Rs.47,928/- and Rs.57,028/- in A.Y. 2013-14 and 2014-15 respectively. Both these disallowances have been made under section 14A read with Rule 8D of the Income Tax Act. 4. With the assistance of ld. Representatives, we have gone through the record carefully. A perusal of paragraph 4 of the assessment order would suggest that the ld. Assessing Officer has recorded a finding in both the years that assessee has no exempt income during these years, but he disallowed the expenditure on the ground that on these investments, in future the assessee will earn tax-free income, thus the ld. Assessing Officer was of the opinion that the expenditure attributable to tax-free anticipated income deserves to be disallowed to the assessee under section 14A read with Rule 8D of the Income Tax Act. He has observed that though in these ITA No. 205 & 206/KOL/2023 A.Ys. 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited 3 years, the assessee has no tax-free income but in future years it will earn some income. Hence he calculated the disallowance. 5. On due consideration of the above facts and circumstances, we are of the view that this view of the ld. Assessing Officer is contrary to the judgment of the Hon’ble Delhi High Court in the case of Pr. Commissioner of Income Tax –vs.- M/s. Era Infrastructure Limited in ITA No. 204 of 2022. This decision has come on 20 th July, 2022. The Hon’ble Delhi High Court has considered the latest amendment brought in section 14A by way of Finance Act, 2022 and thereafter held that if an assessee has no tax-free income, then no expenditure would be disallowed to it. Following this judgment, we allow this ground of appeal for both the years and delete the disallowances. 6. In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on May 23, 2023. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President(KZ) Kolkata, the 23 rd day of May, 2023 Copies to : (1) M/s. Sri Vinayak Fincon Pvt. Limited, 39, Shakespeare Sarani, ITA No. 205 & 206/KOL/2023 A.Ys. 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited 4 Premlata Building, 3 rd Floor, Kolkata-700017 (2) Income Tax Officer, Ward-7(3), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi (4) Commissioner of Income Tax , (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.