Neelachal Sales and Suppliers (P) Ltd., Kolkata V. D.C.I.T.,Circle-12(2), Kolkata

ITA 2158/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4435 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 18-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

ITA NO. 2158/KOL/2019 ASSESSMENT YEAR: 2015-2016 NEELACHAL SALES AND SUPPLIERS (P) LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 2158/KOL/2019 ASSESSMENT YEAR: 2015-2016 NEELACHAL SALES AND SUPPLIERS (P) LIMITED,......... .......................APPELLANT C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE NO. 213, 2 ND FLOOR, KOLKATA-700069 [PAN: AABCN0547P] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .......................RESPONDENT CIRCLE-12(2), KOLKATA APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE APPELLANT SHRI JAYANTA KHANRA, ADDL. CIT (D.R.), FOR THE RESP ONDEN T DATE OF CONCLUDING THE HEARING : OCTOBER 18, 2019 DATE OF PRONOUNCING THE ORDER : NOVEMBER 27, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DAT ED 21.06.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS.1,15,740/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 14A OF THE INCOME TAX AC T, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INVESTMEN T COMPANY, WHICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION ON 30.10.2015 DECLARING TOTAL INCOME AT NIL. IN THE SAID RETURN , INCOME RECEIVED FROM LLP AMOUNTING TO RS.5,796/- WAS CLAIMED TO BE EXEMP T BY THE ASSESSEE UNDER SECTION 10(2A) OF THE ACT. THE EXPENDITURE IN CURRED IN RELATION TO ITA NO. 2158/KOL/2019 ASSESSMENT YEAR: 2015-2016 NEELACHAL SALES AND SUPPLIERS (P) LIMITED 2 THE EARNING OF THE SAID EXEMPT INCOME, HOWEVER, WAS NOT DISALLOWED BY THE ASSESSEE AS REQUIRED BY SECTION 14A OF THE ACT. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 16.11.2017, THE ASSESSING OFFICER WORKED OUT SUCH EXPENSES BY APPLY ING RULE 8D AT RS.1,15,740/- AND MADE A DISALLOWANCE TO THAT EXTEN T UNDER SECTION 14A OF THE ACT. ON APPEAL, THE LD. CIT(APPEALS) CONFIRM ED THE SAID DISALLOWANCE. AGGRIEVED BY THE ORDER OF THE LD. CIT (APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESESE HAS CONTENDED THAT THE EXEMPT INCOME ACTUALLY EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BEING ONLY RS.5,796/-, THE DISALLOWANCE UNDER SECTION 14A AS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) IS LIABLE TO BE RESTRICTED TO RS.5 ,796/-. IN SUPPORT OF THIS CONTENTION, HE, INTER ALIA, HAS RELIED ON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF ITO VS.- M/S. ACCORD CAPITAL MARKETS LTD. VIDE ITS ORDER DATED 16.03.201 8 PASSED IN ITA NO. 2076/KOL/2016, WHEREIN IT WAS HELD THAT THE DISALLO WANCE UNDER SECTION 14A READ WITH RULE 8D CANNOT EXCEED THE EXEMPT INCO ME ACTUALLY EARNED BY THE ASSESSEE AND THE SAME, THEREFORE, SHOULD BE RESTRICTED TO THE EXEMPT INCOME EARNED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE MADE UNDER SEC TION 14A READ WITH RULE 8D TO RS.5,796/- AND ALLOW PARTLY THIS APPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 27, 2019. SD/- SD/- (A.T. VARKEY) (P. M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT) KOLKATA, THE 27 TH DAY OF NOVEMBER, 2019 ITA NO. 2158/KOL/2019 ASSESSMENT YEAR: 2015-2016 NEELACHAL SALES AND SUPPLIERS (P) LIMITED 3 COPIES TO : (1) NEELACHAL SALES AND SUPPLIERS (P) LIMITED, C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE NO. 213, 2 ND FLOOR, KOLKATA-700069 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12(2), KOLKATA (3) COMMISSIONER OF INCOME TAX(APPEALS)-4, KOLKATA ; (4) COMMISSIONER OF INCOME TAX- ,, KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.