M/s. Angela Holdings Pvt. Ltd., , Kolkata V. ITO, Ward - 4(3), , Kolkata

ITA 2193/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8558 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 15-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Earning of tax free income; Rule 8D; Set aside
• Section: 14A

Judgement Text

1 ITA NO. 2193/KOL/2018 ANGELA HOLDINGS PVT. LTD., AY 2013-14 , (SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL (SMC) BENCH: KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 2193/KOL/2018 ASSESSMENT YEAR: 2013-14 M/S. ANGELA HOLDINGS PVT. LTD. (PAN: AACCA1023A) VS. INCOME-TAX OFFICER, WD-4(3), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 20.03.2019 DATE OF PRONOUNCEMENT 10.04.2019 FOR THE APPELLANT SHRI SUNIL SURANA, FCA FOR THE RESPONDENT SHRI RABIN CHOUDHURY, ACIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) - 2, KOLKATA DATED 16.08.2018 FOR AY 2013-14. 2. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE LD. CIT(A) HAS PASSED AN EX PARTE ORDER DATED 16.08.2018 THOUGH THE DATE FIXED WAS 13.08.2018. ACCORDING TO LD. AR, THE DATE FIXED FOR HEARING THOUGH WAS ON 13.08. 2016 THE LD. AR OF THE ASSESSEE WRONGLY WRITTEN IN HIS DIARY THE DATE AS 16.08.2018 . THEREFORE, THE LD. AR PRESENTED HIMSELF BEFORE THE LD. CIT(A) ON 16.08.2018 WHEREIN HE WAS TOLD THAT THE APPEAL HAS ALREADY BEEN DISPOSED OF BEFORE HE CAME TO THE OFFI CE ON THE SAME DAY. SO, THERE IS A VIOLATION OF NATURAL JUSTICE. HOWEVER, THE LD. AR BROUGHT TO OUR NOTICE THAT THE ISSUE INVOLVED IS 14A DISALLOWANCE. ACCORDING TO LD. AR, THE ASSESSEE WAS NOT IN RECEIPT OF ANY EXEMPT INCOME. SO, NO DISALLOWANCE U/S. 14A READ W ITH RULE 8D SHOULD BE INVOKED. ACCORDING TO LD. AR, EVEN IF ANY DISALLOWANCE IS TO BE MADE THEN THE DISALLOWANCE SHOULD NOT EXCEED THE EXEMPT INCOME AS HELD IN THE CASE OF REI AGRO LTD. VS. DCIT 144 ITD 141. 3. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT WAS BROUGHT TO OUR NOTICE THAT THE ORDER IMPUGNED IS AN EX PARTE ORDER. HOWEVER, 2 ITA NO. 2193/KOL/2018 ANGELA HOLDINGS PVT. LTD., AY 2013-14 ACCORDING TO LD. AR, THE ISSUE INVOLVED IS ONLY REG ARDING DISALLOWANCE U/S. 14A OF THE ACT. IT WAS BROUGHT TO OUR NOTICE THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, SO HE WANTED THIS MATTER TO BE SET ASIDE TO THE AO TO VER IFY THIS ASPECT. ACCORDINGLY, I SET ASIDE THE ORDER OF LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION IF THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, THER E SHOULD BE NO DISALLOWANCE U/S. 14A OF THE ACT READ WITH RULE 8D OF THE I. T. RULES, 1962. IN CASE, EVEN IF THERE IS ANY ELEMENT OF EXEMPT INCOME EARNED BY THE ASSESSEE, THE DISALLOWA NCE SHOULD NOT EXCEED THE EXEMPT INCOME EARNED BY THE ASSESSEE. THEREFORE, THE AO I S DIRECTED TO VERIFY THIS ASPECT AND THEN PASS A SPEAKING ORDER IN ACCORDANCE TO PRINCIPLES L AID IN REI AGRO LTD. VS. DCIT 144 ITD 141 WHEREIN THIS TRIBUNAL HAS HELD THAT WHILE MAKIN G THE DISALLOWANCE UNDER RULE 8D(2)(II) AND 8D(2)(III) INVESTMENT YIELDING DIVIDEND INCOME ONLY SHOULD BE TAKEN INTO ACCOUNT. WITH THE AFORESAID OBSERVATION, THE ISSUE IS RESTOR ED TO THE FILE OF AO FOR FRESH ADJUDICATION. APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPO SES. 4. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2019 SD/- (A. T. VARKEY) JUDICIAL MEMBER DATED: 10TH APRIL, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. ANGELA HOLDINGS PVT. LTD., 127, NET AJI SUBHAS ROAD, 2 ND FLOOR, ROOM NO. 4, KOLKATA-700 001. 2 RESPONDENT ITO, WARD-4(3), KOLKATA. 3 4 5 CIT(A)-2 , KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR