Smt. Indira Devi Himatsingka, Kolkata V. ACIT, Circle - 44, , Kolkata

ITA 2262/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7838 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 02-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: MANOJ KATARUKA
• Keywords: Share purchase agreement; Earning of tax free income; Cost of acquisition; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH (D), KOLKATA [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT & SHRI S. S. VISWANETHRA RAVI, JM] I.T.A. NO. 2262/KOL/2018 ASSESSMENT YEAR: 2013-14 SMT. INDIRA HIMATSINGKA.,.......................................................APPELLANT 906, SUBHAM BUILDING, 9 TH FLOOR, 1, SAROJINI NAIDU SARANI, PARK STREET, KOLKATA 700 017. [PAN: AATPH 0964 R] ACIT, CIRCLE 44, KOLKATA......................RESPONDENT KOLKATA. APPEARANCES BY: SHRI MANOJ KATARUKA, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE. SHRI RADHEY SHYAM, CIT (DR) APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : APRIL 10, 2019 DATE OF PRONOUNCING THE ORDER : APRIL 24, 2019 ORDER PER P.M. JAGTAP, VICE PRESIDENT (KZ) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 13, KOLKATA DATED 31.08.2018. 2. THE COMMON ISSUE INVOLVED IN GROUND NO. 1 AND 2 RELATES TO THE DISALLOWANCE MADE BY THE AO U/S 14A WHICH IS PARTLY SUSTAINED BY THE LD. CIT(A) 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 23.09.2013 DECLARING A TOTAL INCOME OF RS. 1,87,68,010/-. IN THE SAID RETURN, DIVIDEND INCOME OF RS. 2,36,300/- RECEIVED DURING THE YEAR UNDER CONSIDERATION WAS CLAIMED TO BE EXEMPT BY THE ASSESSEE. NO 2 SMT. INDIRA DEVI HIMATSINGKA I.T.A. NO. 2262/KOL/2018 ASSESSMENT YEAR: 2013-14 DISALLOWANCE ON ACCOUNT OF EXPENDITURE INCURRED IN RELATION TO THE SAID EXEMPT INCOME HOWEVER WAS OFFERED BY THE ASSESSEE AS REQUIRED BY THE PROVISIONS OF SECTION 14A. THE AO, THEREFORE, APPLIED RULE 8D TO WORK OUT THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE EXEMPT INCOME AT RS. 5,35,092/- AND MADE A DISALLOWANCE TO THAT EXTENT U/S 14A. 4. THE DISALLOWANCE OF RS. 5,35,092/- MADE BY THE AO U/S 14A READ WITH RULE 8D WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A) WHO RESTRICTED THE SAME TO RS. 2,36,300/- BEING THE DIVIDEND INCOME ACTUALLY EARNED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. STILL AGGRIEVED THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT INTEREST EXPENDITURE OF RS. 2,68,141/- WAS INCURRED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND THE SAME WAS TAKEN INTO CONSIDERATION BY THE AO FOR WORKING OUT THE DISALLOWANCE TO BE MADE U/S 14A BY APPLYING RULE 8D IGNORING THE FACT THAT INTEREST INCOME OF RS. 15,12,124/- WAS RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND THERE WAS THUS A NET INTEREST INCOME THAT WAS ACTUALLY RECEIVED BY THE ASSESSEE. BY RELYING ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF DCIT VS M/S. TRADE APARTMENT LTD. RENDERED VIDE AN ORDER DATED MARCH 30, 2012 IN ITA NO. 1277/KOL/2011, HE CONTENDED THAT NO DISALLOWANCE ON ACCOUNT OF INTEREST CAN BE MADE U/S 14A BY APPLYING 3 SMT. INDIRA DEVI HIMATSINGKA I.T.A. NO. 2262/KOL/2018 ASSESSMENT YEAR: 2013-14 RULE 8D WHEN THERE IS ACTUALLY A NET INCOME RECEIVED BY THE ASSESSEE ON ACCOUNT OF INTEREST. HE HAS ALSO INVITED OUR ATTENTION TO THE COPY OF PROFIT AND LOSS ACCOUNT OF THE ASSESSEE PLACED AT PAGE NO. 8 OF HIS PAPER BOOK TO CONTEND THAT THE TOTAL EXPENDITURE OF ONLY RS. 31,851/- HAVING BEEN ACTUALLY CLAIMED BY THE ASSESSEE AS DEDUCTION, THE DISALLOWANCE U/S 14A CANNOT EXCEED THE SAID AMOUNT ACTUALLY CLAIMED BY THE ASSESSEE. THE LEARNED DR HAS CONTENDED THAT THESE SUBMISSIONS NOW BEING SPECIFICALLY MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL REQUIRE RECTIFICATION AND AN OPPORTUNITY MAY BE GIVEN TO THE AO TO VERIFY THE SAME. WE FIND MERIT IN THE CONTENTION OF LEARNED DR AND THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT RAISED ANY OBJECTION IN THIS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE TRIBUNAL. GROUND NO. 1 AND 2 OF THE ASSESSEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 6. THE ISSUE RAISED IN GROUND NO. 3 RELATES TO THE DISALLOWANCE OF RS. 80,649/- MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF ASSESSEES CLAIM FOR LONG TERM CAPITAL LOSS. 7. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, A LONG TERM CAPITAL LOSS OF RS. 2,74,282/- WAS CLAIMED BY THE ASSESSEE ON THE SALE OF SHARES OF M/S. AMARJYOTI PROP (P) LTD. THE WORKING OF THE SAID LOSS AS FURNISHED BY THE ASSESSEE WAS AS UNDER: NAME OF THE SCRIPT DATE OF PURCHASE QUANTITY RATE VALUE DATE OF SALE QUANTITY RATE VALUE LTC GAIN/LOSS INDEXED GAIN/LOSS AMARJYOTI PROP PVT LTD. 06-08-88 6000 1.82 10,920 -DO- 07-09-88 3000 1.82 5,460 4 SMT. INDIRA DEVI HIMATSINGKA I.T.A. NO. 2262/KOL/2018 ASSESSMENT YEAR: 2013-14 -DO- 29-06-92 101 10.00 1,010 -DO- 06-08-92 7449 13.29 98,990 30-10-12 16550 11.75 194462.50 78,082.50 (-)2,74,282.02 TOTAL 16550 1,16,380 16550 194462.50 78,082.50 (-)2,74,282.02 8. ON VERIFICATION OF THE COPIES OF RELEVANT SHARE CERTIFICATES, THE ASSESSING OFFICER FOUND THAT 9000 SHARES TO M/S. AMARJYOTI PROP (P) LTD. WERE ACTUALLY PURCHASED BY THE ASSESSEE ON 22.08.2001 WHILE 2550 SHARES CLAIMED TO BE PURCHASED ON 06.08.1992 WERE ACTUALLY PURCHASED ON 29.03.1996. HE ACCORDINGLY RECOMPUTED THE LONG TERM CAPITAL LOSS ON SALE OF SHARES OF M/S. AMARJYOTI PROP (P) LTD. AT RS. 1,93,633/- AS UNDER: PURCHASE YEAR QUANTITY COST INDEX COST (2012-13) DATE OF SALE QUANTITY VALUE INDEXED GAIN/LOSS 2001-02 6000 L 0,920 21 840 2001-02 3000 5,460 10920 1992-93 101 1,010 3858 1992-93 1995-96 4899 2550 7449 65,100 33,890 98,990 2,48,722 1,02,755 3,51,477 16550 1,16,380 3,88,095 30-10-12 16550 194462.50 (-)1,93,633 ON THE BASIS OF THE ABOVE WORKING, THE AO RESTRICTED THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL LOSS OF RS. 2,74,282/- TO RS. 1,93,633/-. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF THE AO ON THIS ISSUE. 9. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT 6000 AND 3000 SHARES OF M/S. K.N. HIMATSINGKA & CO. PVT. LTD. HAD BEEN PURCHASED BY THE ASSESSEE ON 06.09.1988 AND 07.09.1988 RESPECTIVELY AND ON 5 SMT. INDIRA DEVI HIMATSINGKA I.T.A. NO. 2262/KOL/2018 ASSESSMENT YEAR: 2013-14 AMALGAMATION OF M/S. K.N. HIMATSINGKA & CO. PVT. LTD. WITH M/S. AMARJYOTI PROP (P) LTD. IN THE YEAR 2001, THE ASSESSEE WAS ALLOTTED 9000 SHARES OF M/S. AMARJYOTI PROP (P) LTD. IN LIEU OF 9000 SHARES HELD BY HER IN M/S. K.N. HIMATSINGKA & CO. PVT. LTD. HE HAS SUBMITTED THAT THE ASSESSEE HAD ALSO PURCHASED 5000 SHARES OF ABC DEVELOPERS (P) LTD. IN JUNE/JULY, 1992 AND ON AMALGAMATION OF M/S ABC DEVELOPERS (P) LTD. WITH M/S. AMARJYOTI PROP (P) LTD. IN THE YEAR 1996, SHE WAS ALLOTTED 2550 SHARES OF M/S. AMARJYOTI PROP (P) LTD. IN LIEU OF SHARES HELD BY HER IN M/S. ABC DEVELOPERS PVT. LTD. HE HAS CONTENDED THAT THE PERIOD OF ACQUISITION OF THESE SHARES THUS WAS SEPTEMBER, 1988 AND JUNE/JULY, 1992 AS RIGHTLY CLAIMED BY THE ASSESSEE FOR WORKING OUT THE INDEXED COST OF ACQUISITION WHILE COMPUTING THE LONG TERM CAPITAL LOSS AND THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TAKING THE DATES OF ACQUISITION OF SAID SHARES ON THE BASIS OF SHARE CERTIFICATES ISSUED BY M/S. AMARJYOTI PROP (P) LTD. ON AMALGAMATION IN LIEU OF THE SHARES ORIGINALLY PURCHASED/ACQUIRED BY THE ASSESSEE IN THE YEAR 1988 AND 1992. SINCE THIS CONTENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS DULY SUPPORTED BY THE CERTIFICATES ISSUED BY M/S. AMARJYOTI PROP (P) LTD. CONFIRMING THE RELEVANT DATES OF ACQUISITION OF THE CORRESPONDING SHARES BY THE ASSESSEE ORIGINALLY IN THE YEAR 1988 AND 1992, WE ARE INCLINED TO ACCEPT THE SAME. THE AO IS ACCORDINGLY DIRECTED TO ALLOW THE LONG TERM CAPITAL LOSS ON SALE OF SHARES OF M/S. AMARJYOTI PROP (P) LTD. TO THE TUNE OF RS. 2,74,282/- AS CLAIMED BY THE ASSESSEE. GROUND NO. 3 IS ACCORDINGLY ALLOWED. 6 SMT. INDIRA DEVI HIMATSINGKA I.T.A. NO. 2262/KOL/2018 ASSESSMENT YEAR: 2013-14 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH APRIL, 2019. SD/- SD/- (S. S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE PRESIDENT DATED: 24/04/2019 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. SMT. INDIRA HIMATSINGKA, 906, SUBHAM BUILDING, 9 TH FLOOR, 1, SAROJINI NAIDU SARANI, PARK STREET, KOLKATA 700 017. 2. ACIT, CIRCLE 44, KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR / H.O.O. ITAT, KOLKATA