M/s Bluest Goods & Services Pvt. Ltd., Kolkata V. I.T.O Wd - 5(3),kolkata, Kolkata

ITA 2308/KOL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83209 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 27-08-2013
• Court: TRIBUNAL
• Department Lawyers: K K TRIPATHI
• Assessee Lawyers: S JHAJHARI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, SM C , IN THE INCOME TAX APPELLATE TRIBUNAL SM C BENCH: KOLKATA ( ) BEFORE , ) [BEFORE SHRI MAHAVIR SINGH, JM] / I.T.A NO. 2308 /KOL/20 1 3 / ASSESSMENT YEAR : 20 0 6 - 0 7 M/S. BLUEST GOODS & SERVICES PVT. LTD. VS. INCOME - TAX OFFICER,WD - 5 ( 3 ), KOLKATA (PAN:AA BCB0858P ) ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 2 6 . 11 .201 4 DATE OF PRONOUNCEMENT: 28. 1 1 .201 4 FOR THE APPELLANT : SHRI S. JHAJHARI, FCA FOR THE RESPONDENT : SHRI K. K. TRIPATHI , JCIT, SR. DR / ORDER THIS APPEAL BY ASSESSEE IS ARI SING OUT OF ORDER OF CIT(A) - VI , KOLKATA IN APPEAL NO. 1401 / CIT(A) - VI/WD - 5(3)/09 - 10/KOL DATED 22 . 0 4 .201 3 . ASSESSMENT WAS FRAMED BY ITO, WARD - 5 ( 3 ) , KOLKATA U/S. 14 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 6 - 0 7 VIDE HIS ORDER DATED 24 .1 0 .20 08 . 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF PRELIMINARY EXPENSE U/S. 35D OF THE ACT AT RS.26,430/ - . 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS NOT INTERESTED IN PROSECUTING THIS GROUND AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF EXPENSES WHICH ARE RELATABLE TO EXEMPT INCOME BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT BEING ADMINISTRATIVE EXPENSES. 5 . I HAVE HEARD BO TH THE SIDES AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE AO NOTED THAT THE ASSESSEE HAS EARNED EXEMPT INCOME AND DIVIDEND AT RS.2,70,310/ - AND LONG TERM CAPITAL GAIN AT RS.4,68,23,134/ - . THE AO DISALLOWED THE A DMINISTRATIVE EXPENSES TO THE TUNE OF R S.2,00,501/ - I.E. 50% OF ADMINISTRATIVE EXPENSES COMPUTED BY AO AT RS.4,01,001/ - BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. THE RELEVANT ASSESSMENT YEAR INVOLVED IS 2006 - 07 AND THE AO SIMPLY DISALLOWED THE ADMINISTRATIVE EXPENSES FOR THE REASON THAT THE ASSESSEE HAS EARNED EXEMPT INCOME. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE DISALLOWANCE BY STATING THE REASON THAT EVEN IF 1% IS TO BE TAKEN AS DISALLOWED IT WILL EXCEED THE EX PENDITURE. 2 ITA NO.2308/K/2013 BLUEST GOODS & SERVICES PVT. LTD. AY 2006 - 07 I FIND FROM THE ORDERS OF THE LOWER AUTHORITIES THAT RULE 8D OF I. T. RULES, 1962 ARE NOT APPLICABLE IN THE PRESENT ASSESSMENT YEAR AND HENCE, A FAIR AND REASONABLE DISALLOWANCE IS TO BE MADE. THE TOTAL EXPENDITURE INCURRED BY ASSESSEE IS AT R S.1,70,934/ - I.E. THE ENTIRE ADMINISTRATIVE EXPENSES RELATING TO OTHER BUSINESS ALSO. THIS MUCH CANNOT BE EXPENDITURE RELATABLE TO EXEMPT INCOME. THE AO HAS POINTED OUT THAT THE ADMINISTRATIVE EXPENDITURE OF RS.2,00,551/ - OUT OF TOTAL ADMINISTRATIVE EXPE NSES COMPUTED BY THE AO AT RS.4,01,101/ - IS TO BE DISALLOWED. I FIND THAT THIS IS QUITE HIGH AND UNREASONABLE. HENCE, I RESTRICT THE DISALLOWANCE AT RS.25,000/ - AND DELETE THE BALANCE ADDITION. I ORDER ACCORDINGLY. APPEAL OF ASSESSEE IS PARTLY ALLOWED. 6 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. 7 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 8 . 1 1 . 2 0 1 4 S D / - , (MAHAVIR SINGH) JUDICIAL MEMBER DATED : 2 8 T H NOVEMBER , 201 4 JD.(SR.P.S.) - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT M/S. BLUEST GOODS & SERVICES PVT. LTD., 27, BRABOURNE ROAD, 3 RD FLOOR, ROOM NO. 305, KOLKATA - 700 001. 2 / RESPONDENT ITO, WARD - 5 ( 3 ), KOLKATA . 3 . ( )/ THE CIT(A), KOLKATA 4. 5. / CIT KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .