ACIT, Circle - 8(2), Kolkata, Kolkata V. M/s. Russell Credit Limited, Kolkata

ITA 2419/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5362 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 06-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY
• Assessee Lawyers: BIKASH CHANDA
• Keywords: Earning of tax free income
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 2419/KOL/20 17 ASSESSMENT YEAR : 2010-1 1 ACIT, CIRCLE-8(2), KOLKATA -VS- M/S RUSSE L CREDIT LTD. [PAN: AABCR 3494 H ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ROBIN CHOWDHU RY, ADDL. CIT SR. DR FOR THE RESPONDENT : SHRI BIKASH CHANDA, AR DATE OF HEARING : 11.10.2018 DATE OF PRONOUNCEMENT : 16.10.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-22, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 45/CIT(A)- 22/KOL/10-11/17-18 DATED 30.10.2017 AGAINST THE OR DER PASSED BY THE ACIT, CIRCLE-8, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.03.2013 FOR THE ASSESSM ENT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE LD AO TO REWORK THE DISA LLOWANCE TO BE MADE U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES, IN THE FACTS AN D CIRCUMSTANCES OF THE CASE. 2 ITA NO.2419/KOL/2017 M/S RUSSEL CREDIT LTD. A.YR. 2010-11 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF INVESTMENT, FINANCING. LEASING AND OTHER FINANCIAL SERVICES. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 WAS FILED ON 30.9.2010 DECL ARING TOTAL INCOME OF RS. 19,34,55,362/-. THE ASSESSEE ALSO FILED A REVISED R ETURN ON 29.03.2012 DECLARING TOTAL INCOME OF RS. 19,23,93,827/- UNDER NORMAL PROVISION S OF THE ACT AND BOOK PROFIT U/S 115JB OF THE ACT OF RS. 30,39,73,591/-. THE ASSESSE E EARNED TAX EXEMPT DIVIDEND INCOME OF RS. 18,61,00,400/- FROM ITS INVESTMENT IN UNITS OF MUTUAL FUNDS AND SHARES OF OTHER COMPANIES. IT HAS EARNED EXEMPT LONG TERM CAP ITAL GAINS OF RS. 9,25,75,057/- ON SALE OF SHARES. THE ASSESSEE OFFERED SUO MOTO DISAL LOWANCE OF RS. 31,392/- U/S 14A AS EXPENDITURE INCURRED FOR THE PURPOSE OF EARNING TH E AFORESAID EXEMPT INCOME TOWARDS PROPORTIONATE MANAGEMENT EXPENSES. THE LD. AO HOWEV ER PROCEEDED TO COMPUTE THE DISALLOWANCE U/S 14A OF THE ACT BY APPLYING THE THI RD LIMB OF RULE 8D(2) OF THE RULES IN THE SUM OF RS. 1,20,31,315/-, OVER AND ABOVE THE DISALLOWANCE ALREADY MADE BY THE ASSESSEE IN THE SUM OF RS. 31,392/-, BOTH UNDER NOR MAL PROVISIONS OF THE ACT AS WELL AS IN THE COMPUTATION OF BOOK PROFITS U /S 115JB OF TH E ACT. 4. THE LD. CIT(A) DIRECTED THE LD. AO TO RECOMPUTE THE DISALLOWANCE UNDER RULE 8D(2)(III) OF THE RULES ONLY BY TAKING INTO ACCOUNT THAT THOSE INVESTMENTS WHICH HAD YIELDED DIVIDEND INCOME. AGGRIEVED THE REVENUE IS I N APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE TIME OF HEARING, THE LD. AR STATED THAT SIMILAR ISSUE HAD CROPPED UP BEFORE THIS TRIBUNAL I N ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 I.E. SUBSEQUENT YEAR AND THE SAME HAS BEEN DISPOSED OFF IN FAVOUR OF THE ASSESSEE IN I.T.A. NO. 1317/KOL/2017 DATED 08.06.20 18. WE FIND THAT THIS TRIBUNAL HAD HELD THEREON AS UNDER: 3. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN PARTLY DELETING U/S 14A R.W. 8D DISALLOWANCE. WE FIND NO MERIT IN REVENUES SOLE INVESTMENTS WHICH HAVE NOT YIELDED ANY EXEMPT INCOME IN THE RELEVANT PREVIOUS YEAR. THE QUESTION AS TO WHETHER SUCH INVESTMENTS ARE TO BE EXCLUDED OR INCLUDED STA ND ANSWERED IN HONBLE 3 ITA NO.2419/KOL/2017 M/S RUSSEL CREDIT LTD. A.YR. 2010-11 3 JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF REI AGRO LTD. VS. DCIT IN ASSESSEES FAVOUR AS REITERATED IN THEIR LORDSHIPS SUBSEQUENT JUDGMENT (SUPRA). THE REVENUES INSTANT SOLE SUBSTANTIVE GROUND IS REJECTED ACCORDI NGLY. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE O RDER OF THE LD CITA HAD BEEN RIGHTLY PASSED WHICH REQUIRES NO INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 16.10.2 018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16.10.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-8(2), KOLKATA, P-7, CHOWRINGHEE SQU ARE, KOLKATA-700069 2. M/S RUSSEL CREDIT LTD., VIRGINIA HOUSE, 37, J.L. NEHRU ROAD, KOLKATA-700071. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES