Sukhbir Singh Dhupia, Kolkata V. ACIT, Circle - 37, Kolkata

ITA 2477/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6231 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-02-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 28-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: V N DUTTA
• Keywords: Earning of tax free income; Rule 8D
• Section: 142(1); 14A; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA BEFORE: SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO. 2477/KOL/2018 (ASSESSMENT YEAR: 2008-09) SUKHBIR SINGH DHUPIA APPELLANT [PAN: ADPPD 7774 C] VS ACIT, CIRCLE 37, KOLKATA RESPONDENT FOR THE ASSESSEE : SHRI V.N. DUTTA, ADVOCATE FOR THE REVENUE : SMT. RANU BISWAS, ADDL. CIT DATE OF HEARING : 05.02.2020 DATE OF PRONOUNCEMENT : 12.02.2020 ORDER PER S.S. VISWANETHRA RAVI, JM THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 11.09.2018 PASSED BY THE LD. CIT(A) 11, KOLKATA FOR A.Y. 2008-09. 2. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL IN NATURE, HENCE REQUIRES NO ADJUDICATION. 3. GROUND NO. 2 RAISED BY THE ASSESSEE CHALLENGING THE ACTION OF CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE AO U/S 14A R.W.R. 8D(2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS EMANATING FROM THE RECORD RELEVANT TO THE PRESENT ISSUE IS THAT THE ASSESSEE IS AN INDIVIDUAL DERIVES INCOME FROM INVESTMENTS, SHARE TRADING AND SHARE SPECULATION. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS. 73,20,640/- THROUGH ONLINE. THE AO ISSUED NOTICES U/S 143(2) AND 142(1) OF THE ACT AND IN RESPONSE TO WHICH AUTHORISED REPRESENTATIVE ON BEHALF OF THE ASSESSEE APPEARED BEFORE THE AO AND PRODUCED BOOKS OF ACCOUNTS, BANK STATEMENT 2 I.T.A NO.2477/KOL/2018 SUKHBIR SINGH DHUPIA AND RELATED DOCUMENTS IN SUPPORT OF RETURN OF INCOME. DURING THE COURSE OF EXAMINATION OF SUCH EVIDENCES, THE AO FOUND THE ASSESSEE EARNED EXEMPT INCOME OF RS. 5,96,60,672/-. HAVING NO DISALLOWANCE MADE BY THE ASSESSING OFFICER, THE AO PROCEEDED TO APPLY METHOD CONTEMPLATED IN RULE 8D(2) FOR THE PURPOSE OF COMPUTATION OF EXPENDITURE U/S 14A OF THE ACT. ACCORDINGLY, THE AO DISALLOWED AN AMOUNT OF RS. 13,35,519/- UNDER RULE 8D(2)(II) & (III) OF RS. 3,99,200/- AND RS. 9,36,319/- RESPECTIVELY. THE CIT(A) CONFIRMED THE SAME. 5. BEFORE US, THE LD. AR, MR. V.N. DATTA, ADVOCATE SUBMITS THAT THE DISALLOWANCE MADE BY THE AO AND AS CONFIRMED BY THE CIT(A) UNDER RULE 8D(2) IS NOT MAINTAINABLE. HE SUBMITS THAT THE ASSESSEE HAD SUFFICIENT CAPITAL BALANCE IN HIS ACCOUNT AND MADE INVESTMENT FROM HIS OWN ACCOUNTS AND ARGUED THE DISALLOWANCE MADE BY THE AO UNDER RULE 8D(2)(II) IS NOT WARRANTED. REGARDING THE DISALLOWANCE U/R 8D(2)(III), HE PRAYED TO REMAND THE ISSUE TO THE FILE OF AO FOR COMPUTATION OF EXPENDITURE ON INVESTMENTS WHICH YIELDED EXEMPT INCOME. THE LD. DR RELIED ON THE ORDER OF AUTHORITIES BELOW. 6. WE NOTE THAT THE ASSESSEE MADE INVESTMENTS TO AN EXTENT OF RS. 18,72,63,906/- AND EARNED EXEMPT INCOME OF RS. 5,96,60,672/-, ADMITTEDLY THERE WAS NO DISALLOWANCE MADE BY THE ASSESSEE ON HIS OWN. REGARDING THAT THE DISALLOWANCE UNDER RULE 8D(2)(II), WE FIND THAT THE BALANCE SHEET AS ON 31.03.2003 AT PAGE NO. 1 OF THE PAPER BOOK WHEREIN IT IS OBSERVED THAT THE CAPITAL BALANCE AS ON THE LAST DAY OF FINANCIAL YEAR IS RS. 31,78,93,092/- WHICH CLEARLY SHOWS THAT THE ASSESSEE HAD SUFFICIENT FUNDS IN HIS ACCOUNTS AND AS RIGHTLY POINTED OUT BY THE LD. AR THAT NO DISALLOWANCE IS WARRANTED UNDER RULE 8D(2)(II). THEREFORE, THE DISALLOWANCE MADE BY THE AO AND AS CONFIRMED BY THE LD. CIT(A) IS DELETED. 7. REGARDING THE DISALLOWANCE MADE UNDER RULE 8D(2)(III), HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS REI AGRO PVT. LTD. IN G.A. NO. 3022 OF 2013 ITAT 161 OF 2013 JUDGMENT DATED 23.12.2013 WHEREIN IT IS 3 I.T.A NO.2477/KOL/2018 SUKHBIR SINGH DHUPIA HELD THE DISALLOWANCE UNDER RULE 8D(2)(III) IS TO BE MADE TAKING INTO CONSIDERATION THE INVESTMENTS WHICH YIELDED EXEMPT INCOME. THEREFORE, WE DEEM IT PROPER TO REMAND THE MATTER TO THE FILE OF AO FOR COMPUTATION OF DISALLOWANCE EXPENDITURE UNDER RULE 8D(2)(III) ONLY. THE ASSESSEE IS LIBERTY TO FILE EVIDENCES IN RESPECT OF HIS CLAIM IN THIS REGARD. THE AO SHALL COMPUTE THE EXPENDITURE RELATING TO THE INVESTMENTS YIELDED EXEMPT INCOME. THUS, GROUND NO. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.2020. SD/- SD/- [P.M JAGTAP] [S.S. VISWANETHRA RAVI] VICE-PRESIDENT JUDICIAL MEMBER DATED: 12/02/2020 BISWAJIT, SR.PS COPY OF ORDER FORWARDED TO: 1. SUKHBIR SINGH DHUPIA, C/O. TAPARIA & CO., 28, BLACK BURN LANE, 6 TH FLOOR, KOLKATA 700 012. 2. ACIT, CIRCLE 37, KOLKATA. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, ASSISTANT REGISTRAR ITAT, KOLKATA