D.C.I.T., Circle-12, Kolkata, Kolkata V. M/s Vinayak Dealerd Pvt. Ltd., Kolkata

ITA 2671/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9138 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K CHANDA JCITSR
• Keywords: Earning of tax free income; Revised return
• Section: 14A

Judgement Text

ITA NO.2671/KOL/2013-M/S. VINAYAK DEALERS PVT. LTD. A.Y.2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE HONBLE SHRI A.T.VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER I.T.A. NO. 2671 /KOL/2013 ASSESSMENT YEAR : 2009-10 D.C.I.T., CIRCLE-12, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 7 TH FLOOR,KOLKATA-700069. V/S . M/S. VINAYAK DEALERS PVT. LTD. 5A, CLIVE GHAT STREET, 4 TH FLOOR, KOLKATA-700001. PAN:AAACV 9573 C /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI M.K.CHANDA, JCIT,SR.DR /BY RESPONDENT SHRI ANIL KOCHAR, ADVOCATE /DATE OF HEARING 25.01.2017 /DATE OF PRONOUNCEMENT 17.03.2017 / O R D E R PER WASEEM AHMED, AM THIS APPEAL BY THE ASSESSEE IS DIREC TED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA D ATED 13.08.2013. ASSESSMENT WAS FRAMED BY JCIT (OSD), KOLKATA U/S 1 43(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) V IDE HIS ORDER DATED 28.11.2011 FOR ASSESSMENT YEAR 2009-10. SHRI M.K. CHANDA, LD. DEPARTMENTAL REPRESENTATIVE R EPRESENTED ON BEHALF OF REVENUE AND SHRI ANIL KOCHAR, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE. 2. GROUND NO.2 WAS NOT PRESSED AND THEREFORE SAM E IS DISMISSED AS NOT PRESSED. ITA NO.2671/KOL/2013-M/S. VINAYAK DEALERS PVT. LTD. A.Y.2009-10 2 3. THE ONLY ISSUE RAISED BY THE REVENUE IN GROUN D NO. 1 OF THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN REDUCING THE DISALLOWANCE M ADE BY THE AO UNDER THE PROVISION OF SECTION 14A OF THE ACT FROM RS.85,06,4 03.00 TO RS.1199255.00. 4. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS EARNED DIVIDED INCOME WHICH W AS CLAIMED TO BE EXEMPTED FROM TAX U/S 10(34) OF THE ACT. ACCORDINGLY THE AO INVOKED THE PROVISIONS OF RULE 8D R.W.S. 14A OF THE ACT AND WORKED OUT THE DISALLO WANCE AS UNDER : A) DIRECT EXPENSES RS. 33766 B) INTEREST EXPENSES RS.7316098 C) ADMINISTRATIVE EXPENSES RS.1156538 TOTAL DISALLOWANCES RS.8506403 THE ABOVE DISALLOWANCES MADE BY THE AO WERE ADDED T O THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL TO T HE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT THE A MOUNT OF RS.11,99,255/- WAS DISALLOWED U/S 14A OF THE ACT. THE DETAIL WORKING O F SUCH DISALLOWANCES OF RS.11,99,255 HAS BEEN DULY FURNISHED TO THE AO ALON G WITH TAX AUDIT REPORT IN FORM NO.3CD. THE AO FAILED TO POINT OUT ANY DEFECT IN THE WORKING MADE BY THE ASSESSEE. THE LD. CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE FACTS AND SUBMISSIONS PUT FOR TH ON BEHALF OF THE APPELLANT. I HAVE GONE THROUGH THE WORKING OF THE DISALLOWANCE U NDER SEC 14A READ WITH RULE 8D AS MADE BY THE ASSESSING OFFICER AND THAT GIVEN BY THE AUDITOR ALONG WITH THE REVISED RETURN OF INCOME. IN CIT V. CONSOLIDATED PH OTO & FINVEST LTD. [2012] 211 TAXMAN 184 (DELHI), IT HAS BEEN HELD THAT DISALLOWA NCE OFFERED BY ASSESSEE ITSELF UNDER SECTION 14A WAS SUFFICIENT OR NOT SHOULD BE G ONE BY ASSESSING OFFICER EVEN IF RULE 80 WAS APPLICABLE. IN THE CASE OF MAXOPP IN VESTMENT LTD.V.. CIT [2011] 203 TAXMAN 364. IT HAS BEEN HELD THAT IN TERMS OF SECTI ON 14A(2) CONDITION PRECEDENT FOR ASSESSING OFFICER TO DETERMINE AMOUNT OF EXPEND ITURE INCURRED IN RELATION TO ITA NO.2671/KOL/2013-M/S. VINAYAK DEALERS PVT. LTD. A.Y.2009-10 3 EXEMPT INCOME IS THAT HE MUST RECORD HIS DISSATISFA CTION WITH CORRECTNESS OF CLAIM OF EXPENDITURE MADE BY ASSESSEE OR WITH CORRECTNESS OF CLAIM MADE BY ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED. IN THE PRESE NT CASE, THE DIVIDEND AND CAPITAL GAINS WERE EARNED FROM INVESTMENT MADE IN T HE PAST AND THE EXPENSES RELATABLE TO THE EXEMPTED INCOME IS MINIMUM. THEREF ORE, THE ASSESSING OFFICER OUGHT TO HAVE EXAMINED THE WORKING GIVEN IN THE AUD IT REPORT AND GIVEN HIS FINDING AS TO WHY HE DID NOT AGREE WITH SUCH WORKING. I HAV E GONE THROUGH THE WORKING OF DISALLOWANCE OF EXPENSES AS GIVEN BY THE AUDITORS O F THE APPELLANT. IN MY OPINION, THE WORKING AS GIVEN BY THE AUDITOR IS APPROPRIATE WITH THE EARNING OF EXEMPTED INCOME HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE; THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE FIGURE O F DISALLOWANCE AS GIVEN IN THE REVISED RETURN OF INCOME. THE APPELLANT GETS A RELI EF OF RS. 73,07,148/- ON THIS GROUND. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS OF APPEAL : '1. THAT ON THE FACTS AND UNDER THE CIRCUMSTANCES O F THE CASE LD. CIT(A) ERRED IN REDUCING ARBITRARILY THE DISALLOWANCE OF E XPENSES TO 11,99,255/- IN LIEU OF RS. 85,06,403/- AGAINST EARNING OF EXEMPT I NCOME AS PER PROVISION OF SECTION 14A OF THE I. T. ACT.' 6. THE LD. AR BEFORE US REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD CIT(A) AND ALSO PRAYED FOR RESTORING THE ISSUE TO T HE FILE OF AO FOR FRESH ADJUDICATION. ON THE OTHER HAND, THE LD DR SUPPORTED THE ORDER OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET IT WAS OBSERVED THAT THE A O HAS MADE THE DISALLOWANCES U/S 14A OF THE ACT AFTER INVOKING THE PROVISIONS OF RULE 8D OF INCOME TAX RULES 1962. HOWEVER, WE FIND THAT THE ASSESSEE HAS SUO MOTU DISALLOWED THE EXPENSES FOR RS.11,99,255/- AND THE AO IN DISALLOWA NCE MADE BY THE ASSESSEE HAS NOT POINTED OUT ANY MISTAKE. IN THE CASE ON HAN D, THE AO HAS MADE THE DISALLOWANCE WITHOUT REFERRING AND POINTING OUT ANY MISTAKE IN THE WORKING OF THE ASSESSEE. THEREFORE WE ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF AO TO ADJUDICATE THE MATTER AFRESH AS PER LAW AND AFTER R EFERRING TO THE SUBMISSIONS ITA NO.2671/KOL/2013-M/S. VINAYAK DEALERS PVT. LTD. A.Y.2009-10 4 MADE BY THE ASSESSEE. THE LD DR ALSO RAISED NO OBJE CTION IF THE MATTER IS REMANDED BACK TO THE FILE OF AO. HENCE, THIS GROUN D OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT 17/03/2017 SD/- SD/- ( !') ( !') (A.T.VARKEY) (WASEEM A HMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *RG.PS/DKP* $!% &- 17/03 //201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-12, P-7, CHOWRINGHEE SQUARE , AAYAKAR BHAWA, 7 TH FL, KOL-69 2. /RESPONDENT-M/S VINAYAK DEALERS PVT. LTD. 5A, CLIVE GHAT STREET, 4 TH FLOOR, KOLKATA-001 3. %.%/0 1 1 2 / CONCERNED CIT 4. 1 1 2- / CIT (A) 5. 567 /0, 1 /0 , KOLKATA / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,