PCB Enterprise Pvt. Ltd. , Kolkata V. DCIT, CC 2(2). , Kolkata

ITA 325/KOL/2023

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The case involves PCB Enterprise Pvt. Ltd., the appellant, contesting an order from the National Faceless Appeal Centre (NFAC), Kolkata, which confirmed a disallowance of expenses amounting to Rs.1,92,506 under Section 14A read with Rule 8D of the Income-tax Act, 1961. This disallowance was related to exempt income earned during the assessment year 2014-15. The appellant argued that the disallowance was incorrectly computed as it pertained to dividend income of Rs.72,332, which was significantly lower than the amount considered by the Assessing Officer. The Tribunal, referencing a recent judgment by the Hon'ble Delhi High Court, held that the disallowance under Section 14A should not exceed the exempt income earned, and thus, adjusted the disallowance accordingly.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132681 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2023
• Other Referred Cases: PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Earning of tax free income
• Section: 14A; 250

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI SANJAY GARG, HON’BLE JUDICIAL MEMBER & DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 325/Kol/2023 Assessment Year: 2014-15 PCB Enterprise Pvt. Ltd. 23A, 4 th Floor Netaji Subash Road Kolkata - 700001 [PAN : AABCP8195K] Vs Deputy Commissioner of Income Tax, Central Circle-2, Kolkata अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri Miraj D. Shah, A/R Revenue by : Shri P.P. Barman, Addl. CIT, D/R सुनवाई कᳱ तारीख/Date of Hearing : 23/05/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 06/06/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This is the appeal preferred by the assessee against the order of the National Faceless Appeal Centre (NFAC), Kolkata (hereinafter referred to as the ld. CIT(A)”], passed u/s 250 of the Income-tax Act, 1961 (hereinafter the ‘Act’), dated 08/02/2023 for the Assessment Year 2014-15. 2. The sole issue which arises for our adjudication relates to the confirmation of disallowance of expense u/s 14A r.w.r. 8D at Rs.1,92,506/- being exempt income earned during the year. 3. The ld. Counsel for the assessee submitted that the ld. CIT(A) has passed an ex-parte order without disposing the appeal of the assessee on merits. He further submitted that, the ld. Assessing Officer has wrongly computed the amount of disallowance of expenses of Rs. 1,92,506/- relating to dividend income earned during the year whereas, the assessee has in fact earned only Rs.72,332/- as dividend income. I.T.A. No. 325/Kol/2023 Assessment Year: 2014-15 PCB Enterprise Pvt. Ltd. 2 3.1. The ld. D/R, though not leaving his grounds, could not controvert the factual position. 4. Heard rival contentions. We find that the assessee has earned only Rs.72,332/- as dividend income during the year. Recently, the Hon’ble Delhi High Court PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022) judgment dt. 20/07/2022, has held that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Therefore, since the assessee has earned exempt income of Rs.72,332/- during the year, the disallowance u/s 14A of the Act, is restricted to the same and the remaining disallowance of Rs.1,20,174/- is hereby deleted. 5. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 6 th June, 2023 at Kolkata. Sd/- Sd/- (SANJAY GARG) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 06/06/2023 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata