ITO, Ward-1(4), Kolkata, Kolkata V. M/s. Milestone Shares and Stock Broking Pvt. Ltd., Kolkata

ITA 436/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3333 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Keywords: Earning of tax free income; Proportionate interest
• Section: 14A

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 436 / KOL / 20 17 ASSESSMENT YEAR :2012-13 INCOME TAX OFFICER, WARD-1(4), P-7, CHOWRINGHEE SQUARE, KOLKTA-69 V/S . M/S. MILESTONE SHARE AND STOCK BROKING PVT. LTD., 14, PRINCEP STREET, 1 ST FLOOR, KOLKATA-72 [ PAN NO.AAFCM 7386 P ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S. DASGUPTA, ADDL. CIT-DR /BY RESPONDENT NONE /DATE OF HEARING 26-07-2018 /DATE OF PRONOUNCEMENT 24-08-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 O F COMMISSIONER OF INCOME TAX (APPEALS)-2 KOLKATAS ORDER DATED 05.12. 2016 PASSED IN CASE NO.633/CIT(A)-2/15-16, INVOLVING PROCEEDINGS U/S 14 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. CASE CALLED TWICE. NONE APPEARS AT THE ASSESSEE S BEHEST. THE REGISTRY HAS ALREADY SENT RPAD NOTICE DATED 07.06.2 018. IT IS ACCORDINGLY POSTED EX PARTE . ITA NO.436/KOL/2017 A.Y. 2012-13 ITO WD-1(4) KOL. VS. M/S MILE STONE SHARES AND STOCK BROKING PVT. LTD. PAGE 2 3. THE REVENUES SOLE CONTENTION DURING THE COURSE OF HEARING AS PER REVENUES PLEADINGS IS THAT CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN REVERSING THE ASSESSING OFFICERS ACTION INVOKING U /S 14A R.W.S. 8D DISALLOWANCE OF 1,62,36,681/- COMPRISING OF TAXPAYERS DIRECT, PROP ORTIONATE INTEREST AND ADMINISTRATIVE EXPENDITURE UNDER RULE 8D-1(I) TO (III) INCOME TAX RULES, 1962 INVOLVING CORRESPONDING SUMS OF 1,02,06,385/-, 58,52,707/- AND 8,50,541/-; RESPECTIVELY. THERE IS NO DISPUTE ABOUT THE ASSESSEE HAVING DERIVED EXEMPT INCOME OF 2,54,427/- FROM DIVIDENDS. THE ASSESSING OFFICER INVOKED THE ABOVE COMPUTATION IN HIS ASSESSMENT ORD ER DATED 30.03.2015. 4. COMING TO CIT(A)S ORDER, WE FIND THAT HE HAS DI RECTED THE ASSESSING OFFICER TO RE-EXAMINE CORRECTNESS OF ALL THE THREE HEADS OF EXPENDITURE. HE FIRST OF ALL TAKES NOTE OF THE FACT THAT ASSESSEES ALSO ENGAGED IN SECURITIES TRADING IN MARKET AND THEREFORE THE DIRECT EXPENDIT URE DISALLOWANCE OF 1,02,06,384/- PERTAINS TO ITS BUSINESS ACTIVITY. CO MING TO SECOND ISSUE OF PROPORTIONATE INTEREST EXPENDITURE DISALLOWANCE (SU PRA), THE CIT(A) CONCLUDES THAT INTEREST EXPENDITURE OF 4,64,815/- PERTAINS TO SECURED LOAN CREDITORS. FURTHER AMOUNT OF 19,19,774/- IS STATED TO BE REPRESENTING DELAYED PA YMENT CHARGES TO THE BROKERS WITH WHOM SHARES AND SECURIT IES TRADING HAD BEEN DONE. THE CIT(A) THEREAFTER CONCLUDES REGARDING ADM INISTRATIVE EXPENDITURE THAT ONLY THE DIVIDEND YIELDING INVESTMENT HAVE TO BE TAKEN INTO CONSIDERATION AS PER THIS TRIBUNALS DECISION IN REI AGRO LTD. VS. DCIT (2013) 144 ITD (141) (KOL). IT IS THEREFORE EVIDENT THAT THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO VERIFY ALL THESE FACTS IN RE-EXAMINATION EXERCIS E AND MAKE THE IMPUGNED DISALLOWANCE RELATED TO EXEMPT INCOME YIELDING INVE STMENTS ONLY. 5. MR. DASGUPTA AT THIS STAGE QUOTES SECTION 251(1) (A) OF THE ACT BEFORE US. HIS CASE IS THAT THE CRUCIAL EXPRESSION THEREIN OR HE MAY SET ASIDE REGARDING CIT(A)S JURISDICTION TO REMAND THE CASE TO THE ASSESSING OFFICER STANDS OMITTED WITH EFFECT FROM 01.06.2001 BY THE F INANCE ACT, 2001. THERE CAN BE NO DISPUTE ABOUT THE INSTANT LEGAL CONTENTIO N. THE FACT HOWEVER ITA NO.436/KOL/2017 A.Y. 2012-13 ITO WD-1(4) KOL. VS. M/S MILE STONE SHARES AND STOCK BROKING PVT. LTD. PAGE 3 REMAINS THAT THE ASSESSING OFFICER HAD NOT CONSIDER ED ALL THE ABOVE STATED DETAILS IN HIS ASSESSMENT ORDER AT THE TIME OF INVO KING THE IMPUGNED DISALLOWANCE. WE THEREFORE ACCEPT THE REVENUES ABO VE LEGAL PLEA FOR STATISTICAL PURPOSE AND RESTORE THE INSTANT APPEAL BACK TO THE ASSESSING OFFICER OURSELVES FOR INDEPENDENT EXAMINATION OF TH E ABOVE SOLE ISSUE AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THIS REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 24/ 08/2018 SD/- SD/- ( %) (' %) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 24 / 08 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-1(4), P-7, CHOWRINGHEE SQ. KOLK ATA-69 2. /RESPONDENT-M/S MILESTONE SHARES & STOCK BROKING PV T. LTD.14, PRINCEP STREET 1 ST FLOOR, KOLKATA-72 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,