M/s Kanodia Stock Broking Pvt. Ltd., Kolkata V. ACIT, CC-1(2), KOLKATA, Kolkata

ITA 509/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1630 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU CITSR
• Assessee Lawyers: SHIKHA AGARWAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

ITA NO.509/KOL/2015-M/S. KANODIA STOCK BROKING A.Y. 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SHRI S.S.VISWANETHRA RAVI, JM ] ITA NO.509/KOL/2015 ASSESSMENT YEAR : 2007-08 M/S. KANODIA STOCK BROKING -VERSUS- A.C.I.T.- CENTRAL CIRCLE-1(2), KOLKATA KOLKATA (PAN: AABCK 3292 N) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SMT. SHIKHA AGARWAL, AR FOR THE RESPONDENT: SHRI DAVID Z.CHAWNGTHU, ADDL. C IT(SR.DR) DATE OF HEARING : 10.08.2017. DATE OF PRONOUNCEMENT : 23.08.2017. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)- 20, KOLKATA RELATIN G TO A.Y. 2007-08 ON THE FOLLOWING GROUNDS : 1.THAT THE LD. CIT(A) ERRED IN CONFIRMING DISALLOW ANCE OF EXPENDITURE OF RS.19,50,471/- MADE BY THE AO UNDER SEC.14A OF THE INCOME TAX ACT, 1961. THE AO ADMITTED THAT THE ASSESSEE HAS BEEN A TRADER IN SHARES AND ALL THE EXPENSES ARE RELATING TO THE TRADING BUSINESS OF SHARES BUT DISALLOWED THE PRO RATA INTEREST UNDER SEC.14A CONSIDERING THE 'STOCK IN-TRADE' TO B E THE 'INVESTMENT'. THE DISALLOWANCE IS WRONG AND NEED TO BE DELETED. 2. THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, AM END OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. THE ASSESSEE IS ADMITTEDLY A TRADER IN SHARES . THE TOTAL PURCHASE OF SHARES DURING THE FINANCIAL YEAR 2006-07 WAS RS.87.6 CRORES AND C ORRESPONDING SALES WAS RS.86.53 CRORES. THE INVESTMENTS IN SHARES AS ON 31.03.2006 AS WELL AS ON 31.03.2007 WAS RS.10,15,477/-. THE ASSESSEE EARNED DIVIDEND INCOME OF RS.4,95,262/- DURING THE YEAR. THE AO DISALLOWED AN AMOUNT OF RS.19,50,471/- U/S 1 4A OF THE INCOME TAX ACT, 1961 (ACT). THE HONBLE DELHI COURT IN THE CASE JOI NT INVESTMENTS PVT. LTD. VS CIT IN ITA NO.509/KOL/2015-M/S. KANODIA STOCK BROKING A.Y. 2007-08 2 ITA NO.117/2015 JUDGMENT DATED 25/02/2015 HELD THAT DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (THE ACT) CANNOT EX CEED THE TAX EXEMPT INCOME. 3. THUS THE DISALLOWANCE U/S 14A CANNOT EXCEED R S.4,95,262/- IN THIS CASE. HENCE THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) HAS TO BE REVERSED. . IN ANY EVENT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, KEEPING IN VIE W OF THE FACT THAT THE ASSESSEE IS A TRADER IN SHARES AND STOCKS AND ALSO THE FACT THAT THE ASSESSEE WOULD HAVE INCURRED SOME EXPENSES FOR EARNING THE DIVIDEND INCOME, INTE REST OF JUSTICE WOULD BE MET IF 10% OF THE DIVIDEND INCOME IS DISALLOWED U/S 14A OF THE ACT. WE ORDER ACCORDINGLY. 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE COURT ON 23.08.2017. SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.08.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. KANODIA STOCK BROKING PVT. LTD., 1, R.N.MUKH ERJEE ROAD, 4 TH FLOOR, ROOM NO.5 & 6, KOLKATA-700001. 2. A.C.I.T., CENTRAL CIRCLE-1(2), KOLKATA. 3. C.I.T.(A)-20, KOLKATA. 4. C.I.T., CENTRA L -1, KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES