Redhey IT Solution Pvt. Ltd., Kolkata V. I.T.O.,Ward-4(1), Kolkata

ITA 677/KOL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3352 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-10-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

ITA NO. 677/KOL/2019 AS SESSMENT YEAR: 2015-2016 RADHEY I.T. SOLUTION PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 677/KOL/2019 ASSESSMENT YEAR: 2015-2016 RADHEY I.T. SOLUTION PVT. LIMITED,................. ...................................APPELLANT 5 TH FLOOR, SUITE NO. 519, TOBACCO HOUSE, 1, OLD COURT HOUSE CORNER, KOLKATA-700 001 [PAN: AACCR8083P] -VS.- INCOME TAX OFFICER,,............................... ..........................................RESPONDEN T WARD-4(1), KOLKATA, AAYAKAR BHAWAN, 8 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI SIDDHARTH AGARWAL, ADVOCATE, FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT, SR. D.R , FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : OCTOBER 14, 2019 DATE OF PRONOUNCING THE ORDER : NOVEMBER 15, 2019 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 04.02.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS.6,34,313/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 14A OF THE INCOME TAX AC T, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF PROVIDING I.T. ENABLED SERVICES. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSES SEE ON 30.09.2015 DECLARING TOTAL LOSS OF RS.1,00,001/-. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT EVEN THOUGH THE ASSESSEE-COMPANY HAD NOT EARNED ANY TAX-FREE INCOME , TOTAL INVESTMENT ITA NO. 677/KOL/2019 AS SESSMENT YEAR: 2015-2016 RADHEY I.T. SOLUTION PVT. LIMITED 2 OF RS.1.81 CRORES WAS MADE BY IT IN EQUITY SHARES, WHICH WAS CAPABLE OF GENERATING EXEMPT INCOME. RELYING ON THE CBDT CIRCU LAR NO. 5/2014 DATED 11.02.2014, HE INVOKED RULE 8D AND WORKED OUT THE DISALLOWANCE TO BE MADE UNDER SECTION 14A AT RS.6,34,313/-. ACCORDI NGLY A DISALLOWANCE TO THAT EXTENT WAS MADE BY HIM IN THE ASSESSMENT CO MPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 19.09.2017. ON A PPEAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE B Y THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPE ALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS HELD, INT ER ALIA, BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.- M/S. ASHIKA GLOBAL SECURITIES LIMITED (ITAT NO. 100 OF 2014 DATED 11.0 6.2018) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, SECTION 14A AND RULE 8D COULD NOT BE OPERATED IF THERE WAS NO EXEMPT INCOME ACTUALLY EAR NED BY THE ASSESSEE DURING THE RELEVANT YEAR. SINCE THE ASSESSEE IN THE PRESENT CASE HAD ADMITTEDLY NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION, I HOLD BY RELYING, INTER ALIA, ON TH E DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHIKA GLO BAL SECURITIES LIMITED (SUPRA) THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 14A READ WITH RULE 8D IS NOT SUSTAINABLE. I ACCORDINGLY DELETE THE SAID DISA LLOWANCE AND ALLOW THIS APPEAL OF THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 15, 2019. SD/- (P.M. JAGTAP) VICE-PRESIDENT KOLKATA, THE 15 TH DAY OF NOVEMBER, 2019 ITA NO. 677/KOL/2019 AS SESSMENT YEAR: 2015-2016 RADHEY I.T. SOLUTION PVT. LIMITED 3 COPIES TO : (1) RADHEY I.T. SOLUTION PVT. LIMITED, 5 TH FLOOR, SUITE NO. 519, TOBACCO HOUSE, 1, OLD COURT HOUSE CORNER, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-4(1), KOLKATA, AAYAKAR BHAWAN, 8 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKA TA, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.