Nischay Distributors Pvt. Ltd, Kolkata V. DCIT, CC-4(3), KOL, Kolkata

ITSSA 80/KOL/2023

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Nischay Distributors Pvt. Ltd. appealed against the orders of the Commissioner of Income Tax (Appeals)-21, Kolkata, which confirmed the addition of Rs. 3,89,010 as made by the AO under Section 14A of the Income Tax Act for the assessment years 2011-12 and 2012-13. The primary contention of the appellant was that no exempt income was earned during the years in question, and thus, no disallowance under Section 14A was warranted. The Tribunal noted the absence of any exempt income based on the audited annual accounts provided and referenced a decision by the Hon'ble Delhi High Court in Chem Invest Ltd. vs. CIT, which supported the appellant's position. However, to ensure thorough examination, the Tribunal restored the issue to the AO for verification of exempt income during the relevant assessment years.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127384 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 01-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 15-05-2023
• Other Referred Cases: Chem Invest Ltd. vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.(SS)A. Nos. 80 & 81/Kol/2023 Assessment Years: 2011-12 &2012-13 Nischay Distributors Pvt. Ltd. (PAN: AACCN 2154 K) Vs. DCIT, Central Circle-4(3), Kolkata Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 02.08.2023 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 22.08.2023 For the Appellant/ नधा /रती क$ ओर से Shri Sagar Jain, FCA Shri Ayush Jain, FCA For the Respondent/ राज व क$ ओर से Shri Sunil Kr. Agarwala, CITDR ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-21, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 16.03.2023 for the AY 2011-12 & 2012-13. 2. At the outset we note that the appeal is delayed by one day. In the condonation petition , the delay is stated to be on account of illness of the director who used to attend the tax matters. Considering the facts , we are inclined to condone the delay by admitting the appeal. 2 I.T.(SS).A. Nos.80 & 81/Kol/2023 Assessment Year: 2011-12 &2012-13 Nischay Distributors Pvt. Ltd. 3. The only issue raised by the assessee in the grounds of appeal is against the order of Ld. CIT(A) confirming the addition of Rs. 3,89,010/- as made by the AO u/s 14A of the Act. 4. The Ld. Counsel at the outset pointed out that during the year the assessee has not earned any exempt income during the year and therefore there is no question of disallowance u/s 14A of the Act. The Ld. A.R submitted that it is a settled position of law as has been held in decisions of various judicial forums holding that no disallowance is called for where there is no exempt income during the year. The Ld. A.R referred to audited annual accounts of the assessee to corroborate his submissions that the assessee has not had any exempt income during the year. The Ld. A.R therefore prayed that the addition made by the AO u/s 14A of the Act as confirmed by ld CIT(A) may kindly be deleted as the assessee is not having any exempt income. 5. The Ld. D.R on the other hand stated that the fact whether the assessee has earned any exempt income or not during the assessment year is not clear in the appellate order and therefore the issue may be restored to the file of the AO to examine the issue accordingly. 6. After having rival contentions of both the parties and perusing the material on record, we find that apparently the assessee is not having any exempt income on the basis of audited annual accounts filed before us. In absence of any exempt income being received by the assessee during the year, the invocation of provisions of Section 14A of the Act and consequent disallowance of Rs. 3,89,010/- cannot be sustained. The issue is squarely covered by the decision of Hon’ble Delhi High Court in the case of Chem Invest Ltd. vs. CIT in ITA 749/2014 dated 2.9.2015. However we are restoring this issue to the file of AO to ascertain this fact whether the assessee has earned any exempt income during the year or not and decide the issue accordingly. Needless to say in case the assessee has not received any exempt income during the year the disallowance of Rs. 3,89,010/- made u/s 14A of the Act has to be deleted. The 3 I.T.(SS).A. Nos.80 & 81/Kol/2023 Assessment Year: 2011-12 &2012-13 Nischay Distributors Pvt. Ltd. AO also directed to give opportunity of hearing to the assessee before deciding the issue. Accordingly grounds raised by the assessee is allowed for statistical purposes. 7. Issue raised in IT(SS)A Nos. 81/Kol/2023 for AY 2012-13 is similar to one as decided by us in IT(SS)A No. 80/Kol/2023, therefore our decision in IT(SS)A No. 80/Kol/2023 would ,mutatis mutandis, apply to this appeal as well. Accordingly the appeal is allowed for statistical purposes. 8. In the result, both the appeals of the assessee are allowed for statistical purposes. Order is pronounced in the open court on 22 nd August, 2023 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 22 nd August, 2023 SB, Sr. PS Copy of the order forwarded to: 1. Appellant- Nischay Distributors Pvt. Ltd., BJ-311, Sector-II, Sech Bhawan, Salt Lake City, Kolkata-700091. 2. Respondent- DCIT, Central Circle-4(3), Kolkata 3. Ld. CIT(A)- 21, Kolkata 4. Ld. PCIT- 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata