JAIDEEP HALWASIYA,INDIA V. ACIT, CIRCLE-10(1), KOLKATA, INDIA

ITA 2641/KOL/2024

AI Insights

The case involves an appeal by Jaideep Halwasiya against the order of the Commissioner of Income Tax (Appeals), Kolkata, which upheld an enhanced disallowance of expenses related to exempt income under section 14A read with rule 8D of the Income Tax Rules, 1962. The primary contention was whether the disallowance could exceed the amount of exempt income earned, which was Rs.1,25,000. The Tribunal, referencing a Supreme Court decision, ruled that the disallowance should not exceed the exempt income, thereby deleting the enhancement but retaining the original disallowance made by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360647 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Caraf Builders & Construction Pvt. Ltd. vs. 112 taxman.com 322 (SC)
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONALISA PAL MUKHERJEE
• Assessee Lawyers: S. K. TULSIYAN; LATA GOYAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No.2641/Kol/2024 Assessment Year: 2016-17 Jaideep Halwasiya 3rd floor, P-24, India Exchange Place, Kolkata-700001. (PAN: AAWPH1706L) Vs. ACIT, Circle-10(1), Kolkata (Appellant) (Respondent) Present for: Appellant by : Shri S. K. Tulsiyan, Advocate & Ms. Lata Goyal, AR Respondent by : Ms. Monalisa Pal Mukherjee, JCIT, Sr. DR Date of Hearing : 22.05.2025 Date of Pronouncement : 22.05.2025 O R D E R Per Bench : The captioned appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), Kolkata-27 [in short “CIT(A)”] vide order No. ITBA/APL/S/250/2024-25/1070686700(1) dated 27.11.2024 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the assessment year 2016-17. 2 ITA No. 2641/Kol/2024 Jaideep Halwasiya, AY: 2016-17 2. Ms. Monalisa Pal Mukherjee, JCIT, Sr. DR represented on behalf of the revenue and Shri S. K. Tulsiyan, Advocate along with Ms. Lata Goyal, AR appeared on behalf of the assessee. 3. It was submitted by the Ld. AR that the only issue in the assessee’s appeal was against the action of the disallowance made by invoking the provisions of section 14A r.w.r 8D of the I. T. Rules, 1962 (hereinafter referred to as the “Rules”). It was the submission that the assessee had earned exempt income to an extent of Rs.1,25,000/-. The assessee for the said amount had disallowed expenses u/s. 14A of the Act to an extent of Rs.3,13,450/-. It was the submission that Ld. CIT(A) has upheld enhancement of the disallowance to Rs.28,91,512/-. It was submitted by the ld. AR that in view of the decision of Hon’ble Supreme Court in the case of Caraf Builders & Construction Pvt. Ltd. reported in 112 taxman.com 322 (SC) the disallowance u/s. 14A read with rule 8D could not exceed the exempt income earned. It was the submission that the disallowance as made by the AO may be deleted. 4. In reply, the Ld. Sr. DR vehemently supported the orders of the lower authorities. 5. We have considered the rival submissions. A perusal of the decision of the Hon’ble Supreme Court in the case of Caraf Builders & Construction Pvt. Ltd. (supra) clearly shows that the Hon’ble Supreme Court has upheld the finding of the Hon’ble High Court wherein it has been specifically held that the disallowance u/s. 14A read with Rule 8D cannot exceed the exempt income for the relevant year. This being so, and respectfully following the principles laid down by the Hon’ble Supreme Court in the case of Caraf Builders & Construction Pvt. Ltd. (supra), the enhancement made by the Assessing Officer u/s. 14A of the Act stands deleted. However, the disallowance as made by the assessee to the extent of Rs.3,13,540/- shall remain. 3 ITA No. 2641/Kol/2024 Jaideep Halwasiya, AY: 2016-17 6. In the result, the appeal of the assessee is allowed. Order is dictated and pronounced in the open court. Sd/- Sd/- (Sanjay Awasthi) (George Mathan) Accountant Member Judicial Member Dated: 22nd May, 2025 JD, Sr. P.S. Copy to: 1. The Appellant: Shri Jaideep Halwasiya 2. The Respondent- ACIT, Circle-10(1), Kolkata. 3. CIT(A), Kolkata-27. 4. Pr. CIT 5. DR, ITAT, Kolkata Bench, Kolkata 6. Guard file. True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "