M/S. GENESIS EXPORTS PVT. LTD.,KOLKATA V. DCIT, CIRCLE 11(1) (EARLIER CIRCLE 12(1), KOLKATA

ITA 3036/KOL/2025

AI Insights

The case involves M/s Genesis Exports Pvt. Ltd., the appellant, contesting a disallowance of Rs. 29,31,778 made under Section 14A read with Rule 8D of the Income Tax Act, 1961, by the AO during the assessment for the year 2017-2018. The disallowance was confirmed by the Ld. CIT(A). The primary contention was the inclusion of all investments, both yielding and not yielding exempt income, in the disallowance computation. The Tribunal found merit in the assessee's argument, referencing a similar case (PCIT Vs. REI Agro Limited) and adjusted the disallowance to Rs. 10,75,748 based on the average investment that yielded exempt income.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837983 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 11-12-2025
• Other Referred Cases: PCIT Vs. REI Agro Limited 2022 140 taxman.com 71 (Kol)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA SHRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. No. 3036/Kol/2025 (Assessment Year 2017-2018) M/s Genesis Exports Pvt. Ltd., 8th Floor, Premises No. 803 & 804, Eco Centre, EM-4, Sector-V, Kolkata - 700091 [PAN: AAACG9811C] ……..…...…………….... Appellant vs. DCIT, Circle 11(1) (formerly Circle 12(1), Kolkata), Aayakar Bhawan, P-7, Chowringhee Square, Kolkata - 700069 ……..…...…………….... Respondent Appearances by: Assessee represented by : Robin Maheshwary, CA Department represented by : Susanta Saha, Sr. DR Date of concluding the hearing : 29.01.2026 Date of pronouncing the order : 17.02.2026 O R D E R The present appeal filed by the assessee arises from order dated 27.11.2025 passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to “the Act”) by the Ld. Additional/Joint Commissioner of Income Tax (Appeals) -2, Chennai [hereafter referred to “the Ld. Addl./JCIT(A)]. 2. The only issue raised by the assessee is against the Ld.CIT(A) confirming the disallowance as made by the AO u/s 14A read with Rule 8D of the IT Rules of Rs. 29,31,778/-. 3. After hearing the rival contention and perusing the material on record, we find that the AO during the course of assessment proceedings invoked provisions of section 14A read with Rule 8D thereby computing the disallowance of Rs. 29,56,778/- and after allowing deduction of suo-motto Printed from counselvise.com 2 ITA No. 3036 /Kol/2025 M/s Genesis Exports Pvt. Ltd. disallowance of Rs. 25,000/- , the balance amount of Rs. 29,31,778/- was added to the income of the assessee which was also confirmed by the Ld. CIT(A). We note that in this case, the AO has computed disallowance u/s 14A read with rule 8D of the Rules by taking all the investments .i.e. investment yielded exempt income as well as investments which did not yield any exempt income during the year. The Ld.CIT(A) despite being specifically prayed by the assessee and despite placing all the details on record before CIT(A) did not consider the plea of the assessee and dismissed the appeal of the assessee. After examining the documents placed before us, we find that on the basis of average investment which yielded exempt income during the year, the disallowance comes to Rs. 11,00,748/-. After allowing suo motto deduction in respect of the disallowance made by the assessee, the net disallowance worked out to Rs. 10,75,748/-. Consequently, we set aside the order of the Ld.CIT(A) and direct the AO to restrict the addition to Rs. 10,75,748/-. The case of the assessee is squarely covered by the decision of Hon’ble Kolkata High Court in the case of PCIT Vs. REI Agro Limited 2022 140 taxman.com 71 (Kol), wherein similar issue has been allowed . Accordingly the AO is directed to restrict the addition to Rs. 10,75,748/-. 4. In the result, the appeal of the assessee is partly allowed. Order pronounced on 17.02.2026 SD/- Rajesh Kumar) Accountant Member Dated: 17.02.2026 AK, Sr. P.S. Printed from counselvise.com 3 ITA No. 3036 /Kol/2025 M/s Genesis Exports Pvt. Ltd. Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches Printed from counselvise.com "