NATIONAL BEARING CO (JAIPUR) LIMITED,KOLKATA V. DCIT, CIRCLE 5(1), KOLKATA

ITA 1233/KOL/2025

AI Insights

The case involves an appeal by National Bearing CO (Jaipur) Limited against the order of the ld. Addl/JCIT(A)-1, Visakhapatnam, for the assessment year 2017-2018. The primary issue in the appeal was the confirmation of the addition made by the Assessing Officer under Section 14A read with Rule 8D of the Income Tax Act, which pertained to disallowances related to expenses incurred in earning exempt income. The assessee had initially disallowed an amount of Rs.61,993 in its return. However, the Assessing Officer, referencing CBDT Circular No.5/2014, expanded the scope of disallowance to all expenditures, not just those directly linked to investments yielding exempt income. The Tribunal, referencing a decision by the Hon'ble Jurisdictional High Court, ruled in favor of the assessee, directing a recomputation of the disallowance to include only those investments that actually yielded exempt income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714449 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Shalimar Pellet Feeds Ltd. [2023] 453 ITR 547 (Cal)
• Laws Referred To: Income Tax Act, Rule 8D
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH DAS BISWAS
• Assessee Lawyers: AKKAL DUDHEWALA
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

" आयकर अपीलीय अधिकरण, “एस.एम.सी” न्यायपीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH KOLKATA श्री जाजज माथन, न्याययक सदस्य क े समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER आयकर अपील सं/ITA No.1233/KOL/2025 (नििाारण वर्ा / Assessment Year : 2017-2018) National Bearing CO (Jaipur) Limited 11th Floor Birla Building, 9/1, RN Mukherjee Road, BBD Bagh West Bengal-700001 Vs DCIT, Circle-5(1), Kolkata PAN No. : AABCN 0090 R (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri Akkal Dudhewala, AR राजस्व की ओर से /Revenue by : Shri Somnath Das Biswas, Sr. DR सुनवाई की तारीख / Date of Hearing : 07/08/2025 घोषणा की तारीख/Date of Pronouncement : 07/08/2025 आदेश / O R D E R This is an appeal filed by the assessee against the order dated 21.05.2025 passed by the ld. Addl/JCIT(A)-1, Visakhapatnam for the assessment year 2017-2018. 2. Shri Akkal Dudhewala, ld.AR appeared on behalf of the assessee and Shri Somnath Das Biswas, ld. Sr. DR appeared on behalf of the revenue. 3. It was the submission of the ld.AR that the only issue in the assessee’s appeal was against the action of the ld.CIT(A) in confirming the addition made by the Assessing Officer by invoking provisions of Section 14A read with rule 8D. It was the submission that the assessee had in its return suo moto disallowed an amount of Rs.61,993/- under Section 14A r.w.rule 8D. The Assessing Officer relied upon the Circular issued by the CBDT in Circular No.5/2014 to hold that it was not only the investment which has yielded the exempt income but all the expenditure are to be Printed from counselvise.com ITA No.1233/KOL/2025 2 considered for disallowance u/s.14A of the Act read with rule 8D. It was the submission that the issue is squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of Shalimar Pellet Feeds Ltd., reported in [2023] 453 ITR 547 (Cal), wherein the Hon’ble Jurisdictional High Court has categorically held that for the purpose of computing the disallowance u/s.14A r.w.rule 8D only such investments are to be considered which have yielded the exempt income. It was the submission that the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) is liable to be deleted. 4. In reply, ld.Sr. DR vehemently supported the orders of the ld.AO and ld. CIT(A). 5. I have considered the rival submissions. As it is noticed that the issue in regard to the disallowance u/s.14A of the Act read with rule 8D, on the issue before me, is now squarely covered by the decision of the Hon’ble Jurisdictional High Court in the case of Shalimar Pellet Feeds Ltd., referred to supra, therefore, respectfully following the decision of the Hon’ble Jurisdictional High Court, the Assessing Officer is directed to recompute the disallowance by considering the only such investment which has yielded the exempt income. 6. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 07/08/2025. Sd/- (जाजज माथन) (GEORGE MATHAN) न्यानयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 07/08/2025 Prakash Kumar Mishra, Sr.P.S. Printed from counselvise.com ITA No.1233/KOL/2025 3 आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशािुसार/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ज फाईल / Guard file. सत्यापपत प्रयत //True Copy// Printed from counselvise.com "