PCB ENTERPRISE PVT. LTD.,KOLKATA vs. DCIT, CC 2(2)., KOLKATA

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ITA 325/KOL/2023Status: PendingITAT Kolkata06 June 2023AY 2014-152 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance under Section 14A should not exceed the exempt income earned. Therefore, the disallowance was restricted to the actual dividend income earned by the assessee.

What were the facts?

The assessee appealed an ex-parte order confirming a disallowance of expenses under Section 14A. The assessee argued that the disallowance was wrongly computed as they earned only Rs. 72,332/- as dividend income.

What were the issues?

Whether the disallowance of expenses under Section 14A should exceed the exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA

Before: SHRI SANJAY GARG, HON’BLE & DR. MANISH BORAD, HON’BLE

For Appellant: Shri Miraj D. Shah, A/R
Hearing: 23/05/2023Pronounced: 06/06/2023

O R D E R

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

1.

This is the appeal preferred by the assessee against the order of the National Faceless Appeal Centre (NFAC), Kolkata (hereinafter referred to as the ld. CIT(A)”], passed u/s 250 of the Income-tax Act, 1961 (hereinafter the ‘Act’), dated 08/02/2023 for the Assessment Year 2014-15.

2.

The sole issue which arises for our adjudication relates to the confirmation of disallowance of expense u/s 14A r.w.r. 8D at Rs.1,92,506/- being exempt income earned during the year.

3.

The ld. Counsel for the assessee submitted that the ld. CIT(A) has passed an ex-parte order without disposing the appeal of the assessee on merits. He further submitted that, the ld. Assessing Officer has wrongly computed the amount of disallowance of expenses of Rs. 1,92,506/- relating to dividend income earned during the year whereas, the assessee has in fact earned only Rs.72,332/- as dividend income.

Assessment Year: 2014-15 PCB Enterprise Pvt. Ltd. 2 3.1. The ld. D/R, though not leaving his grounds, could not controvert the factual position.

4.

Heard rival contentions. We find that the assessee has earned only Rs.72,332/- as dividend income during the year. Recently, the Hon’ble Delhi High Court PCIT Vs. Era Infrastructure (India) Ltd. (ITA 204/2022) judgment dt. 20/07/2022, has held that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Therefore, since the assessee has earned exempt income of Rs.72,332/- during the year, the disallowance u/s 14A of the Act, is restricted to the same and the remaining disallowance of Rs.1,20,174/- is hereby deleted.

5.

In the result, appeal of the assessee is allowed. Order pronounced in the Court on 6th June, 2023 at Kolkata.

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