NOBLE COMMUNICATIONS PVT. LTD.,KOLKATA vs. A.C.I.T., CIRCLE - 5(1),, KOLKATA

Both the appeals filed by the assessee are with delays of 68 days. The assessee has filed petitions for condonation of the delays. The reasons in the petitions are plausible and reasonable. Consequently, the delays in filing the appeals are hereby condoned and we proceed to dispose off the appeals on merits.

It was submitted by the ld. AR that the main issue in the assessee’s appeal is in regard to the disallowance made by the Assessing Officer by invoking the provisions of section 14A. It was the submission that the assessee had disallowed Rs.3,62,602/- u/s 14A in respect of exempt income received by the assessee of Rs.7,88,14,386/- for the assessment year 2017-18. It was the submission that the requisite satisfaction has not been recorded. It was also the submission that the Assessing Officer has not considered the provisions of rule 8D and has considered annual average of the total investments. Under rule 8D such investments which have generated exempt income are to be considered. The ld. AR placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. REI Agro Ltd. in ITA No.161 of 2013 dated 23.12.2013 and also the decision of the Coordinate Mumbai Bench of

In reply, the ld. Sr. DR vehemently supported the orders of the Assessing Officer and ld. CIT(A).

We have considered the rival submissions. A perusal of the facts in the present case and specifically the computation of the disallowance u/s 14A r.w.r. 8D as made by the Assessing Officer clearly shows that the Assessing Officer has taken yearly average of total investments and not the investments which yielded exempt income. This being so, in the interest of justice, the issue in this appeal in respect of 14A disallowance is restored to the file of the Assessing Officer to recompute the disallowance and the same is to be done in line with the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. REI Agro Ltd. referred to supra and the decision of the Coordinate Mumbai Bench of this Tribunal in the case of Hercules Hoists Ltd. vs. DCIT referred to supra.

In respect of argument raised by the ld. AR that there is no recording of satisfaction, it must be mentioned here that the Assessing

For the assessment year 2018-19, it was submitted by the ld. AR that the assessee has claimed interest expenditure of 72,38,792/- out of which an amount of Rs.45,33,294/- has been disallowed u/s 14A. It was the submission that this was the interest paid on the loan taken being the unsecured loan was raised during the year for purchase of mutual funds. It was the submission that the profit earned from the mutual funds have been offered to tax. It was the submission that the said expenditure is not to be considered. It was the submission that the assessee has earned Rs.99,76,12,475/- from such mutual funds which has been shows at page 102 of the paper-book. In the computation of total income, the ld. AR has drawn out attention to the long-term capital gains with STT at Rs.94,76,08,802/-. It was the submission that this was the net of the long-term capital gains which has been offered to tax. It was the submission that the entire interest is related to this income and consequently, the same cannot be considered when computing the disallowance u/s 14A.

The ld. Sr. DR submitted that he has no objection if the same is to be verified before the Assessing Officer.

In the result, both the appeals of the assessee are partly allowed for statistical purposes.