AKASH NARAYAN SAHGAL,KOLKATA vs. D.C.I.T., CIRCLE - 29,, KOLKATA

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ITA 443/KOL/2026Status: DisposedITAT Kolkata23 June 2026AY 2014-20154 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted the AO's error in including non-exempt income-generating investments for disallowance calculation. The matter was restored to the AO for readjudication.

What were the facts?

The Assessing Officer (AO) computed disallowance under Section 14A read with Rule 8D by considering all investments, not just those yielding exempt income. The assessee argued this was an error, citing a jurisdictional High Court decision.

What were the issues?

Whether the disallowance under Section 14A and Rule 8D should be computed based on all investments or only those yielding exempt income.

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,

Hearing: 23/06/2026Pronounced: 23/06/2026

आदेश / O R D E R Per George Mathan, JM: This is an appeal filed by the assessee against the order of the ADDL/JCIT(A)-2, LUDHIANA [hereinafter referred to as the ‘CIT(A)’] in appeal no.CIT(A), Kolkata-8/10314/2016-17 dated 22.12.2025. 2. Shri Siddharth Agarwal, AR represented on behalf of the assessee and Shri Nicholus Murmu, Addl. CIT, Sr. DR represented on behalf of the revenue.

ITA 443/Kol/2026 3. It was submitted by the ld. AR that the only issue in this appeal of the assessee is in regard to computation of the disallowable expenditure by applying the provisions of section 14A read with rule 8D. It was the submission that in page 2 of the assessment order, the Assessing Officer while computing the average value of the investments has taken the entire investments as against such investments which have generated the exempt income. It was the further submission that even in regard to the computation under rule 8D(2)(ii) of the Act, the Assessing Officer has adopted the figure of the entire investments as against the value of such investments which have given rise to exempt income. It was the submission that thus the Assessing Officer has erred in calculating the disallowance under both rule 8D(2)(ii) and (iii) of the Act. It was prayed that in view of the decision of the Coordinate Bench of this Tribunal in the case of REI Agro Ltd. vs. DCIT reported in 35 taxmann.com 404 which has been upheld by the Hon’ble Jurisdictional High Court in the case of PCIT vs. REI Agro Ltd. reported in 140 taxmann.com 71 (Cal). It was the submission that the Assessing Officer may be directed to recompute the disallowance u/s 14A by adopting the value of only such investments which give rise to exempt income.

ITA 443/Kol/2026 4. In reply, the ld. Sr. DR submitted that this issue may be restored to the file of the Assessing Officer for readjudication.

5.

I have considered the rival submissions. As it is noticed that the Assessing Officer has taken the entire investments which have generated exempt income and which have not generated such exempt income for the purpose of computing disallowance u/s 14A, the issues in this appeal are restored to the file of the Assessing Officer for readjudication. The Assessing Officer shall take into consideration only such investments which give rise to exempt income while computing the disallowance u/s 14A r.w.r. 8D. 6. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 23/06/2026.

Sd/- (GEORGE MATHAN) न्यधनयक सदस्य / JUDICIAL MEMBER Kolkata, Dated: 23/06/2026 RS

ITA 443/Kol/2026 आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. संबंधित आयकर आयुक्त / Concerned CIT 4. आयकर आयुक्त(अपील) / The CIT(A)- 5. ववभागीय प्रतततनधि, आयकर अपीलीय अधिकरण,/ DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file.

BY ORDER,

Asstt. Registrar, ITAT, Kolkata

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