AMIN SONS MARKETING PVT. LTD.,BARODA vs. THE INCOME TAX OFFICER, WARD-1(1), BARODA

In this case, original assessment u/s. 143(3) of the act was completed on 31st Dec, 2007 by determining the total income of the assessee at Rs. 11,07,590/- against the income declared in the return of income of Rs. 5,31,580/- . Subsequently, the case was reopened by issuing of notice u/s. 148 of the act. On scrutiny, the assessing officer has noticed that assessee has earned exempt income in the form of dividend of Rs. 18,695/-. The assessee has not disallowed any expenses pertaining to earning of exempt income,thereafter, the assessing officer has applied provision of section 14A r.w.s 8D of the act and disallowed an amount of Rs. 2,94,860/- u/s. 14A r.w.s 8D of the act.

Aggrieved assessee filed appeal before the ld. CIT(A) who has dismissed the appeal of the assessee by stating that assessing officer has correctly worked out the disallowance of Rs. 2,94,860/- u/s. 14A of the act. During the course of appellate proceedings before us, the ld. counsel has submitted paper book containing detail of submission filed before the assessing officer and the CIT(A) by the assessee. On the other hand, ld. departmental representative supported the order of the ld. CIT(A).

After perusal of the information on record, we observed that the total amount of exempt income earned by the assessee in this case is only Rs. 18,695/-. There is no other expenditure which is directly or indirectly related to the exempt income. After following the various decisions of the ITAT benches, we restrict the amount of disallowance to the extent of exempt income of Rs. 18,695/-. Accordingly, the appeal of the assessee is partly allowed on this issue.

Regarding first ground of appeal of the assessee on the justification of reopening of assessment u/s. 148 of the act, we observe that in the original assessment the assessing officer has not examined the issue of disallowance u/s 14A of the act. As per material on record the assessing officer has also not raised any specific query on the issue of by the assessee towards earning exempt income. Therefore, we are inclined with the findings of the ld. CIT(A) elaborated in his order. Accordingly this ground of appeal of the assessee is dismissed.

In the result, the appeal of the assessee is partly allowed.