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

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.

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 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.

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

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.