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Facts
The assessee's appeal was filed with a delay of 77 days. The assessee had earned exempt income of Rs. 2,75,000, while the AO computed a disallowance under Section 14A at Rs. 10,90,605. The assessee sought to restrict the disallowance to the quantum of exempt income.
Held
The Tribunal held that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of State Bank of Patiala. Therefore, the AO was directed to restrict the disallowance under Section 14A to the amount of exempt income earned by the assessee.
Key Issues
Whether the disallowance under Section 14A should be restricted to the amount of exempt income earned by the assessee.
Sections Cited
14A
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Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA
Before: SHRI GEORGE MATHAN
(नििाारण वर्ा / Assessment Year :2017-2018) Hollyfield Traders Private Limited Vs CIT(A), Kolkata-27 EN-28, Sector-V, Bidhannagar, Salt Lake City, North 24 Parganas West Bengal-700091 PAN No. : AAACH 8293 D (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. नििााररती की ओर से /Assessee by : Shri Ayush Kedia, AR : Smt. Madhumita Das, Sr.DR राजस्व की ओर से /Revenue by सुनवाई की तारीख / Date of Hearing : 10/07/2025 घोषणा की तारीख/Date of Pronouncement : 10/07/2025 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld. CIT(A), Kolkata-27, dated 24.08.2024 for the Assessment Year 2017-2018.
Shri Ayush Kedia, ld.AR appeared on behalf of the assessee and Smt. Madhumita Das, ld. Sr.DR appeared on behalf of the revenue.
The appeal of the assessee is barred by 77 days. In this regard, the assessee has filed affidavit stating sufficient reasons for condonation of delay, which are also not found to be false. Ld. Sr. DR also did not raise any serious objection. Accordingly, the delay of 77 days in filing the appeal is condoned and the appeal is admitted for hearing.
It was the submission by the ld. AR that the only issue in the appeal of the assessee is in respect of the disallowance u/s.14A of the Act made by the AO. It was the submission the assessee had earned exempt income Rs.2,75,000/- during the impugned assessment year. It was the submission that the AO had computed the disallowance u/s.14A f the Act at Rs.10,90,605/-. It was the submission that the only prayer of the assessee is that the disallowance u/s.14A of the Act may be restricted to the exempt income as earned by the assessee. It was the submission that the issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of State Bank of Patiala, reported in [2018] 99 taxmann.com 286 wherein the Hon’ble Supreme Court confirmed the view taken by the Hon’ble Punjab & Haryana High Court of restricting the disallowance to the quantum of exempt income. The ld. AR has also relied upon the decision of the Hon’ble Supreme Court in the case of Caraf Builders & Constructions (P) Ltd., reported in [2019] 112 taxmann.com 322(SC).
In reply, ld. Sr. DR vehemently relied on the order of the ld. CIT(A). It was the submission that the revenue’s SLP in the case of India Bulls on the issue is pending before the Hon’ble Supreme Court.
I have considered the rival submissions. A perusal of the facts and circumstances of the case shows that the issue in this appeal is squarely covered by the decision of the Hon’ble Supreme Court in the case of State Bank of Patiala, reported in [2018] 99 taxmann.com 286, therefore, the AO is directed to restrict the disallowance u/s.14A of the Act to the amount of the exempt income as earned by the assessee.