J.L.MORISON(INDIA) LTD,KOLKATA vs. DCIT-11(1), KOLKATA

The present appeal has been preferred by the assessee agitating against the order dated 30.03.2021 of the Principal Commissioner of Income Tax (hereinafter referred to as ld. ‘Pr. CIT’) passed u/s 263 of the Income Tax Act, 1961 (hereinafter the ‘Act’) and thereby setting aside the assessment order dated 05.10.2018 passed u/s 143(3) of the Act with the direction to the Assessing Officer (hereinafter the ‘AO’) to pass assessment order afresh.

The brief facts of the case are that from assessment record, the ld. Pr. CIT observed that the AO at the time of calculation of expenditure relating to the earning tax exempt income for the purpose of calculation of disallowance u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter the ‘Rules’) has not taken into consideration the investments not yielding exempt income. He, therefore set aside the assessment order directing the AO for passing assessment order afresh taking the average value of all investments including the investments not yielding tax exempt income for the purpose of calculation of disallowance u/s 14A of the Act read with Rule 8D of the Rules.

Being aggrieved by the order of the ld. Pr. CIT, the assessee has come in appeal before us.

We have heard the rival contentions of both the parties and gone through the record. We find that the issue is squarely covered in favour of the assessee by various decisions of the Coordinate Benches of the Tribunal. Reliance in this respect can be placed on the decision of the Special Bench of Delhi Tribunal in the case of ACIT vs. Vireet Investment (P) Ltd. (2017) 58 ITR 313 (Del-Trib.)(SB) wherein it has been held that only those investments are to be considered for computing average value of investment which yielded exempt income during the year for the purpose of calculation of disallowance u/s 14A of the Act read with Rule 8D of the Rules. Another view has been taken by the Kolkata Bench of the Tribunal in the case of REI Agro Ltd. vs. DCIT (2013) 35 taxmann.com 404 (Kolkata-Trib.). No Contrary case law has been produced by the ld. D/R before us.

In view of this, we do not find justification on the part of the ld. Pr. CIT exercising his revisional jurisdiction u/s 263 of the Act. Hence the order passed by the ld. Pr. CIT u/s 263 of the Act is, therefore quashed.

In the result, the appeal of the assessee stands allowed. Order is pronounced in the open court on 09.02.2022. Sd/- Sd/- [Rajesh Kumar] [Sanjay Garg] Accountant Member Judicial Member Dated: 09.02.2022 Bidhan (P.S.)