CITY HOLDINGS PRIVATE LIMITED (ERSTWHILE CITY HOLDINGS LIMITED),KOLKATA vs. ACIT, CIRCLE 3(1),, KOLKATA

This appeal filed by the assessee is directed against the order dated 11.09.2025 of the NFAC, Delhi passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2017–18.

Brief facts of the case are that the assessee is a company and filed its return of income for assessment year 2017-18 by declaring an income of Rs.9,83,61,241/-. The case of the assessee selected under limited scrutiny for the reason that Expenses debited to Profit and loss account for earning exempt income is significantly lower as compared to investment made to earn exempt income. The total expenses incurred by the assessee was Rs.2,53,043 out of which the assessee had itself disallowed Rs.6,173/- as expenses u/s 14A of the Act. The Assessing Officer disallowed a total sum of Rs.10,53,453/- u/s 14A of the Act as against the disallowance of Rs.6,173/- made by the assessee.

Aggrieved by the said order, the assessee filed an appeal before the ld. CIT(A) wherein the appeal of the assessee has been dismissed.

Aggrieved and dissatisfied with the above order, the assessee filed the present appeal. The ld. AR challenges the very impugned order thereby submitting that the Assessing Officer as well as the ld. CIT(A) failed to appreciate the evidences filed by the assessee and the disallowance was made merely on conjectures and without any proper verification. He has further submitted that the Assessing Officer without recording his dissatisfaction for acceptance of said computation and without assigning any reason for rejection of the said sum of Rs.6,173/- had disregarded the submission made by the assessee. The ld. AR further submits that the assessee earned a dividend income of Rs.13,77,167/- against this, the assessee suo moto disallowed u/s 14A amounting to Rs.6173/- in the computation of income and according to him, the Assessing Officer proceeded to compute disallowance under Rule 8D in wholly mechanical manner by applying 1% of the average value of investments, and thereby made a disallowance of ₹10,59,626, without recording any dissatisfaction as to the correctness of the disallowance offered by the assessee. The ld. AR further submits that before the ld. CIT(A), the assessee filed a detailed submission stating that total expenditure debited to the Profit & Loss Account was Rs.18,42,889, out of which Rs.15,38,750/- had already been voluntarily disallowed in the computation of income and not claimed as deduction. The prayer of the assessee is that the suo moto disallowance of Rs.6173/- is fair as offered by the assessee and the mechanical disallowance made by the Assessing Officer may be deleted.