M/S. GENESIS EXPORTS PVT. LTD.,,KOLKATA vs. DCIT, CIRCLE 11(1) (EARLIER CIRCLE 12(1),, KOLKATA

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ITA 3036/KOL/2025Status: DisposedITAT Kolkata17 February 2026AY 2017-2018Bench: CIT(A) did not consider the plea of the assessee and dismissed the appeal of the assessee. After examining the documents placed before us, we find that on the basis of average investment which yielded exempt income during the year, the disallowance comes to Rs. 11,00,748/-. After allowing suo motto deduction in respect of the disallowance made by the assessee, the net disallowance worked out to Rs. 10,75,748/-. Consequently, we set aside the order of the Ld.CIT(A) and direct the AO to restr1 pages
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What did the Tribunal hold?

The Tribunal found that the disallowance computed on the basis of average investment yielding exempt income during the year came to Rs. 11,00,748/-. After allowing suo motto deduction, the net disallowance was Rs. 10,75,748/-. The case was found to be squarely covered by the decision of the Hon'ble Kolkata High Court in PCIT Vs. REI Agro Limited.

What were the facts?

The assessee filed an appeal against the order of the Ld. CIT(A) which confirmed the disallowance made by the AO under section 14A read with Rule 8D of the IT Rules. The AO computed disallowance by considering all investments, irrespective of whether they yielded exempt income. The Ld. CIT(A) dismissed the assessee's appeal despite the submission of details.

What were the issues?

Whether the disallowance under section 14A read with Rule 8D was correctly computed by the AO and confirmed by the CIT(A), considering the assessee's investments and exempt income earned.

Which sections of the Income-tax Act were involved?

Section 14A,Section 250

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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA

Date of concluding the hearing : 29.01.2026 Date of pronouncing the order : 17.02.2026 O R D E R The present appeal filed by the assessee arises from order dated 27.11.2025 passed u/s 250 of the Income Tax Act, 1961 (hereafter referred to “the Act”) by the Ld. Additional/Joint Commissioner of Income Tax (Appeals) -2, Chennai [hereafter referred to “the Ld. Addl./JCIT(A)].

2.

The only issue raised by the assessee is against the Ld.CIT(A) confirming the disallowance as made by the AO u/s 14A read with Rule 8D of the IT Rules of Rs. 29,31,778/-.

3.

After hearing the rival contention and perusing the material on record, we find that the AO during the course of assessment proceedings invoked provisions of section 14A read with Rule 8D thereby computing the disallowance of Rs. 29,56,778/- and after allowing deduction of suo-motto

M/s Genesis Exports Pvt. Ltd. disallowance of Rs. 25,000/- , the balance amount of Rs. 29,31,778/- was added to the income of the assessee which was also confirmed by the Ld. CIT(A). We note that in this case, the AO has computed disallowance u/s 14A read with rule 8D of the Rules by taking all the investments .i.e. investment yielded exempt income as well as investments which did not yield any exempt income during the year. The Ld.CIT(A) despite being specifically prayed by the assessee and despite placing all the details on record before CIT(A) did not consider the plea of the assessee and dismissed the appeal of the assessee. After examining the documents placed before us, we find that on the basis of average investment which yielded exempt income during the year, the disallowance comes to Rs. 11,00,748/-. After allowing suo motto deduction in respect of the disallowance made by the assessee, the net disallowance worked out to Rs. 10,75,748/-. Consequently, we set aside the order of the Ld.CIT(A) and direct the AO to restrict the addition to Rs. 10,75,748/-. The case of the assessee is squarely covered by the decision of Hon’ble Kolkata High Court in the case of PCIT Vs. REI Agro Limited 2022 140 taxman.com 71 (Kol), wherein similar issue has been allowed . Accordingly the AO is directed to restrict the addition to Rs. 10,75,748/-.

4.

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

Order pronounced on 17.02.2026

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