M/S J.M.TEXTILES (P) LTD,KOLKATA vs. I.T.O.,WARD-11(2), KOLKATA

This is an appeal preferred by the assessee against the order of Ld. CIT(A)-4, Kolkata dated 23-01-2019 for the assessment year 2014-15. 2. At the outset, the Ld. Counsel for the assessee Shri Sunil Surana submitted that he is not pressing the second ground of appeal preferred by the assessee, therefore, the ground no.2 of the assessee stands dismissed being not pressed.

3. The Ld. Counsel for the assessee has also brought to our notice that the ground no.1 is regarding the disallowance made by the AO applying section 14A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) read with Rule 8D of the Income-tax Rules, 1962 (hereinafter referred to as the “Rules”). According to Ld. Counsel, the assessee did not receive any dividend income, therefore, relying upon the decision of Hon’ble Calcutta High Court in the case of CIT Vs. M/s. Ashika Global Securities Ltd. in ITAT 100 of 2014, GA 2122 of 2014 dated 11.06.2018 contended that no disallowance u/s. 14A was warranted in the facts of the case and, therefore, the order of the AO/Ld. CIT(A) is erroneous.

4. After hearing the rival submissions and having gone through the facts and circumstances of the case we note that the AO has acknowledged [in the assessment order at page 1] that assessee has not derived any dividend income. Despite that he applied Rule 8D read with sec. 14A to compute the disallowance u/s 14A of the Act, which he ought not to J. M. Textiles Pvt. Ltd., AY- 2014-15 have done, since the assessee did not earn any exempt income. According to me, section 14A disallowance was not warranted since the assessee did not earn any exempt income, which view has been upheld by the Hon’ble Calcutta High Court in Ashika Global Securities Ltd. (supra) and, therefore, we direct deletion of the addition of Rs.11,87,028/-. 5. In the result, appeal of assessee is partly allowed. Order is pronounced in the open court on 27th November, 2019.

Sd/- (Aby. T. Varkey) Judicial Member

Dated :27th November, 2019 Jd.(Sr.P.S.) Copy of the order forwarded to: