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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM
आदेश / O R D E R Per Bench:
The captioned appeal filed by the assessee , pertaining to assessment year 2015-16, is directed against the order passed by the Commissioner of Income Tax (Appeal)-12, Kolkata in appeal no. 10077/CIT(A)-12/AC, Cir-40/2017-18, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the “Act”) dated 20/11/2017.
The grounds of appeal raised by the assessee are as follows:
1. That the ld. CIT(A) has erred in holding that Assessing Officer ought to have added to Rs. 1,72,00,000/- as against Rs. 1,32,47,120/- u/s 14A/ Rule 8D(2)(1).
M/s Asam Bengal Carriers Assessment Year:2015-16 2. That the ld. CIT(A) has further erred in not considering the submission of assessee that the addition u/s 14A Rule 8D cannot exceed the amount of income claimed as exempted being Rs. 9,93,439/- in this case thereby not following judicial decorum in accepting decision of ITAT, Kolkata and other cited. 3. That the appellant craves leave to add, to amend or withdraw to any ground on or before the hearing of the appeal.
Brief facts qua the issue are that the assessee filed his return of income for A.Y. 2015-16 on 22.03.2016 declaring total income at Rs. 26,61,140/- and subsequently the assessee revised his return of income on 21.02.2017 declaring total income of Rs. Nil. The assessee’s case was selected for scrutiny assessment u/s 143(2) and the Assessing Officer framed the assessment u/s 143(3) of the Act. Assessee received dividend income of Rs. 9,93,439/- during the assessment year under consideration. During the assessment proceedings, the Assessing Officer computed the disallowance under Rule 8D(2)(ii) and 8D(2)(iii) read with section 14A of the Act at Rs. 1,32,47,120/-.
Aggrieved by the order of the Assessing Officer the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the addition made by the Assessing Officer.
Aggrieved the order of the ld. CIT(A) the assessee is in appeal before us.
The ld. Counsel for the assessee submitted before the Bench that the addition, if any, u/s 14A read with Rule 8D should not exist the amount of income exempt being Rs. 9,93,439/-, and prayed the Bench that addition u/s 14A should be restricted to Rs. 9,93,439/- in the light of the various precedents available on this issue.
M/s Asam Bengal Carriers Assessment Year:2015-16 7. However, on the other hand, the ld. DR has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity.
We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that in plethora of judgments, the various High Courts have held that the disallowance u/s 14A read with Rule 8D should not exceed the amount of exempt income. The ld. Counsel has contended before the Bench that the disallowance u/s 14A cannot exceed the exempt income received by the assessee. We note that in the following judgments of various Hon’ble High Courts, it has been held that disallowance u/s 14A read with Rule 8D should not exceed the exempt income received by the assessee. i) CIT vs. Cortech Energy Pvt. Ltd. reported in 325 ITR 97 (Guj) ii) CIT vs. Halsim India Pvt. Ltd. reported in 111 DTR 158 (Del) iii) CIT vs. Shiva Motors Pvt. Ltd. reported in 111 DTR 153 (All)
Respectfully following the judgments of the various High Courts on the issue under consideration, we direct the Assessing Officer to restrict the disallowance u/s 14A to the extent of the exempted income.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 22.11.2019