JATASHIV PLAZA PRIVATE LIMITED,KOLKATA vs. ITO, WARD - 6(4), KOLKATA, KOLKATA

PDF · subscribers
ITA 1898/KOL/2018Status: DisposedITAT Kolkata15 May 2019AY 2013-142 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee had not earned any exempt income during the assessment year, no disallowance under Section 14A could be made. The disallowance was deleted.

What were the facts?

The Assessing Officer (AO) made a disallowance of Rs. 6,58,000/- under Section 14A of the Income Tax Act, 1961, for expenditure incurred in relation to exempt income. The assessee argued that no exempt income was earned during the year.

What were the issues?

Whether disallowance under Section 14A is permissible when no exempt income has been earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, KOLKATA BENCH, “SMC” AT KOLKATA

Before: Shri A. T. Varkey, JM]

Hearing: 20.02.2019Pronounced: 15.05.2019

ORDER This is an appeal preferred by the Assessee against the order of the CIT(A)-2, Kolkata dated 11.07.2018 for Assessment Year 2013-14.

2.

The only grievance of the assessee against the action of the Ld.CIT(A) in confirming the addition made by the AO of Rs. 6,58,000/- u/s 14A of the Act.

3.

Brief facts of the case is that the AO while going through the balance sheet noted that the assessee has made investment in equities and has failed to add proportionate expenditure incurred for earning exempt income as per section of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).

4.

When the AO gave show cause to the assessee as to why disallowance u/s 14A read with Rule 8D should not be resorted to, the AR of the assessee submitted that the assessee was not earning any exempt income this year and, therefore, the suo-moto disallowance of Rs. 2,19,752/-/- should be accepted and no disallowance by applying Rule 8D should be made against the assessee. However, the AO did not agree and he took note of the CBDT Circular No. 5 of 2014 and made a disallowance of half percentage of average investment which comes to Rs. 2,50,368/- which was disallowed and added to the income of the assessee[ In the appeal before the Ld CIT(A) the assessee raised additional ground wherein it pleaded that AO has further made addition on this issue to the tune of Rs 4,07,632/-. Thus

M/s. Jatashiv Plaza Pvt. Ltd. AY- 2013-14 making a total disallowance of Rs 6,58,000/-]. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the action of the AO. Aggrieved the assessee is before us.

5.

I have heard both the sides and perused the records. I note that the assessee has not earned any exempt income in this assessment year and, therefore, since there was no exempt income, there cannot be any disallowance u/s 14A of the Act by mechanically applying Rule 8D, for that I rely upon the order of the Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs CIT 378 ITR 33 and delete the disallowance of Rs. 6,58,000/-.

6.

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

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →