M/S. CHEMCROWN EXPORTS LTD.,KOLKATA vs. DCIT, CIRCLE - 11, KOLKATA, KOLKATA

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ITA 2218/KOL/2017Status: DisposedITAT Kolkata30 January 2019AY 2012-132 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the disallowance under Section 14A cannot exceed the amount of exempt income earned by the assessee. This decision was based on the binding judgment of the Jurisdictional High Court.

What were the facts?

The assessee company filed appeals against the order of the CIT(A) for AY 2011-12 and 2012-13. The common issue in both appeals concerned the disallowance made under Section 14A of the Income Tax Act.

What were the issues?

Whether the disallowance under Section 14A can exceed the exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi

IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, KOLKATA Before Sri J. Sudhakar Reddy, Accountant Member & Sri S.S. Viswanethra Ravi, Judicial Member & 2218/KOL/2017 Assessment Years: 2011-12 & 2012-13 M/s Chemcrown Exports Ltd....................……………………….………………………………..………Appellant [PAN :AABCC 1681 M ] DCIT, Circle-11(1), Kolkata…..…………………………………………………….…………………...Respondent Appearances by: Shri Srikumar Banerjee, appeared on behalf of the Appellant. Shri S. Halder, Sr. DR, appeared on behalf of the Respondent.. Date of concluding the hearing : January 17, 2019 Date of pronouncing the order : January 30, 2019 ORDER Per J. Sudhakar Reddy, Accountant Member :-

Both these appeals filed by the assessee directed against a common order by the Learned Commissioner of Income Tax (Appeals)-4, Kolkata, [ld. CIT(A)] passed u/s. 250 of the Income Tax Act, 1961, (the ‘Act’), dated 18/08/2017, for the Assessment Years 2011-12 & 2012-13.

2.

As the issues arising both these appeals are common, for the sake of convenience, they are heard together and disposed off by way of this common order.

3.

Heard rival contentions. In both the appeals, the common issue that is argued is regarding restricting the disallowance u/s 14A of the Act to the extent of exempt income earned. The Hon’ble Jurisdictional High Court in of 2014 in the case of CIT vs. Ashika Global Securities Limited GA 2122 of 2014 decided on 11.06.2018 held that, disallowance u/s 14A of the Act cannot exceed the exempt income earned by the assessee. This judgment has followed the judgment of the Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT in ITA No.117/2015.

4.

Respectfully following the binding decision of the Jurisdictional High Court on this issue, we direct the Assessing Officer to restrict the disallowance

2 M/s Chemcrown Exports Ltd & 2218/KOL/2017 Assessment Years: 2011-12 & 2012-13 u/s 14A of the Act for both the Assessment Years to the extent of exempt income earned by the assessee. In the result, these grounds are allowed in part. 5. Ground Nos.4 & 5 for the Assessment Year 2011-12 are dismissed as not pressed. 6. In the result, both the appeals are allowed in part. Kolkata, the 30th January, 2019.

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