Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
ORDER Shri S.S. Viswanethra Ravi, JM:
This appeal by the Revenue is directed against the order dt. 28-08-2017 of the Commissioner of Income Tax (Appeals), 2, Kolkata for the A.Y 2011-12.
The only issue is to be decided as to whether the CIT(A) is justified in deleting the disallowance made by the AO u/s. 14A of the Act in contravention of Circular No. 05 of 2014 issued by the CBDT in the facts and circumstances of the case.
The ld. DR placed his reliance in the case of Lally Motors India (P) Ltd reported in (2018) 93 Taxman.com 39 (Amritsar-Trib) and argued that the disallowance u/s. 14A of the could even be made when there is no exempt income.
The ld. AR submits that the assesse on its own disallowed a sum of Rs.27,70,943/- for the purpose of section 14A r.w.rule 8D2(i) & (iii). No investment was made in the shares of Mukund Engineers Ltd during the year and part of interest could be disallowed under Rule 8D(2)(ii) of the IT Rules. The AO computed M/s. MKJ Enterprises Ltd the disallowance under Rule 8D(2)(ii) taking into account the entire interest expenditure. The assesse earned interest of Rs.39,38,15,800/- on the loans advances and net interest expenditure for the year under consideration is Rs.19,94,78,874/-. Net of interest expenditure is to be considered for the purpose of disallowance u/s. 14A if netting off interest earned against interest expenditure and no further interest expense remains and no disallowance can be made u/s. 14A of the Act. The ld. AR supported the order of the ld. CIT(A) and pleaded the order of Hon’ble Amritsar Tribunal in the case of Lally Motors India P.Ltd supra is not applicable in the present facts and circumstances of the case and placed reliance in the case of REI Agro of Hon’ble Jurisdictional High Court of Calcutta.
Heard rival submissions and perused the material on record. It is noted from the record that the assessee received dividend income of Rs.15000/- from M/s. Mukund Engineers Ltd. According to assessee, it is exempt from tax and no expenses were incurred in earning said exempt income except incurring of D-mat charges expenses of Rs.2,232/-, but, considering the average value of investments disallowed on its own Rs.27,68,711 @ 0.5%. That no interest bearing funds were utilized for earning said dividend income. Therefore, it is clear according to assessee there was no amount of expenditure by way of interest incurred in earning said dividend income and contended that no disallowance under Rule 8D2(ii) is maintainable. The CIT-A found satisfied with regard and by placing reliance on the decision of Hon’ble High Court of Calcutta in the case of REI Agro Ltd, wherein it held that only investments yielded exempted is to be considered for disallowance U/Sec. 14A of the Act. In view of the above, we find no infirmity with order of CIT- A and it is justified. Ground no. 1 raised by the Revenue is dismissed.