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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi
order : September 5th , 2018 ORDER Per J. Sudhakar Reddy, AM :- This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals) - 1 Kolkata, (hereinafter the ‘Ld. CIT(A)’), dt. 29/04/2016, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2011-12. 2. The assessee is a company and is a manufacturer and trader of jute goods as well as trading in shares, securities and commodities.
We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- :-
Ground No. 1, is general in nature.
Ground No. 2 & 3, are on the disallowance made u/s 14A r.w.r. 8D(ii) of the Act. We find that the dividend earned by the assessee is Rs.4,02,339/- and the disallowance made u/s 14A is Rs.9,95,147/-. It is well settled that the quantum of disallowance cannot exceed dividend income earned. For this proposition of law we rely on the judgment of the Hon’ble Delhi High Court in the case of Joint Investments (P.) Ltd. v. Commissioner of Income-tax [2015] 233 Taxman 117 (Delhi).
The ld. Assessing Officer is directed to restrict the disallowance to a figure which is not more than the dividend income earned.
5.1. In the result, Ground No.2 & 3, are allowed in part.
Ground No. 4, is against the disallowance u/s 40(a)(ia) of the Act. After hearing rival contentions, we remit the matter back to the file of the Assessing Officer for considering the claim of the assessee that, the payee has reflected the transactions in question in its accounts and offered the same for tax and hence the Second Proviso to Section 40(a)(ia) of the Act, should be applied. For this propositions of law, reliance is placed upon the judgment of the Hon’ble Calcutta High Court in the case of PCIT vs. Tirupati Construction in GA No. 2146/2016, ITAT No. 287 of 2016 dated 29.08.2016. If the payee has reflected this payment as its income and considered the same in its books of accounts, then no disallowance can be made u/s 40(a)(ia) of the Act.
Ground No. 5, is against the disallowance made u/s 36(1)(vii) of the Act. The assessee had made trade advances to different parties during the course of business. As these advances became irrecoverable, he wrote off the same in the books of account and claimed deductions as bad debt u/s 36(1)(vii) r.w.s. 36(2) of the Act. The Assessing Officer disallowed the same on the ground that the amount in question is not routed through the profit and loss account of the assessee. We find no infirmity in this finding of the Assessing Officer and hence uphold the same as the assessee could not demonstrate that these amounts were taken into account. The assessee made an alternative contention that the amount in question should be allowed as a business loss u/s 28(1) of the Act. This claim depends upon the year of crystallisation. The fact that the loss in question has arisen during the course of business is not in dispute. Hence, we set aside this issue to the file of the Assessing Officer for examining the claim of the u/s 28(1) of the Act, in accordance with law.
Ground No. 6 is against the order of the ld. CIT(A) against the carry forward of long term loss of Rs.2,51,77,870/-, on the ground that the return of income in question was not filed within the due date prescribed u/s 139(1) of the Act. Before us, the assessee submits that there is no dispute regarding the genuineness of the loss and that the delay in filing of the return was due to circumstances beyond the control of the assessee and has to be allowed.
8.1. The ld. CIT(A) at page 20 of his order held as follows:- “The claim of loss to be carried-forward must be dealt in accordance with the provisions of the Income Tax Act. From perusal of documents on record, it is observed that the Return of income was e-filled on 30.06.2012 and was a belated Return. Further, as per provisions of section 139(3) of the Income Tax Act, 1961, claim of carry forward of losses in case of any Return of Income which is filed after the due date of filling such Return is not allowable. In view of the above, the claim of the appellant is not found to be justified. This ground is not allowed.”
8.2. We find no infirmity in this order of the ld. CIT(A) and hence uphold the same. Accordingly, this ground of the assessee is dismissed.
In the result, appeal of the assessee is allowed in part.