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Income Tax Appellate Tribunal, BENCH ‘SMC’ KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM]
This is an appeal filed by the assessee directed against order of the Commissioner of Income Tax-(A)-5, Kolkata dated 03.01.2018 passed u/s 250 of the Income Tax Act, 1961 (the ‘Act ‘) relating to A.Y. 2012-13.
After hearing rival contentions, I find that the sole issue that arises for adjudication is disallowance u/s 14A of the Act. The dividend income earned by the assessee during the year which is claimed as exempt u/s 10(34) of the Act is Rs.6,02,230/-. The disallowance u/s 14A of the Act arrived at by the AO is Rs.17,38,804/-.
The Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd vs CIT [2015] 372 ITR 694(Delhi) has held that the quantum of disallowance u/s 14A of the Act cannot exceed the dividend income earned which is exempt u/s 10(34) of the Act.
Moreover, the Hon’ble Calcutta High Court in the case of CIT vs REI Agro Ltd in GA No.3581 of 2013 ITAT No.20 of 2013 has laid down that, when disallowance Anilraj Promoters & Fincon Pvt. Ltd. A.Y.202-13 2 is made u/s 14A, only those scripts on which dividend is earned has to be considered. These two principles of law laid down have not been applied to this case by the ld. AO. The ld. CIT(A) has passed an exparte order. In this facts and circumstances I restore this issue to the file of the AO for fresh adjudication in accordance with law. The AO is directed to compute the disallowance u/s 14A, only with reference to the shares on which the assessee has earned dividend income during the year. Such disallowance u/s 14A of the Act shall not be more than the dividend income earned by the assessee during the year, which was claimed as exempt.
In the result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 30.08.2018.