ITO, WARD-1(4), KOLKATA, KOLKATA vs. M/S. MILESTONE SHARES AND STOCK BROKING PVT. LTD., KOLKATA

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ITA 436/KOL/2017Status: DisposedITAT Kolkata24 August 2018AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted the CIT(A)'s direction for re-examination but also acknowledged the Revenue's argument regarding the omission of the power to remand from Section 251(1)(a). Consequently, the appeal was restored to the Assessing Officer for independent examination.

What were the facts?

The Assessing Officer disallowed expenses under Section 14A read with Rule 8D. The assessee had earned exempt dividend income. The CIT(A) directed the Assessing Officer to re-examine the disallowance, considering the nature of the assessee's business and specific loan details.

What were the issues?

Whether the CIT(A) had the power to remand the case to the Assessing Officer for re-examination of disallowances under Section 14A, and the correctness of the disallowance itself.

Which sections of the Income-tax Act were involved?

Section 14A,Section 251(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA

Before: Shri S.S.Godara & Shri, M. Balaganesh

आदेश /O R D E R PER S.S.Godara, Judicial Member:- This Revenue’s appeal for assessment year 2012-13 of Commissioner of Income Tax (Appeals)-2 Kolkata’s order dated 05.12.2016 passed in case No.633/CIT(A)-2/15-16, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’.

2.

Case called twice. None appears at the assessee’s behest. The Registry has already sent RPAD notice dated 07.06.2018. It is accordingly posted ex parte.

1.

ITO Wd-1(4) Kol. Vs. M/s Milestone Shares and Stock Broking Pvt. Ltd. Page 2 3. The Revenue’s sole contention during the course of hearing as per Revenue’s pleadings is that CIT(A) has erred in law as well as on facts in reversing the Assessing Officer’s action invoking u/s 14A r.w.s. 8D disallowance of ₹1,62,36,681/- comprising of taxpayer’s direct, proportionate interest and administrative expenditure under Rule 8D-1(i) to (iii) Income Tax Rules, 1962 involving corresponding sums of ₹1,02,06,385/-, 58,52,707/- and ₹8,50,541/-; respectively. There is no dispute about the assessee having derived exempt income of ₹2,54,427/- from dividends. The Assessing Officer invoked the above computation in his assessment order dated 30.03.2015.

4.

Coming to CIT(A)’s order, we find that he has directed the Assessing Officer to re-examine correctness of all the three heads of expenditure. He first of all takes note of the fact that assessee’s also engaged in securities trading in market and therefore the direct expenditure disallowance of ₹1,02,06,384/- pertains to its business activity. Coming to second issue of proportionate interest expenditure disallowance (supra), the CIT(A) concludes that interest expenditure of ₹4,64,815/- pertains to secured loan creditors. Further amount of ₹19,19,774/- is stated to be representing delayed payment charges to the brokers with whom shares and securities trading had been done. The CIT(A) thereafter concludes regarding administrative expenditure that only the dividend yielding investment have to be taken into consideration as per this tribunal’s decision in REI Agro Ltd. Vs. DCIT (2013) 144 ITD (141) (Kol). It is therefore evident that the CIT(A) has directed the Assessing Officer to verify all these facts in re-examination exercise and make the impugned disallowance related to exempt income yielding investments only.

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