GEMINI OVERSEAS LIMITED,KOLKATA vs. DCIT, CIRCLE - 6(1), KOLKATA, KOLKATA

PDF · subscribers
ITA 1651/KOL/2017Status: DisposedITAT Kolkata31 July 2018AY 2012-133 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the deletion of the proportionate interest expenditure disallowance under Section 14A, affirming the suo motu disallowance of administrative expenditure. The repair and maintenance disallowance was also deleted as no specific query was raised by the AO and the expenditure was found to be revenue in nature.

What were the facts?

The assessee appealed against the CIT(A)'s order upholding the disallowance of ₹2,15,912/- under Section 14A read with Rule 8D and a repair and maintenance disallowance of ₹48,284/-. The assessee had suo motu disallowed administrative expenditure but the AO increased it by adding proportionate interest expenditure.

What were the issues?

Whether proportionate interest expenditure is disallowable under Section 14A read with Rule 8D when exempt income is minimal, and whether repair and maintenance expenses are disallowable without specific queries from the AO.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3),Section 31

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA

Before: Shri P.M.Jagtap & Shri S.S.Godara

आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2012-13 arises against Commissioner of Income Tax (Appeals)-2, Kolkata’s order dated 05.05.2017 passed in case No.1671/CIT(A)-2/14-15 upholding Assessing Officer’s action inter alia disallowing / adding an amount of ₹2,15,912/- u/s 14A r.w. Rule 8D as well as repair and maintenance disallowance of ₹48,284/-; respectively in assessment order dated 31.03.2014, involving proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. 2. We come to the former issue of section 14A r.w. 8D disallowance of ₹2,155,912/-made in assessment as upheld in lower appellate proceedings to the tune of ₹2,15,912/-. There is no dispute about the assessee having derived exempt income Gemini Overseas Ltd. Vs. DCIT, Cir-6(1) Kol. Page 2 from dividends amounting to ₹1,576/- in the relevant previous year. It had suo motu disallowed administrative expenditure of ₹1,35,585/- @ 0.5% of average value of investments under Rule 8D(2)(iii). The Assessing Officer increased the same to the extent proportionate interest expenditure disallowance under Rule 8D(2)(ii) to the extent of ₹1,34,585/- thereby computing the total disallowance to ₹2,15,912/- as upheld in the CIT(A)’s order under challenge.

3.

Learned Departmental Representative strongly supports both the lower authorities action making the impugned proportionate expenditure disallowance. He fails to dispute the assessee having incurred total interest expenditure of ₹19,29,949/- on term loan and cash credit in case of banks involving respective figures of ₹6,05,182/- and ₹13,24,759/- nexus between the assessee’s interest expenditure vis-à- vis its exempt income exists therefore as stipulated u/s 14A(2) r.w.s Rule 8D of the Income Tax Rules. We therefore direct the Assessing Officer to delete the said proportionate interest expenditure disallowance of ₹1,34,585/-. Needless to say, the above suo motu disallowance of administrative expenditure is affirmed. This former substantive ground is partly accepted.

4.

Next comes the assessee’s latter grievance challenging repair and maintenance disallowance of ₹48,284/- made in both the lower appellate proceedings. The Assessing Officer simply observes in his assessment order that no details were filed during the course of scrutiny. The assessee strongly contested the same in lower appellate proceedings and filed written statements specifically averring therein that Assessing Officer’s show cause notice u/s 142(1) of the Act dated 14.02.2014 nowhere raised any specific query regarding the impugned repair and maintenance. It then referred to Note 24 of its audited accounts indicating the expenditure in question to be of revenue nature since incurred on repairs and maintenance, plant and machinery, furniture, computer, vehicle etc. Relevant ledger accounts had also been placed on record. We find that CIT(A) has nowhere discussed the same in his lower appellate adjudication whilst affirming Assessing Officer’s action. We therefore conclude that there is no material on record suggesting the assessee’s repair and maintenance to have been hit by the specific embargo u/s 31 Explanation of the Act. We reject Learned Departmental Representative’s vehement contentions supportive of

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →