M/S. BORBHETA ESTATE P. LTD.,KOLKATA vs. JCIT(OSD)C-4, KOLKATA, KOLKATA

This appeal by the assessee against the order dated 31.01.2017 passed by CIT(A)-16, Kolkata for AY 2009-10.

The only issue emanates amongst three grounds raised by the assessee is as to whether the CIT(A) is justified in confirming the addition made by the AO by invoking Rule 8D(2)(ii) & (iii) of the Income Tax Rules, 1962 (in short “Rules”).

Briefly facts and circumstances of the case are that the assessee is a company engaged in the business of Tea manufacturing and growing. The AO found the assessee has earned dividend income and by invoking Rule 8D(ii) & (iii) disallowed Rs.8,92,570/- for the purpose of section 14A of the Act. The relevant portion of AO is reproduced hereunder:-

Before us, Ld. AR submits that the AO has considered entire investments and disallowed impugned amount of Rs.8,92,570/- which was confirmed by the CIT(A) which is incorrect. The AO ignored our calculation in respect of those investments which has given exempt income. Further, Ld.AR argued that the AO should take those investments which have been yielded exempt income for the purpose of working of disallowance u/s 14A of the Act. The respondent-Revenue accepted the calculations submitted by the assessee in this respect for AY 2008-09 and prayed to remand the matter to the file of the AO for a fresh consideration to work out disallowance taking into consideration those investments which have been given exempt income. The Ld.DR submits that the assessee did not give any calculations in the original assessment proceedings as well as in the remand proceedings and referred to para 3 of the CIT(A) and argued that the assessee failed to segregate the expenses and investments and supported the orders of both the authorities below.

Heard rival submissions and perused the material available on record. It is also noted from the order of CIT(A) in para No.3 that no proper submission was made to segregate expenses and investments, which is, in our opinion, is necessary for working out expenses that may have been incurred in earning the exempt income and the arguments of the Ld.AR was that any disallowance should relate to those investments which yielded exempt income in such circumstances, taking into consideration the facts & circumstances of the case, we deem it proper to remand the file of the AO for his fresh consideration to work out the expenses relating those investments which yielded exempt income. The assessee is directed to file all relevant details in this regard segregating the expenses and investments. Thus, Grounds No.1 to 3 raised by the assessee are allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.