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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy
M/s. SSL Consolidated Ltd…..…………….………………………………………….…………………….…Respondent 6, Russel Street Kolkata – 700 071 [PAN: AADCS 5478 G] Appearances by: Shri Sallong Yaden, Addl. CIT, appeared on behalf of the Revenue. None, appeared on behalf of the Assessee. Date of concluding the hearing : March 26th, 2018 Date of pronouncing the order : April 13th , 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)-5, (hereinafter the ‘Ld. CIT(A)’), dt. 14/09/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’), relating to Assessment Year 2013-14.
None appeared on behalf of the assessee despite notice by RPAD. There is no vakalatnama filed either. Under these circumstances, I dispose off the case ex-parte, qua the assessee, after hearing the ld. D/R.
Heard the ld. D/R. The only issue is the disallowance u/s 14A. the ld. CIT(A) at page 6 of his order held as follows:- “The appellant had not earned any dividend income on shares held as investment in the financial year. The only dividend earned was on shares, held as stock in trade which would not attract Section 14A of the Act read with Rule 8D(ii)(iii) as held by various judicial pronouncements.”
The Hon’ble Supreme Court in the case of Maxopp Investment Ltd. vs. Commissioner of Income Tax, Civil Appeal Nos. 104-109 of 2015, held as follows:- “…..the first and foremost issue that falls for consideration is as to whether the dominant purpose test, which is pressed into service by the assessees would apply while interpreting Section 14A of the Act or we have to go by the theory of apportionment.
2 Assessment Year: 2010-11 Ashika Capital Limited We are of the opinion that the dominant purpose for which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Limited may have made the investment in order to gain control of the investee company. However, that does not appear to be a relevant factor in determining the issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section14A of the Act in mind, the said provision has to be interpreted, particularly, the word 'in relation to the income' that does not form part of total income. Considered in this hue, the principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14A of the Act.” 4.1. Hence this decision of the ld. CIT(A) is hereby reversed.
This leaves us with only the issue of quantification of disallowance. 5.1. I set aside this matter to the file of the Assessing Officer for fresh quantification of the disallowance u/s 14A of the Act, in light of the decision cited above.
In the result, appeal of the revenue is allowed to the extent indicated above.