D.C.I.T., CIRCLE-12, KOLKATA, KOLKATA vs. M/S VINAYAK DEALERD PVT. LTD., KOLKATA

Ground No.2 was not pressed and therefore same is dismissed as not pressed. -M/s. Vinayak Dealers Pvt. Ltd. A.Y.2009-10 2

The only issue raised by the Revenue in Ground No. 1 of this appeal is that the ld. CIT(A) erred in reducing the disallowance made by the AO under the provision of section 14A of the Act from Rs.85,06,403.00 to Rs.1199255.00.

Briefly stated the facts are that the assessee is a private limited company. The Assessing Officer during the course of assessment proceedings observed that the assessee has earned divided income which was claimed to be exempted from tax u/s 10(34) of the Act. Accordingly the AO invoked the provisions of Rule 8D r.w.s. 14A of the Act and worked out the disallowance as under : a) Direct expenses Rs. 33766 b) Interest expenses Rs.7316098 c) Administrative expenses Rs.1156538

Total disallowances Rs.8506403 The above disallowances made by the AO were added to the total income of the assessee.

Aggrieved, the assessee preferred an appeal to the ld. CIT(A). The assessee before the ld. CIT(A) submitted that the amount of Rs.11,99,255/- was disallowed u/s 14A of the Act. The detail working of such disallowances of Rs.11,99,255 has been duly furnished to the AO along with Tax Audit Report in Form No.3CD. The AO failed to point out any defect in the working made by the assessee. The ld. CIT(A) after considering the submissions of the assessee has deleted the addition made by the AO by observing as under :- “I have considered the facts and submissions put forth on behalf of the appellant. I have gone through the working of the disallowance under sec 14A read with Rule 8D as made by the Assessing Officer and that given by the auditor along with the revised return of income. In CIT v. Consolidated Photo & Finvest Ltd. [2012] 211 Taxman 184 (Delhi), it has been held that disallowance offered by assessee itself under section 14A was sufficient or not should be gone by Assessing Officer even if rule 80 was applicable. In the case of Maxopp Investment Ltd.v.. CIT [2011] 203 Taxman 364. It has been held that in terms of section 14A(2) condition precedent for Assessing Officer to determine amount of expenditure incurred in relation to ITA No.2671/Kol/2013-M/s. Vinayak Dealers Pvt. Ltd. A.Y.2009-10 3

The ld. AR before us reiterated the submissions as made before the ld CIT(A) and also prayed for restoring the issue to the file of AO for fresh adjudication. On the other hand, the ld DR supported the order of authorities below.

We have heard the rival contentions and perused the materials available on record. At the outset it was observed that the AO has made the disallowances u/s 14A of the Act after invoking the provisions of rule 8D of Income Tax Rules 1962. However, we find that the assessee has suo motu disallowed the expenses for Rs.11,99,255/- and the AO in disallowance made by the assessee has not pointed out any mistake. In the case on hand, the AO has made the disallowance without referring and pointing out any mistake in the working of the assessee. Therefore we are inclined to restore this issue to the file of AO to adjudicate the matter afresh as per law and after referring to the submissions ITA No.2671/Kol/2013-M/s. Vinayak Dealers Pvt. Ltd. A.Y.2009-10 4 made by the assessee. The ld DR also raised no objection if the matter is remanded back to the file of AO. Hence, this ground of Revenue’s appeal is allowed for statistical purposes.

In the result, Revenue’s appeal stands allowed for statistical purpose. Order pronounced in the open court 17/03/2017 Sd/- Sd/- (�या�यक सद�य) (लेखा सद�य) (A.T.Varkey) (Waseem Ahmed) (Judicial Member) (Accountant Member)