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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Hon’ble Shri A.T.Varkey & Shri Waseem Ahmed
आदेश /O R D E R
Per Waseem Ahmed, AM This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XII, Kolkata dated 13.08.2013. Assessment was framed by JCIT (OSD), Kolkata u/s 143(3) of the Income tax Act, 1961 (hereinafter referred to as ‘the Act ‘) vide his order dated 28.11.2011 for assessment year 2009-10. Shri M.K. Chanda, Ld. Departmental Representative represented on behalf of Revenue and Shri Anil Kochar, Ld. Advocate appeared on behalf of assessee.
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
exempt income is that he must record his dissatisfaction with correctness of claim of expenditure made by assessee or with correctness of claim made by assessee that no expenditure has been incurred. In the present case, the dividend and capital gains were earned from investment made in the past and the expenses relatable to the exempted income is minimum. Therefore, the Assessing Officer ought to have examined the working given in the audit report and given his finding as to why he did not agree with such working. I have gone through the working of disallowance of expenses as given by the Auditors of the appellant. In my opinion, the working as given by the Auditor is appropriate with the earning of exempted income having regard to the facts and circumstances of the case. Therefore; the Assessing Officer is directed to adopt the figure of disallowance as given in the revised return of income. The appellant gets a relief of Rs. 73,07,148/- on this ground.”
Being aggrieved by the order of the ld. CIT(A) the revenue is in appeal before us on the following grounds of appeal :
1. That on the facts and under the circumstances of the case Ld. CIT(A) erred in reducing arbitrarily the disallowance of expenses to 11,99,255/- in lieu of Rs. 85,06,403/- against earning of exempt income as per provision of Section 14A of the I. T. Act."
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)