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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri Mahavir Singh & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XII, Kolkata in appeal No.281/XX/10/11-12 dated 04.01.2012. Assessment was framed by JCIT(OSD) under CIT-IV, 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.
ITA No.539/Kol/2013 A.Y.2009-10 Lalita Steel Inds.(P) Ltd. v. JCIT(OSD) under CIT-IV Kol. Page 2 2. Issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the disallowance of ₹52,36,580/- made by Assessing Officer on account of proportionate expenses which was claimed as attributable to Short Term Capital Gains (STCG) shown u/s 111A of the Act.
Facts of the case are that assessee is a Private Limited Company and having registration with Reserve Bank of India as Non-Banking Financial Corporation (NBFC for short) and engaged in the business of granting loan and advance, investment and share trading. During the year under consideration, assessee has earned STCG of ₹1,10,62,567/- arising out of sale of equity share and mutual units. The assessee has shown the following expense in its profit and loss account:- Administrative expense amounting to ₹17,75,305/-; (1) Interest expense of ₹93,99,773/-; (2) Depreciation of ₹6,90,490/-; (3)
Assessee has claimed the expense of ₹52,36,580- against the income under head STCG as stated above but AO disallowed a sum of ₹52,36,580/- as claimed by assessee against STCG showed u/s111A of the Act on the ground that the capital gain is charged to tax at special rate and no expenditure is allowable for deduction against that income. Accordingly, AO disallowed the expenses claimed by assessee for an amount of ₹52,36,580/- and added to the total income of assessee.
Aggrieved assessee preferred appeal before Ld. CIT(A) who uphold the action of Assessing Officer by observing as under:- “I have considered the finding of the AO and the written submission filed by the AR I think STDCG u/s/ 111A of the IT Act, 1961 is charged at a Special Rate, therefore, A.O is justified in not allowing any expenditure incurred for this purpose. So far as, AR’s arguments that the expenditure should be allowed as business expenses then in that situation the AR/assessee should have shown their income from STCG
ITA No.539/Kol/2013 A.Y.2009-10 Lalita Steel Inds.(P) Ltd. v. JCIT(OSD) under CIT-IV Kol. Page 3 as business income instead of income u/s. 111A of the IT Act, 1961. Therefore, AO’s action of not allowing any expenditure in this case seems justified, thus, assessee’s appeal grounds no. 2 and 3 are dismissed.”
Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. Shri Subash Agarwal Ld. Authorized Representative appearing on behalf of assessee and Shri Prabal Chowdhury, Ld. Departmental Representative appearing on behalf of Revenue.
We have heard both the parties and perused the material available on record. Ld. AR submitted that assessee is engaged in business of sale and purchase of share and all the expenses claimed in profit and loss account were in connection with business of assessee and prayed for allowabilty of those expenses. On the other hand, Ld. DR vehemently relied on the orders of authorities below. From the aforesaid discussion, we find that assessee during the year has earned profit which was taxable at special rate under head STCG and assessee has claimed expense against that income which was disallowed by AO on the ground that income is chargeable at a special rate. Therefore, no expense of whatsoever will be allowed from the income showed u/s. 111A of the Act. Before us the Ld. AR further took alternative plea stating that if such expenses are not allowed against the STCG u/s.111A of the Act then allow them as business expenditure against income under head of ‘business’. Ld. AR further submitted that assessee has incurred this expenditure for the purpose of its business and in case same are not allowed against the income under the head STCG then the same should be allowed against the business income of the assessee. After considering the plea of Ld. AR, in view of his submission, we restore this matter to the file of AO with a direction that if these expenses are having connections with the business of assessee then it should be allowed as business expenditure as specified in the chapter 6 of the
ITA No.539/Kol/2013 A.Y.2009-10 Lalita Steel Inds.(P) Ltd. v. JCIT(OSD) under CIT-IV Kol. Page 4 Income Tax Act and as per the provisions of section 28 to 44D of the Act. This ground of assessee’s appeal is allowed for statistical purpose.
In the result, appeal filed by assessee is allowed for statistical purpose. Order pronounced in the open court 04/12/2015 Sd/- Sd/- (Mahavir Singh) (Waseem Ahmed) (Judicial Member) (Accountant Member) Kolkata, *Dkp �दनांकः- 04/12/2015 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Lalita Steel Inds.(P)Ltd. 227 AJC Bose Road, Kolkata-20 2. ��यथ�/Respondent-JCIT(OSD)under CIT-IV, Aayakar Bhawan, P7, Chowringhee Square, Kolkata-700 069 3. संबं�धत आयकर आयु�त / Concerned CIT Kolkata 4. आयकर आयु�त- अपील / CIT (A) Kolkata 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड� फाइल / Guard file. By order/आदेश से, /True Copy/ उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, कोलकाता ।