ITAT KOLKATA BENCH ‘B’
Deputy Commissioner of Income-tax, Circle 6, Kolkata
Versus
Gulshan Investment Co. Ltd.
IT Appeal No. 666 (Kol.) of 2012
[ASSESSMENT YEAR 2008-09]
Date of pronouncement- 11.03.2013
ORDER
Pramod Kumar, Accountant Member
By way of this appeal, the Assessing Officer has challenged correctness of learned Commissioner (Appeals)’s order dated 21st January 2011, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the assessment year 2008-09, on the following ground:
That on the facts and circumstances of the case, learned CIT(A) erred in law in holding that the dis allowance under section 14 A of the Income Tax Act, read with rule 8D of the Income Tax Rules, is not applicable in the case of the assessee since the shares were kept as stock in trade. The CIT(A) should have upheld the dis allowance made by the AO.
2. The appeal is time barred by 10 days, but the Assessing Officer has moved a condonation petition, duly supported by an affidavit. Learned counsel for the assessee does not object to the prayer for consolidation. In this view of the matter, and having regard to the material on record, we condone the delay and proceed to take up the matter on merits.
3. The issue in appeal lies in a very narrow compass of undisputed material facts. The assessee is engaged in the business of share trading. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that while the assessee has earned dividend income of Rs. 18,91,556, the assessee has not made any dis allowance under section 14A in respect of “expenses relatable to the above exempt income”. The Assessing Officer also noticed that the assessee had paid interest of Rs. 10,34,315. On these facts, the Assessing Officer computed the dis allowance under section 14 A r.w.r. 8 D as follows:
Dis allowance under section 14A :
During the relevant year, the assessee had earned dividend income of Rs. 18,91,556/-. It was found that the expenses relatable to above exempt income has not been included back to the total income for taxation. (2) Assessee paid interest for Rs. 10,34,315/-. As per point 2 of Rule 8D Rs. 7,97,762/- is disallowed. As per point (3) dis allowance is worked out as section 14A read with Rule 8D of the I.T. Act as under :-
