EIH Limited Vs DCIT (ITAT Kolkata)
ITAT Kolkata held that the disallowance u/s 14A of the Income Tax Act, read with Rule 8D of the Income Tax Rules should be restricted to the dividend yielding investments. Accordingly, AO directed to re-compute disallowance.
Facts- The issue in the present appeal is regarding the disallowance of Rs. 50,51,380/- u/s 14A of the Act r.w. Rule 8D, r.w. section 115JB of the Act. Briefly, it is observed that the appellant had suo-moto disallowed Rs. 10,32,739/- on this account. However, AO applied Rule 8D of the I.T. Rules and disallowed the impugned amount.
Conclusion- Held that the judicial pronouncements on this issue are in favour of the appellant in as much as it is fairly well settled as of now that any disallowance u/s 14A of the Act, r.w. Rule 8D will need to be made on investments yielding exempt income. Thus, AO is directed to recompute the disallowance u/s 14A of the Act by taking into account only exempt income yielding investments. Needless to say, the disallowance already made by the assessee will need to be given credit for.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
1. These are a batch of two appeals for AYs 2017-18 and 2018-19, with several common grounds. Accordingly, these appeals are being disposed of through a single order.
