Calcutta High Court
Commissioner Of Income Tax vs M/S. R E I Agro Ltd on 9 April, 2014
Author: Girish Chandra Gupta
Bench: Girish Chandra Gupta, Sudip Ahluwalia
GA No. 3581 of 2013
I.T.A.T. No. 220 of 2013
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
COMMISSIONER OF INCOME TAX, CENTRAL -II, KOLKATA
VERSUS
M/S. R E I AGRO LTD.
BEFORE:
The Hon'ble JUSTICE GIRISH CHANDRA GUPTA
AND
The Hon'ble JUSTICE SUDIP AHLUWALIA
Date : 9th April, 2014.
For the appellant :
Mr. P.K.Bhowmick,Advocate
For respondent :
Mr. J.P.Khaitan,Sr. Advocate Mr. P. Jhunjhunwalla,Advocate Mr. C.S.Das,Advocate The Court : - The Assessing Officer disallowed expenditure for a sum of Rs. 4,03,86,996/- under Section 14A of the Income Tax Act without first recording that he was not satisfied with the correctness of the claim of the assessee in respect of the expenditure in relation to income which is exempt from the liability 2 to pay tax under the Income Tax Act. The CIT appeal reduced the amount of disallowance to a sum of Rs. 26,09,386/-. Aggrieved by the order of the CIT appeal, the Revenue approached the Appellate Tribunal which by its judgment and order dated 19th June,2013 dismissed the appeal. The Revenue has once again come up in appeal before us. Mr. Bhowmick, learned Counsel appearing for the appellant /Revenue drew our attention to a judgment of this Court in the case of Dhanuka & Sons Vs. Commissioner of Income Tax reported in 339 ITR 319 wherein the following view was taken :
"In the case before us, there is no dispute that part of the income of the assessee from its business is from dividend which is exempt from tax whereas the assessee was unable to produce any material before the authorities below showing the source from which such shares were acquired. Mr. Khaitan strenuously contended before us that for the last few years before the relevant previous years, no new share has been acquired and thus, the loan that was taken and for which the interest is payable by the assessee was not for acquisition of those old shares and, therefore, the authorities below erred in law in giving benefit of proportionate deduction. 3
In our opinion, the mere fact that those shares were old one and not acquired recently is immaterial. It is for the assessee to show the source of acquisition of those shares by production of materials that those were acquired from the funds available in the hands of the assessee at the relevant point of time without taking benefit of any loan. If those shares were purchased from the amount taken in loan, even for instance, five or ten years ago, it is for the assessee to show by the production of documentary evidence that such loaned amount had already been paid back and for the relevant assessment year, no interest is payable by the assessee for acquiring those old shares. In the absence of any such materials placed by the assessee, in our opinion, the authorities below rightly held that proportionate amount should be disallowed having regard to the total income and the income from the exempt source. In the absence of any material disclosing the source of acquisition of shares which is within the special knowledge of the assessee, the assessing authority took a most reasonable approach in asssessment."
Mr. Khaitan,learned Senior Counsel appearing for the assessee submitted that the judgment in the case of Dhanuka & Sons has no manner of application 4 to the facts and circumstances of this case. In that case, the assessee was unable to produce any material before the authorities showing the source from which the shares were acquired. He contended that no such finding has been recorded by the Assessing Officer in this case. The Assessing Officer, as a matter of fact, did not record his dissatisfaction with the correctness of the claim made by the assesssee. Therefore, the judgment cited by Mr. Bhowmick has not manner of application.
We have considered the rival submissions and are of the opinion that on the basis of the judgment cited by Mr. Bhowmick, it cannot be said that the appeal raises any question or substantial question of law. The appeal is, therefore, not admitted and is, consequently, dismissed.
(GIRISH CHANDRA GUPTA, J.) (SUDIP AHLUWALIA, J.) S.Chandra