Income Tax Appellate Tribunal - Kolkata
Orient Paper & Industries Limited, ... vs Dcit, Circle-6(1), Kolkata, Kolkata on 27 June, 2018
ITA No.817/Kol/2017 Orient Paper & Industries Ltd. A.Y.2011-12 1
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH 'D' KOLKATA
[Before Hon'ble Shri S.S.Godara, JM & Shri M.Balaganesh, AM ]
ITA No.817/Kol/2017
Assessment Year : 2011-12
Orient Paper & Industries Ltd. -versus- D.C.I.T., Circle-6(1)
Kolkata Kolkata
(PAN: AAACO 3279 J)
(Appellant) (Respondent)
For the Appellant: Shri A.Choudhury
For the Respondent:Shri A.Bhattacharjee, Addl. CIT
Date of Hearing : 18.06..2018.
Date of Pronouncement : 27.06.2018.
ORDER
PER S.S.GODARA, JM:
This assessee's appeal for A.Y.2011-12 arises against the CIT(A)-17, Kolkata's order dated 30.12.2016 passed in Appeal No.270/CIT(A)-17/Kol/15-16 upholding the Assessing Officer's action making section 14A read with Rule 8D disallowance of proportionate interest of Rs.1,05,31,136/- in assessment order dated 27.03.2014 involving proceedings u/s 143 (3) of the Income Tax Act, 1961 (in short the 'Act').
2. We come to the above sole issue of correctness of section 14A read with Rule 8D disallowance. There is no dispute about the fact that the assessee has derived exempt income from dividends amounting to Rs.4,49,65,951/- in the relevant previous year. The Assessing Officer invoked section 14A read with Rule 8D clause (i) to (iii) of the Income Tax. Rules to compute the impugned disallowance in the nature of demat charges, proportionate interest and administrative expenditure involving sums of Rs.330, Rs.1,05,77,957/- and Rs.24,68,828/- respectively; coming to Rs.1,30,47,105/- as upheld in course of the lower appellate proceedings to the extent of proportionate and administrative expenditure in question of Rs.1,05,31,136/-.
ITA No.817/Kol/2017 Orient Paper & Industries Ltd. A.Y.2011-12 23. Learned counsel representing assessee files its balance sheet of the relevant previous year. Its non interest bearing funds therein read a figure of Rs.90262.24 lakhs whereas its total investments are of Rs.6631.54 lakhs. These crucial details have gone undisputed from the Revenue's side. We therefore quote hon'ble Gujarat high court's decision in PCIT vs Nima Credit & Capital Pvt. Ltd. [2018] 300 CTR 286 (Gujarat) as well as that of hon'ble Bombay high court in CIT vs Reliance Utilities and Power Ltd 313 ITR 340 to conclude that the impugned section 14A disallowance is not sustainable in case of an assessee having surplus non interest bearing funds thereby deriving net interest income and that the necessary presumption in this kind of factual back drop is that it had made investments out of non interest bearing funds only; respectively to delete the impugned proportionate expenditure disallowance of Rs.1,05,77,957/-.
4. Coming to administrative expenditure disallowance of Rs.24,68,828/- @ ½ % of average value of investments, both parties are ad item that this tribunal coordinate bench in REI Agro Ltd vs DCIT 144 ITD 141 (Kol) has held that only dividend yielding investments are to be considered for the purpose of computation of the disallowance in question. There is no dispute that neither the Assessing Officer nor the CIT(A) has proceeded on the said assumption. We therefore restore the instant latter issue back to the Assessing Officer for consequential computation.
5. This assessee's appeal is partly allowed in the above terms.
Order pronounced in the Court on 27.06.2018.
Sd/- Sd/-
[M.. Balaganesh ] [ S.S.Godhara ]
Accountant Member Judicial Member
Dated : 27.06.2018.
[RG Sr.PS]
ITA No.817/Kol/2017 Orient Paper & Industries Ltd. A.Y.2011-12 3
Copy of the order forwarded to:
1.Orient Paper & Industries Limited, 9/1, R.N.Mukherjee Road, Kolkata-700001.
2. D.C.I.T., Circle-6(1), Kolkata.
3. C.I.T.(A)- 17, Kolkata 4. C.I.T-2, Kolkata
5. CIT(DR), Kolkata Benches, Kolkata.
True Copy By order, Senior Private Secretary Head of Office/D.D.O, ITAT Kolkata Benches