TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal rules sales tax remission as capital receipt & limits disallowance under section 14A</h1> <h3>A.C.I.T., Circle-4 (1), Kolkata Versus M/s Keventer Agro Ltd.</h3> A.C.I.T., Circle-4 (1), Kolkata Versus M/s Keventer Agro Ltd. - TMI Issues:1. Sales tax remission - Whether capital or revenue receiptRs.2. Disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) - Expenditure on interest-bearing funds.Sales Tax Remission - Capital or Revenue ReceiptRs.The appeal by the Revenue was against the order passed by C.I.T-(A)-17, Kolkata for A.Y. 2011-12 regarding the treatment of sales tax remission. The assessee, a company engaged in manufacturing and marketing food items, initially declared total income of &8377; 2,86,30,720/-, later revised to &8377; 36,71,210/-. The AO determined income at &8377; 10,47,36,353/- under MAT proceedings, disallowing amounts on account of sales tax remission and u/s 14A. The CIT(A) deleted the addition related to sales tax remission based on previous decisions. The Tribunal confirmed this decision, stating that the sales tax remission was a capital receipt under the West Bengal Incentive Scheme, promoting industries in the state, and thus not for business operations. Citing precedents, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.Disallowance u/s 14A of the Act r.w.r. 8D(2)(iii) - Expenditure on Interest-Bearing FundsThe second issue was the disallowance under section 14A of the Act with reference to Rule 8D(2)(iii). The AO disallowed expenditure under Rule 8D(ii) & (iii), which the CIT(A) confirmed after examining the cash flow statement. The CIT(A), following a Co-ordinate Bench decision, directed the AO to consider investments yielding dividends for computing disallowances under Rule 8D(2)(iii). The Tribunal upheld the CIT(A)'s decision, noting that the AO's determination of average investments was incorrect. Citing the decision in the REI Agro Ltd case, the Tribunal agreed with the CIT(A) that only investments giving rise to income not forming part of the total income should be considered for disallowance under section 14A. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order.In conclusion, the Tribunal dismissed the Revenue's appeal concerning both issues, affirming the CIT(A)'s decisions on the treatment of sales tax remission as a capital receipt and the disallowance under section 14A of the Act.
TaxTMI 
TaxTMI 
