TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 33
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....tified in invoking revisionary jurisdiction u/s 263 of the Act for these three years, in the facts and circumstances of the case in the context of disallowance u/s 14A read with Rule 8D of the Rules. 3. The brief facts of this issue is that the assessee had filed his return of income for the assessment year 2010-11 on 30.09.2010 declaring taxable income of Rs. 2,77,13,292/-. The assessee derives income from investment and trading in shares, capital gains and income from other sources. The assessee is doing his share transaction business in his proprietorship concern under the name and style of (i) M/s Kishan Gopal Mohta and (ii) Kishan & Co. and both the concerns are situated at 7, Lyons Range, Kolkata- 700001. The assessee furnished the revised computation of total income during the course of assessment proceedings admitting the revised income of Rs. 2,79,40,410/- which was accepted by the Ld. AO. In the course of assessment proceedings, the Ld. AO sought to make disallowance u/s 14A of the Act read with Rule 8D of the Rules. The assessee stated that he had voluntarily disallowed the sum of Rs. 21,29,607/- u/s 14A read with rule 8D covering all the three limbs of the Rules. The a....
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.... the character of the said receipt, being the business income in view of shares held as stock-in-trade, does not undergo any change. In this regard, the assessee placed reliance on the decision of Hon'ble Supreme Court in the case of UCO Bank vs. CIT reported in 32 ITR 688 (SC) and Hon'ble Madras High Court in the case of CIT vs. Shri Kishan Chand Mal reported in 58 ITR 26 (Mad). The Ld. CIT ignored all the contentions of the assessee and directed the Ld. AO to adopt the interest paid figure of Rs. 1,61,44,852/- as against Rs. 6,51,821/- considered by the ld. AO for the purpose of working out the disallowance under Rule 8D(2)(ii) on the ground that the Ld. AO had not considered the issue in the right perspective. Accordingly, he directed the Ld. AO to make necessary investigation of the above issue and passed a fresh order after granting reasonable opportunity of being heard to the assessee. Aggrieved, the assessee is in appeal before us on the following grounds: 1. That on the facts and circumstances of the case the Ld. Commissioner of Income Tax, Kolkata-12, erred in assuming jurisdiction u/s 263 of the Act. 2. That the order passed by the Ld. Commissioner of Income Tax on 2....
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....Mahindra Pvt. Ltd. 64141181 7576398 c) Kotak Securities Limited 0 8545 d) Morgan Stanley India Pvt. Ltd. 66273233 4398194 Total 210702566 14789234 ii) Loans used for dividend yielding investments: Name of Party Loan Amount Interest Amount a) BNP Paribas 0 77854 b) ABN Amro Bank 1206991 74556 c) HDFC Bank 0 444 d) IDBI Bank 1820500 154419 e) ICICI Bank 1608973 128635 f) Axis Bank 1908149 114991 Total 6544613 550899 iii) Interest paid on cash loan: Name of Party Loan Amount Interest Amount a) Citycorp Finance India Pvt. Ltd. 100921 iv) It was further stated that interest amount of Rs. 703707/- was paid on the loan from Morgan Stanley Capital India Pvt. Ltd. which was used for investment in shares. It was also stated before the Ld. CIT that this sum should not be allowed by the Ld. AO u/s 14A. 6. The Ld. AR however argued that this sum of Rs. 703797/- was not at all discussed by the Ld. CIT in his entire revision order u/s 263 of the Act. The Ld. CIT did not discuss the breakup of the loans and its utilization thereon as detailed above in his revision order. ....
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....proves that the Ld. AO had proceeded on incorrect assumption of facts. He argued that the Ld. CIT has only set aside to the file of the Ld. AO to make proper enquiries in the facts of the case. He argued that the Ld. AO had not taken any view in this matter. He placed reliance on the decision of this Tribunal in the case of Kalyani Barter Pvt. Ltd. vs. ITO reported in 163 ITD 571 wherein it was held that the disallowance under 14A would be applicable for shares held as stock-in-trade. The availability of own funds as argued by the Ld. AR had not been conclusively proved by the assessee as having used for investments, which should have been verified by the Ld. AO. 8. In defence, the Ld. AR argued that there was absolutely no whisper about the disallowance of interest in the sum of Rs. 703797/- as agreed by the assessee in the entire order of Ld. CIT u/s 263 of the Act. This goes to prove that the Ld. CIT had completely ignored the entire contentions of the assessee and had proceeded to revise the assessment with a pre-conceived notion of treating the order of the Ld. AO as erroneous and prejudicial to the interest of the revenue. He also argued that the Ld. CIT however held that st....
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....action of the replies given thereon proceeded not to make any disallowance of interest as diverted for non-business purposes u/s 36(1)(iii) of the Act. Hence this goes to prove that the assessee had given the entire details of interest payment on borrowed funds and its specific utilization thereon before the Ld. AO itself and the Ld. AO had taken a conscious decision on the same and had not disallowed any interest u/s 36(1)(iii) of the Act. This goes to prove that the interest payments other than Rs. 651821 have been used by the assessee only for his business purposes and not for any investments. We find that even though the assessee had agreed before the Ld. CIT that a sum of Rs. 703797/- represents interest payment being utilized for investment in shares which ought to have been considered for disallowance under second limb of Rule 8D(2) of the Rules, the Ld. CIT had not looked into the same and had not even whispered about the same in his entire revision order. Apart from this, we also find that the Ld. CIT had made a mention that stock-in-trade is not included in current assets of the assessee in his balance sheet which is factually incorrect. We have perused the balance sheet ....