Itat/28/2024 Ia No: Ga/2/2024 Principal Commissioner Of Income Tax Central 1 Kolkata v. M/S Edmond Finvest Pvt Ltd

OD–22 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/28/2024IA NO: GA/2/2024PRINCIPAL COMMISSIONER OF INCOMETAX CENTRAL 1 KOLKATAVSM/S EDMOND FINVEST PVT LTD BEFORE :THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 26 February, 2024. Appearance :Mr. Amit Sharma, Adv.…for appellantMr. Pratyush Jhunjhunwala, Adv.…for respondent The Court :- Heard learned counsel on both sides. This appeal filed by the revenue under Section 260A of the Income TaxAct, 1961 (the Act) is directed against the order dated 16[th] May, 2023 passed bythe Income Tax Appellate Tribunal ‘B’ Bench, Kolkata in I.T.A. No. 96/Kol/2021for the assessment year 2015-2016. The revenue has raised the following substantial questions of low forconsideration :- i)Whether the Learned Income Tax Appellate Tribunal has committedsubstantial error in law in upholding the order of the Commissionerof Income Tax (Appeals) deleting the addition made under Section 68of the Income Tax Act, 1961 on account of unexplained unsecuredloan transactions and interest expense corresponding to suchunexplained loan transactions by holding that the Assessing Officersubstantial error in law in upholding the order of the Commissionerof Income Tax (Appeals) deleting the addition made under Section 68of the Income Tax Act, 1961 on account of unexplained unsecuredloan transactions and interest expense corresponding to suchunexplained loan transactions by holding that the Assessing Officer did not make any independent inquiry whereas the Assessing Officerhad made independent enquiry by issuing summons/notices ? ii)Whether the Learned Income Tax Appellate Tribunal has committedsubstantial error in law in upholding the order of the Commissionerof Income Tax (Appeals) deleting the disallowance made underSection 14A of the Income Tax Act, 1961 without considering thatdisallowance under Section 14A of the Income Tax Act, 1961 is notdependent on the amount of exempt income earned during the year?iii)Whether the Learned Income Tax Appellate Tribunal has committedsubstantial error in law in upholding the order of the Commissionerof Income Tax (Appeals) deleting the disallowance made underSection 14A of the Income Tax Act, 1961 without consideringCBDT’s Circular No. 5/2014 dated 11.02.2014 which provides fordisallowance of expenditure even when taxpayer in a particular yearhas not earned any exempt income ? There are two issues involved in the instant case. Firstly, whether theCommissioner of Income Tax, Appeals (CITA) was right in deleting the additionmade under Section 68 o the Act, which order was affirmed by the Tribunal andwhether the CITA was right in allowing the appeal filed by the assessee anddirected the assessing officer to restrict the disallowance under Section 14A onlyby considering only the investments which have yielded tax free dividend incomeduring the financial year under consideration. So far as the first is concernednamely, whether the addition under Section 68 was justified, we find that thelearned Tribunal has elaborately considered the factual position and relevantparagraph of the findings rendered by the CITA have been quoted by theTribunal. From the said findings it is clearly evident that the assessee has discharged its onus to establish the creditworthiness of the lenders can also thefact that the loans have been repaid and the loans from three creditorscompanies which were doubted was to the tune of Rs.1 crore and othertransactions of the respondent assessee was not doubted by the department.Thus we find, that the factual issue has been thoroughly dealt with and in thisappeal filed under Section 260A of the Act, we are not expected to respondent-appreciate the factual position. Thus we find no substantial questions of lawarose on the said issue. The second issue is with regard to the disallowanceunder Section 14A. We find that the CITA rightly took note of the variousdecisions and held that the disallowance under Section 14A should be computedonly to the reference to the investments which actually yielded additional incomeduring the relevant year. In fact, this specific stand taken by the assessee duringthe assessment proceedings which was brushed aside by the assessing officer.Thus we find that the law on the subject has been rightly noted by the CITAwhich order has been affirmed by the learned Tribunal and we find there is nospecific question arising for consideration on this issue as well. For the above reasons, the appeal filed by the revenue is dismissed. (T.S. SIVAGNANAM)CHIEF JUSTICECHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.)