Principal Commissioner Of Incometax-1, Kolkata v. M/S. Suvarna Commercial Pvt. Ltd

OD-31 ITAT/65/2021IA No.GA/2/2021 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE PRINCIPAL COMMISSIONER OF INCOMETAX-1, KOLKATA -Versus- M/S. SUVARNA COMMERCIAL PVT. LTD. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : 17[th] December, 2021. Appearance:Mr. P. K. Bhowmick, Adv....for the appellant.Mr. Vikash Singh, Adv....for the respondent. The Court : This appeal filed by the revenue underSection 260A of the Income Tax Act, 1961 (the ‘Act’ in brevity) isdirected against the order dated 22[nd] November, 2019 passed by theIncome Tax Appellate Tribunal, “A” Bench, Kolkata (the ‘Tribunal’in short) in ITA No.2099/Kol/2018 for the assessment year 2010-11.The revenue has framed the following substantial questionof law for consideration: (i)Whether in the facts and circumstances of the caseand in law Learned Income Tax Tribunal was justified inquashing the rectification u/s. 154/143(3) of the Act,1961 passed by the AO without appreciating the fact thatAO has rightly added the disallowance u/s. 14A r.w. Rule8D of Rs.58,29,976/- while computing book profit u/s.115JB of the Income Tax Act, 1961? We have heard Mr. P. K. Bhowmick, learned counsel for theappellant/revenue and Mr. Vikash Singh, learned counsel for therespondent/assessee. The learned counsel appearing for the respondent/assesseesubmits that the appeal cannot be pursued on account of low taxeffect. However, it appears that there is no written instructiongiven by the Department to the learned Counsel for the revenue.Therefore, we have considered the merits of the matter and we findthat the Tribunal rightly held that disallowance made underSection 14A of the Act read with Rule 8D of the Rules, 1962 isonly artificial disallowance and obviously the same is not debitedin the profit and loss account and the same cannot be improvedinto Clause (f)of Explanation 2 to Section 115JB of the Act.furthermore, the Tribunal while affirming the order passed by theCIT(A) noted that the Assessing Officer has not discussed anythingin the order of assessment by making additions/disallowance ofexpenses under Section 14A read with Rule 8D to determine bookprofit under Section 115JB and has passed order under Section 154 of the Act recomputing the book profit under Section 115JB of theAct. This was held to be not legally sustainable. We find that there is no error committed by the Tribunalwarranting interference of the order impugned. Accordingly, theappeal (ITAT/65/2021) fails and is dismissed. Consequently, thesubstantial question of law is answered against the revenue.The connected application for stay (IA No.GA/2/2021) alsostands dismissed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) A/s./S.Das