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TMI Blog2022 (7) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... risdictional High Court of Calcutta in the case of CIT v. REI Agro Ltd. [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT ] which has upheld the findings of the ITAT by holding that only those investments could be considered for the purposes of disallowance under rule 8D(2)(iii) which had yielded tax free dividend income during the year. Respectfully following the decision of the Hon'ble Jurisdictional High Court [ 2013 (12) TMI 1517 - CALCUTTA HIGH COURT ], we find it proper to remit this specific issue to the file of the ld. AO for the limited purpose of verification and to re-compute the disallowance under Rule 8D(2)(iii) by considering the decision supra. Accordingly, this ground no. 3 of appeal by the assessee is allowed for statistical purposes. - ITA No. 316/Kol/2021 - - - Dated:- 28-6-2022 - SHRI ABY T. VARKEY , JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL , ACCOUNTANT MEMBER For the Appellant : S. M. Surana, Advocate For the Respondents : Ranu Biswas , Addl. CIT , D/R ORDER Per Girish Agrawal , Accountant Member This appeal by the assessee is arising out of the order of the National Faceless Appeal Centre, Delhi [hereinafter the ld. CIT(A) ] vide order n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration. Only 1.3% of the total area was used by the assessee for purposes other than earning rental income which is an undisputed fact. 5.1. During the course of assessment proceedings, ld. AO noted that assessee has claimed deductions towards expenses of employee benefits of Rs. 24,89,307/- and other expenses of Rs. 66,26,695/- (excluding rates and taxes amounting to Rs. 13,11,757/-) while computing income from business. Ld. AO called for details of these expenses from the assessee to demonstrate how they are incidental to earning of business income and issued a show cause notice for the same. 5.2. Assessee submitted its reply by stating that it is engaged in the business of trading of shares and has reported a sale of Rs. 76,85,313/- in respect of sale of shares in the audited profit and loss account placed at page 2 of the paper book. It claimed that expenses proposed to be disallowed are business expenses and relatable to the business and trading of shares. Upon examination, ld. AO noted that the expense head of other expenses in the Statement of Profit Loss includes expenses incurred towards electricity charges for common area of the building, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, Co-ordinate Bench of the ITAT, Kolkata had held in favor of the assessee for the assessment year 2011-12. Ld. CIT(A) noted that the issue in hand is purely factual in nature and without drawing similarity with the aforesaid orders and without furnishing any details and supporting documents with respect to claim of business expenditure, the matter cannot be simply held to be covered by the aforesaid orders of preceding years. Ld. CIT(A) noted that in the aforesaid orders of the preceding years, ld. AO had disallowed 100% of the business expenditure though there was business activity in purchase and sale of shares. He further noted that in the present case, the area of building let out is 98.7% and only 1.3% of the area is used for business purposes. He thus, by distinguishing the facts of the present case with the facts involved in the preceding years, for which the orders were placed on record, upheld the disallowance made by the ld. AO @ 50% out of the business expenditure in the sum of Rs. 45,58,001/-. On similar footing, he sustained the addition made in respect of municipal taxes. Disallowance made by the ld. AO u/s. 14A of the Act was also sustained by noting that huge ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w sentiments, it consciously avoided to trade in shares in the market, instead made investments in mutual funds of Rs. 3406 lacs in the year. In the assessment order placed as page 24 of the paper book, ld. AO noted that Assessee was asked as to why the sale of shares should not be considered as a capital gain and not a business activity of the assessee. While giving its finding, the Co-ordinate bench noted in para 4 that When the AO has accepted in the previous assessment year that the scrips in question as stock-in-trade, the AO without valid reason cannot hold that the opening stock-in-trade has to be treated as investment..................We note that the assessee in AY 2008-09 has treated the said five scrips purchased as stock in trade which was accepted by the AO and the same was the opening stock for the instant assessment year i.e. as on 01.04.2008, therefore, as per the Circular of the CBDT, since the assessee has taken a stand that the shares are stock in trade then irrespective of the time of holding, the income arising from the transaction of such shares needs to be treated as business income. Therefore, the ld. CIT(A) has rightly treated the same as business inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; which was adjudicated upon by placing reliance on the first appeal order of the preceding year i.e. AY 2009-10, which was later affirmed by the Co-ordinate bench. 10.2. For AY 2011-12, in assessee's own case before the Co-ordinate Bench of ITAT, Kolkata in ITA No. 2412/Kol/2016 order dtd. 13.04.2018, we note that ld. AR had relied on the order of the Co-ordinate Bench of ITAT Kolkata in the assessee's own case for AY 2009-10 (supra) and argued that the Tribunal held the stock of shares as stock-in-trade. In para 3 of this order, it is noted that The ld. AR submits that the issue involved in A.Y. 2009-10 and in the year under consideration are identical and supported the order of CIT(A). While arriving at the decision, the Co-ordinate bench noted in para 4 (placed at page 34 of the paper book), We note that the order of CIT(A) for A.Y. 2009-10 was challenged before the Tribunal and the Tribunal considered the treatment of stocks as held by the assessee as stock-in-trade and upheld the order of CIT(A) in computing the income of the assessee from business...................Para 5. In view of the same we do not find any infirmity in the order of CIT(A) and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant Electricity Charges - Rs.3,38,071/- for let out premises Office upkeep maintenance charges Night Guard for Office - Rs. 74,500/- Painting and repairing office - Rs.1,61,400/- Maintenance of Roof Garden - Rs.1,21,285/- Miscellaneous Expenses - Rs.33,21,954/- Donation : - Rs.17,00,000/- Donation is paid to Shri Harsha Chand Padmabati Suchanti Charitable Trust in which promoter Dr. Niren Chand Suchanti, Mrs. Sujata Suchanti, Mr. Navin Chand Suchanti and Mrs. Purnima Suchanti are trustees. 11. From the perusal of orders of the appellate authorities for the preceding assessment years i.e., A.Y. 2009-10 to 2012-13, we find that the ld. CIT(A) in the present case has rightly noted that the instant issue is purely factual in nature and by merely submitting the orders of the ld. CIT(A) and Co-ordinate bench of ITAT for the preceding years, without drawing similarities, is not a valid and substantial documentary evidence for accepting the claim of the assessee. 12. In the conspectus of above factual analysis of the orders of preceding years relied upon by the assessee, we note that there are factual differences which are predominantly centere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the same view should continue to prevail in the subsequent years unless there is some material change in facts. In the present case, the learned counsel for the revenue has not been able to point out even a single distinguishing feature in respect of the assessment year in question which could have prompted the assessing officer to take a view different from the earlier assessment years in which the same income was brought to tax as income from business. [Emphasis supplied by us by bold and underline] 13.1. From the financial statements of the assessee for the impugned year, we observe from Note 9 placed at page 8 of the paper book that it gives details about 'Long Term Investment Non-trade' as on 31.03.2016 which is reported at Rs. 28,63,02,209. In Note 10, details of 'Long Term Loans and Advances' shows Rs. 4,75,621/- only under the sub-head of 'security deposits' and 'nil' for 'long term advances' and 'other advances', as on 31.03.2016. There is no 'stock-in-trade' reported in the Balance Sheet under the head 'Current Assets/Current Investments', nor in the Note 11, 12 and 13 to the said Balance Sheet as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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