Basant Properties Ltd. vs. ACIT, Circle-5(1), Kolkata

Parties Involved

Facts Summary

The assessee, Basant Properties Ltd., a domestic company, filed its return of income for the assessment year 2017-18 electronically on 28.10.2017 declaring a loss of Rs. 18,89,620/-. The return was selected for scrutiny assessment under CASS. During the assessment proceedings, the Assessing Officer found that the assessee had earned total dividend income of Rs.1,78,00,000/- which did not form part of total income. The assessee argued that only those investments in respect of which dividend has been received should be considered for computing disallowable expenses under section 14A/8D. However, the Assessing Officer disallowed 1% of the annual average investment of Rs. 13,98,934/- under section 14A read with section 8D of the Act. Aggrieved by this order, the assessee filed an appeal before the Ld. CIT(A), which was dismissed. Consequently, the assessee filed this appeal before the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the disallowance under section 14A of the Act should be computed by taking into consideration only those shares which had yielded dividend income in the year under consideration.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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