Bengal Rubber Company Limited vs DCIT, Circle-5, Kolkata

Parties Involved

Facts Summary

The assessee, Bengal Rubber Company Limited, filed its original return of income for the Assessment Year 2017-18 declaring a total income of Rs. 24,46,682/-. The return was selected for scrutiny assessment, and it was noticed that the assessee had earned total dividend income of Rs. 7,44,81,950/- which was not included in the total income. The assessee had computed the disallowable expenses under Section 14A of the Income Tax Act, 1961, considering only those investments for which dividends were received, omitting other investments. The Assessing Officer computed the disallowance based on all investments, leading to a disallowance of Rs. 20,82,896/-. The assessee appealed to the Commissioner of Income-tax (Appeals) but did not receive relief.…

Legal Issues

• 1. Whether the disallowance under Section 14A of the Income Tax Act, 1961, should be computed based on all investments or only those investments for which dividends were received.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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