Kuntal Hasmukhlal Shah Vs. ACIT-4(1)(1)

Parties Involved

Facts Summary

The assessee, Kuntal Hasmukhlal Shah, filed his return of income electronically for the assessment year 2017-18, declaring a total income of Rs. 21,70,080/-. The case was selected for limited scrutiny under CASS to examine the allowability of expenses incurred in relation to earning of exempt income. The assessee earned exempt income comprising dividend income of Rs. 11,60,930/- and long-term capital gains of Rs. 2,49,99,481/-. The Assessing Officer observed that the assessee had earned substantial exempt income but had not made any disallowance under section 14A of the Act. The assessee submitted that the expenses relating to earning of exempt income were not debited to the Profit and Loss Account but were directly debited to the capital account, and therefore were not claimed as deduction in the computation of income. The Assessing Officer, however, did not accept the explanation and computed disallowance under section 14A read with Rule 8D.…

Legal Issues

• 1. Whether the Assessing Officer erred in assessing total income of the Appellant at Rs. 35,46,700 as against Rs. 21,70,080 being income declared in his return of income.
• 2. Whether the Assessing Officer has erred in making disallowance of Rs. 13,76,621 under section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962.
• 3. Whether the Assessing Officer erred in disallowing expenses of Rs 792,077 contrary to Rule 8D of the IT Rules and ignoring the fact that such expenses were never claimed as deductible expenditure by the Appellant.
• 4. Whether the Assessing Officer erred in making a disallowance which is very excessive and unreasonable.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

Similar Judgements

• Veedol Corporation Limited Vs. DCIT, Circle 4(1)

• Ambuja Neotia Hotel Ventures Ltd. vs. DCIT, Circle 8(1)

  Kolkata Bench benchAY 2014-15Partly Allowed

• M/s Mahabhadra Constructions Ltd. Vs DCIT

  Delhi Bench ‘E’, New Delhi benchAY 2014-15Allowed

• ITA No. 4890/Del/2024 Vinay Dua (A.Y. 2018-19)

  Delhi Bench benchAY 2018-19Allowed

• Sreeleathers Limited

  Kolkata Bench benchAY 2017-2018Allowed

• M/s Bluediamond Tracom Pvt Ltd Vs ITO Ward-3(1), Kolkata

  Kolkata benchAY 2014-2015Allowed