Sri Saradha Logistics Pvt. Ltd. v. The DCIT

Parties Involved

Facts Summary

Sri Saradha Logistics Pvt. Ltd. filed its return of income for the Assessment Year 2017-18 on 28.10.2017, reporting a current year loss of Rs.9,81,95,808/-. The company also reported dividend income of Rs.1,75,78,988/- which was exempt under section 10(34) of the Income Tax Act, 1961. The Assessing Officer (AO) questioned the absence of expenditure for earning the exempt income and assumed that the company must have incurred managerial, administrative, and monitoring expenses towards earning the exempt income. Consequently, the AO disallowed the expenditure under section 14A of the Act and computed the disallowance under rule 8D(2)(ii) of the Income Tax Rules, 1962, resulting in a disallowance of Rs.1,75,78,988/-. The AO also levied a penalty of Rs.29,06,070/- under section 270A of the Act for under-reporting income. The company appealed against this order to the Commissioner of Income Tax (Appeals), who confirmed the AO's decision. The company further appealed to the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the disallowance of expenditure under section 14A of the Act and the penalty levied under section 270A of the Act are sustainable.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

Similar Judgements

• Bishamber Dayal vs. ITO

  Delhi Bench 'A', New Delhi benchAY 2019-20Allowed

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

  Kolkata Bench benchAY 2014-15Partly Allowed

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

• Nikhil Rajpal vs ITO

  Delhi Bench ‘F’, New Delhi benchAY 2019-20Allowed

• ITA No.1542/Bang/2024

  C'' Bench: Bangalore benchAY 2019-20Dismissed

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

  Kolkata benchAY 2014-2015Allowed