ASHISHKUMAR SHASHIKANT DOSHI,PALANPUR V. THE DY.CIT, CIRCLE GANDHINAGAR, GANDHINAGAR

ITA 1399/AHD/2024

AI Insights

This case involves an appeal by Ashishkumar Shashikant Doshi against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre, Delhi, which had upheld the additions and disallowances made by the Assessing Officer under various sections of the Income-tax Act, 1961 for the Assessment Year 2016-17. The main issues in the appeal were the disallowance under section 14A related to expenses incurred in earning dividend income, the disallowance of interest expenses under section 36(1)(iii), and the addition of notional rent under section 23(4). The Tribunal's decision involved a detailed examination of the financial transactions and the application of relevant sections of the Income-tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312499 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S. K. AGAL
• Assessee Lawyers: PARIN S. SHAH
• Keywords: Earning of tax free income; Notional interest
• Section: 143(3); 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE PRESIDENT SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER I.T.A. No.1399/Ahd/2024 (Assessment Year: 2016-17) Ashishkumar Shashikant Doshi, Swastik Building, Main Road, Near City Police Station, Palanpur, Gujarat-385535 [PAN No. AFQPS 1238 F] Vs. The Deputy Commissioner of Income Tax, Circle, Gandhinagar (Appellant) .. (Respondent) Appellant by : Shri Parin S. Shah, AR Respondent by: Shri S.K. Agal, Sr DR Date of Hearing 24.04.2025 Date of Pronouncement 01.05.2025 O R D E R PER: DR. B.R.R. KUMAR, VICE PRESIDENT: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as \"CIT(A)\" for short) dated 18.06.2024, passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as \"the Act\" for short) for the Assessment Year (AY) 2016-17. 2. In this case, the assessee has filed his return of income for the year under consideration on 16.10.2016 declaring total income of Rs.(-)8,15,407/-. The case of the assessee was selected for scrutiny under CASS. The Assessing Officer thereafter completed the assessment u/s 143(3) of the Act on 27.12.2018, assessing the total income of the assessee at Rs.7,54,580/-, by making following additions/disallowances :- i. Disallowance u/s 14A of the Act - Rs.3,15,860/- ii. Disallowance of interest expenses u/s 36(1)(iii) of the Act - Rs. 54,130/- iii. Addition on account of notional rent u/s 23(4) of the Act - Rs.12,00,000/- ITA No. 1399/Ahd/2024 Ashishkumar Shashikant Doshi Vs. DCIT Asst.Year : 2016-17 - 2– 3. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee. 4. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 5. We have heard both the parties and perused the material available on record. Disallowance u/s 14A:- 6. The assessee has earned dividend of Rs.2,83,383/- against which the Assessing Officer made disallowance of Rs.3,15,860/-. The assessee submitted that this dividend is out of investment in shares earlier and no amount was spent in earning the exempt income. It was submitted that the assessee had own funds to the tune of Rs.7.11 crores which is sufficient to make investments. Having gone through the facts on record, we hold that an amount of Rs.5000/- shall be considered as the expenses incurred for earning the dividend income. Appeal of the assessee on Ground Nos. 2, 3, 4 & 5 are hereby allowed. Disallowance u/s 36(1)(iii) 7. During the year the assessee has advanced loan of Rs.1.63 crores and has not charged the interest on the amount of loan of Rs.11.62 lakhs. The Assessing Officer made addition of Rs.54,130/- on account of interest received. The assessee had own capital of Rs.7.11 crores. Since the assessee has sufficient capital to advance loan of Rs.11.62 lakhs, we hold that no notional interest is chargeable nor disallowable. Appeal of the assessee on Ground No. 6 is hereby allowed. ITA No. 1399/Ahd/2024 Ashishkumar Shashikant Doshi Vs. DCIT Asst.Year : 2016-17 - 3– Addition u/s 23(4) of the Act 8. The Assessing Officer determined notional rent @ Rs.1 lakh per month, amounting to Rs.12 lakhs per annum. The Ld. CIT(A) earlier determined the same at Rs.50,000/- per month which the Revenue has not disputed. Hence, keeping in view the order of the Ld. CIT(A) in earlier year, the notional rent is determined at Rs.50,000/- per month. Appeal of the assessee on Ground No.7 is partly allowed. 9. In the result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 01.05.2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE PRESIDENT Ahmedabad; Dated 01.05.2025 btk TRUE COPY आदेश क\u0007 \b त ल प अ\u0010े षत आदेश क\u0007 \b त ल प अ\u0010े षत आदेश क\u0007 \b त ल प अ\u0010े षत आदेश क\u0007 \b त ल प अ\u0010े षत/Copy of the Order forwarded to : 1. अपीलाथ\u0016 / The Appellant 2. \b\u0017यथ\u0016 / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT 4. आयकर आयु त(अपील) / The CIT(A)- 5. वभागीय \b त न ध, आयकर अपील(य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड- फाईल / Guard file. आदेशानुसार आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार उप/सहायक पंजीकार उप/सहायक पंजीकार उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील(य अ धकरण, अहमदाबाद आयकर अपील(य अ धकरण, अहमदाबाद आयकर अपील(य अ धकरण, अहमदाबाद आयकर अपील(य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …28.04.2025…………… 2. Date on which the typed draft is placed before the Dictating Member 29.04.2025 3. Other Member…… 29.04.2025…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 29.04.2025……………… 5. Date on which the fair order is placed before the Dictating Member for pronouncement 01.05.2025……………… 6. Date on which the fair order comes back to the Sr.P.S./P.S …01.05.2025…………… 7. Date on which the file goes to the Bench Clerk ……01.05.2025………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "