GULSHAN HARESH BAKHTIANI, MUMBAI V. JCIT 26(1), MUMBAI

ITA 101/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0049 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.101/MUM/2017 (ASSESSMENT YEAR- 2012-13) SHRI GULSHAN HARESH BAKHTIANI C/O SHRI SURESH N. OTWANI, ADVOCATE, 305, 3 RD FLOOR, ADAMJI BUILDING, 413, KATHA BAZAR, MUMBAI-4 00009 PAN: ACUPB4663J VS. JCIT-26(1), PRATYAKSHAKAR BHAVAN, C-10/ROOM NO. 502, BANDRA KURLA COMPLEX, MUMBAI-400050 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURESH OTWANI -AR REVENUE BY : SHRI RAM TIWARI (SR.DR) DATE OF HEARING : 22.08.2017 DATE OF PRONOUNCEMENT : 22.08.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMIS SIONER OF INCOME TAX (APPEALS)-38 [CIT(A)], MUMBAI DATED 21.10.2016 FOR THE ASSESSMENT YEAR (AY) 2012-13. THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED BY THE ORDER OF [T COMMISSIONER OF INCOME TAX- 26(1), MUMBAI, THIS APPEAL PETITION IS BEING SUBMITTED ON THE FOLLOWING GROUNDS WHICH IS PRAYED MAY BE CONSIDERED WITHOUT P REJUDICE TO ONE ANOTHER. 1. THE FAA I.E. CIT (A)-38, MUMBAI- 38 HAS ERRED IN DECIDING THE ISSUE WHICH IS SETTLED IGNORING THE FACTS BEFORE HE R. 2. THE APPEAL IS FILED IN TIME AND ORDER. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE GROUNDS ON OR BEFORE THE FINAL DATE OF HEARING. PRAYER ITA NO. 101/MUM/2017- SHRI GULSHAN HARESH BAKHTIANI 2 THE APPELLANT THEREFORE PRAYED THAT THE DISALLOWANC E U/S 14A MAY BE RESTRICTED T O RS.1,35,228/- OR ANY OTHER RELIEF MA Y BE GRANTED AS MAY BE DEEMED FIT AND JUST, CONSIDERING THE FACTS AND CIRC UMSTANCES OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME FOR RELEVANT AY ON 30.09.2012 DECLARING TOTAL INCOM E OF RS.2,71,38,184/-. THE ASSESSMENT WAS COMPLETED ON 2 3.03.3015 U/S. 143(3) OF THE ACT. IN THE RETURN OF INCOME THE ASSE SSEE HAS SHOWN TO HAVE EARN DIVINED INCOME OF RS. 74,783/- AND CLAIME D AS EXEMPTED UNDER SECTION 10(34) OF THE ACT. THE ASSESSING OFFI CER (AO) WHILE PASSING THE ASSESSMENT ORDER DISALLOWED RS.9,13,973 /- U/S. 14A OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWA NCE WAS UPHELD. FURTHER, AGGRIEVED, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE RE VENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE HAS VOLUNTARILY DISALLOWED A SUM OF RS . 1,35,228/- ON THE BASIS OF AVERAGE INVESTMENT DURING THE YEAR. THE IN VESTMENT MADE FROM ASSESSEES OWN FUND AND HAS NO INCURRED ANY EX PENDITURE. THE INTEREST DISALLOWANCE IS NOT WARRANTED. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE DISALLOWANCE MAY BE RESTRIC TED TO THE EXEMPT INCOME EARNED DURING THE YEAR UNDER CONSIDERATION. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER AUTH ORITIES BELOW AND ITA NO. 101/MUM/2017- SHRI GULSHAN HARESH BAKHTIANI 3 WOULD SUBMIT THAT THE ASSESSEE VOLUNTARILY DISALLOW ED RS.1,35,228/-, AND NOW SEEKING MORE RELIEF FROM THE TRIBUNAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED THE DIVIDEND IN COME OF RS. 74,738/-. THE ASSESSEE HAS SHOWN INVESTMENT AS ON 3 1.03.2011 OF RS. 3,13,84,404/-. SIMILARLY, THE TOTAL INVESTMENT AS O N 31.03.2012 WAS RS. 7,28,49,322/-. THE AO WHILE MAKING THE DISALLOWANCE , DISALLOWED THE INTEREST EXPENSES OF RS. 7,78,745/- AND 0.5% OF AVE RAGE VALUE OF INVESTMENT OF RS.135,228/- AND WORKED OUT THE DISAL LOWANCE OF RS.9,13,973/-. 5. WE HAVE SEEN THAT THE AO HAS NOT RECORDED ITS SATIS FACTION ABOUT THE WORKING OF SECTION 14A PROVIDED BY ASSESSEE. THE AO NOT DISPUTED ABOUT INTEREST FREE FUND AVAILABLE WITH ASSESSEE. T HE INVESTMENT MADE FOR EARNING THE EXEMPT INCOME IS LESS THAN THE INTE REST FREE FUNDS AVAILABLE WITH ASSESSEE. THE AO HAS NOT DISPUTED TH E EXEMPT INCOME. THE HONBLE DELHI HIGH COURT IN CASE OF JOINT INVES TMENTS PVT. LTD. VS. CIT IN ITA NO. 117/2015 DATED 25.02.2015 HELD T HAT BY NO STRETCH OF IMAGINATION SECTION 14A OR RULE 8D BE INTERPRETE D SO AS TO MEAN THAT ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE TAX ITA NO. 101/MUM/2017- SHRI GULSHAN HARESH BAKHTIANI 4 EXEMPT INCOME . THE PROPORTIONATE OR PORTION OF THE TAX EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT. THU S, CONSIDERING THE FACTS OF THE PRESENT CASE AND THE SUBMISSION MADE B Y LD. AR OF THE ASSESSEE, WE RESTRICT THE DISALLOWANCE UNDER SECTIO N 14A FOR TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESSEE. THE AO IS DIRECTED ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE APPEAL IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF AUGUST 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 22/8/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI GUARD FILE. //TRUE COPY/