CHAMPSHI DEVSHI SHAH, DADAR V. ACIT-15(1)(2), MUMBAI

ITA 1020/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6356 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 22-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET DUGGAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI BEFORE SHRI MAHAVIR SINGH, VP & SHRI M. BALAGANESH, AM ITA NO. 1020/MUM/2019 (ASSESSMENT YEAR 2014-15) SHRI CHAMPSHI DEVSHI SHAH 385, N.C. KELKAR ROAD, DADAR (W), MUMBAI-400028 VS. ACIT-15(1)(2), R. NO. AB 483A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. (APPELLANT) (RESPONDENT) PAN NO. AAEPS5844C APPELLANT BY : SHRI MAYUR MAKADIA (AR) RESPONDENT BY : SHRI MANPREET DUGGAL (SR. DR) DATE OF HEARING : 07.04.2021 DATE OF PRONOUNCEMENT : 16.04.2021 O R D E R PER M. BALAGANESH, AM: 1. THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -24, MUMBAI [H EREINAFTER REFERRED TO AS THE LD CITA] IN APPEAL NO. CIT(A)-24/ACIT-15(1)(2)/ IT-694/2016-17 DATED 27.12.2018 AGAINST THE ORDER PASSED BY THE LEARNED ASSTT. COMMISSIONER OF INCOME TAX, RANGE 15(1)(2), MUMBAI [HEREINAFTER REF ERRED TO AS THE LD AO] UNDER SECTION [U/S] 143(3) OF THE INCOME TAX ACT, 1 961 [HEREINAFTER REFERRED TO AS THE ACT] DATED 19.12.2016 FOR THE ASSESSMENT Y EAR 2014-15. PAGE | 2 ITA NO. 1020 MUM 2019-SHRI CHAMPSHI DEVSHI SHAH 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. COMMISSIONER OF INCOME TAX (APPEALS [FOR SHORT THE CIT(A)] WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE UNDER SECTION 14A O F THE INCOME TAX ACT (THE ACT) READ WITH RULE 8D(2) OF THE INCOME TAX RULES ( THE RULES). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS AN INDIVIDUAL E NGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS AND HAD FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 31.10.2014 DECLARING TOTAL INCOME O F RS. 1,27,67,090/-. WE FIND THAT ASSESSEE HAD EARNED EXEMPT INCOME TO THE TUNE OF RS. 8,64,141/- AGAINST WHICH THE ASSESSEE HAD MADE VOLUNTARY DISALLOWANCE OF EXPENSES TO THE TUNE OF RS. 14,57,932/- UNDER SECOND LIMB OF RULE 8D(2) OF THE RULES. 4. WE FIND THAT ASSESSEE PLEADED THAT SEPARATE BOOK S OF ACCOUNT ARE MAINTAINED FOR HIS PROPRIETARY CONCERN AND FOR HIS PERSONAL ACTIVITIES. IT WAS PLEADED THAT IN PROPRIETARY CONCERN, NO INVESTMENTS WERE MADE BY THE ASSESSEE AND THAT ALL THE INVESTMENTS WERE MADE ONLY IN THE PERSONAL ACTIVITIES OF THE ASSESSEE. ACCORDINGLY, THE ASSESSEE PLEADED BEFORE THE ASSESSING OFFICER (AO) THAT NO FURTHER DISALLOWANCE OF EXPENSES UNDER SECT ION 14A OF THE ACT NEED TO BE MADE. 5. WE FIND THAT AO DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND DIRECTLY PROCEEDED TO MAKE DISALLOWANCE BY APPLYING COMPUTATION MECHANISM PAGE | 3 ITA NO. 1020 MUM 2019-SHRI CHAMPSHI DEVSHI SHAH PROVIDED IN 2 ND AND 3 RD LIMB OF RULE 8D(2) OF THE RULES AND ARRIVED AT THE DISALLOWANCE OF RS. 26,63,908/- AND AFTER REDUCING THE VOLUNTARY DISALLOWANCE MADE BY THE ASSESSEE, THE NET DISALLOWANCE OF RS. 1 2,05,976/- WAS MADE UNDER SECTION 14A OF THE ACT IN THE ASSESSMENT. 6. THIS ACTION OF THE AO WAS UPHELD BY THE LD. CIT( A). WE FIND THAT THE LAW IS NOW VERY WELL BY THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF MAXOPP INVESTMENTS (402 ITR 640) WHEREIN IT HAS BEEN HELD THAT DISALLOWANCE UNDER SECTION 14A OF THE ACT CANNOT EXCEED EXEMPT INCOME. THERE IS NO DISPUTE THAT THE EXEMPT INCOME DERIVED BY THE ASSESSEE IS ONLY R S. 8,64,141/-. THE ASSESSEE BEFORE US IS NOT SEEKING ANY REDUCTION FOR DISALLOW ANCE OF EXPENSES MADE VOLUNTARILY IN THE SUM OF RS, 14,57,932/- WHICH ITS ELF IS MORE THAN THE EXEMPT INCOME. HENCE, THERE IS NO NEED TO MAKE ANY FURTHER DISALLOWANCE UNDER SECTION 14A OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2021 SD/- SD/- MAHAVIR SINGH M. BALAGANESH (VICE-PRESIDENT) (ACCOUNTANT MEMBER) MUMBAI, DATED:16.04.2021 SK.PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( / THE CIT(A) PAGE | 4 ITA NO. 1020 MUM 2019-SHRI CHAMPSHI DEVSHI SHAH 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. ' / GUARD FILE. BY ORDER, //TRUE COPY// (ASSTT.REGISTRAR) ITAT, MUMBAI