NELUM P. GIDWANI, MUMBAI V. ACIT CEN CIR 17 & 28, MUMBAI

ITA 1214/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1725 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DI LIP J THAKKAR
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO. 1214/MUM/2011(A.Y.2008-09) SHRI. NELUM P. GIDWANI, 92-B, EMBASSY APARTMENTS, 46, NEPEAN SEA ROAD, MUMBAI - 400 036 PAN: AAOPG 2869D (APPELLANT) VS. THE ACIT, CEN. CIR. 17 & 28, MUMBAI. (RESPONDENT) APPELLANT BY : SHRI DILIP J. THAKKAR RESPONDENT BY : SHRI MOHIT JAIN DATE OF HEARING : 26/02/2013 DATE OF PRONOUNCEMENT : 26/02/2013 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-39, MUMBAI, DATED 19/12/ 2011 FOR ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ERRED IN CONFIRM ING THE ACTION OF ASSESSING OFFICER, OF MAKING THE ADDITION MADE BY THE A U/S 1 4A OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT A. THE ASSESSEE IS AN INDEPENDENT FINANCIAL CONSULT ANT. B. IT WAS INFORMED TO THE AO THAT THE ASSESSEE HIMS ELF MANAGES ALL HIS FINANCES AND DOES NOT IRIC ANY EXPENSES TO HIRE OUTSIDE SERV ICES FOR MANAGING HIS PORTFOLIO AND C. THE PERSONAL EXPENSES TO THE TUNE OF RS. 21.40 L ACS INCURRED BY HIM ARE ALREADY CONSIDERED PERSONAL IN NATURE AND DEBITED T O HIS CAPITAL ACCOUNT AND HENCE NO FURTHER DISALLOWANCE RS. 1.35 LACS IS CALL ED FOR HENCE NO DISALLOWANCE IS REQUIRED U/S 14A. ITA NO. 1214/MUM/2011(A.Y.2008-09) 2 2. IT WAS NOTICED BY THE AO THAT ASSESSEE HAS EXEMP TED INCOME OF RS.59,29,831/- ARISING OUT OF DIVIDEND; INTEREST ON PPF; INTEREST RELIEF EARNED; SHARE OF PROFIT FROM RAMPART TRUST AND LONG TERM CA PITAL GAIN OF RS.45,80,983/-. THE ASSESSEE IS WORKING AS AN INDE PENDENT FINANCIAL CONSULTANT AND IS ENGAGED IN THE ACTIVITY OF CARRY ING OUT ASSIGNMENT FROM TIME TO TIME FOR VARIOUS COMPANIES IN INDIA AND ABROAD F ROM WHERE SHE IS RECEIVING FEES. SHE IS ALSO EARNING INCOME AS DIRECTORS FEE AND INCOME FROM OTHER SOURCES. ON THESE FACTS, AO AFTER APPLYING RULE-8 D HAS ARRIVED AT A CONCLUSION THAT A DISALLOWANCE OF RS.1,35,115/- IS REQUIRED TO BE MADE. ACCORDINGLY THE SAID AMOUNT WAS DISALLOWED. AN APP EAL WAS FILED BEFORE LD. CIT(A). LD. CIT(A) ALSO AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE HAS COME TO A CONCLUSION THAT THE AO WAS RIGHT IN APPLY ING PROVISIONS OF RULE 8D AS THE ASSESSEE HAD SUBSTANTIAL TAX FREE INVESTMENT OF RS.2,80,85,425/-. THE ASSESSEE IS AGGRIEVED HENCE, HAS FILED THE AFOREME NTIONED GROUNDS OF APPEAL. 3. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY L D. AR THAT ACCORDING TO SCHEDULE F IN WHICH COPY OF ACCOUNT OF ASSESSEE I S FILED AND PERSONAL EXPENSES TO THE TUNE OF RS.11,11,661.07 ARE DEBITED . THEREFORE, HE PLEADED THAT THERE IS NO ROOM FOR MAKING DISALLOWANCE UNDER SECTION 14A OF THE ACT WITH REFERENCE TO RULE 8D AS NO EXPENDITURE WHATSOE VER HAS BEEN DEBITED BY THE ASSESSEE TO HER P&L ACCOUNT. HE SUBMITTED THAT THE P&L ACCOUNT OF THE ASSESSEE HAS BEEN SUBMITTED AT PAGE-2 OF THE PAPER BOOK, WHEREIN AGAINST TOTAL RECEIPT OF RS.83,10,513/- THE NET INCOME HAD BEEN SHOWN AT RS.76,05,227.06 AND TOTAL EXPENDITURE OF RS.7,05,32 6.89 HAVE BEEN CLAIMED. THUS IT WAS SUBMITTED BY LD. AR THAT THERE ARE NO E XPENSES RELATING TO EXEMPTED INCOME DEBITED BY THE ASSESSEE TO P&L AC COUNT. THUS HE SUBMITTED THAT DISALLOWANCE UPHELD BY LD. CIT(A) SHOULD BE DE LETED. ITA NO. 1214/MUM/2011(A.Y.2008-09) 3 4. ON THE OTHER HAND, LD. DR RELYING UPON THE ORDER PASSED BY AO AND LD. CIT(A) SUBMITTED THAT DISALLOWANCE HAS RIGHTLY BEEN UPHELD AS RULE 8D IS APPLICABLE FOR AND FROM 2008-09. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT IS NOT DISPUTED THA T RULE 8D IS APPLICABLE W.E.F. 2008-09 AS PER THE DECISION OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT, 328 ITR 81(BOM). NOW THE ASSESSEE IS SAYING THAT THE EXPENDITURE INCURRE D BY HER ON EXEMPTED INCOME HAS BEEN DEBITED TO HER PERSONAL ACCOUNT. HOWEVER, NO DETAIL WHATSOEVER HAS BEEN FIELD TO SUBSTANTIATE THAT CONT ENTION AS IN THE P&L ACCOUNT ITSELF EXPENSES TO THE TUNE OF RS.7,05,32 6.89 HAVE BEEN DEBITED. LD. AR ALSO DID NOT FILE ANY BREAK-UP OF THE AMOUNT DEB ITED TO THE CAPITAL ACCOUNT AMOUNTING TO RS.11,11,661/- TO JUSTIFY THAT EXPENDI TURE INCURRED FOR EARNING EXEMPTED INCOME ARE PART OF THAT AMOUNT. IT IS A LSO NOTICED THAT THE P&L ACCOUNT ATTACHED BY THE ASSESSEE IN THE PAPER BOOK RELATES TO A.Y 2007-08 ONLY. THERE BEING NO MATERIAL BROUGHT ON RECORD T O SUGGEST THAT ASSESSEE DID NOT INCUR ANY EXPENDITURE TO EARN EXEMPTED INCOME WHICH IS SUBSTANTIAL IN THE YEAR UNDER CONSIDERATION, IT CANNOT BE SAID THA T ASSESSEE HAS EITHER NOT INCURRED ANY EXPENDITURE FOR EARNING THAT INCOME OR THE SAME ARE DEBITED TO THE PERSONAL ACCOUNT OF THE ASSESSEE WITHOUT TAKING IT TO THE P&L ACCOUNT. ACCORDINGLY WE DECLINE TO INTERFERE IN THE DISALLOW ANCE UPHELD BY THE LD. CIT(A) AND APPEAL FILED BY THE ASSESSEE IS DISMISSED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 26 TH DAY OF FEB.2013 SD/- SD/- (RAJENDRA SINGH ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 26 TH FEB.2013 ITA NO. 1214/MUM/2011(A.Y.2008-09) 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R B BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.