ITO, WARD-2(3)(8), SURAT V. PRABHA PRAKASHCHANDRA SANCHETI, SURAT

ITA 149/SRT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2456 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 15-02-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 29-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SITA RAM MEENA
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM &DR. A.L.SAINI, AM आयकरअपीलसं./ITA No.149/AHD/2020 (िनधाŊरणवषŊ / Assessment Year: (2012-13) (Virtual Court Hearing) Income Tax Officer, Ward- 2(3)(8), Room No. 407, 4 th Floor, Anavil Business Centre, Adajan-Hajira Road, Adajan, Surat-395009 Vs. Prabha Prakashchandra Sancheti 206, Super Diamond Apartment, Nagoriwad, Saiyedpura, Surat- 395003 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABWPJ 2151L (Appellant ) (Respondent) Assessee by : Shri Rohit Vijayvargia, C.A Respondent by : Shri Sita Ram Meena– Sr.D.R सुनवाईकीतारीख/ Date of Hearing : 16/02/2022 घोषणाकीतारीख/Date of Pronouncement : 25/02/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue pertaining to assessment year 2012- 13, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals)-1,Surat [‘CIT(A)’ for short], dated 25.02.2020, which in turn arises out of an order passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short ‘the Act’), dated 30.11.2017. 2. The grounds of appeal raised by Revenue are as follows:- “(i)On the facts and in the circumstances of the case and in law, the ld. CIT(As) erred in deleting the disallowance of Rs.1,39,094/- made u/s 14A of the Act, despite the fact that the AO had satisfactorily established the applicability of provisions of section 14 r.w. Rule 8D of the I.T. Rules, 1962. (ii)On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the net taxable income to Rs.1,20,000/- whereas the AO has rightly calculated the notional rental income at Rs.4,91,054/- on the house property by applying notional ALV at 10% of the value of house property. (iii) On the facts and circumstances of the case and in law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Office. It is, therefore, prayed that the order of the Page | 2 ITA No.149/SRT/2020 A.Y. 12-13 Prabha P Sancheti Ld. CIT(A)-1 Surat maybe set-aside and that of the Assessing Officer’s order may be restored. (iv) On the facts and circumstances of the case and in law, the appellant craves its right to add, alter, amend, deleted, any of the ground or grounds of appeal.” 3. So far as the grievance of the assessee in ground no.1, is concerned, the relevant material facts are like this. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that assessee has shown exempt income u/s 10(11) and 10(38) of the Act but assessee has not made any voluntary disallowance under section 14A of the Act. Therefore, assessing officer had applied section 14A of the Act and calculated disallowance as per rule 8D at Rs.139094/- and disallowed the same. 4. On appeal, ld CIT(A) deleted the addition. The Ld. CIT(A) examined the balance-sheet of the assessee and observed that no interest bearing funds were used for making impugned investments. Therefore, Ld. CIT(A) relied on the decision of Hon'ble jurisdictional High Court in the case of India Gelatine & Chemical Ltd. (2015) 376 ITR 353 (Guj) and deleted the addition. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us. 5.We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We find merit in the order passed by ld CIT(A). We note that no interest bearing funds were used for making investments, hence there should not be disallowance under section 14A of the Act. The ld CIT(A) relied on the binding decision of Hon'ble jurisdictional High Court in the case of India Gelatine & Chemical Ltd (supra) and deleted the addition, therefore, we do not find any infirmity in the order of ld CIT(A). Hence, we approve the order of ld CIT(A) and dismiss the ground no.1 raised by the Revenue. 6. Coming to ground no.2 raised by Revenue, which relates to notional rental income of house property. We have heard both the parties. We note that assessing Page | 3 ITA No.149/SRT/2020 A.Y. 12-13 Prabha P Sancheti officer has discussed and computed the notional rent which is given in para 7 of assessment order. We note thatassessing officer estimated ALV at 10% of Building value but has not given any reason for the same, on the contrary the assessee has offered rental income of Rs.84,000/- in computation of income. During the appellate proceedings the assessee has field details of the property, municipal tax bill, printout from online rental and real estimate sales portal www.makaan.com and also lease deed to show that property was leased out at rent of Rs.17,000/- per month in year 2017. The ld CIT(A) observed that even in the portal ww.makaan.com it is seen the current rentals are at Rs.18,000/- per month on similar properties. It is also seen that municipal tax levied on property is Rs.15312/-. Municipal tax is generally levied at 1/11 of the ALV of the property. Considering all these relevant factors, the ld CIT(A) estimated the rental income of the impugned property during the period F.Y 2011-12 at Rs.15,000/- per month, accordingly the rental income or ALV for the year comes to Rs.1,80,000/-. After allowing for standard deduction u/s24 of the Act, the net taxable rental income comes to Rs.1,20,000/- of which Rs.84,000/- is already offered by assessee, hence the addition on this account was restricted by CIT(A) to Rs.36,000/-. Taking into account all these facts, we are of the view that there is no any infirmity in the order of Ld. CIT(A). That being so, we decline to interfere with the order of Ld. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 7. In the result, the appeal of the Revenue is dismissed. Order is pronounced on 25/02/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 25/02/2022 Dkp Outsourcing Sr.P.S. Page | 4 ITA No.149/SRT/2020 A.Y. 12-13 Prabha P Sancheti Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat