HITEN P.DALAL, MUMBAI V. DCIT CIR 14(2), MUMBAI

ITA 2055/MUM/2010

• Counselvise Citation: 205519914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 10-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMPAT KUMAR
• Assessee Lawyers: NATASHA MANGAT
• Keywords: Business income; Salary income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.2055/MUM/2010 (ASSESSMENT YEAR: 2006-07) SHRI HITEN P. DALAL, PLOT NO.77ABC, GOVERNMENT INDUSTRIAL ESTATE, CHARKOP, KANDIVALI (W), MUMBAI -400 067 ....... APPELLANT VS DCIT, CIR -14(2), 3 RD FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI -400 020 ..... RESPONDENT PAN: AABPD 5221 H APPELLANT BY: MS NATASHA MANGAT RESPONDENT BY: SHRI SAMPAT KUMAR O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A) 25, MUMBAI DATED 19.01.2010. TH E LD. COUNSEL SUBMITS THAT AS PER THE INSTRUCTION OF THE ASSESSEE HE IS NOT PRESSING GROUND NO.1 IN RESPECT OF THE CLAIM OF EXEMPTION U/ S.10AA. AS GROUND NO.1 IS NOT PRESSED BY THE LD. COUNSEL, IS D ISMISSED. ITA NO.2055/MUM/2010 SHRI HITEN P. DALAL 2 2. NEXT ISSUE IS THE ADDITION OF RS 3,66,332/- MADE BY THE A.O. U/S.14A OF THE ACT. 3. WE HAVE HEARD THE PARTIES. THE ASSESSEE IS AN I NDIVIDUAL AND DERIVING THE INCOMES BY WAY OF SALARY, CAPITAL GAIN S, INCOME FROM OTHER SOURCES ETC. THE ASSESSEE HAS DECLARED DIVID END INCOME OF RS 87,73,227/- WHICH WAS DECLARED UNDER THE HEAD INCO ME FROM OTHER SOURCES AND ALSO CLAIMED THE SAID AS EXEMPT U/S.10 (23). THE A.O. WAS OF THE VIEW THAT THOUGH THE ASSESSEE HAS EARNED THE INCOME BUT NO EXPENDITURE IS CLAIMED CLAIMING THE SAME FOR EAR NING THE DIVIDEND. THE A.O. MADE THE DISALLOWANCE @ 0.5% ON THE AVERAG E INVESTMENT WHICH WAS WORKED OUT AT RS 3,66,332/-. THE ASSESSE E CHALLENGED THE ISSUE BEFORE THE LD. CIT (A) BUT WITHOUT SUCCESS. 4. WE HAVE HEARD THE PARTIES. THE SCHEME OF SEC.14 A AS WELL AS RULE 8D HAS BEEN EXPLAINED BY THE HONBLE BOMBAY HI GH COURT IN THE CASE OF DCIT VS. GODREJ AND BOYCEE MFG. CO. LTD. 32 8 ITR 81 (BOM). THE SAID DECISION WAS NOT AVAILABLE WHEN THIS ISSUE WAS DECIDED BY BOTH THE AUTHORITIES BELOW. WE, THEREFORE, CONSIDE RED IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE A.O. FOR FRESH CONSIDE RATION TO DECIDE THE SAME AFRESH IN THE LIGHT PRINCIPLES LAID DOWN IN TH E CASE OF DCIT VS. GODREJ AND BOYCEE MFG. CO. LTD. (SUPRA). NEEDLESS TO SAY THE A.O. SHOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 5. GROUND NO.3 IS IN RESPECT OF THE DISALLOWANCE OF LEGAL FEES OF RS 9,500/-. 6. WE HAVE HEARD THE PARTIES. AS NOTED BY THE A.O. THAT THE ASSESEE HAS CLAIMED LEGAL FEES OF RS 9,500/- U/S.57 OF THE ACT. AS NOTED BY THE A.O. THE RELATION OF THE EXPENDITURE O F LEGAL FEES COULD NOT BE EXPLAINED BY THE ASSESSEE. THE LD. COUNSEL ARGU ED THAT LEGAL FEES IS PAID TO M/S. D.M. PAREKH & CO. FOR FILING THE RE TURN OF INCOME AND AFTER LOOKING AFTER THE ANOTHER TAX MATTER. HE, FU RTHER PLEADS THAT ITA NO.2055/MUM/2010 SHRI HITEN P. DALAL 3 INCOME OF THE ASSESSEE IN RESPECT OF SAID EXPENDITU RE IS ALLOWABLE EXPENDITURE. THOUGH THE A.O. HAS ASSESSED THE INCO ME FROM SHARE TRANSACTION TREATING THE SAME AS BUSINESS INCOME BU T THE LD. CIT (A) DIRECTED TO THE A.O. TO TREAT THE SAME AS SHORT TER M CAPITAL GAIN. THE ASSESSEE HAS NO OTHER BUSINESS INCOME. SECTION 57( III) PROVIDES THAT EXPENDITURE INCURRED FOR EARNING THE INCOME ONLY IS ALLOWABLE. THE ASSESSEE HAS PAID THE FEES TO ITS COUNSEL BY UTILIZ ING THEIR SERVICES TO FILE THE RETURN OF INCOME. UNLIKE SECTION 37(1), T HERE IS NO RESIDUARY CLAUSE FOR ALLOWING THE DEDUCTION IF THE INCOME IS COMPUTED UNDER THE HEAD INCOME FROM OTHER SOURCES. MOREOVER, UNLESS STATUTE PERMITS ANY DEDUCTION CAN BE ALLOWED TO THE ASSESSEE IN RES PECT OF THE EXPENDITURE THOUGH IT IS CLAIMED, IN OUR OPINION, S AME CAN NOT BE ALLOWED. LEGAL FEES PAID FOR FILING THE RETURN OF I NCOME IS NOT A PERMISSIBLE DEDUCTION EITHER UNDER THE HEAD INCOME FROM OTHER SOURCES OR INCOME FROM SALARY. IN OUR OPINION, AS PER THE FACTS ON RECORD, THE SAID DEDUCTION IS NOT PERMISSIBLE. ACC ORDINGLY, GROUND NO.3 IS DISMISSED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 6 TH MAY 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 16 TH MAY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)25, MUMBAI. 4) THE CIT CONCERNED - CONCERNED, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA NO.2055/MUM/2010 SHRI HITEN P. DALAL 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 13.05.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 14.05.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER