SUNILKUMAR MANGILAL BACHHAWAT, MUMBAI V. D.C.I.T. CIR.4(1), NAVI MUMBAI

ITA 216/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84152 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 13-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: GAJENDRA GOLCHHA
• Keywords: Non-deduction of tax
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, M UMBAI BEFORE HONBLE S/SHRI VIJAY PAL RAO (JM) , AND B.R.BASKARAN (AM) , . . , ./I.T.A. NO.216/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) SUNIULKUMAR MANGILAL BACHHAWAT, JIVRAJ JOGRAJ, 102, VITHALWADI, 2 ND FLOOR, KALBADEVI ROAD, MUMBAI-400002 / VS. DY. COMMISSIONER OF INCOME TAX 4(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./ ./ PAN/GIRNO.:AABPB7526P ! / APPELLANT BY : SHRI GAJENDRA GOLCHHA ' ! /RESPONDENT BY SHRI LOVE KUMAR # ' $% / DATE OF HEARING : 13.11.2014 &' ' $% /DATE OF PRONOUNCEMENT : 19 .11.2014. / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 06-12- 2012 PASSED BY LD CIT(A)-8, MUMBAI AND IT RELATES T O THE ASSESSMENT YEAR 2009-10. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE IS CARRYING ON SHARE TRADING ACTIVITY IN THE NAME AND STYLE M/S SUNIL INVESTMENT. HOWEVER, HE HAS ACCOUNTED FOR HIS INVESTMENTS IN HIS PERSO NAL BOOKS. ACCORDINGLY, THE DIVIDEND INCOME IS CREDITED IN HIS CAPITAL ACCOUNT AVAILABLE IN PERSONAL BOOKS. THE AO MADE DISALLOWANCE U/S 14A OF THE ACT AS PER THE PROVISIONS OF RULE 8D ITA NO.216/M/2013 2 OF THE I.T RULES. THE LD CIT(A) CONFIRMED THE SAME AND HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING, IT WAS FAIRLY BROUGHT TO OUR NOTICE BY LD A.R THAT THE IDENTICAL DISALLOWANCE MADE BY THE AO HAS BEEN SCAL ED DOWN BY THE ITAT, VIDE ITS ORDER DATED 7.3.2014 PASSED IN ASSESSEES OWN C ASE IN ITA NO. 3647/MUM/2012. WE PERUSED THE ORDER OF THE ITAT. WE NOTICE THAT THE TRIBUNAL HAS TAKEN NOTE OF THE FACT THAT THE CAPITAL ACCOUNT BALANCE OF THE ASSESSEE IN HIS BUSINESS CONCERN NAMED M/S SUNIL INVESTMENT SHOWED NEGATIVE BALANCE OF RS.32.61 LAKHS AS ON 31.3.2008 AND ON THAT DATE, TH E BORROWALS STOOD AT RS.169.59 LAKHS. ACCORDINGLY, THE TRIBUNAL HELD TH AT THE ASSESSEE HAS DIVERTED 20% OF THE BORRWED FUNDS TO PERSONAL BOOKS (WHERE I NVESTMENT IS ACCOUNTED FOR). ACCORDINGLY, THE TRIBUNAL EXPRESSED THE VIEW THAT T HE INTEREST DISALLOWANCE SHOULD BE RESTRICTED TO 20% OF THE TOTAL INTEREST E XPENDITURE INCURRED BY THE ASSESSEE. WITH REGARD TO THE DISALLOWANCE OF GENER AL & ADMINISTRATIVE EXPENSES, THE TRIBUNAL HAD CONFIRMED THE AMOUNT DISALLOWED AS PER RULE 8D. 4. A PERUSAL OF THE CURRENT YEARS BALANCE SHE ET OF THE CONCERN M/S SUNIL INVESTMENT WOULD SHOW THAT THE ASSESSEE IS HAVING N EGATIVE CAPITAL BALANCE OF RS.71.50 LAKHS AND THE LOANS STOOD AT RS.181.40 LAK HS. THE LD A.R SUBMITTED THAT THE NEGATIVE BALANCE IN THE CAPITAL ACCOUNT HA S INCREASED DUE TO THE LOSS OF RS.32.00 LAKHS SUFFERED DURING THE YEAR UNDER CONSI DERATION. IF WE REDUCE THE CURRENT YEAR LOSS CITED ABOVE, STILL THE CAPITAL BA LANCE SHOWS NEGATIVE BALANCE OF RS.39.50 LAKHS AGAINST THE BORROWALS OF RS.181.40 L AKHS, MEANING THEREBY, THE ASSESSEE HAS DIVERTED AROUND 22% OF THE BORROWALS T O PERSONAL BOOKS. THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF RS.9,2 0,801/- AND 22% THEREOF WORKS OUT TO RS.2.02 LAKHS. WE NOTICE THAT THE ASS ESSING OFFICER HAS DISALLOWED INTEREST EXPENDITURE TO THE TUNE OF RS.2,07,040/- A S PER RULE 8D, WHICH IS APPROXIMATELY EQUAL TO THE ANALYSIS MADE ABOVE. HE NCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN CONFIRMIN G THE DISALLOWANCE OF INTEREST EXPENDITURE U/S 14A. WITH REGARD TO THE DISALLOWAN CE OF GENERAL & ADMINISTRATIVE EXPENSES, WE HAVE ALREADY SEEN THAT THE CO-ORDINAT E BENCH OF TRIBUNAL HAD CONFIRMED THE DISALLOWANCE MADE AS PER THE WORKINGS GIVEN IN RULE 8D IN THE IMMEDIATELY PRECEDING YEAR. IN THE INSTANT YEAR ALS O, DISALLOWANCE OF GENERAL & ITA NO.216/M/2013 3 ADMINISTRATIVE EXPENSES HAS BEEN MADE IN AN IDENTIC AL MANNER. HENCE WE AFFIRM THE ORDER OF LD CIT(A) ON THIS ISSUE ALSO. 5. THE NEXT ISSUE RELATES TO THE DISALLOWANCE MA DE U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE IN RESPECT OF LATE P AYMENT CHARGES AND INTEREST PAID TO M/S JOINDRE CAPITAL SERVICES. BEFORE THE A O, THE ASSESSEE DID NOT FURNISH ANY EXPLANATION AND HENCE THE AO DISALLOWE D THE EXPENDITURE U/S 40(A)(IA) OF THE ACT. BEFORE THE LD CIT(A), THE AS SESSEE CONTENDED THAT THE AMENDMENT MADE IN SEC. 40(A)(IA) BY FINANCE ACT, 20 12 IS RETROSPECTIVE IN NATURE, HOWEVER, THE SAID CONTENTION DID NOT FIND F AVOUR WITH HIM. KEEPING ASIDE THE ISSUE WHETHER THE ABOVE SAID AMENDMENT IS RETRO SPECTIVE OR PROSPECTIVE FOR A WHILE, WE NOTICE THAT THE ASSESSEE DID NOT FURNIS H ANY MATERIAL TO SUBSTANTIATE HIS CLAIM THAT HE HAD COMPLIED WITH THE CONDITIONS PRESCRIBED IN THE AMENDMENT. WE ALSO NOTICE THAT THE LAW IN THIS RESPECT OF IS E VOLVING AND HENCE, IN OUR VIEW, THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH WITHOUT BEING INFLUENCED BY THE DECISION OF LD CIT(A) AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. THE ASSESSEE IS ALSO DIRECTED TO MAKE HIS SUBMISSIONS IN THIS REGARD BEFORE THE AO WITH FULL FACTS. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS TREATED AS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPE N COURT ON 19TH NOV, 2014 . &' # () * + 19TH NOV , 2014 ' ' , - SD SD ( / VIJAY PAL RAO ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( # MUMBAI: 19TH NOV,2014. . . ./ SRL , SR. PS ITA NO.216/M/2013 4 !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # 0$ ( ) / THE CIT(A)- CONCERNED 4. # 0$ / CIT CONCERNED 5. 6. 1, $ 2 , % 2 , ( # / DR, ITAT, MUMBAI CONCERNED ,3 4 / GUARD FILE. 5 # / BY ORDER, TRUE COPY 6 (ASSTT. REGISTRAR) % 2 , ( # /ITAT, MUMBAI