Mahesh Kumar Mittal, Ludhiana V. ACIT, Ludhiana

ITA 269/CHANDI/2015

• Counselvise Citation: 26921514 RSA 2015
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Salary income; Earning of tax free income
• Section: 154; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 269 & 270/CHD/2015 ASSESSMENT YEAR: 2009-10 & 2010-11 SHRI MAHESH KUMAR MITTAL, VS THE ACIT, G.T. ROAD, MILLER GANJ, CIRCLE V, LUDHIANA. LUDHIANA. PAN: ABRPM6251F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARW AL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 14.10.2015 DATE OF PRONOUNCEMENT : 16.10.2015 O R D E R PER BHAVNESH SAINI,JM BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE ORDERS OF LD. CIT(APPEALS)-II LUDHIANA DATED 14.01.2015 FOR ASSESSMENT YEAR 2009-10 AND DATED 12.02.2015 FOR ASSESSMENT YEAR 2010-11. 2. IN BOTH THE APPEALS, THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN CONFIRMING DISALLOWANC E OF RS. 27,585/- AND RS. 37,741/- RESPECTIVELY IN BOTH YEAR S UNDER APPEALS UNDER SECTION 14A READ WITH RULE 8D. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE DERIVED INCOME FROM SALARY, DIVIDEND AND INTEREST EARNED. IN ASSESSMENT YEAR 2009-10, ASSESSING OFFICER MADE ADD ITION OF RS. 2,71,388/-. THE ASSESSEE FILED RETURN OF IN COME OF RS. 86,35,150/-. THE ASSESSING OFFICER NOTED THAT ASSESSEE 2 HAD SHOWN INVESTMENTS, INCOME FROM WHICH DOES NOT F ORM PART OF THE TOTAL INCOME. THE ASSESSING OFFICER NO TED THAT ASSESSEE HAD EARNED DIVIDEND INCOME OF RS. 76,874/- AND HAS CLAIMED EXPENSES AMOUNTING TO RS. 27,585/-. TH E ASSESSING OFFICER MADE THE ABOVE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(III) OF THE INCOME TA X ACT. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSEE HAS NOT PAID ANY INTEREST AND HAS NOT INCU RRED ANY EXPENDITURE TO EARN EXEMPT INCOME. THE ASSESSE E ALSO FILED APPLICATION FOR RECTIFICATION ON 24.08.2012 P OINTING OUT THAT THE TOTAL EXPENDITURE DEBITED IN THE PROFI T & LOSS ACCOUNT IS ONLY A SUM OF RS. 27,585/- AND THE DISALLOWANCE, IF ANY, CANNOT EXCEED THE AMOUNT OF T HE EXPENDITURE. IT WAS ALSO STATED THAT ASSESSING OFF ICER IN THE ORDER UNDER SECTION 154 REDUCED THE DISALLOWANC E TO RS. 27,585/-. IT WAS SUBMITTED THAT NONE OF THE EXPENDITURE RELATES TO EARNING OF THE EXEMPT INCOME , THEREFORE, NO DISALLOWANCE IS CALLED FOR. IT WAS A LSO SUBMITTED ALTERNATIVELY THAT EVEN IF DISALLOWANCE I S CALLED FOR, THE SAME COULD BE IN PROPORTION TO THE TAXABLE AND NON-TAXABLE INCOME. THE LD. CIT(APPEALS) FOUND THA T ASSESSEE HAS SHOWN INCOME FROM SALARY, DIVIDEND AND INTEREST. IN THESE CIRCUMSTANCES, IT CANNOT BE SAI D THAT NO AMOUNT OF EXPENSES LIKE ACCOUNTANTS SALARY, STATIO NARY ETC. WAS INCURRED WITH RELATION TO EXEMPT INCOME. THE LD. CIT(APPEALS), THEREFORE, CONFIRMED THE DISALLOWANCE MADE BY ASSESSING OFFICER IN A SUM OF RS. 27,585/-. 3 4. SIMILARLY, IN ASSESSMENT YEAR 2010-11, THE ASSES SEE DECLARED INCOME OF RS. 1,57,50,780/-, THE ASSESSEE HAS SAME SOURCE OF INCOME. THE ASSESSEE EARNED DIVIDEN D INCOME OF RS. 1,10,759/- AND CLAIMED EXPENSES OF RS . 37,741/-. THE ASSESSING OFFICER APPLIED SECTION 14 A READ WITH RULE 8D OF THE ACT AND DISALLOWED A SUM OF RS. 2,71,104/-. HOWEVER, AS THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 37,741/- IN THE PROFIT & LOSS ACCOU NT, THEREFORE, DISALLOWANCE WAS RESTRICTED TO THE SUM O F RS. 37,740/-. THE LD. CIT(APPEALS), FOLLOWING THE ORDE R FOR ASSESSMENT YEAR 2009-10, DISMISSED THE APPEAL OF TH E ASSESSEE AS WELL. 5. AFTER HEARING RIVAL CONTENTIONS, WE DO NOT FIND ANY MERIT IN BOTH THE APPEALS OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED PROFIT & LOSS ACCOUNT IN THE CASE OF ASSESSEE FOR BOTH THE YEARS WHICH SHOWS THAT ASS ESSEE HAS INCOME FROM SALARY, DIVIDEND AND INTEREST. THE ASSESSEE CLAIMED EXPENSES AMOUNTING TO RS. 27,585/- IN ASSESSMENT YEAR 2009-10 AND RS. 37,741/- IN ASSESSM ENT YEAR 2010-11. THESE FACTS, THEREFORE, CLEARLY SUPPO RT THE FINDINGS OF LD. CIT(APPEALS) THAT FOR EARNING DIVID END INCOME, ASSESSEE HAS INCURRED THESE EXPENSES TO EAR N EXEMPT INCOME. ON SALARY AND INTEREST, NO EXPENSES SHALL HAVE TO BE INCURRED BY THE ASSESSEE. THEREFORE, TH E ONLY INCOME LEFT WITH THE ASSESSEE WAS DIVIDEND INCOME. THEREFORE, ALL THE EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT WERE MEANT AND INCURRED FOR EARNING EXEMPT INCOME. THE ASSESSEE ALSO PLEADED BEFORE ASSESSING OFFICER 4 IN SECTION 154 PROCEEDINGS THAT THE ADDITION MADE C OULD BE MADE TO THAT EXTENT ONLY BECAUSE THE SUM OF RS. 27, 585/- AND RS.37,741/- WERE DEBITED AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT. THUS, THE ASSESSEE HIMSELF HAS ADM ITTED TO HAVE INCURRED THESE EXPENSES FOR EARNING EXEMPT INCOME. THE LD. COUNSEL FOR THE ASSESSEE HAS FAILE D TO POINT OUT ANY INFIRMITY IN THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSING OFFICER HAS ACCEPTED THE CONTE NTION OF THE ASSESSEE FOR PARTLY REDUCING THE ADDITION DESPI TE THE ASSESSING OFFICER HAS CALCULATED HIGHER AMOUNT OF DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. 6. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE A UTHORITIES BELOW. WE CONFIRM THE SAME AND DISMISS BOTH THE AP PEALS OF THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH OCT., 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD