Rajeev Kumar Mittal, Ludhiana V. ACIT, Ludhiana

ITA 272/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9994 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-03-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Salary income; Earning of tax free income
• Section: 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NOS. 272 & 273/CHD/2015 A.YS: 2009-10 & 2010-11 SHRI RAJEEV KUMAR MITTAL, VS THE ACIT, G.T.ROAD, MILLERGANJ, CIRCLE V, LUDHIANA. LUDHIANA. PAN: ACHPM4702A (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (WRITTEN SUBMISSIONS BY ASSESSEE) RESPONDENT BY : SHRI AMIT RAJ DATE OF HEARING : 10.05.2016 DATE OF PRONOUNCEMENT : 23.05.2016 O R D E R PER BHAVNESH SAINI,JM BOTH THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF LD. CIT(APPEALS)-2 LUDHIANA DATED 14.01.2015 FOR ASSESSMENT YEAR 2009-10 AND DATED 12.02.2015 FOR ASSESSMENT YEAR 2010-11. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE. THE LD. COUNSEL FOR THE ASSESSEE FORWARDE D A LETTER MAKING REQUEST THAT APPEAL MAY BE DISPOSED O FF AS PER WRITTEN SUBMISSIONS. 2 3. WE HAVE HEARD LD. DR AND PERUSED THE FINDINGS OF AUTHORITIES BELOW AND HAVE ALSO CONSIDERED THE WRIT TEN SUBMISSIONS. 4. IN ASSESSMENT YEAR 2009-10, THE ASSESSEE CHALLENGED THE DISALLOWANCE OF RS. 26,523/- UNDER SECTION 14A READ WITH RULE 8D OF THE INCOME TAX ACT . 5. THE BRIEF FACTS ARE THAT RETURN DECLARING INCOME OF RS. 96,08,520/- WAS FILED. THE ASSESSEE DRAWS INCO ME FROM SALARY AND OTHER SOURCES. THE ASSESSING OFFIC ER NOTED THAT ASSESSEE HAD SHOWED INVESTMENTS, INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE ASSESSING OFFICER FURTHER NOTED THAT ASSESSEE HAD EARNED DIVIDEND INCOME OF RS. 76,564/- AND HAS CLAI MED EXPENSES AMOUNTING TO RS. 26,523/-. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHY DISALLOWA NCE UNDER SECTION 14A OF THE ACT IN RESPECT OF EXPENDIT URE IN RELATION TO INVESTMENTS MAY NOT BE MADE. THE ASSES SING OFFICER, AFTER CONSIDERING EXPLANATION OF THE ASSES SEE HELD THAT PROVISIONS OF SECTION 14A ARE APPLICABLE IN THIS CASE. THE ASSESSING OFFICER, ACCORDINGLY, COM PUTED THE DISALLOWANCE UNDER RULE 8D(III) AT RS. 2,75,838 /- AND DISALLOWED THIS AMOUNT. 6. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMISSION OF THE ASSESSEE WAS FILED IN WHICH IT WAS SUBMITTED THAT ASSESSEE HAS N OT PAID ANY INTEREST AND ALSO NOT INCURRED ANY EXPENDI TURE 3 TO EARN EXEMPT INCOME. IT WAS SUBMITTED THAT ASSES SEE FILED RECTIFICATION APPLICATION POINTING OUT THAT T OTAL EXPENDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT IS ONLY IN A SUM OF RS. 26,523/- THEREFORE, DISALLOWANCE SH OULD NOT EXCEED THIS AMOUNT. THE ASSESSING OFFICER VIDE ORDER DATED 07.09.2012 UNDER SECTION 154 REDUCED TH E DISALLOWANCE TO RS. 26,523/-. THE ASSESSEE SUBMITT ED THAT NONE OF THE EXPENDITURE RELATES TO EARNING OF THE EXEMPT INCOME AND AS SUCH, NO DISALLOWANCE IS CALLE D FOR. 7. THE LD. CIT(APPEALS), AFTER PERUSING OF THE DOCUMENTS FOUND THAT ASSESSEE HAS CLAIMED SALARY EXPENSES, STATIONERY, FEES AND TAX AND BANK COMMISS ION IN THE PROFIT & LOSS ACCOUNT. THE ASSESSEE HAD INC OME FROM SALARY, DIVIDEND AND INTEREST. THE LD. CIT(APPEALS), THEREFORE, NOTED THAT IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT NO AMOUNT OF EXPENSES LIKE ABOVE WERE INCURRED WITH RELATION TO EXEMPT INCOME. THE ADDITION WAS CONFIRMED AND APPE AL OF THE ASSESSEE WAS DISMISSED. 8. AFTER CONSIDERING SUBMISSIONS OF THE LD. DR AND WRITTEN SUBMISSIONS OF THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE ASSESSEE IN THE WRITTEN SUBMISSION SUBMITTED THAT HE HAD EARNED DIVIDEND INCOME OF RS. 76,563/- AND INCURRED TOTAL EXPENDITURE OF RS. 26,523/- AS PER PROFIT & LOSS ACCOUNT. IT IS CLAIMED THAT ASSESSEE HAD NOT INCUR RED 4 ANY EXPENDITURE TO EARN EXEMPT INCOME. IT IS ALSO PLEADED THAT THE EXPENDITURE OF RS. 26,523/- MAY BE APPORTIONED BETWEEN TAXABLE AND NON-TAXABLE INCOME. ASSESSEE'S TAXABLE INCOME IS RS. 81,82,102/- AND EXEMPT INCOME IS RS. 76,563/-. THE ASSESSEE RELIED UPON ORDER OF ITAT CHANDIGARH IN THE CASE OF ACIT V S VARDHMAN HOLDINGS LTD. IN ITA 550/2015 DATED 04.09.2015. 8(I) THE TRADING AND PROFIT & LOSS ACCOUNT OF THE ASSESSEE SHOWS ASSESSEE HAS SALARY INCOME, DIVIDEND AND INTEREST. THERE IS NO OTHER INCOME PARTICULARL Y NO BUSINESS INCOME HAVE BEEN SHOWN. THE ASSESSEE IN T HE PROFIT & LOSS ACCOUNT CLAIMED DEDUCTION TO THE EXTE NT OF RS. 26,523/- ON ACCOUNT OF SALARY, STATIONERY EXPEN SES, FEES AND TAXES AND BANK COMMISSION. THESE EXPENSES COULD NOT BE INCURRED FOR EARNING SALARY INCOME AND INTEREST INCOME. NO DETAILS OF INTEREST EARNED OR WHETHER THESE EXPENSES HAVE ANY RELATION WITH INTER EST EARNED HAVE BEEN PROVED ON RECORD. THEREFORE, THES E EXPENSES OF RS. 26,523/- CLAIMED IN THE PROFIT & LO SS ACCOUNT HAVE NOT BEEN PROVED TO HAVE ANY CONNECTION WITH EARNING OF SALARY INCOME AND INTEREST EARNED. THERE IS, THUS, ADMISSION OF ASSESSEE THAT EXPENSES OF RS. 26,523/- PERTAIN TO EARNING OF DIVIDEND/ EXEMPT INCOME. 8(II) WE MAY ALSO NOTE HERE THAT THESE EXPENSES COU LD NOT HAVE ANY CONNECTION WITH EARNING OF SALARY AND 5 INTEREST INCOME. THE ONLY INCOME LEFT WITH THE ASS ESSEE IS DIVIDEND INCOME WHICH IS EXEMPT THEREFORE, THE EXPENDITURE OF RS. 26,523/- CLAIMED IN THE PROFIT & LOSS ACCOUNT HAVE ADMITTEDLY LINK WITH THE EARNING OF DIVIDEND INCOME. THE ASSESSEE HAS NOT PROVED ANYTH ING OTHERWISE ON RECORD. THE ASSESSEE IN THE RECTIFICA TION APPLICATION BEFORE ASSESSING OFFICER ALSO POINTED O UT THAT TOTAL EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT IS RS. 26,523/- THEREFORE, DISALLOWANCE IF ANY SHOULD NOT EXCEED THIS EXPENDITURE. THE EXPLANATIO N OF THE ASSESSEE BEFORE ASSESSING OFFICER WAS, THUS, VE RY SPECIFIC THAT THE EXPENDITURE OF RS. 26,523/- HAVE BEEN CLAIMED ONLY ON ACCOUNT OF EARNING OF DIVIDEND INCO ME. AS NOTED ABOVE, SINCE THERE IS NO OTHER INCOME EARN ED BY ASSESSEE AND THAT THERE COULD NOT BE ANY CONNECT ION WITH THE INCURRING OF EXPENDITURE ON ACCOUNT OF EAR NING OF SALARY AND INTEREST INCOME THEREFORE, IT APPEARS THAT ASSESSEE IS TAKING DIFFERENT STAND AT THE STAGE IN ORDER TO THWART PROVISIONS OF LAW. WE, THEREFORE, HOLD T HAT ASSESSEE HAS INCURRED EXPENDITURE OF RS. 26,523/- F OR EARNING EXEMPT INCOME OF RS. 76,564/-. THE ASSESSE E IN THE ALTERNATE CONTENTION ALSO SUBMITTED THAT THE EXPENDITURE MAY BE APPORTIONED BETWEEN TAXABLE AND NON-TAXABLE INCOME AND RELIED UPON ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF VARDHMAN HOLDINGS LTD. (SUPRA). COPY OF THE ORDER IN THIS CASE HAS B EEN PLACED ON RECORD IN WHICH THE FACTS ARE TOTALLY DIF FERENT. IN THIS CASE, ASSESSEE HAS TAXABLE INCOME OF RS. 2. 17 CR 6 AND HAS CLAIMED EXPENSES OF RS. 20,07,688/-. THE ASSESSEE HAS NON-TAXABLE INCOME OF RS. 2,96,383/- O NLY. THEREFORE, IT WAS OBSERVED THAT ASSESSEE WOULD NOT INCUR SUCH A HUGE EXPENDITURE TO EARN SMALL NON-TAXABLE INCOME AND ASSESSEE WOULD NOT INCUR ANY EXPENDITURE TO EARN SUBSTANTIAL TAXABLE INCOME. THEREFORE, THIS DECISION IS NOT APPLICABLE IN THE CASE OF THE ASSES SEE, PARTICULARLY IN THE LIGHT OF THE ADMITTED FACT THAT ASSESSEE HAS DECLARED OTHER TAXABLE INCOME ON ACCOU NT OF SALARY AND INTEREST ONLY AGAINST WHICH NO EXPEND ITURE COULD BE INCURRED BY ASSESSEE. 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND PARTICULARLY WHEN ASSESSING OFFICER HAS ALREADY GRA NTED SUBSTANTIAL RELIEF TO THE ASSESSEE, WE ARE OF THE V IEW THAT NO FURTHER INTERFERENCE IS CALLED FOR IN THE M ATTER. THE APPEAL OF THE ASSESSEE IN ASSESSMENT YEAR 2009- 10 HAS, THUS, NO MERIT, SAME IS ACCORDINGLY DISMISSED. 10. IN ASSESSMENT YEAR 2010-11, ASSESSEE CHALLENGED DISALLOWANCE OF RS. 37,786/- UNDER SECTION 14A READ WITH RULE 8D. THE LD. CIT(APPEALS) FOLLOWED HIS OR DER IN ASSESSMENT YEAR 2009-10 AND DISMISSED THE APPEAL OF THE ASSESSEE. SINCE WE HAVE DISMISSED THE APPEAL O F THE ASSESSEE FOR ASSESSMENT YEAR 2009-10 ABOVE, CONFIRM ING THE ORDER OF THE LD. CIT(APPEALS), THEREFORE, THIS APPEAL OF THE ASSESSEE HAS NO MERIT. SAME IS ACCORDINGLY, DISMISSED. 7 11. WE MAY OBSERVE THAT THESE APPEALS ARE DECIDED O N THE BASIS OF PECULIAR ADMITTED FACTS NOTED ABOVE I. E. THE ASSESSEE APART FROM EXEMPT INCOME HAS ONLY SALARY A ND INTEREST INCOME AND CLAIMED DEDUCTION OF THE EXPENDITURE IN THE PROFIT & LOSS ACCOUNT OF RS. 26, 523/- . 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD MAY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD