Shri Paras Harish Shah, Ahmedabad V. The Income Tax Officer, Ward-5(2)(3), Ahmedabad

ITA 2727/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6045 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: S V MASHURWALA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 2727/AHD/2016 / ASSESSMENT YEAR: 2013-14 PARAS HARISH SHAH C/O. M/S.MADHUSUDAN C. MASHRUWALA & CO., CA AKIK, 301-303, OPP: LIONS HALL MITHAKHALI AHMEDABAD 380 006. AFDPS 6093 K VS ITO, WARD-5(2)(3) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.V. MASHURWALA, AR REVENUE BY : SMT.ANUPAMA SINGLA, SR.DR / DATE OF HEARING : 15/02/2018 /DATE OF PRONOUNCEMENT : 15/02/2018 O R D E R PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST ORDER OF LD.CIT(A), AHMEDABAD DATED 24.8.2016 PASSE D FOR THE ASSTT.YEAR 2013-14. 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUN AL) RULES, 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF G RIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOW ANCE OF RS.2,23,236/- MADE BY THE AO UNDER SECTION 14A OF THE INCOME TAX ACT, R.W. RULE 8D OF THE INCOME TAX RULES, 1962. ITA NO.2727/AHD/2016 - 2 - 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 14.10.2013 DECLARING TOTAL INCOME AT RS.4,91,910 /-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UND ER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTI NY OF THE ACCOUNTS IT REVEALED TO THE AO THAT THE ASSESSEE HAS MADE INVES TMENT IN VARIOUS SCRIPS. HE HAS EARNED INTEREST INCOME AT RS.6,70,472/- AND CLA IMED INTEREST EXPENDITURE OF RS.8,93,708/-. ACCORDING TO THE AO, SINCE THE ASSE SSEE HAD EXEMPT INCOME THEREFORE INTEREST EXPENDITURE DESERVES TO BE DISAL LOWED. HE WORKED OUT SUCH DISALLOWANCE TO RS.2,23,236/- WHICH IS INTEREST EXP ENDITURE RS.8,93,708/- MINUS INTEREST INCOME RS.6,70,472/-. APPEAL TO THE LD.FI RST APPELLATE AUTHORITY DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT SIMILAR DISALLOWANCE WAS MADE IN THE ASSTT.YEAR 2012-13. W HEN THE DISPUTE TRAVELLED TO THE TRIBUNAL IN ITA NO. 3266/AHD/2015, THE TRIBU NAL HAS RESTRICTED THE DISALLOWANCE EQUIVALENT TO THE EXEMPT INCOME EARNED BY THE ASSESSEE. HE POINTED OUT THAT IN THIS YEAR EXEMPT INCOME RELATED TO THE ASSESSEE IS ONLY RS.13,000/- ROUGHLY, WHEREAS DISALLOWANCE CONFIRMED BY THE LD.CIT(A) IS OF RS.2,23,236/-. HE PLACED ON RECORD COPY OF THE TRI BUNALS ORDER IN ITA NO.3266/AHD/2015. ON THE OTHER HAND, THE LD.DR RELI ED UPON ORDERS OF THE REVENUE AUTHORITIES. 5. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, I FIND THAT IN THE ASSTT.YEAR 2012-13, THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE OF INTEREST EXPENDITURE EQUIVALENT TO THE DIVIDEND INCOME OR EX EMPT INCOME BY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TAIKISHA ENGG. (I) LTD., 370 ITR 338. THE TRIBUNAL HAS PLAC ED RELIANCE UPON THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF D AGA GLOBAL CHEMICALS LTD., IN ITA NO.5592/MUM/2012 ORDER DATED 1.1.2015. UNDERSIGNED IS ALSO PARTY TO ORDER OF THE ITAT IN THE ASSTT.YEAR 2012-1 2 WHICH IS A DIVISION BENCH ITA NO.2727/AHD/2016 - 3 - DECISION. I FIND THAT NEITHER THE AO HAS MENTIONED EXACT AMOUNT OF DIVIDEND INCOME OR EXEMPT INCOME EARNED BY THE ASSESSEE IN T HE ASSESSMENT ORDER NOR LD.CIT(A). ACCORDING TO THE ASSESSEE DETAILS AVAIL ABLE AT PAGE NO.28 OF THE PAPER BOOK INDICATE THE DIVIDEND INCOME OF RS.13,87 0/-. HOWEVER, IT IS NOT DISCERNIBLE FROM THE RECORD WHETHER THESE DETAILS W ERE GIVEN TO THE AO OR NOT, AND WHETHER THE AO HAS VERIFIED THIS OR NOT. CONSI DERING THIS ASPECT, I DEEM IT APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF A O WITH DIRECTION THAT THE LD.AO SHALL VERIFY QUANTUM OF DIVIDEND INCOME/EXEMPT INCO ME AND RESTRICT THE DISALLOWANCE OUT OF INTEREST EXPENDITURE EQUIVALENT TO THE EXEMPT INCOME/DIVIDEND INCOME. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 15 TH FEB., 2018. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 15 /02/2018