Smt. Dipaben Maulik Kumar Patel, Mehsana V. Income Tax Officer,Ward-1, Mehsana

ITA 3065/AHD/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9203 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G C DAXINI
• Section: 142(1); 14A; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO.3065/AHD/2015 (ASSESSMENT YEAR : 2012-13) SMT. DIPABEN MAULIKKUMAR PATEL, OPP- UMIYA SHOPPING CENTRE, HIGHWAY, MEHSANA 374002. VS. INCOME TAX OFFICER, WARD 1, MEHSANA. [PAN NO. AHLPP 2990 E] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI ANIL KSHATRIYA, A.R. RESPONDENT BY : SHRI G. C. DAXINI, SR. D.R. DATE OF HEARING 31/12/2019 DATE OF PRONOUNCEMENT 29/03/2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 30.09.2015 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) GANDHINAGAR, AHMEDABAD ARISING OUT OF THE ORDER DAT ED 30.01.2015 PASSED BY THE ITO, WARD-1, MEHSANA UNDER SECTION 143(1) OF THE ACT FOR A.Y. 2012-13. 2. THE ASSESSEE FILED HER RETURN OF INCOME DECLARIN G TOTAL INCOME AT RS.3,07,270/- ON 31.08.2012 WHICH WAS PROPOSED U/S 143(1) OF THE ACT. ON SCRUTINY NOTICE U/S 143(2) OF THE ACT DATED 06.08.2 013 FOLLOWED BY A FURTHER NOTICE DATED 01.09.2014 U/S 143(2) AND 142(1) DUE T O CHANGE OF INCUMBENT WAS SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSE SSMENT PROCEEDING IT APPEARS FROM THE BALANCE SHEET THAT THE ASSESSEE HA S INVESTED RS.72,61,924/- AT THE BEGINNING OF THE YEAR AND RS.72,82,147/- AT THE END OF THE YEAR. THE ITA NO.3065/AHD/2015 SMT. DIPABEN MAULIKKUMAR PATEL VS. ITO ASST.YEAR 2012-13 - 2 - ASSESSEE CLAIMED DIVIDEND INCOME OF RS. 1,30,595/- AND RS. 74,470/- AS INTEREST INCOME ON PPF AS EXEMPT FROM TAX. THE ASSE SSEE HAS NOT DISALLOWED ANY AMOUNT TOWARDS DISALLOWANCE U/S 14A. THE SAID D IVIDEND INCOME IS ATTRIBUTABLE TO ASSESSEES INVESTMENT IN THE PAST. FURTHER THAT, THE ASSESSEE HAS NOT MADE ANY FRESH INVESTMENT NOR BORROWED ANY FUND FOR SUCH INVESTMENT FOR EARNING DIVIDEND. IT WAS ALSO CONTENDED BY THE ASSE SSEE THAT NO EXPENDITURE WAS INCURRED IN EARNING DIVIDEND INCOME, NO NOTIONA L DISALLOWANCE COULD BE MADE IN THE HANDS OF THE ASSESSEE AND IN THAT VIEW OF THE MATTER THERE IS NO QUESTION OF INVOKING THE PROVISION OF SECTION 14A O F THE ACT. HOWEVER, THE CONTENTION MADE BY THE ASSESSEE WAS NOT ACCEPTED BY THE LEARNED AO, HE THEN WORKED OUT DISALLOWANCE U/S 14A R.W.R. 8D AT RS. 5, 70,521/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S 14A WHICH WAS IN T URN CONFIRMED BY THE LEARNED CIT(A). HENCE, THE INSTANT APPEAL BEFORE US . 3. WE FIND THAT THE DISALLOWANCE MADE BY THE AUTHOR ITIES IS MUCH MORE THAN THE DIVIDEND INCOME EARNED BY THE ASSESSEE WHI CH IS NOT IN TERMS OF THE RATIO LAID DOWN BY THE JUDGMENT PASSED IN THE MATTE R OF CIT-VS-CORRTECH ENERGY PVT. LTD. REPORTED [2014] 45 TAXMANN.COM 116 . WE, THEREFORE, RESTRICT SUCH DISALLOWANCE TO THE DIVIDEND INCOME TO THE TUN E OF RS.1,30,595/-. IN THE RESULT, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 4. THE ASSESSEE HAS CLAIMED EXPENSES OF RS. 8,18,24 1/- U/S 57 OF THE ACT AGAINST INTEREST INCOME OF RS. 37,852/- ON THE INVE STMENT OF RS. 3,45,656/-. IN FACT IT APPEARS FROM THE RECORDS THAT THE INTEREST EXPENSES WAS INCIDENTAL TO THE LOAN OF AN AMOUNT OF RS. 92,51,122/- WHICH WAS TAKE N FOR MISCELLANEOUS PURPOSES. THE ASSESSEE SUBMITTED BEFORE THE LEARNED AO THAT BORROWED FUND HAS BEEN INVESTED BY THE ASSESSEE IN SHARES AND PRO PERTIES FROM WHERE THE ASSESSEE HAS EARNED RENTAL INCOME OF RS. 12,59,509/ - AND FURTHER INVESTED IN ITA NO.3065/AHD/2015 SMT. DIPABEN MAULIKKUMAR PATEL VS. ITO ASST.YEAR 2012-13 - 3 - FDR FROM WHERE INTEREST INCOME WAS ALSO RECEIVED AS DISCLOSED IN THE RETURN. THE ASSESSEE, THEREFORE, RIGHTLY CLAIMED INTEREST E XPENDITURE OF RS. 8,18,241/- U/S 57 OF THE ACT. SUCH DEDUCTION CLAIMED IS ON ACC OUNT OF INTEREST PAYMENT ON BORROWED FUND UTILIZED BY THE ASSESSEE SOLELY AND E XCLUSIVELY FOR THE PURPOSE OF EARNING INCOME OR MAKING PROFIT. HOWEVER, SUCH C ONTENTION MADE BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LEARNED AO . HE, THEREFORE RESTRICTED THE DEDUCTION OF RS. 37,852/- AND DISALLOWED RS. 7, 80,389/-. IN APPEAL, THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE OF RS. 6 ,49,794/-. HENCE, THE INSTANT APPEAL BEFORE US. 5. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LEARNED ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE IS SQUARELY COVERED BY THE LEARNED TRIBUNAL IN THE ASSESSEES O WN CASE FOR A.Y. 2013-14 A COPY WHEREOF WAS ALSO HANDED OVER TO US. HE, THEREF ORE, PRAYED FOR THE SAME RELIEF. ON THE CONTRARY, THE LEARNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 6. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. WE HAVE FURTHER CONSIDERED CAREFULLY THE OR DER PASSED BY THE CO- ORDINATE BENCH IN ITA NO. 1936/AHD/2016 FOR A.Y. 20 13-14 DEALING THE IDENTICAL ISSUE. THE RELEVANT PORTION WHEREOF IS AS FOLLOWS: 9. AS REGARDS THIS GRIEVANCE, I HAVE NOTED THAT TH E DEDUCTION HAS BEEN DECLINED ON THE GROUND THAT INTEREST EARNINGS ARE M UCH LESS AND ONLY SUCH EXPENSES CAN BE ALLOWED AS DEDUCTION AS ARE INCURRE D 'WHOLLY AND EXCLUSIVELY' TO EARN SUCH AN INCOME. THAT APPROACH IS FLAWED. AS LONG AS INTEREST EXPENSES ARE INCURRED IN THE COURSE OF THE ACTIVITY WHICH RELATES TO THE EARNING OF THAT INCOME, DEDUCTION UNDER SECTION 57( III) HAS TO BE ALLOWED. THE ACTIVITY IS TO BE CONSIDERED ON A HOLISTIC BASIS. H OWEVER, WHILE DEALING WITH THE IMMEDIATELY PRECEDING GROUND, THE MATTER HAS BE EN REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING DEDUCIBILITY OF INTEREST UNDER SECTION 24(B) WHICH APPEARS TO BE OVERLAPPING, IN ALL FAIRN ESS, THIS GROUND OF APPEAL ITA NO.3065/AHD/2015 SMT. DIPABEN MAULIKKUMAR PATEL VS. ITO ASST.YEAR 2012-13 - 4 - IS ALSO REQUIRED TO ADJUDICATED AFRESH, ON MERITS A ND IN THE LIGHT OF THE ABOVE OBSERVATIONS, BY THE ASSESSING OFFICER. I DIRECT SO . 7. HAVING HEARD THE PARTIES, HAVING PERUSED THE ORD ER PASSED BY THE CO- ORDINATE BENCH, WE ARE OF THE VIEW TO REMIT THE ISS UE TO THE FILE OF THE LEARNED AO FOR FRESH ADJUDICATION OF THE SAME ON MERIT IN T HE LIGHT OF THE OBSERVATION MADE BY THE CO-ORDINATE BENCH IN ASSESSEES OWN CAS E FOR A.Y. 2013-14. HENCE, THE GROUND IS ALLOWED FOR STATISTICAL PURPOS ES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/03/2019 SD/- SD/- ( PRAMOD KUMAR ) ( MS. M ADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 29/03/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-GANDHINGAR, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD