BIJAL ASHOK SHAH, MUMBAI V. ACIT CEN CIR 8, MUMBAI

ITA 3089/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8816 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMALATHA
• Keywords: Opportunity of being heard; Earning of tax free income; Difference of opinion; Change of opinion
• Section: 143(3); 14A; 147

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 3089/MUM/2017 ( / ASSESSMENT YEAR: 2009 - 10 ) BIJAL ASHOK SHAH 187/189, GURUKUL CHAMBER, MUMBADEVI ROAD, ZAVERI BAZAR, MUMBAI - 400 002 / VS. ACIT, CENTRAL CIRCLE - 2(1), MUMBAI ./ ./ PAN/GIR NO. AVZPS 0810 J ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ASHOK MEHTA / RESPONDENT BY : MS. HEMALATHA / DATE OF HEARING : 28.08.2017 / DATE OF PRONOUNCEMENT : 01.11 .2017 / O R D E R PER S HAMIM YAHYA , A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 52 , MUMBAI (CIT(A) FOR SHORT) DATED 01.02.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2009 - 10. 2 ITA NO. 3089/MUM/2017 (A.Y. 2009 - 10) BIJAL ASHOK SHAH VS. ACIT 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. THE LEARNED ASSESSING OFFICER AND CIT (APPEALS) - 52 ERRED IN REOPENING THE ASSESSMENT U/S 147 BASED ON CHANGE OF OPINION THOUGH THE FACTS WERE ON RECORD AND THE ASSESSING OFFICER HAS CONSCIOUSLY ACCEPTED THE CLAIM THAT THERE WERE NO EXPENSE S RELATING TO EARNINGS OF EXEMPT INCOME WHILE PASSING AN ORDER U/S 143(3) DATED 20.12.2011. 2. THE LEARNED ASSESSING OFFICER AND CIT (APPEALS) - 52 ERRED IN APPLYING RULE 8D WITHOUT GIVING ANY FINDING AS TO WHY THE CONTENTION OF THE ASSESSEE THAT THERE A RE NO EXPENSE RELATING TO EARNING EXEMPT INCOME IS INCORRECT. 3. THE LEARNED ASSESSING OFFICER AND CIT (APPEALS) - 52 ERRED IN DISALLOWING INTEREST EXPENSES OF RS.3,16,781/ - UNDER RULE 8D WITHOUT CONSIDERING THE CONTENTION OF THE ASSESSEE THAT THE ENTIRE INTEREST BEARING FUNDS WERE USED FOR THE PURPOSE OF EARNING TAXABLE INCOME AND THE INVESTMENTS WERE MADE FROM CAPITAL AND INTEREST FREE LOANS AVAILABLE WITH THE ASSESSEE. 4. THE LEARNED ASSESSING OFFICER AND CIT(A) - 52 ERRED IN NOT FOLLOWING THE BINDING JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF HDFC LTD. 368 ITR 377 (BOM), INSPITE OF IT BEING BROUGHT TO THE NOTICE AND ALL THE RELEVANT DETAILS ALSO FILED BEFORE HIM. 5. THE LEARNED ASSESSING OFFICER AND CIT (A) - 52 ERRED IN DISALLOWING RS.L 87787 - UNDER SECTION 14A R.W.R 8D (2)(III) WITHOUT CONSIDERING THE FACT THAT ALL THE EXPENSES ARE INCURRED FOR THE PURPOSE OF EARNING TAXABLE INCOME AND THAT THERE WERE NO EXPENSES INCURRED AS THE DIVIDEND WAS DIRECTLY CREDITED IN THE BANK ACCOUNT. 3. THE ISSUE IN THIS APPEAL RELATES TO DISALLOWANCE U/S. 14A. UPON HEARING BOTH THE COUNSELS AND PERUSING THE RECORD I NOTE THAT IN THIS CASE, THE LD. COUNSEL OF THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS RAISED FOLLOWING AS GROUND NO. 3 BEFORE THE LD. CIT(A): 3. THE LEARNED ASSESSING OFFICER ERRED IN DISALLOWING INTEREST EXPENSES OF RS.3,16,781/ - UNDER CLAUSE (II) OF RULE 8D WITHOUT CONSIDERING THE CONTENTION OF THE ASSESSEE THAT THE ENTIRE INTEREST BEARING FUNDS WERE USED FOR THE PURPOSE OF EARNING TAXABLE INCOM E AND THE INVESTMENTS WERE MADE FROM CAPITAL AND INTEREST FREE LOANS AVAILABLE WITH THE ASSESSEE. 4. HOWEVER, IT IS THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT LD. CIT(A) HAS NOT AT ALL DEALT WITH THIS ISSUE IN HIS APPELLATE ORDER. IN THIS REG ARD, THE LD. COUNSEL 3 ITA NO. 3089/MUM/2017 (A.Y. 2009 - 10) BIJAL ASHOK SHAH VS. ACIT OF THE ASSESSEE SUBMITTED THE ISSUE THAT WHEN THERE IS SUFFICIENT NON - INTEREST BEARING FUNDS TO MAKE THE INVESTMENT, NO DISALLOWANCE IS CALLED FOR U/S. 14A HAS BEEN DULY UPHELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HD FC BANK LTD. 368 ITR 377 (BOM). 5. UPON CAREFUL CONSIDERATION, I NOTE THAT IT IS THE ASSESSEES CONTENTION THAT THE ASSESSEE HAS SUFFICIENT NON - INTEREST BEARING FUNDS TO MAKE TAX FREE INVESTMENTS. THIS ISSUE WAS DULY RAISED BEFORE THE LD. CIT(A), BUT HE HAS NOT ADJUDICATED UPON THE ISSUE. HENCE, THE ORDER OF THE LD. CIT(A) IS NOT COMPLETE TO THIS EXTENT. HENCE, IN ORDER TO ENABLE THE LD. CIT(A) TO COMPLETE HIS A PPELLATE ORDER, I REMIT THIS ISSUE TO THE FILE OF THE LD. CIT(A). T HE LD. CIT(A) IS DIRECTED TO CONSIDER THIS ISSUE AND PASS A SPEAKING ORDER THEREUPON AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. SINCE, THE ABOVE SAID ISSUE IS BEING REMITTED TO THE FILE OF THE LD. CIT(A), AND THE SAME GOES TO THE ROOT OF THE MATTER, THE OTHER ISSUES RAISED UNDER THIS APPEALS ARE NOT BEING COMMENTED UPON. THE ASSESSEE IS AT LIBERTY TO RAISE THEM AT THE APPROPRIATE STAGE , AS HE DEEMS FIT . 6. IN THE RESULT, TH IS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.11.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 01.11.2017 . . ./ ROSHANI , SR. PS 4 ITA NO. 3089/MUM/2017 (A.Y. 2009 - 10) BIJAL ASHOK SHAH VS. ACIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUA RD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI