ASHISH G. DAMANI, MUMBAI V. ITO 16(2)(2), MUMBAI

ITA 3107/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4548 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: MITESH SHAH
• Section: 143(3)

Judgement Text

ITA NO. 3107/MUM/09 ASSESSMENT YEAR 2005-06 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) ITA NO. 3107/MUM/09 ASSESSMENT YEAR 2005-06 ASHISH G DAMANI .APPELLANT SUMANGAL APARTMENTS 13, RIDGE ROAD, MUMBAI 400006 PAN : AAHPD2766P VS. INCOME TAX OFFICER WARD 16(2)(2), MUMBAI . RESPONDENT APPELLANT BY : SHRI MITESH SHAH RESPONDENT BY : SMT SURENDRA KUMAR O R D E R 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS D IRECTED AGAINST THE ORDER DATED 3 RD FEBRUARY 2009, PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, F OR THE ASSESSMENT YEAR 2005-06. 2. THE SHORT ISSUE THAT I AM REQUIRED TO ADJUDICATE IN THIS APPEAL IS WHETHER OR NOT THE CIT(A) WAS JUSTIFIED IN UPHOLDIN G THE DISALLOWANCE OF RS 7,06,176 UNDER SECTION 14 A OF THE ACT. 3. GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) FAI LED TO APPRECIATE THAT THE INVESTMENT IN SHARES IS COVERED BY THE CREDIT B ALANCE IN THE CAPITAL ACCOUNT BEING INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE, THAT THE ASSESSING OFFICER COULD NOT CORRELATE THE INTEREST BEARING FU NDS TO INVESTMENT IN SHARES AND THAT THE APPELLANT HAS RECEIVED INTEREST OF RS 3,25,981 WHICH OUGHT TO HAVE BEEN SET OFF SINCE SUCH INTEREST INCOME HELPE D THE ASSESSEE TO RECOUP THE INTEREST EXPENDITURE. IN SUPPORT OF THE PLEA FO R ALLOWABILITY OF SET OFF OF INTEREST, THE ASSESSEE HAS RELIED UPON TRIBUNALS D ECISION IN THE GROUP CASE OF ANAND G DAMANI (ITA NO. 544/MUM/06; ORDER DATED 20 TH JANUARY 2009). ITA NO. 3107/MUM/09 ASSESSMENT YEAR 2005-06 PAGE 2 OF 3 4. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, I AM OF THE CONSIDERED VIEW, AS LEARNED RE PRESENTATIVES HAVE FAIRLY AGREED, THAT THE QUESTION OF DISALLOWANCE WILL HAVE TO BE EXAMINED IN THE LIGHT OF, INTER ALIA, BY THE DECISION OF THE HONBL E BOMBAY HIGH COURT IN THE CASE OF GODREJ& BOYCE LIMITED VS. ACIT, (ITA NO.626 OF 2010) DATED 12.8.2010 AND A REASONABLE ESTIMATE OF THE EXPENSE S INCURRED TO EARN THE TAX EXEMPTED INCOME WILL HAVE TO BE DISALLOWED. HO WEVER, AS LEARNED COUNSEL FOR THE ASSESSEE POINTS OUT THAT THE ISSUE REGARDING SET OFF OF INTEREST RECEIVED IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY A DIVISION BENCH ORDER OF THIS TRIBUNAL IN THE CASE OF ANAND G DAMANI (SUP RA), AND, TO THAT EXTENT, PLEA OF THE ASSESSEE MUST BE UPHELD. WITH THESE OBSERVATIONS, I REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR REA DJUDICATION ON THE DISALLOWANCE UNDER SECTION 14 A OF THE ACT. WHILE S O ADJUDICATING THE MATTER AFRESH, ASSESSING OFFICER WILL DEAL WITH ALL THE CO NTENTIONS RAISED BY THE ASSESSEE BY WAY OF A SPEAKING ORDER IN ACCORDANCE W ITH THE LAW, AND AFTER GIVING A FAIR OPPORTUNITY OF HEARING TO THE ASSESSE E. 5. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF SEPTEMBER 2010. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF SEPTEMBER, 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT , MUMBAI 4. THE COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - SMC BENCH, MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI ITA NO. 3107/MUM/09 ASSESSMENT YEAR 2005-06 PAGE 3 OF 3