PRAKASH D. SHAH, MUMBAI V. ADDL CIT RG 11(3), MUMBAI

ITA 3195/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84289 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 3195/MUM/2013 ( / ASSESSMENT YEAR: 2008-09) PRAKASH D. SHAH 503A, MITHILA APARTMENTS, S. V. ROAD, KANDIVALI (W), MUMBAI-400 067 / VS. ADDL. CIT, RANGE 11(3), ROOM NO. 446, MAHARSHI KARVE MARG, AAYAKAR BHAWAN, MUMBAI-400 020 ! ./' ./PAN/GIR NO. ACKPS 7985 A ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !# & ' / APPELLANT BY : SHRI HEMEN CHANDARIYA $%!# & ' / RESPONDENT BY : SHRI SACHCHIDANAND DUBEY () * & + / DATE OF HEARING : 18.11.2014 DATE OF ORDER : 20.11.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, MUMBAI (CIT(A) FOR SHO RT) DATED 20.12.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2008-09 VIDE ORDER DATED 24.12.2010. 2. THE APPEAL RAISES TWO ISSUES, PER ITS TWO GROUND S, WHICH WE SHALL TAKE UP IN SERIATIM. THE FIRST RELATES TO THE DISALLOWANCE U/S .14A OF THE ACT AT RS.1 LAC. THE ASSESSEE, AN ADVOCATE BY PROFESSION, WAS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OBSERVED BY THE ASSESSING OFFICER (A.O.) TO HAVE MADE CONSID ERABLE INVESTMENTS IN SHARES AND MUTUAL FUNDS. THE ASSESSEES CONTENTION, THEREFORE, THAT IT HAD NOT INCURRED ANY 2 ITA NO. 3195/MUM/2013 (A.Y. 2008-09) PRAKASH D. SHAH VS. ADDL. CIT EXPENDITURE IN RELATION TO THE TAX-EXEMPT INCOME IN THE FORM OF DIVIDEND (RS.11.01 LACS) AND INTEREST (RS.0.32 LACS), WOULD NOT HOLD. THE AS SESSEE HAVING NOT INCURRED ANY INTEREST COST, HE EFFECTED THE DISALLOWANCE QUA INDIRECT, ADMINISTRATIVE EXPENDITURE U/S.14A AT RS.1,98,461/- APPLYING RULE 8D(2)(III). IN APPEAL, THE ASSESSEE SOUGHT TO SUBSTANTIATE ITS CASE WITH REFERENCE TO ITS ACCOUNTS, BEING MAINTAI NED SEPARATELY FOR THE PROFESSIONAL ACTIVITY AND PERSONAL ACTIVITIES. THE LD. CIT(A), C ONSIDERING THE FACTS OF THE CASE, RESTRICTED THE DISALLOWANCE TO RS.1 LAC, SO THAT TH E ASSESSEE IS IN SECOND APPEAL. 3. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE (AR ) WOULD DRAW OUR ATTENTION TO THE ASSESSEES CAPITAL ACCOUNT (PB PG.14), WHICH IS CLA IMED TO BEAR ALL THE EXPENSES THAT ARE NOT RELATED TO THE ASSESSEES PROFESSION. NO NON-PR OFESSIONAL EXPENDITURE HAVING BEEN CLAIMED BY THE ASSESSEE PER ITS RETURN OF INCOME, N O DISALLOWANCE U/S.14A WOULD OBTAIN. THE LD. CIT(A) WAS THEREFORE WRONG IN SUSTAINING TH E DISALLOWANCE THERE-UNDER AT RS.1 LAC. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE OTHER HAND, SUPPORT THE IMPUGNED ORDER. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. IN-AS-MUCH AS THE ASSESSEE CLAIMS TO HAVE MAINTAINED SEPARATE ACCOUNT S FOR ITS PROFESSIONAL AND NON- PROFESSIONAL ACTIVITY, WITH THE EXPENDITURE QUA THE FORMER ONLY CLAIMED IN COMPUTING THE TOTAL INCOME, IN OUR VIEW, IT WAS INCUMBENT ON THE REVENUE TO HAVE SHOWN AS TO HOW THE SAID CLAIM IS EITHER NOT CORRECT OR OTHERWISE HIS B OOKS NOT MAINTAINED PROPERLY ON THAT BASIS. THE ASSESSEES ACCOUNTS, THOUGH NOT STRICTLY SEPARATE, YET ARE SUFFICIENTLY SEGREGATED IN-AS-MUCH AS THE NON-PROFESSIONAL TRANSACTIONS ARE ACCOUNTED FOR IN THE CAPITAL ACCOUNT. THE REVENUES APPROACH, HOWEVER, IS MARKED BY ADHOC ISM. THE DISALLOWANCE U/S.14A COULD ONLY ARISE UPON ISSUING A FINDING AS TO THE ( ACTUAL) INCURRING OF THE EXPENDITURE, DIRECT OR INDIRECT, ATTRIBUTABLE TO INCOME NOT FORM ING PART OF THE TOTAL INCOME. IN-AS-MUCH AS WE HAVE NO BASIS TO ARRIVE AT SUCH A FINDING IN THE FACTS OF THE CASE, IN OUR VIEW NO DISALLOWANCE U/S.14A COULD BE VALIDLY MADE. WE DECI DE ACCORDINGLY, ALLOWING THE ASSESSEES GROUND NO.1 3 ITA NO. 3195/MUM/2013 (A.Y. 2008-09) PRAKASH D. SHAH VS. ADDL. CIT 5. VIDE ITS GROUND NO. 2, THE ASSESSEE CONTESTS THE NON-ALLOWANCE OF DEDUCTION U/S.80G, CLAIMED AT RS.10,000/-, I.E., IN RESPECT O F DONATION OF RS.20,000/-. WHILE THE A.O. EFFECTED THE DISALLOWANCE IN VIEW OF THE NON-F URNISHING OF THE RELEVANT DETAILS, THE SAME, VIZ. THE BANK STATEMENT AS WELL AS THE RECEIP T, WERE FURNISHED BEFORE THE LD. CIT(A), WHO, HOWEVER, CONFIRMED THE DISALLOWANCE WITHOUT ADVERTING TO THE SAME. THE RELEVANT DETAILS STAND PLACED AT PGS. 25-26 OF THE ASSESSEE S PAPER-BOOK. THE RECEIPT (PB PG. 25) DOES NOT BEAR THE DETAILS OF THE APPROVAL ACCORDED TO THE DONEE-INSTITUTION U/S. 80G(5), INCLUDING THE PERIOD OF ITS VALIDITY, AS IS USUALLY THE CASE. ALSO, THE VERIFICATION BY THE REVENUE, I.E., OF THE ASSESSEES CLAIM, WHERE DESIR ED, COULD BE MADE ONLY ON THE BASIS OF THE SAID DETAILS. BESIDES, THE RECEIPT WOULD REQUIR E BEING FURNISHED TO THE REVENUE IN ORIGINAL, WHICH THEREFORE CANNOT BE SAID TO HAVE NO T ACTED IN ACCORDANCE WITH LAW, I.E., IN DENYING THE ASSESSEE ITS IMPUGNED CLAIM. THE LD. AR , UPON BEING SO CONVEYED BY THE BENCH DURING HEARING, WOULD SUBMIT THAT THE SAID CL AIM IS VALID; THE NAME OF THE DONEE APPEARING IN THE LIST OF THE APPROVED INSTITUTIONS ON THE INTER-NET SITE MAINTAINED BY THE REVENUE. THE ASSESSEES CLAIM, THOUGH NOT PROPERLY MADE BEFORE THE AUTHORITIES BELOW, APPEARS TO US TO BE A VALID CLAIM. WE, THEREFORE, IN THE INTEREST OF JUSTICE, ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FI LE OF THE A.O. TO ALLOW THE ASSESSEE AN OPPORTUNITY TO SUBSTANTIATE ITS CASE OF THE SAID C LAIM BEING VALID IN LAW; AND WHO SHALL DECIDE THE SAME BY ISSUING DEFINITE FINDING/S OF FA CT. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES PARTLY ALLOWED. ,- . (/ 0, & ) 1 & 23 ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 18, 2014 AT THE CONCLUSION OF THE HEARING SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 4* MUMBAI; 5( DATED : 20.11.2014 ).(../ ROSHANI , SR. PS 4 ITA NO. 3195/MUM/2013 (A.Y. 2008-09) PRAKASH D. SHAH VS. ADDL. CIT !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. 8)9 : $(;/ , + ;/- , 4* / DR, ITAT, MUMBAI 6. : =0 > * / GUARD FILE !' / BY ORDER, )/* + (DY./ASSTT. REGISTRAR) , 4* / ITAT, MUMBAI