SOWMAYA GAUTAM DESHPANDE, MUMBAI V. ASST CIT CEN CIR 32, MUMBAI

ITA 3197/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0084 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Depreciation; Earning of tax free income; Additional evidence
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER ITA NO.3197/MUM/2016 ASSESSMENT YEAR : 2008-09 SMT. SOWM YA GAUTAM DESHPANDE 307 RAUT LANE, OPP ISKCON, VILE PARLE (W), MUMBAI 400 049 PAN AHAPD5607K VS. ACIT CENT. CIR. 32, MUMBAI (APPELLANT) RESPONDENT) APPELLANT BY : SHRI ANUJ KISHNADWALA RESPONDENT BY : SHRI T A KHAN DATE OF HEARING : 21 .0 6 .201 7 DATE OF PRONOUNCEMENT : 21. 0 6 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE DECISION RENDERED BY THE LEARNED CIT(A)-53, MUMBAI, FOR A.Y. 2008-09, ON THE FOLLOWING ISSUES: A) DETERMINATION OF NOTIONAL RENT B) DISALLOWANCE U/S. 14A 2. THE LEARNED AR SUBMITTED THAT THE ASSESSEE IS A DENTIST BY PROFESSION. SHE HAS SHOWN INVESTMENT IN FOUR FLATS DURING THE Y EAR UNDER CONSIDERATION. IN THE RETURN OF INCOME, SHE DECLARED RENTAL INCOME FROM TWO FLATS ONLY. THE ASSESSING OFFICER TOOK ONE FLAT AS SELF-OCCUPIED AN D PROPOSED TO COMPUTE DEEMED RENT IN RESPECT OF THE FOURTH FLAT. THE ASS ESSEE ALSO AGREED TO THE SAME AND, ACCORDINGLY, THE ASSESSING OFFICER ESTIMA TED 7% OF THE COST OF THE PROPERTY (7% OF RS.16,64,888/- SHOWN AS FLAT NO.2 IN PARAGRAPH 7) AS DEEMED RENT AND ASSESSED THE SAME. ITA NO.3197/MUM/2016 SMT SOWMYA GAUTAM DESHPANDE 2 3. BEFORE THE CIT(A), THE ASSESSEE TOOK A PLEA THAT THE FLAT ON WHICH DEEMED RENT WAS ESTIMATED WAS UNDER CONSTRUCTION DU RING THE YEAR UNDER CONSIDERATION AND THE POSSESSION WAS OBTAINED ONLY ON 11.04.2009. ACCORDINGLY IT WAS SUBMITTED THAT THERE IS NO REQUI REMENT TO COMPUTE NOTIONAL RENT ON THE SAID FLAT. IN SUPPORT OF THE SAME, THE ASSESSEE FURNISHED A COPY OF POSSESSION LETTER DATED 11.04.2009. THE LEARNED CIT(A) NOTICED THAT THE REFERENCE NUMBER MENTIONED IN THE POSSESSI ON LETTER WAS MPTC/CC/JAS/3507/2007-08. ACCORDINGLY, HE TOOK A V IEW THAT THE POSSESSION SHOULD HAVE BEEN GIVEN DURING THE F Y 20 07-08 AND THE DATE OF LETTER, NAMELY 11.04.09 MENTIONED THEREIN, WAS WRON G. ACCORDINGLY, HE CONFIRMED THE ESTIMATION OF DEEMED RENT. 4. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS O BTAINED A FRESH CONFIRMATION LETTER FROM THE BUILDER TO PROVE THE F ACT THAT THE POSSESSION LETTER WAS OBTAINED ON 11.04.2009 ONLY. THE SAID C ONFIRMATION LETTER FURTHER STATES THAT THE PROJECT ITSELF WAS COMPLETED AND CO MPLETION CERTIFICATE WAS OBTAINED ON 17.02.2009. THE LEARNED AR SUBMITTED T HAT THE ASSESSEE HAD GIVEN A COPY OF COMPLETION CERTIFICATE AND CONFIRMA TION LETTER AS ADDITIONAL EVIDENCE. 5. THE LEARNED DR SUBMITTED THAT THE ADDITIONAL EVI DENCE REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER. ITA NO.3197/MUM/2016 SMT SOWMYA GAUTAM DESHPANDE 3 6. HAVING HEARD THE RIVAL CONTENTIONS, I AM OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESS ING OFFICER FOR CONSIDERING THE ADDITIONAL EVIDENCE. I WISH TO STATE THAT THER E IS NO ESTOPPEL AGAINST LAW AND HENCE MERE ACCEPTANCE GIVEN BY THE ASSESSEE TO THE ASSESSING OFFICER TO ASSESS THE NOTIONAL RENT WOULD NOT ENABLE THE ASSES SING OFFICER TO ASSESS THE INCOME, WHICH IS OTHERWISE NOT ASSESSABLE. IN THE INSTANT CASE, IT IS THE CLAIM OF THE ASSESSEE THAT SHE DID NOT GET POSSESSION OF FLAT NO.2 DURING THE YEAR UNDER CONSIDERATION AND THE POSSESSION WAS OBTAINED ONLY IN APRIL 2009. I NOTICE THAT THE ADDRESS OF FLAT NO.2 WAS NOT GIVEN IN THE ASSESSMENT ORDER. HOWEVER, THE POSSESSION LETTER STATES THE ADDRESS A S FLAT NO. G1-1104, BUILDING G1, JASMINIUM AT MAGARPATTA CITY, MAGARPAT TA, PUNE. HENCE IT NEEDS TO BE VERIFIED AS TO WHETHER THE FLAT NO.2 IS THE SAME PROPERTY REFERRED TO IN THE POSSESSION LETTER. IN ANY CASE, THE ASSE SSEE HAS FURNISHED CERTAIN ADDITIONAL EVIDENCES TO SUPPORT HIS CLAIM AND THEY REQUIRE EXAMINATION AT THE END OF THE AO. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FI LE OF THE ASSESSING OFFICER FOR EXAMINING IT AFRESH. 7. THE NEXT ISSUE RELATES TO DISALLOWANCE MADE U/S. 14A OF THE ACT. THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF ` .1,55,289/-(WRONGLY STATED AS ` 25,76,234/- IN THE ASSESSMENT ORDER). THE ASSESS EE DID NOT DISALLOW ANY EXPENDITURE AND, HENCE, THE ASSESSING OFFICER COMPU TED THE DISALLOWANCE AS PER RULE 8D(2)(III) OF THE IT RULES @0.50% ON AVERA GE VALUE OF INVESTMENT, ITA NO.3197/MUM/2016 SMT SOWMYA GAUTAM DESHPANDE 4 WHICH WORKED OUT AT ` .1,58,979/-. THE LEARNED CIT(A) ALSO CONFIRMED THE SAME. 8. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS C REDITED NON- PROFESSIONAL INCOME INCLUDING DIVIDEND INCOME DIREC TLY TO HER CAPITAL ACCOUNT AND IN THE SAME MANNER NON-PROFESSIONAL EXPENDITURE ARE ALSO DEBITED DIRECTLY TO THE CAPITAL ACCOUNT. HE SUBMITTED THAT THE INCOME AND EXPENDITURE ACCOUNT HAS BEEN PREPARED ONLY FOR HER DENTIST PROFESSION. INVITING MY ATTENTION TO PAGE NO.7 OF THE PAPER BOO K, WHEREIN CAPITAL ACCOUNT OF THE ASSESSEE IS PLACED, THE LEARNED AR SUBMITTED THAT THE DEMAT CHARGES, SHARE EXPENSES, SECURITY TRANSACTIONS, TAXES, ETC., HAVE BEEN DIRECTLY DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. ACCORDINGL Y, THE LEARNED AR SUBMITTED THAT THE ASSESSEE DID NOT CLAIM ANY EXPENDITURE AGA INST EXEMPT INCOME AND, HENCE, NO DISALLOWANCE U/S. 14A IS CALLED FOR. 9. I HEARD THE LEARNED REPRESENTATIVES AND PERUSED THE RECORD. I NOTICE THAT THE INCOME AND EXPENDITURE ACCOUNT HAS BEEN PR EPARED FOR THE DENTIST PROFESSION OF THE ASSESSEE. AGAINST THE PROFESSION AL RECEIPTS OF ` .8.98 LACS, THE ASSESSEE HAS CLAIMED EXPENDITURE OF ` .5.98 LACS. OUT OF THE EXPENDITURE CLAIMED, THE MAJOR EXPENSES CONSISTED OF RENT ( ` 1.84 LACS), INTEREST ON CAR LOAN (0.80 LACS), DEPRECIATION ( ` 1.80 LACS) AND BUSINESS DEVELOPMENT EXPENSES ( ` 1.06 LACS). THUS, THE ASSESSEE HAS CLAIMED ABOUT ` 43,000/- TOWARDS OTHER EXPENSES. I NOTICED THAT THE ASSESSE E HAS CREDITED ALL NON- PROFESSIONAL INCOME IN HER CAPITAL ACCOUNT AND DEBI TED ALL NON-PROFESSION ITA NO.3197/MUM/2016 SMT SOWMYA GAUTAM DESHPANDE 5 EXPENSES ALSO IN HER CAPITAL ACCOUNT. THUS, THERE IS MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSEE DID NOT CLAIM ANY EXPENDITURE RELATABLE TO THE EXEMPT INCOME WHILE COMPUTING HER TOTAL INCOME. IN THIS VIEW OF THE MATTER, NO DISALLOWANCE U/S. 14A IS CALLED FOR. AC CORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AN D DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE U/S. 14A OF THE ACT. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 1 ST JUNE 2017 SD/- (B R BASKARAN) ACCOUNTANT MEMBER MUMBAI, DATED : 21 ST JUNE, 2017. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI