ITO 20(2)(3), MUMBAI V. NITI M SHAH, MUMBAI

ITA 3303/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93243 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2014
• Court: TRIBUNAL
• Department Lawyers: NEELIMA V NADKARNI
• Assessee Lawyers: MRS HIRAL SHAH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.3303/M/2014 (AY:2009 - 2010 ) ITO 20(2)(3), 411, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. / VS. MRS. NITI M. SHAH, C/O. CLIENS LABORATORIES, 12, B/1,STEELMADE INDUSTRIAL ESTATE, MAROL, ANDHERI (E), MUMBAI 400 059. ./ PAN : AAPPS2815Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. NEELIMA V. NADKARNI, DR / RESPONDENT BY : MRS. HIRAL SHAH / DATE OF HEARING : 06.7.2015 / DATE OF PRONOUNCEMENT : 22 .7.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 8.5.2014 IS AGAINST THE ORDER OF THE CIT (A) - 31, MUMBAI DATED 18.3.2014 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUND WHICH READ AS UNDER: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN FACTS AND LAW AND DELETED THE ADDITION / DISALLOWANCE MADE U/S 14A OF THE ACT AMOUNTING TO THE TUNE OF RS. 12,12,107/ - . 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE ADDITION OF RS. 12,12,107/ - MADE U/S 14A OF THE ACT. BRIEFLY STATED, RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE, WHO IS AN INDIVIDUAL, FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 96,347/ - . THE RETURNED INCOME WAS SCRUTINIZED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 14,74,270/ - , WHICH INCLUDES THE SAID ADDITION OF RS. 12,12,107/ - MADE U/S 14A OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DELE TED THE ADDITION MADE BY THE AO. PARAS 3 TO 3.12 OF THE CIT (A)S ORDER ARE RELEVANT IN T HIS REGARD. AGGRIEVED WITH THE 2 SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND. 4. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNA L IN THE ASSESSEES OWN CASE IN ITA NO.4727/M/2013 (AY 2008 - 2009), DATED 29.4.2015 AND MENTIONED THAT SIMILAR ADDITION WAS MADE IN THE SAID ASSESSMENT YEAR AND EVENTUALLY THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE TRIBUNAL (SUPRA) AND THE ITAT, MUMBAI GAVE A FINDING THAT THE EXEMPT INCOME AND THE EXPENDITURE CLAIMED IN THE PROFIT & LOSS ACCOUNT HAS NOT NEXUS. ACCORDINGLY, TRIBUNAL GRANTED RELIEF TO THE ASSESSEE BY CONFIRMING THE ORDER OF THE CIT (A). PARA 4 WITH ITS SUB - PARAS OF THE TRIBUNALS ORDER (SUPRA) ARE RELEVANT IN THIS REGARD. FURTHER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR FINDING WAS GIVEN BY THE CIT (A) IN THE YEAR UNDER CONSIDERATION AS THE EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT HAS NO NEXUS TO THE EXEMPT INC OME CLAIMED IN THE RETURN OF INCOME. RELEVANT PORTION OF THE CIT (A)S ORDER FROM PAGE 14 (PARA 3.11) IS EXTRACTED AS FOLLOWS: THUS, FORM THE ABOVE IT IS CLEAR THAT THE INTEREST EXPENDITURE INCURRED DURING THE YEAR CANNOT BE HELD TO HAVE A NEXUS WITH THE TAX - FREE INCOME. THE ONLY INVESTMENT MADE BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION, IS IN THE HDFC CASH MANAGEMENT FUND TO THE TUNE OF RS. 1.03 CRS. PERUSAL OF THE BANK STATEMENT OF THE APPELLANTS ACCOUNT SHOWS THAT THIS INVESTMENT IS MADE OUT OF RECEIPTS OF RS. 1,03,27,500/ - FROM SALE OF GOVT. OF INDIA BONDS CREDITED ON 7.1.2009. THUS, THE INTEREST PAYMENTS DURING THE YEAR IN CONSIDERATION ARE NOT RELATABLE TO THE INVESTMENT IN PREVIOUS YEARS OR IN THE CURRENT YEAR. 5. THUS, SUMMARILY SAY, THE ARGUMENT OF THE ASSESSEE BEFORE THE BENCH REVOLVES AROUND THE ABSENCE OF THE NEXUS BETWEEN THE EXEMPT INCOME TO THE INTEREST DEBITED TO THE PROFIT & LOSS ACCOUNT. CIT (A) APPRECIATED THE SAME AND DELETED THE ADDITION. THEREFORE, THE SAME NEED N OT BE DISTURBED. 6. ON THE OTHER HAND, LD DR MERELY RELIED ON THE ORDER OF THE AO. 7. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US AND THE CITED DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009. ON PERUSAL OF THE CIT (A)S ORDER IN THIS REGARD, I FIND THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE. NOTHING ADVERSE IS BROUGHT TO MY NOTICE , IN ANY WAY. FURTHER, IT IS NOTICED THAT THE IDENTICAL ISSUE WAS ADJUDICATED BY THE TRIBUNAL IN ASSESSEES CASE FOR 3 THE AY 2008 - 2009 (SUPRA) DATED 29.4.2015 DISMISSING THE REVENUES APPEAL. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCE D IN THE OPEN COURT ON 22 ND JULY, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 22 .7 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI