Shri Viren Shantilal Shah, Ahmedabad V. The Dy.CIT, Circle-1(2), Baroda

ITA 3306/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6180 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: KINJAL V SHAH
• Keywords: Earning of tax free income
• Section: 14A; 10

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM AND SHRI AMARJIT SINGH, AM ./ITA.NO. 3306/AHD/2015 ( / ASSTT YEAR :2012-13) SHRI VIREN SHANTILAL SHAH A-58, KUNJ SOCIETY, AKAPURI, VADODARA-390007 VS. THE DY. CIT CIRCLE-1(2), BARODA-390007 (APPELLANT) (RESPONDENT) / APPELLANT BY: KINJAL V. SHAH, A.R. / RESPONDENT BY: PRASOON KABRA, SR. D.R. / DATE OF HEARING 10-01-2018 /DATE OF PRONOUNCEMENT 02 -02-2018 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: IN THIS CASE RETURN OF INCOME DECLARING INCOME OF RS. 2,11,72,330/- WAS FILED ON 29.09.2012. SUBSEQUENTLY THE CASE WAS SELECTED UNDER SCRUTINY ASSESSMENT BY ISSUING NOTI CE U/S. 143(2) OF THE ACT ON 09.08.2013. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. HAS NOTICED THAT ASSESSEE HAS CLAIMED EXEMPTION U/S. 10 (34) OF THE ACT ITA.NO.3306/AHD/2015 ASSESSMENT YEAR 2012-13 - 2 TO THE AMOUNT OF RS. 1,10,435/-. THE A.O. OBSERVED THAT ASSESSEE HAS NOT MADE ANY DISALLOWANCE OF EXPENDITURE INCURR ED DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO EARNING EXEMPT INCOME. T HEREFORE HE COMPUTED AN EXPENDITURE OF RS. 3,16,942/-. ACCORDIN G TO SECTION 14A R.W.S. RULE 8D OF THE INCOME-TAX RULE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). LD. CIT(A) WHO HAS DISMISSED THE APPEAL OF THE ASSESSEE I.E. B Y STATING THAT A.O. HAS CORRECTLY DISALLOWED THE EXPENSES ACCORDIN G TO THE PROVISION OF SECTION 14A OF THE ACT. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US. LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING WRITTEN SUBMISSION GIVEN BEFORE LD. CIT(A), ACKNOWLEDGEMENT OF IT RETU RN, TAX AUDIT BALANCE SHEET ETC. SHE CONTENDED THAT ASSESSEE HAS EARNED MEAGER DIVIDEND INCOME OF RS. 2620/- AND DISALLOWAN CE UNDER SECTION 14A CANNOT EXCEED AMOUNT OF EXEMPT INCOME. 5. ON THE OTHER HAND LD. D.R. RELIED ON THE ORDER O F LD. CIT(A). THE LD. COUNSEL HAS ALSO CONTENDED THAT ASSESSEE HA S MADE INVESTMENT OUT OF TAX FREE FUND AND ON WHICH NO EXP ENDITURE HAS BEEN INCURRED ON EXEMPT INCOME. 6. ON PERUSAL OF MATERIAL PLACED ON RECORD, WE OBSE RVE THAT ASSESSEE HAS EARNED EXEMPT INCOME IN THE FORM OF DI VIDEND OF RS. 26,260/- FROM VARIOUS INVESTMENT IN SHARES. WE FURT HER NOTICE THAT HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVES TMENT PVT. LTD. VS. CIT (2015) 372 ITR 694 (DELHI) HELD THAT THE WI NDOW FOR ITA.NO.3306/AHD/2015 ASSESSMENT YEAR 2012-13 - 3 DISALLOWANCE IS INDICTED IN SECTION 14A AND IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO TAX EXEMPT INCOME. WE HAVE ALSO NOTICED THAT THE HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. HALIM INDIA PVT. LTD. (2014) 272 CTR 282 (DELHI) HAS HELD THAT THERE CAN BE NO DISALLOWA NCE UNDER SECTION 14A IN ABSENCE OF EXEMPT INCOME. AFTER CONS IDERING THE ABOVE FACTS AND JUDICIAL FINDINGS WE RESTRICT THE D ISALLOWANCE TO THE EXTENT OF ACTUAL EXEMPT INCOME OF RS. 26,240/-. THE REFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 02/ 02/2018 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER DATED, 02 / 02/2018 MUKUL !' #' / COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &$% / THE RESPONDENT. 3. '(( ) * / CONCERNED CIT 4. ) * ( ) / THE CIT(A)- 5. '-. , , /DR,ITAT, AHMEDABAD. 6. .0 12 / GUARD FILE. ) ' / BY ORDER, ' (3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD