TASNEEM YASIR VARAWLA, MUMBAI V. ADDL CIT RG 13(3), MUMBAI

ITA 360/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49035 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 16-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K RAVIKIRAN
• Keywords: Depreciation; Business expenditure; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, E BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER I.T.A NO.360/ MUM/2010 ASSESSMENT YEAR: 2006-07 TASNEEM YASIR VARAWLA, .. APPELLANT 3 RD FLOOR, RAHIMTOOLA HOUSE, 7Y, HIMJI STREET, FORT, MUMBAI-400 001 PA NO.AAFPV 5723 J VS ADDL. CIT, RANGE 13(3) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: K.GOPAL, FOR THE APPELLANT K.RAVIKIRAN, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 30 TH OCTOBER, 2009, IN THE MATTER OF ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 2. GROUND NOS.1 & 2 ARE AS UNDER: 1. THE LD CIT(A) ERRED IN CONFIRMING DISALLOWANCE O F REPAIR EXPENSES AMOUNTING TO ` .10,54,130. 2. WITHOUT PREJUDICE TO ABOVE, THE LD CIT(A) ERRED IN NOT CONSIDERING AND ALLOWING CLAIM FOR DEPRECIATION ON THE SAID EXPENSES. 3. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSE E HAS DEBITED AN AMOUNT OF ` .10,54,130 IN HER INCOME AND EXPENDITURE ACCOUNT UN DER THE HEAD REPAIRS & MAINTENANCE. THE AO NOTICED THAT THE ASSESSEE HAD UND ERTAKEN RENOVATION OF HER OFFICE PREMISES LOCATED AT PREMISES NO.7, 3 RD FLOOR IN RAHIMTOOLA HOUSE, FORT, MUMBAI, WHICH IS IN THE NAME OF HER HUSBAND SHRI YASIR VARAWALA. THE ASSESSEE HAD I.T.A NO.360/ MUM/2010 TASNEEM YASIR VARAWLA 2 OCCUPIED THE PREMISES FOR CARRYING ON HER PROFESSIONAL ACTIVITIES WITHOUT PAYING ANY RENT. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICE R WAS OF THE VIEW THAT THE ASSESSEE WAS NEITHER A TENANT, NOR A SUB-TENANT, NOR THE OWNER OF THE PREMISES, THEREFORE, IT WAS NOT HER LIABILITY TO INCUR THE EXP ENDITURE. ACCORDINGLY, HE DISALLOWED ` .10,54,130 TOWARDS EXPENDITURE UNDER THE HEAD REPAI RS & MAINTENANCE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVE D, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. BEING AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. LEARNED COUNSEL VERY FAIRLY ADMITS THAT THE ISSU E IS COVERED AGAINST THE ASSESSEE, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN T HE VIEW TAKEN BY THE CO- ORDINATE BENCHES, IN ASSESSES OWN CASE FOR THE PRE CEDING YEARS ON MATERIALLY IDENTICAL SET OF FACTS. RESPECTFULLY FOLLOWING THE DECISIONS OF THE CO-ORDINATE BENCHES IN ASSESSEES OWN CASE, WE APPROVE THE CONC LUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. HOWEVER, WITH REGARD TO ALTERNATE PLEA TAKEN IN GROUND NO.2, FOR ALLOWING THE CLAIM OF DEPRECIATION ON THE SAID EXPE NSES, WITH THE CONSENT OF THE PARTIES, WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE CLAIM OF DEPRECIATION AFRESH. 6. GROUND NO.1 IS THUS DISMISSED AND GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO. 3 READS AS UNDER: THE LD CIT(A) ERRED IN CONFIRMING DISALLOWANCE OUT OF BUSINESS EXPENSES TO THE EXTENT OF ` .2,14,314. 8. NO SPECIFIC ARGUMENTS WERE ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, WE FIND NO REASON TO INTERFERE IN THE O RDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED. THIS GROUND IS DISMISSED. 9. GROUND NOS.4 & 5 READ AS UNDER:- I.T.A NO.360/ MUM/2010 TASNEEM YASIR VARAWLA 3 4. THE LD CIT(A) ERRED IN ENHANCING ASSESSMENT ON THE I SSUE OF DISALLOWANCE UNDER SECTION 14A. 5. THE LD CIT(A) ERRED IN DIRECTING DISALLOWANCE UND ER SECTION 14A IN ACCORDANCE WITH DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT P.LTD., 312 ITR (AT)1. 10. LEARNED REPRESENTATIVES AGREE THAT SO FAR AS THE DI SALLOWANCE UNDER SECTION 14A IS CONCERNED, THE ISSUE IS NOW COVERED IN FAVOUR OF TH E ASSESEE BY THE HONBLE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF GODREJ & BOYC E MFG CO LTD VS DCIT (328 ITR 81), WHEREIN, IT HAS BEEN HELD THAT RULE 8D OF THE INCO ME TAX RULES, 1962 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM A.Y. 2008-09. THE ASSESSMEN T YEAR INVOLVED IN THE PRESENT CASE IS 2006-07 AND, THEREFORE, RULE 8D IS NOT APPLICABLE I N THE PRESENT CASE. THE HONBLE HIGH COURT HAS ALSO HELD THAT A REASONABLE DISALLOWANCE FOR EX PENSES INCURRED IN EARNING DIVIDEND INCOME IS NEVERTHELESS TO BE COMPUTED BY THE AO. I N VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BO YCE MFG CO. LTD (SUPRA) AND AS AGREED TO BY THE PARTIES, WE REMIT THE ISSUE TO THE FILE OF THE AO TO RE-COMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF THE LAW LAID DOWN BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO. LTD (SUPRA). 11. THIS ISSUE IS THUS ALLOWED FOR STATISTICAL PURP OSES. 12. IN THE RESULT, APPEAL IS PARTLY ALLOWED AS PER THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 20 TH MAY 2011. SD/- (V. DURGA RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 20 TH MAY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),24, MUMBAI 4. COMMISSIONER OF INCOME TAX, 13 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI