BAMAN KDB MEHTA, MUMBAI V. DCIT RG 4(1)(1), MUMBAI

ITA 3657/MUM/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3615 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R M MADHAVI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 3657 /MUM/2015 (ASSESSMENT YEAR : 2010-11) BAMAN KDB MEHTA, 2 ND FLOOR, FLAT NO.6, FIRUZA ARA, 160, MAHARSHI KARVE ROAD, CHURCHGATE, MUMBAI 400021 PAN:AAEPM 3854C ... APPELLANT VS. THE DCIT , RANGE 4(1)(1), ROOM NO.640, 6 TH FLOOR, AAYKAR BHAVAN,MUMBAI 400 012 .... RESPONDENT APPELLANT BY : NONE RESPONDENT BY : MS. R.M.MADHAVI DATE OF HEARING : 05/07/2016 DATE OF PRONOUNCEMENT : 05/07/2016 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST AN ORDE R PASSED BY CIT(A)- 9, MUMBAI DATED 13/04/2015, WHICH IN TURN ARISES OU T OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 19/2/2013. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING ACTION OF THE ASSESS ING OFFICER WHEREBY PROVISION OF SECTION 14A HAVE BEEN INVOKED AND 2 ITA NO. 3657 /MUM/2015 (ASSESSMENT YEAR : 2010-11) DISALLOWANCE OF RS. 11,69,282/- HAS BEEN MADE AS PE R RULE 8D WITHOUT APPRECIATING THAT NO EXPENDITURE DIRECTLY O R INDIRECTLY HAS BEEN INCURRED FOR EARNING EXEMPT INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE UNDER S ECTION.14A TO THE EXTENT OF RS.7,66,897/- OUT OF THE INTEREST CLAIMED U/S 57(III) OF RS.26,74,442/- WITHOUT APPRECIATING THE FACT THAT N O PART OF THE LOAN ON WHICH INTEREST PAID WAS UTILIZED IN ACQUIRING .I NVESTMENT RATHER THE SAME HAS BEEN UTILIZED IN GIVING LOAN ON WHICH INTEREST INCOME IS EARNED. THE LD. CIT (A) FURTHER FAILED TO APPRECIAT E THAT THERE IS NET INTEREST INCOME, THEREFORE, NO DISALLOWANCE CAN BE MADE OUT OF INTEREST EXPENDITURE. 3. AT THE TIME OF HEARING, IT WAS NOTICED THAT IN S PITE OF SERVICE OF NOTICE OF HEARING BY REGISTERED POST, NONE APPEARED ON BEHALF OF THE APPELLANT ASSESSEE. ACCORDINGLY, FOLLOWING RULE 24 OF INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963, THE APPEAL OF THE ASSESSEE IS BEING DISPOSED OF EX-PARTE QUA THE APPELLANT, AFTER HEARI NG LD. DEPARTMENTAL REPRESENTATIVE ON MERIT. 4. THE APPELLANT IS AN INDIVIDUAL, ENGAGED IN THE B USINESS OF TRADING AND BROKING IN DEBT SECURITIES AND ALSO INVESTMENT IN SHARES. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD EARNED DI VIDEND ON SHARES OF RS.13,73,532/- AND LONG TERM CAPITAL GAIN ON SALE OF SHARES OF RS.37,94,211/-, WHICH WERE EXEMPT INCOMES, WHEREAS ASSESSEE HAD NOT DISALLOWED ANY EXPENDITURE UNDER SECTION 14A OF THE ACT AS BEING RELATED TO EARNING OF SUCH INCOME. THE ASSESSING O FFICER MADE A DISALLOWANCE OF RS.11,69,282/- UNDER SECTION 14A OF THE ACT BY APPLYING THE FORMULA CONTAINED IN RULE 8D (2) OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). THE CIT(A) HAS AFFIRM ED THE DISALLOWANCE, AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3 ITA NO. 3657 /MUM/2015 (ASSESSMENT YEAR : 2010-11) 5. THE ORDERS OF THE AUTHORITIES BELOW REVEAL THAT THE DISALLOWANCE HAS BEEN MADE PRIMARILY FOR THE REASON THAT ASSESS EE WAS NOT ABLE TO JUSTIFY AS TO WHY NO DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS MADE IN THE RETURN OF INCOME. BEFORE ME ALSO, THER E IS NO MATERIAL TO DISTRACT FROM THE FINDINGS OF THE LOWER AUTHORITIES , WHICH ARE HEREBY AFFIRMED. THUS, THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND ASSESSEE FAILS IN HIS APPEAL. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COUR T IN THE PRESENCE OF LD. DEPARTMENTAL REPRESENTATIVE AT TH E TIME OF HEARING ON 05/07/2016. SD/- (G.S. PANNU) ACCOU NTANT MEMBER MUMBAI, DATED 05/07/2016 VM , 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. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI