LATE SHRI MOHAN V. BHATIYA, MUMBAI V. ITO 2(1)(1), MUMBAI

ITA 445/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1127 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-01-2017
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: MANISH SANGHAVI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 445 /MUM/ 201 7 (ASSESSMENT YEAR 20 1 2 - 1 3 ) LATE SHRI MOHAN V. BHATIYA (LEGAL HEIR KAMAL BHATIYA) 13, PAPER BOX HOUSE MAHAKALI CAVES ROAD ANDHERI EAST MUMBAI - 40 0 093. VS. ITO 2(1)(1) ROOM NO. 561 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAAPB7932Q ASSESSEE BY SHRI MANISH SANGHAVI DEPARTMENT BY MS. BEENA SANTOSH DATE OF HEARING 2 . 5. 201 7 DATE OF PRONOUNCEM ENT 2 .5 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 29 - 11 - 2016 PASSED BY LD CIT(A) CONFIRMING THE DISALLOWANCE MADE U/S 14A OF THE ACT FOR ASSESSMENT YEAR 2012 - 13. 2. THE LD A.R SUBMITTED THAT THE ASSESSEE EARNE D DIVIDEND INCOME OF RS.17.29 LAKHS AND DID NOT MAKE ANY DISALLOWANCE U/S 14A OF THE ACT FOR THE REASON THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WERE TOWARDS TELEPHONE (RS.12,188/ - ) AND AUDIT FEE (RS.22,472/ - ) ONLY. HOWEVER THE AO COMPUTED THE DISALL OWANCE AS PER RULE 8D(2)(III) AND THE SAME WAS ALSO CONFIRMED BY THE LD CIT(A). THE LD A.R SUBMITTED THAT THE DELHI BENCH OF TRIBUNAL HAS HELD IN THE CASE OF MODERN INFO TECHNOLOGY P LTD VS. ITO (ITA NO.4294/DEL/2002 DATED 19 - 10 - 2012) THAT THE DISALLOWANC E COMPUTED U/S 14A CANNOT EXCEED ACTUAL EXPENDITURE CLAIMED BY THE ASSESSEE. LATE SHRI MOHAN V. BHATIYA 2 3. THE LD D.R, ON THE CONTRARY, SUPPORTED THE ORDERS PASSED BY THE TAX AUTHORITIES. 4. I HEARD THE PARTIES AND PERUSED THE RECORD. I NOTICE THAT THE DELHI BENCH OF TRIBU NAL IN THE CASE CITED ABOVE HAS HELD THAT THE NO DISALLOWANCE U/S 14A IS CALLED FOR WHEN THE ASSESSEE HAS NOT INCURRED AND CLAIMED ANY EXPENDITURE FOR EARNING EXEMPT INCOME. IT WAS FURTHER HELD IN THE CASE BEFORE THE DELHI BENCH THAT THE DISALLOWANCE SHOU LD BE RESTRICTED TO THE ACTUAL AMOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE. IN THE INSTANT CASE ALSO, THE ASSESSEE HAS CLAIMED EXPENDITURE TOWARDS TELEPHONE BILL AND AUDIT FEE ONLY. NO OTHER EXPENDITURE HAS BEEN CLAIMED BY THE ASSESSEE. ACCORDINGLY, B Y FOLLOWING THE DECISION OF DELHI BENCH OF TRIBUNAL REFERRED ABOVE, I DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO THE ACTUAL AMOUNT OF EXPENDITURE INCURRED AND CLAIMED BY THE ASSESSEE. THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE WOULD STAND MODIFIED ACC ORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 . 5 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 5 / 20 1 7 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) PS ITAT, MUMBAI