ACIT 10(1), MUMBAI V. DR. RAMA SANKARNARAYANA IYER, MUMBAI

ITA 4712/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2847 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI N.K.BILLAIYA, AM AND SHRI AMARJIT SINGH , JM ITA NO.4712/MUM/2012 : ASST.YEAR 2009-2010 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 10(1) MUMBAI. / VS. DR.RAMA SANKARANARAYANA IYER 32 RASHMI, DMONTE PARK BANDRA (WEST), MUMBAI 400 050 PAN : AAAP13482L. ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : DR.K.SHIVARAM ! '#$ /ASSESSEE BY : SHRI SANJEEV KASHYAP / DATE OF HEARING : 20.10.2015 / DATE OF PRONOUNCEMENT : 28. 10.2015. / O R D E R PER N.K.BILLAIYA (AM) : THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) 21, MUMBAI, DATED 23.04.2012 PERTAINING TO ASSESSMENT YEAR 2009-2010. 2. THE SOLE REASON OF THE REVENUE IS THAT THE CIT(A ) ERRED IN DELETING ADDITION OF RS.14,74,197 MADE U/S 14A OF THE ACT. B RIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS RENDERING CONSULT ANCY SERVICES AS A PROPRIETOR OF M/S.RGR CONSULTANTS IN THE FIELD OF C HEMICAL ENGINEERING. WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO NOT ICED THAT THE ASSESSEE HAS RECEIVED DIVIDEND OF RS.1.78 CRORE, WHICH WAS CLAIM ED EXEMPT U/S 10(38) OF ITA NO.4712/MUM/2012 DR.RAMA SANKARNARAYAN IYER. 2 THE ACT, ALONG WITH LONG TERM CAPITAL GAIN CLAIMED EXEMPT U/S 10(34) / 10(35) OF THE ACT. 3. THE ASSESSEE WAS ASKED TO EXPLAIN WHY DISALLOWAN CE OF EXPENSES U/S 14A READ WITH RULE 8D SHOULD NOT BE MADE. THE ASSES SEE EXPLAINED THAT HE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING THE EX EMPT INCOME THOUGH HE HAS ALREADY DISALLOWED RS.12,000. THIS EXPLANATION DID NOT FIND ANY FAVOUR WITH THE AO, WHO PROCEEDED BY COMPUTING THE DISALLO WANCE AS PER THE PROVISIONS OF SECTION 14A R.W.R. 8D AND THE SAME WA S COMPUTED AT RS.14,74,197. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE CIT(A) AND REITERATED THE CLAIM THAT NO EXPENDITURE WAS IN CURRED FOR EARNING THE EXEMPT INCOME. AFTER ANALYZING THE FACTS IN CORRECT PERSPECTIVE, THE CIT(A) WAS CONVINCED THAT THE EXPENDITURE U/S 14A CAN BE D ISALLOWED ONLY IF THE SAME HAS BEEN INCURRED AND ALSO CLAIMED FOR THE PUR POSE OF EARNING EXEMPT INCOME. THE CIT(A) FURTHER OBSERVED THAT THE ASSESS EE HAS NOT DEDUCTED / CLAIMED ANY EXPENSES WHICH COULD BE ALSO ATTRIBUTAB LE TO EARNING OF EXEMPT INCOME. AFTER THOROUGHLY EXAMINING THE INCOME AND E XPENDITURE ACCOUNT, WHICH IS EXHIBITED AT PAGE 4 OF THE CIT(A)S ORDER. THE CIT(A) FINALLY CONCLUDED BY HOLDING THAT NO DISALLOWANCE U/S 14A O F THE ACT WAS REQUIRED IN RESPECT OF ADMINISTRATIVE AND MANAGERIAL EXPENSES. SINCE THE ASSESSEE HAS NOT CLAIMED ANY SUCH EXPENSES AGAINST TAXABLE INCOM E OFFERED UNDER DIFFERENT HEADS, THE DISALLOWANCE MADE BY THE AO WA S DELETED. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE LEARNED DEPARTM ENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDING OF THE AO. THE COUNS EL FOR THE ASSESSEE COULD ITA NO.4712/MUM/2012 DR.RAMA SANKARNARAYAN IYER. 3 NOT ADD ANYTHING NEW TO WHAT CIT(A) HAS ALREADY CON SIDERED WHILE GIVING RELIEF TO THE ASSESSEE. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IT IS AN UNDENIABLE FACT THAT THE ASSESSEE HAS NOT CLAIMED A NY EXPENSES, WHICH CAN BE SAID TO BE ATTRIBUTABLE TO EARNING OF EXEMPT INC OME. AS RIGHTLY MENTIONED BY THE CIT(A) THAT ALL THE EXPENDITURE CLAIMED IN T HE INCOME AND EXPENDITURE ACCOUNT ARE DIRECTLY RELATED TO THE RENDERING OF CO NSULTANCY SERVICES IN THE FIELD OF CHEMICAL ENGINEERING. NEITHER THE AO NOR T HE LEARNED DR COULD POINT OUT ANY EXPENDITURE THAT COULD HAVE BEEN INCURRED F OR EARNING THE EXEMPT INCOME. WE, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING THE CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THIS 28 TH DAY OF OCTOBER, 2015. !' # $ SD/- (AMARJIT SINGH) SD/- (N.K.BILLAIYA) ! / JUDICIAL MEMBER / ACCOUNTANT MEMBER ! MUMBAI; ! DATED : 28 TH OCTOBER, 2015. DEVDAS* (!$)*+ *,$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' ( ) / THE CIT, MUMBAI. 4. ' / CIT(A) - 21, MUMBAI 5. *+# ,,-. , -. , ! / DR, ITA NO.4712/MUM/2012 DR.RAMA SANKARNARAYAN IYER. 4 / BY ORDER, * , //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI ITAT, MUMBAI 6. #01 2 / GUARD FILE.