SHIRIN SOLI CONTRACTOR, MUMBAI V. ACIT RG 11(3), MUMBAI

ITA 4840/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92438 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 14-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) . . , , ./ I.T.A. NO. 4840 / MUM/20 1 2 ( / ASSESSMENT YEAR : 20 08 - 09 ) SHIRIN SOLI CONTRACTOR, FLAT NO.75, JEHANGIR MANSION HUGES ROAD, CHOWPATTY, MUMBAI - 400007 / VS. COMMISSIONER OF INCOME TAX - 11(3), ROOM NO.446, AAYAKAR BHAVAN, M K ROAD, MUMB AI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAGPC8816N / A SSESSEES BY SHRI NISHIT GANDHI / RE VENUE BY SHRI N V NADKARNI / DATE OF HEARING : 2 2 .4. 201 5 / DATE OF PRONOUNCEMENT : 24. 4 . 201 5 / O R D E R PER B.R. BASKARAN (AM) THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 09 - 05 - 2012 PASSED BY LD CIT(A) - 2, M UMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2008 - 09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT. 2. THE LD A.R SUBMITTED THAT THE ASSESSEE IS A DOCTOR AND DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE EARNED EXEMPTED INCOME TO THE TUNE OF RS.2.38 CRORES, WHICH INCLUDED LONG TERM CAPITAL GAIN OF RS.2.08 CRORES AND DIVIDEND/TAX FREE INTEREST OF RS.0.30 CRORE. THE ASSESSEE DID NOT INCUR ANY EXPENDITURE IN EARNING THE ABOVE S AID INCOME AND HENCE SHE ITA NO. 4840 / MUM/201 2 2 DID NOT MAKE ANY DISALLOWANCE U/S 14A OF THE ACT. THE ASSESSING OFFICER, HOWEVER, DISALLOWED A SUM OF RS.3,65,751/ - U/S 8 (2)(III) OF THE ACT , I.E., 0.5% OF THE AVERAGE VALUE OF INVESTMENTS. INVITING OUR ATTENTION TO THE PROFIT AN D LOSS ACCOUNT OF THE ASSESSEE, THE LD A.R SUBMITTED THAT ALL THE EXPENSES CLAIMED BY THE ASSESSEE WERE RELATED TO HER PROFESSIONAL INCOME AND ACCORDINGLY HE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE AS PER RULE 8D O F THE ACT WITHOUT EXAMINING THE CLAIM OF THE ASSESSEE WITH REFERENCE TO THE ACCOUNTS. HE FURTHER CONTENDED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE WITHOUT PROPERLY APPRECIATING THE CONTENTIONS OF THE ASSESSEE. 3. THE LD D.R , ON THE OTHER HAND, SUBMITTED THAT THE DISALLOWANCE U/S 14A R.W. RULE 8D IS APPLICABLE TO THE YEAR UNDER CONSIDERATION AND SINCE THE ASSESSEE HAS EARNED EXEMPTED INCOME, THE AO HAS COMPUTED THE DISALLOWANCE. SHE FURTHER SUBMITTED THAT THE ASSESSEE HAS CL AIMED EXPENDITURE IN HER PROFIT AND LOSS ACCOUNT AND HENCE THE DISALLOWANCE WAS MADE. 4. IN THE REJOINDER, THE LD A.R SUBMITTED THAT THE ASSESSEE HAD AGREED FOR AN ADHOC DISALLOWANCE OF RS.30,000/ - BEFORE THE AO AND ACCORDINGLY HE PRAYED THAT THE DISA LLOWANCE MAY BE RESTRICTED TO THAT AMOUNT. HE FURTHER SUBMITTED THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DR. KIRTIKUMAR L UPADHAYAYA (ITA NO.6670/MUM/2011 DATED 13.8.2014) HAS EXPRESSED THE VIEW THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WITHOUT EXAMINING THE ACCOUNTS OF THE ASSESSEE IS NOT CORRECT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT FURNISHED BY THE ASSESSEE WOULD SHOW THAT THERE IS SOME MERIT IN THE CONTE NTIONS OF THE ASSESSEE THAT THE ITA NO. 4840 / MUM/201 2 3 EXPENSES CLAIMED THEREIN ARE RELATED TO THE PROFESSIONAL INCOME OF THE ASSESSEE. WE NOTICE THAT THE ASSESSING OFFICER/LD CIT(A) DID NOT EXAMINE THE CLAIM OF THE ASSESSEE BY HAVING REGARD TO THE ACCOUNTS MAINTAINED BY THE AS SESSEE AND HENCE THEY WERE NOT JUSTIFIED IN INVOKING RULE 8D FOR COMPUTING DISALLOWANCE U/S 14A OF THE ACT. HOWEVER, IT CANNOT ALSO BE DENIED THAT THE ASSESSEE COULD NOT HAVE EARNED THE EXEMPTED INCOME WITHOUT INDIRECTLY UTILIZING THE INFRASTRUCTURE AND O THER FACILITIES RELATING TO THE PROFESSION. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE WOULD MEET THE ENDS OF JUSTICE, IF THE DISALLOWANCE OUT OF EXPENSES IS MADE AT RS.50,000/ - (RUPEES FIFTY THOUSAND). ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE U/S 14A OF THE ACT TO RS.50,000/ - , AS STATED ABOVE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE AB OVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24TH APR , 2015 . 24 TH APR , 2015 SD SD ( / AMIT SHUKLA ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 24TH APR ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI