SHRI VIVEK TALWAR, MUMBAI V. DCIT- CC - 8(3) , MUMBAI

ITA 5005/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0250 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 28-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Salary income; Earning of tax free income; TDS; Rule 8D; Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.5005/MUM/2018 ASSESSMENT YEAR : 2012-13 SHRI VIVEK TALWAR, 17-B, ILL PALAZZO, RIDGE ROAD, MALABAR HILL, MUMBAI 400 006. PAN AAAPT3994Q VS. DCIT CC 8(3), MUMBAI (APPELLANT) (RESPONDENT) FOR THE ASSESSEE : SHRI VIMAL PUNMIYA FOR THE REVENUE : SHRI RAJEEV GUBGOTRA DATE OF HEARING : 07.08.2019 DATE OF PRONOUNCEMENT : 09 .09.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE CIT(A) -50, MUMBAI, DATED 1.06.2018, FOR A.Y. 2012-13, WHICH IN TURN ARISES OUT OF THE ORDER OF ASSESSMENT PASSED U/S. 143(3) R.W.S. 147 O F THE INCOME TAX ACT, 1961. 2. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE C ONFIRMATION OF THE DISALLOWANCE OF RS 5,74,534/- BY THE CIT(A) AS MADE BY THE AO APPLYING RULE 8D R.W.S. 14A OF THE INCOME TAX ACT. THE FACTS IN BRIEF ARE THAT THE ASSESSEE 2 ITA 5005/MUM2018 SHRI VIVEK TALWAR IS THE MANAGING DIRECTOR OF A LISTED COMPANY M/S. N ITCO LTD. DRUING THE YEAR THE ASSESSEE HAS EARNED INCOME BY WAY OF SALARY, IN COME FROM HOUSE PROPERTY, INCOME FROM OTHER SOURCES AND LOSS FROM B USINESS IN FUTURE AND OPTION SEGMENT. DURING THE YEAR THE LOSS FROM FUTU RE AND OPTION SEGMENT WAS INCURRED TO THE TUNE OF RS 93,32,053/- THE SAI D LOSS COMPRISED OF AS UNDER: PARTICULARS AMOUNT LOSS FROM FUTURE TRADING 87,55,414/- ADDITIONAL BROKERAGE CHARGES FOR FUTURE TRANSACTION 6,959/ - DELAYED PAYMENT CHARGES 1,750/ - INTEREST ON LOAN 2,75,127/ - SECURITY TRANSACTION TAX 89,563/ - SERVICE CHARGES 68,105/- AUDIT FEES 5,515/- RENT RATE & TAXES 1,29,100/ - BANK CHARGES 520/ - TOTAL 93,32,053/ - 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS EARNED DIVIDEND OF RS 47,15,551/-, WHI CH WAS CLAIMED TO BE EXEMPT AGAINST WHICH THE ASSESSEE HAS SUO MOTO DISA LLOWED DEMAT CHARGES OF RS 2,105/-. ACCORDINGLY, THE AO INVOKED THE PRO VISIONS OF SECTION 14A READ WITH RULE 8D AFTER ISSUING SHOW CASE NOTICE TO THE ASSESSEE AND MADE DISALLOWANCE OF RS 17,12,716/- . HOWEVER THE AO UPO N PERUSAL OF THE PERUSAL OF PROFIT & LOSS ACCOUNT AND STATEMENT OF TOTAL INC OME CAME TO THE CONCLUSION THAT THE ASSESSEE HAS ONLY CLAIMED EXPENSES TO THE TUNE OF RS 5,74,434/- 3 ITA 5005/MUM2018 SHRI VIVEK TALWAR AFTER SUO MOTO DEDUCTING THE DEMAT CHARGES OF RS 2, 105/- AND RESTRICTED THE DISALLOWANCE TO RS. 5,76,639/-. 4. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE AO BY HOLDING THAT THE ASSESSEE HAS CLAIMED EXP ENSES AT RS 5,76,639/- AGAINST THE RENTAL INCOME, SALARY INCOME AND PROFIT FROM VARIOUS FIRM WHICH ARE NOT ALLOWABLE AND THUS JUSTIFIED THE ADDITION MADE BY THE AO. 5. THE LEARNED AR SUBMITTED BEFORE US THAT THE EXPE NSES CLAIMED BY THE ASSESSEE AT RS 5,76,639/- WERE INCURRED IN CONNECTI ON WITH THE BUSINESS IN FUTURE AND OPTION SEGMENT. HE FURTHER SUBMITTED ITE M-WISE DETAILS OF EXPENSES INCURRED. THE LEARNED AR THEREFORE, PRAYE D THAT SINCE THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE, WHICH CAN BE ATTRI BUTABLE TOWARDS EARNING OF EXEMPT INCOME THE DISALLOWANCE AS MADE BY THE AO AND CONFIRMED BY THE CIT(A) MAY BE REVERSED. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS SUO MOTTO DISALLOWED A SUM OF RS 2,105/-, WHICH WERE IN CURRED ON ACCOUNT OF DEMAT CHARGES. THEREFORE, THE LEARNED AR PRAYED FOR THE DELETION OF THE DISALLOWANCE OF RS 5,74,434/- . 6. THE LEARNED DR RELIED ON THE ORDERS OF THE AUTHO RITIES BELOW. 7. AFTER HEARING THE RIVAL PARTIES, WE OBSERVE THAT THE ASSESSEE HAS INCURRED EXPENSES OF RS 5,76,639/- IN THE BUSINESS OF FUTURE & OPTION SEGMENT AS UNDER: 4 ITA 5005/MUM2018 SHRI VIVEK TALWAR NATURE OF EXPENSES AMOUNT ADDITIONAL BROKERAGE CHARGES FOR FUTURE TRANSACTION 6,959/ - DELAYED PAYMENT CHARGES 1,750/ - INTEREST ON LOAN 2,75,127/ - SECURITY TRANSACTION TAX 89,563/ - SERVICE CHARGES 68,105/ - AUDIT FEES 5,515 RENT RATE & TAXES 1,29,100/ - BANK CHARGES 520/- TOTAL 5,76,639/- WE OBSERVE FROM THE NATURE OF THESE EXPENSES THAT T HESE WERE EXCLUSIVELY INCURRED IN CONNECTION WITH THE BUSINESS OF FUTURE AND OPTION SEGMENT AND NOTHING IS RELATABLE OR ATTRIBUTABLE TO EARNING OF EXEMPT INCOME. WE, THEREFORE, DO NOT FIND ANY REASON TO SUSTAIN THE OR DER OF THE CIT(A) AS THE EXPENSES WHICH ARE INCURRED IN CONNECTION WITH THE BUSINESS OF FUTURE AND OPTION SEGMENT WERE CONSIDERED FOR THE PURPOSE OF D ISALLOWANCE U/S. 14A READ WITH RULE 8D. ACCORDINGLY, WE SET ASIDE THE O RDER OF CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE. 8. THE ISSUE IN GROUND NO.2 IS AGAINST THE ORDER OF THE CIT(A) IN NOT GIVING CREDIT OF TDS AMOUNTING TO RS 4,11,600/- AS CLAIMED BY THE ASSESSEE U/S. 194I. THE LEARNED AR AT THE OUTSET SUBMITTED THAT LEARNED CIT(A) HAS DIRECTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE AND ALLOW THE TDS CREDIT THEREAFTER. THE AO HAS NOT DONE ANYTHING TILL DATE IN THAT REGARD. THE LEARNED AR SUBMITTED THAT SIMILAR DIRECTION MAY BE GIVEN SO THAT THE ASSESSEE 5 ITA 5005/MUM2018 SHRI VIVEK TALWAR MAY BE GIVEN CREDIT OF RS 4,11,600/-. THE LEARNED DR FAIRLY AGREED TO THE CONTENTION OF THE LEARNED AR IN THIS REGARD. 9. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE VI EW THAT THE LEARNED CIT(A) HAS ALREADY GIVEN DIRECTION TO THE AO TO EXA MINE THE ISSUE AND ALLOW CREDIT OF TDS TO THE ASSESSEE. THUS, THIS DOES NOT REQUIRE ANY ADJUDICATION AT OUR END. HOWEVER, WE DIRECT THE AO TO DECIDE THE I SSUE WITHOUT ANY LOSS OF TIME AFTER EXAMINING THE CLAIM OF THE ASSESSEE AND AS PER THE FACTS OF THE CASE AND AS PER LAW. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.2019. SD/- SD/- (RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 09.09.2019. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI