URMILA ASHOKE DAGA, MUMBAI V. ITO WD 12(3)(2), MUMBAI

ITA 5131/MUM/2010

• Counselvise Citation: 513119914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 21-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: K SHIVRAM MS RENU CHOUDHARI
• Keywords: Earning of tax free income; Assessment record
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER. I.T.A. NO. 5131/MUM/2010. ASSESSMENT YEAR : 2006-07. MRS. URMILA ASHOK DAGA, THE INCOME TAX OFFICER, 512, MAKER CHAMBER-V, VS. WARD-12(3)(2), 221, NARIMAN POINT, MUMBAI. MUMBAI 400021. PAN : AAIPD 2678P. APPELLANT. RESPONDENT. APPELLANT BY : SHRI K. SHIVRAM, MS. RENU CHOUDHARI. RESPONDENT BY : SHRI G.P. TRIVEDI. DATE OF HEARING : 12-09-2011. DATE OF PRONOUNCEMENT : 30-09-2011. O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED CIT(APPEALS)-23, MUMBAI DATED 26-04-2010. 2. THE ISSUE RAISED IN GROUND NO. 1 OF THIS APPEAL RELATES TO THE ADDITION OF RS.21,000/- MADE BY THE AO AND CONFIRMED BY THE LEA RNED CIT(APPEALS) ON ACCOUNT OF HOUSE PROPERTY INCOME. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 20-11-20 06 DECLARING TOTAL INCOME OF RS.1,00,890/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS NOTICED BY THE 2 ITA NO.5131/MUM/2010 ASSESSMENT YEAR : 2006-07. AO FROM BALANCE SHEET FILED BY THE ASSESSEE ALONG W ITH HER RETURN OF INCOME THAT THE ASSESSEE OWNS A FLAT AT PUNE. THE AO, THEREFORE , REQUIRED THE ASSESSEE TO EXPLAIN WHETHER THE SAID FLAT WAS SELF OCCUPIED OR LET OUT IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS ALSO ASKED BY THE A O TO EXPLAIN WHY THE INCOME FROM THE SAID HOUSE PROPERTY SHOULD NOT BE ADDED TO HER TOTAL INCOME. SINCE THE ASSESSEE COULD NOT FURNISH ANY DETAILS OR EXPLANATI ON IN THIS REGARD, THE AO ADOPTED THE ANNUAL LETTING VALUE OF THE ASSESSEES HOUSE PR OPERTY ON ESTIMATED BASIS AT RS.30,000/- AND AFTER ALLOWING DEDUCTION OF RS.9000 /- U/S 24, THE BALANCE AMOUNT OF RS.21,000/- WAS BROUGHT TO TAX BY HIM IN THE HA NDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. DURING THE COURS E OF APPELLATE PROCEEDINGS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) THAT THE RESIDENTIAL FLAT AT PUNE WAS OWNED BY THE ASSESSEE JOINTLY WITH HER HUSBAND MR. ASHOK DAGA. THE ASSESSEE ALSO SUBMITTED THAT SHE WA S STAYING IN THE SAID FLAT AND WHILE FILING THE RETURN OF INCOME, NIL VALUE OF THE SAID SELF OCCUPIED FLAT WAS NOT SHOWN BY OVERSIGHT. IT WAS SUBMITTED THAT ON REALIS ING THIS MISTAKE, A REVISED COMPUTATION OF TOTAL INCOME WAS FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS SHOWING INCOME FROM SELF OCC UPIED PROPERTY AT NIL. 4. THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE ON THIS ISSUE DID NOT FIND FAVOUR WITH THE LEARNED CIT(APPEALS) WHO PROCEEDED TO CONFIRM THE ADDITION MADE BY THE AO ON THIS ISSUE FOR THE FOLLOWING REASONS G IVEN IN PARAGRAPH NO. 2.3 OF HIS IMPUGNED ORDER : I HAVE CONSIDERED THE SUBMISSIONS MADE FOR THE AP PELLANT AND THE ASSESSMENT ORDER, AND ALSO PERUSED THE ASSESSMENT R ECORD. THE ASSESSING OFFICER HAD, VIDE ORDER SHEET ENTRY DATED 10/10/200 8 SPECIFICALLY CALLED FOR DETAILS OF HOUSE PROPERTY PUNE WHETHER SOP / LOP. PLEASE EXPLAIN WHY THE INCOME FROM HOUSE PROPERTY SHOULD NOT BE ADDED TO T HE INCOME. THE APPELLANT STATES TO HAVE FILED LETTER DATED 18/10/2 008 WHEREIN THE CLAIM OF 3 ITA NO.5131/MUM/2010 ASSESSMENT YEAR : 2006-07. THE PROPERTY AS HAS BEEN MADE. LETTER NO. 266 DATED 18/10/2008 OF THE APPELLANT IS ON THE ASSESSMENT RECORD. WHILE A REVI SED COMPUTATION OF INCOME WAS FILED ALONG WITH THE LETTER, THE ANNEXUR E REGARDING HOUSE PROPERTY ONLY MENTIONS. FLAT AT PUNE (CO-PARCENOR), ANNUAL RENT RECEIVED FROM HOUSE PROPERTY AT D (I.E., NIL). THERE IS NO MENTION OF IT, BEING SOP OR OTHERWISE. THE MENTION OF NIL VALUE OF RENT RECEI VED COULD ALSO BE AN INDICATOR THAT THE PROPERTY THOUGH NOT SOP WAS VACA NT OR NOT LET OUT. THERE IS ALSO NO SPECIFIC REPLY ON RECORD TO THE ASSESSING O FFICERS QUERY AS TO WHY INCOME FROM HOUSE PROPERTY SHOULD NOT BE ADDED TO T HE INCOME. IN VIEW OF THE FACTS ON RECORD, IT CANNOT BE SAID THAT THE APP ELLANT HAD MADE ANY CLAIM FOR THE PROPERTY BEING SOP. THUS, THE ASSESSING OFF ICERS ACTION IN ESTIMATING ALV AS HAS BEEN DONE IS CONFIRMED. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LEARNED C OUNSEL FOR THE ASSESSEE BEFORE ME, THE FLAT AT PUNE WAS THE ONLY RESIDENTIAL PROPE RTY OWNED BY THE ASSESSEE AND THIS POSITION IS NOT IN DISPUTE AS THE ONLY INCOME BROUGHT TO TAX BY THE AO IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM H OUSE PROPERTY IS THE IMPUGNED AMOUNT OF RS.21,000/- WHICH IS IN RESPECT OF THE SAID FLAT. IT IS OBSERVED THAT A REVISED COMPUTATION OF TOTAL INCOME WAS FILE D BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO SHOW ING INCOME FROM THE SAID FLAT AT NIL BEING SELF OCCUPIED HOUSE PROPERTY AND THIS AVERMENT MADE BY THE ASSESSEE WAS BRUSHED ASIDE BY THE AO WITHOUT BRINGING ANYTHI NG ON RECORD TO SHOW THAT THE SAID PROPERTY WAS ACTUALLY LET OUT BY THE ASSESSEE. IN THE ABSENCE OF ANY SUCH MATERIAL BROUGHT ON RECORD BY THE AO AND KEEPING IN VIEW THE FACT THAT THE RESIDENTIAL FLAT AT PUNE WAS THE ONLY HOUSE PROPERT Y OWNED BY THE ASSESSEE, I AM OF THE VIEW THAT THE IMPUGNED ADDITION OF RS.21,000/- MADE BY THE AO MERELY ON THE BASIS OF ASSUMPTION AND SURMISES WAS NOT SUSTAINABL E AND THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE SAM E. THE ADDITION MADE BY THE 4 ITA NO.5131/MUM/2010 ASSESSMENT YEAR : 2006-07. AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) IS, TH EREFORE, DELETED AND GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. 6. THE ISSUE RAISED IN GROUND NO.2 RELATES TO THE A DDITION OF RS.64,609/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) U/S 14A OF THE ACT READ WITH RULE 8D OF INCOME TAX RULES, 1962. 7. IN HER RETURN OF INCOME, A SUM OF RS.3,77,851/- WAS CLAIMED TO BE EXEMPT INCOME BY THE ASSESSEE U/S 10(36) / 10(38). NO DISA LLOWANCE IN RESPECT OF EXPENSES INCURRED IN RELATION TO THE SAID EXEMPT INCOME, HOW EVER, WAS MADE BY THE ASSESSEE AS REQUIRED BY THE PROVISIONS OF SECTION 14A. THE Q UANTUM OF SUCH EXPENSES, THEREFORE, WAS WORKED OUT BY THE AO BY APPLYING RUL E 8D. ON APPEAL, THE LEARNED CIT(APPEALS) UPHELD THE ACTION OF THE AO IN MAKING A DISALLOWANCE U/S 14A RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT, M UMBAI IN THE CASE OF DAGA CAPITAL MANAGEMENT (P) LTD. REPORTED IN 117 ITD 1 69(MUM.)(S.B.). 8. AFTER CONSIDERING THE RIVAL SUBMISSION AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ISSUE INVOLVED IN T HIS GROUND RAISED BY THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF DCIT VS. GODREJ AND BOYCE MFG. CO. LTD. 328 ITR 81 WHEREIN IT WAS HELD THAT RULE 8D IS APPLICABLE ONLY FROM ASSESSMENT YEAR 200 8-09 AND PRIOR TO ASSESSMENT YEAR 2008-09, THE QUANTUM OF DISALLOWANCE TO BE MAD E U/S 14A HAS TO BE DETERMINED BY ADOPTING SOME REASONABLE METHOD. KEEP ING IN VIEW THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, I SE T ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO DETERMINE THE QUANTUM OF DISALLOWANC E OF EXPENSES TO BE MADE U/S 14A BY ADOPTING SOME REASONABLE METHOD. GROUND NO. 2 IS ACCORDINGLY TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO.5131/MUM/2010 ASSESSMENT YEAR : 2006-07. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPT., 2011. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH SEPT., 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, SMC BENCH, MUMBAI. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENCH ES, MUMBA I. WAKODE