Dr. Ashok Seth, New Delhi V. DCIT, New Delhi

ITA 5298/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87028 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 24-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR SENIOR
• Assessee Lawyers: T R TALWAR
• Keywords: Salary income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.554/DEL./2013 (ASSESSMENT YEAR : 2009-10) ITA NO.5298/DEL./2013 (ASSESSMENT YEAR : 2010-11) DR. ASHOK SETH, VS. DCIT, CIRCLE 37 (1), A 20, GEETANJALI ENCLAVE, NEW DELHI. NEW DELHI 110 017. (PAN : AARPS1432R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.R. TALWAR, ADVOCATE REVENUE BY : MS. Y. KAKKAR, SENIOR DR DATE OF HEARING : 05.03.2015 DATE OF PRONOUNCEMENT : 13.03.2015 ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : ITA NO.554/DEL/2013 ITA NO.554/DEL/2013 FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXVIII, NEW DELHI DATED 21.11.2012 FO R THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A DOCTOR AND EARNING INCOME FROM SALARY/BUSINESS/ PROFESSION/CAPITAL GAIN AND OTHER SOURCES. THE ASS ESSING OFFICER HAS MADE ITA NOS.554 & 5298/DEL./2013 2 CERTAIN ADDITIONS WHICH HAVE BEEN CONFIRMED BY THE CIT (A), AGAINST WHICH, THE ASSESSEE IS IN APPEAL BEFORE US BY TAKING THE FOLLO WING GROUNDS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED CIT(A) HAS ERRED: 1. A) IN TREATING THE MEMBERSHIP EXPENSES OF RS.1,25,6 18/- PAID BY THE APPELLANT TO THE ITC HEALTH CLUB & INDIA HAB ITAT CENTRE HEALTH CLUB PURELY IN THE NATURE OF PERSONAL EXPEND ITURE AND NOT RELATING TO APPELLANT'S PROFESSION, AS CLAIMED. B) IN IGNORING THAT THE SAME WERE INCURRED WHOLLY A ND EXCLUSIVELY IN THE PER-SUIT AND FOR THE PURPOSE OF THE APPELLANT'S PROFESSION AS A CARDIOLOGIST FOR MONITORING / DETER MINING THE CORRELATION BETWEEN THE CARDIO EXERCISES AND THEIR EFFECT ON THE PERFORMANCE OF HEART FUNCTIONS. 2. A) IN CONFIRMING THE DISALLOWANCE OF A PAYMENT OF RS.1,68,000 ACTUALLY PAID DURING THE YEAR TO THE EV ENT MANAGEMENT SERVICES WHICH WAS WHOLLY AND EXCLUSIVEL Y LAID OUT FOR THE PURPOSE OF THE APPELLANT'S PROFESSION D UE TO NON- DEDUCTION OF TAX AT SOURCE . B) IN NOT FOLLOWING THE ITAT SPECIAL BENCH VISAKHAP ATNAM'S DECISION IN THE CASE OF MERILYN SHIPPING AND TRANSP ORTERS V. ADDL. CIT (2012) 136 ITD 23 (SB) 3. A) IN CONFIRMING THE DISALLOWANCE OF RS.3,54,086/- U/S 14A OF THE IT ACT R/W RULE 8D OF THE IT RULES, 1962, WHEN NO DIRECT AND PROXIMATE NEXUS BETWEEN THE EXEMPTED INCOME AND THE EXPENDITURE CLAIMED HAS BEEN ESTABLISHED. B) IN NOT FOLLOWING THE ITAT BOMBAY BENCH DECISION IN THE CASE OF JUSTICE SAM P BHARUCHA V. ADDITIONAL CIT (2 012) 53 SOT 192 (MUMBAI) (URO). 3. IN THE GROUND NO.1(A) & 1(B), THE ASSESSEE HAS C HALLENGED CONFIRMATION OF DISALLOWANCE OF RS.1,25,618/- PAID BY THE ASSESSEE TO ITC HEALTH CLUB AND INDIA HABITAT CENTRE HEALTH CLUB. ITA NOS.554 & 5298/DEL./2013 3 4. THE ASSESSING OFFICER HELD THAT RS.1,25,618/- IS PURELY PERSONAL EXPENDITURE AND NOT RELATED TO THE PROFESSION OF TH E ASSESSEE. THE CIT (A) HAS CONFIRMED THIS ADDITION. THE CIT (A) HAS ALSO CONC UR WITH THE ASSESSING OFFICER THAT THE MEMBERSHIP FEE PAID TO THE CLUBS BY THE AS SESSEE IS PURELY IN THE NATURE OF PERSONAL EXPENDITURE AND NOT RELATED TO THE PROF ESSION. 5. BEFORE US, THE LD. AR HAS CANVASSED THAT THE ASS ESSEE IS A VERY EMINENT DOCTOR AND HE HAS TAKEN THE MEMBERSHIP IN ORDER TO VISIT THE PEOPLE WHO UNDERGO CARDIO TRAINING/EXERCISE AT THE HEALTH CLUB S AND MONITOR THEIR PERFORMANCE OF HEART FUNCTIONS IN ORDER TO ASCERTAI N THE NECESSITY OF CARDIO EXERCISES FOR THE WELLNESS OF HEART AND ALSO TO DET ERMINE THE CORRELATION BETWEEN THE CARDIO EXERCISE AND ITS EFFECT ON THE OVERALL H EALTH OF THE PEOPLE AT THESE HEALTH CLUBS. THERE IS NO DOCUMENTARY OR ANY OTHER EVIDENCE IN SUPPORT OF SUCH PLEADINGS. ASSESSEES PLEA IS COMPLETELY BASELESS AND NOT CONVINCING. THEREFORE, WE ARE UNABLE TO AGREE WITH THIS CONTENT ION OF THE LD. AR. THE MEMBERSHIP TAKEN BY THE ASSESSEE IS PURELY FOR HIS PERSONAL BENEFIT AND IT HAS NOTHING TO DO WITH THE PROFESSION AND BUSINESS OF T HE ASSESSEE. THEREFORE, WE DISMISS THIS GROUND OF ASSESSEES APPEAL. 6. IN THE GROUND NOS.2(A) & 2(B), THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.1,68,000/- ACTUALLY PAID TO EVE NT MANAGEMENT SERVICES. THIS AMOUNT WAS PAID WITHOUT DEDUCTING THE TDS . 7. BEFORE US, LD. AR RELIED ON THE ORDER OF THE ITA T, SPECIAL BENCH, VISAKHAPATNAMS DECISION IN THE CASE OF MERILYN SHI PPING AND TRANSPORTERS VS. ADDL. CIT (2012) 136 ITD 23 (SB). HOWEVER, THE L D. DR BROUGHT TO OUR ITA NOS.554 & 5298/DEL./2013 4 NOTICE THE LETTER OF LD. AUTHORISED REPRESENTATIVE DATED 25.1.2011 PLACED AT PAGES 9 & 10 OF THE PAPER BOOK WHEREIN THE ASSESSEE HIMSE LF HAS PLEADED THAT THESE EXPENSES BE DISALLOWED AND BEING OFFERED FOR TAXATI ON BY THE ASSESSEE. LD. DR SUBMITTED THAT THE ASSESSEE HIMSELF HAS AGREED TO T HIS AND NOW THIS HAS BEEN CHALLENGED WITHOUT ANY REASON. 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THIS AMOUNT FOR EVENT MANAGEMENT SERVICES WAS PAID WITHOUT DEDUCTING TDS. ASSESSEE HIMSELF HAD GIVEN IN WRITING THAT AMOUNT BE OFFERED FOR TAXES. THE ASSESSEES SUBMISSION WITH REGARD TO OFFERING AMOUNT TO TAXES HAS IN A WA Y RESTRICTED ASSESSING OFFICER TO MAKE FURTHER INQUIRY ON THESE EXPENSES. IN THES E FACTUAL MATRIX OF THIS CASE, WE FIND THAT THE DECISION OF ITAT, SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORTERS VS. ADDL. CIT, CITED SUPR A, IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. THEREFORE, WE FIND N O MERITS ON THIS ISSUE IN THE ASSESSEES APPEAL AND THE SAME IS ACCORDINGLY REJEC TED. 9. IN THE GROUND NO.3, THE ISSUE INVOLVED IS CONFIR MING THE DISALLOWANCE OF RS.3,54,086/-14A OF THE ACT R/W RULE 8D OF THE INCO ME-TAX RULES, 1962. 10. LD. AR SUBMITTED THAT NO DIRECT AND PROXIMATE N EXUS BETWEEN THE EXEMPTED INCOME AND THE EXPENDITURE CLAIMED WAS EST ABLISHED. HE RELIED ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF JUSTI CE SAM P BHARUCHA VS. ADDL. CIT (2012) 53 SOT 192 (MUMBAI). LD. AR SUB MITTED THAT THE ASSESSEE HAS EARNED ONLY RS.76,660/- AS EXEMPTED INCOME. FU RTHER, THE ASSESSEE IS HAVING PERSONAL DRAWINGS OF RS.27,97,024/- WHICH IS EVIDEN T FROM THE CAPITAL ACCOUNT OF THE ASSESSEE PLACED AT PAGE 23 OF THE PAPER BOOK. THE STT CHARGES AND ITA NOS.554 & 5298/DEL./2013 5 BROKERAGES HAVE ALSO BEEN PAID BY THE ASSESSEE FROM HIS PERSONAL ACCOUNT. THE REVENUE HAS FAILED TO PINPOINT ANY EXPENDITURE DEBI TED IN THE INCOME & EXPENDITURE ACCOUNT FOR THE PROFESSION OF THE ASSES SEE. HE ALSO PLEADED THAT SINCE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE AND REVENUE HAS FAILED TO PINPOINT ANY SPECIFIC INSTANCE, THEREFORE, THE COND ITIONS INVOKING THE PROVISIONS OF SECTION 14A R/W RULE 8D ARE NOT FULFILLED. THES E PROVISIONS CAN BE INVOKED ONLY WHEN THE ASSESSING OFFICER HAS SATISFIED HIMSE LF THAT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EXPENDITUR E THAT NO EXPENDITURE HAS BEEN DEBITED IN THE INCOME & EXPENDITURE ACCOUNT RELATIN G TO EXEMPTED INCOME. 11. LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. WE FIND THAT THE EXPENDITURE RELATED TO THE EARNING OF EXEMPTED INCOME LIKE STT AND BROKERAGE WERE SHOWN IN THE WITHDRAWALS. THE ASSESSEE IS ALSO HAVING PE RSONAL DRAWINGS OF RS.27,97,024/- FOR THE YEAR UNDER CONSIDERATION. A LL THESE FACTS SHOW THAT THE ASSESSEE IS NOT DEBITING THE EXPENDITURE RELATED TO THE EXEMPTED INCOME IN ITS INCOME& EXPENDITURE ACCOUNT AND THE REVENUE HAS FAI LED TO PINPOINT ANY SPECIFIC INSTANCE IN THIS REGARD. THEREFORE, WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE (ITA NO.554/DEL/2013) IS PARTLY ALLOWED. ITA NO.5298/DEL/2013 14. THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-XXVIII, NEW DELHI DATED 22.07.2013 WHEREI N THE ONLY ISSUE INVOLVED ITA NOS.554 & 5298/DEL./2013 6 IS REGARDING THE DISALLOWANCE OF RS.2,54,149/- U/S 14A OF THE INCOME-TAX ACT, 1961 R/W RULE 8D OF THE INCOME-TAX RULES, 1962. 15. THE ASSESSEE CLAIMED THAT THERE WAS NO DIRECT A ND PROXIMATE NEXUS BETWEEN THE EXEMPTED INCOME AND THE EXPENDITURE CLA IMED. IT WAS PLEADED THAT NONE OF THE EXPENDITURE INCURRED AND CLAIMED BY THE ASSESSEE IS IN RELATION TO THE EXEMPTED INCOME IN ITS INCOME & EXPENDITURE ACCOUNT . 16. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. FO R THE SIMILAR REASONS AS STATED ABOVE IN THE ASSESSMENT YEAR 2009-10, WE ALL OW THIS GROUND OF ASSESSEES APPEAL AS THE REVENUE IS FAILED TO PINPOINT ANY EXP ENDITURE IN THE INCOME & EXPENDITURE ACCOUNT. FURTHER, THE ASSESSEE IS INCU RRING SUCH EXPENSES FROM HIS PERSONAL DRAWINGS. ACCORDINGLY, THIS GROUND OF ASS ESSEES APPEAL IS ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE (ITA NO.5298/DEL/2013) STANDS ALLOWED. 18. TO SUM UP : THE APPEAL OF THE ASSESSEE BEING IT A NO.554/DEL/2013 IS PARTLY ALLOWED AND THE APPEAL FILED BY THE ASSESSEE BEING ITA NO.5298/DEL/2013 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 13 TH DAY OF MARCH, 2015. SD/- SD/- (G.C. GUPTA) (B.C. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 13 TH DAY OF MARCH, 2015 TS ITA NOS.554 & 5298/DEL./2013 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) -XXVIII, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.