Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 2870 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 9 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-01-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
12-11-2015
Assessment Year
2010-2011
Appeal Filed On
25-03-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !'!! # , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 159 & 577/PN/2014 $& ' !(' / ASSESSMENT YEARS : 2008-09 & 2010-11 SHRI RAVINDRA N SAKLA, OFFICE NO. 1-5, MILLENNIUM STAR, DHOLE PATIL ROAD, PUNE 411001 PAN : ACEPS2235F ....... / APPELLANT )& / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE / RESPONDENT / ITA NOS. 266, 431 & 559/PN/2014 $& ' !(' / ASSESSMENT YEARS : 2008-09, 2009-10 & 2010-11 DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE ....... / APPELLANT )& / V/S. SHRI RAVINDRA N SAKLA, OFFICE NO. 1-5, MILLENNIUM STAR, DHOLE PATIL ROAD, PUNE 411001 PAN : ACEPS2235F / RESPONDENT ASSESSEE BY : SHRI VIPIN GUJRATHI REVENUE BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 12-11-2015 / DATE OF PRONOUNCEMENT : 08-01-2016 2 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 * / ORDER PER VIKAS AWASTHY, JM : THESE ARE SET OF FIVE APPEALS, TWO APPEALS ARE FILED BY THE ASSESSEE AND THREE APPEALS ARE BY THE REVENUE. ITA NO. 159/PN/2014 IS FILE D BY THE ASSESSEE IMPUGNING THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS)-II, PUNE DATED 29-10-2013 FOR THE ASSESSMENT YEAR 2008-09. THE REVENUE HAS FILED CROSS APPEAL AGAINST THE SAID ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NO. 266/PN/2014. IN ITA NO. 577/PN/2014 THE ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 21-11-2013 FOR TH E ASSESSMENT YEAR 2010-11. THE REVENUE HAS FILED CROSS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ITA NO. 559/PN/2014 . THE REVENUE HAS ALSO CHALLENGED THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS)-II, PUNE DATED 29-10-2013 FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO. 431/PN/2014. THERE IS NO CROSS APPEAL BY TH E ASSESSEE IN THE SAID ASSESSMENT YEAR. SINCE, THE ISSUES RAISED IN TH E APPEALS ARE SIMILAR, THE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. 2. THE ASSESSEE IN BOTH THE APPEALS HAS RAISED SOLITARY ISSUE ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS ) IN CONFIRMING THE DISALLOWANCE U/S. 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). WHEREAS, THE RE VENUE IN THE APPEALS FOR ALL THE THREE IMPUGNED ASSESSMENT YEARS HAVE CHALLENGED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN RESTRIC TING THE DISALLOWANCE U/S. 14A TO THE EXTENT OF TOTAL EXPENDITURE D EBITED IN THE PROFIT AND LOSS ACCOUNT. 3 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 IN APPEAL FOR THE ASSESSMENT YEAR 2009-10, THE REVENUE HAS ALSO ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE INCOME FROM LETTING OUT OF SHOPS IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WHEREAS , THE ASSESSING OFFICER HAS HELD THE SAME TO BE BUSINESS INCOME. IN ASSESSMENT YEAR 2010-11 THE REVENUE HAS RAISED SE COND GROUND OF APPEAL AGAINST THE FINDINGS OF COMMISSIONER OF INC OME TAX (APPEALS) IN HOLDING THAT THE PROVISIONS OF SECTION 14A CANNO T BE APPLIED FOR MAKING DISALLOWANCE OF DEPRECIATION. 3. THE FACTS OF THE CASE AS EMANATING FROM THE RECORD A RE: THE ASSESSEE IS A PARTNER IN VARIOUS PARTNERSHIP FIRMS ENGAGE D IN THE BUSINESS OF BUILDING CONSTRUCTION, PROMOTER AND DEVELOPER O F REAL ESTATE. THE ASSESSEE IN THE RETURN OF INCOME FOR THE IMP UGNED ASSESSMENT YEARS HAD DECLARED SHARE IN PROFITS FROM VAR IOUS PARTNERSHIP FIRMS, WHICH IS EXEMPT FROM TAX U/S. 10(2A) OF TH E ACT. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS TH E ASSESSING OFFICER INVOKED THE PROVISIONS OF RULE 8D AND MADE DISALLOWANC E U/S. 14A OF RS.18,94,440/- IN ASSESSMENT YEAR 2008-09, RS.38,69 ,583/- IN ASSESSMENT YEAR 2009-10 AND RS.45,85,031/- IN ASSESSMEN T YEAR 2010-11. AGGRIEVED BY THE ASSESSMENT ORDERS, THE ASSESSEE PREFE RRED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) FO R THE RESPECTIVE ASSESSMENT YEARS. THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER PLACING RELIANCE ON THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GILLETTE GROUP INDIA (P.) LTD. VS. ASS ISTANT COMMISSIONER OF INCOME TAX REPORTED AS 16 ITR (TRIB) 57 (DELHI) 4 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 RESTRICTED THE DISALLOWANCE TO THE TOTAL EXPENDITURE DEBIT ED IN THE PROFIT AND LOSS ACCOUNT. AGAINST THE FINDINGS OF COMMISSIONER OF I NCOME TAX (APPEALS), BOTH, THE ASSESSEE AND THE DEPARTMENT ARE IN A PPEAL BEFORE THE TRIBUNAL. 4. SHRI VIPIN GUJRATHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN MAKING DISALLOWANCE U/S. 14A OF THE ACT. THE ASSESSEE HAD BROUGHT TO THE NOTICE OF ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) T HAT THERE IS NO NEXUS BETWEEN THE EXPENDITURE INCURRED AND EXEMP T INCOME EARNED BY THE ASSESSEE. THE ASSESSEE IS HAVING OWN FUN DS MUCH MORE THAN THE INVESTMENT MADE IN ALL THE PARTNERSHIP FIRMS. THE RE HAS BEEN INCREASE IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE PA RTNERSHIP FIRM BY VIRTUE OF : (I) INTEREST INCOME, (II) REMUNERATION RECEIVED FRO M PARTNERSHIP FIRMS WHICH IS CREATED TO THE CAPITAL ACCOUNT; AND (III) SHARE FROM THE NET PROFITS. THE LD. AR SUBMITTED THAT THE ASS ESSING OFFICER HAS ERRED IN RECORDING THE FACTUAL FINDINGS THAT THE ASSE SSEE HAS MADE HUGE INVESTMENT IN THE PERIOD RELEVANT TO THE ASSESSMEN T YEAR 2010-11. THE ASSESSING OFFICER HAS NOT RECORDED SATISFACTION BEFORE INVOKING THE PROVISIONS OF RULE 8D(2). THEREFORE, THE DISALLOWANCE MADE U/S . 14A R.W. RULE 8D IS NOT SUSTAINABLE. IN SUPPORT OF HIS SUBMISSI ON, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. COMMISSIONER OF INCOME-TAX V. RELIANCE UTILITIES AND POWER LT D., 313 ITR 340 (BOM); II. CIT VS. HDFC BANK LTD., 366 ITR 505 (BOM); III. GILLETTE GROUP INDIA PVT. LTD. VS. ACIT, 16 ITR (TRIB.) 57; IV. M/S. SEARCH ENVIRO LIMITED VS. ACIT, ITA NO. 3464/MUM/2011 FOR THE ASSESSMENT YEAR 2007-08 DECIDED ON 02-03-2012; V. ASSTT. COMMISSIONER OF INCOME TAX VS. M/S. MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION COMPANY LTD., ITA NO . 5 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 2114/PN/2012 FOR THE ASSESSMENT YEAR 2009-10 DECIDED ON 27-05-2014; AND VI. DY. COMMISSIONER OF INCOME TAX VS. M/S. SUBRAMANYA CONSTRUCTIONS & DEVELOPMENT CO. LTD., ITA NO. 404/BANG/20 13 FOR THE ASSESSMENT YEAR 2009-10 DECIDED ON 20-02-2015. 5. ON THE OTHER HAND SHRI DHEERAJ KUMAR JAIN REPRESEN TING THE DEPARTMENT SUBMITTED THAT THE COMMISSIONER OF INCOME TA X (APPEALS) HAS ERRED IN RESTRICTING THE DISALLOWANCE U/S. 14A FOR THE IMPUGNED ASSESSMENT YEARS TO THE EXTENT OF TOTAL EXPENDITURE DE BITED IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER HAS RIGHTLY INVOK ED THE PROVISIONS OF RULE 8D FOR MAKING DISALLOWANCE U/S. 14A. THE LD. DR VEHEMENTLY DEFENDED THE ORDER OF ASSESSING OFFICER IN MAK ING DISALLOWANCE U/S. 14A OF THE ACT. 5.1 THE LD. DR FURTHER SUBMITTED THAT IN THE APPEAL FOR THE ASSESSMENT YEAR 2009-10, THE REVENUE HAS ALSO ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THE RENTAL INC OME FROM LETTING OUT OF SHOPS AS INCOME FROM HOUSE PROPERT Y. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUYING AND SELLING OF SHOPS, FLATS, BUNGALOWS ETC. THE SHOPS FROM WHICH THE ASSESSEE H AS EARNED RENTAL INCOME ARE SHOWN AS STOCK-IN-TRADE FOR THE BUSINE SS. THE RENTAL INCOME RECEIVED BY THE ASSESSEE IS INCIDENTAL AND SUBSER VIENT TO THE MAIN BUSINESS OF THE ASSESSEE. THEREFORE, THE RENTAL INCOM E RECEIVED BY THE ASSESSEE IS TAXABLE UNDER THE HEAD BUSINESS IN COME AND NOT UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5.2 THE LD. DR SUBMITTED THAT IN THE APPEAL FOR ASSESSMENT YEAR 2010-11 APART FROM THE ISSUE OF DISALLOWANCE U/S. 14A R.W. RULE 8D, 6 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS) IN HOLDING THAT THE PROVISIONS OF SECTION 14A CANNO T BE APPLIED ON DEPRECIATION CLAIMED OF THE ASSESSEE. A BARE RE ADING OF SECTION 14A WOULD SHOW THAT THE DISALLOWANCE HAS TO BE M ADE IN RESPECT OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE EXPENDITURE INCLUDES BO TH, DIRECT AS WELL AS INDIRECT EXPENDITURE. THE LD. DR PRAYED FOR UPHOLDING THE FINDINGS OF THE ASSESSING OFFICER. 6. THE LD. AR CONTROVERTING THE CONTENTIONS OF THE REVE NUE SUBMITTED, THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S GIVEN A VERY REASONED FINDING IN RESPECT OF RENTAL INCOME TO BE A SSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAD RENTED OUT THE SHOPS ONLY WITH AN INTENTION TO EXPLOIT THE SAID PRO PERTY AND THERE WAS NO COMPLEX COMMERCIAL ACTIVITY INVOLVED IN LETTING OUT O F THE SHOPS. THE ASSESSEE WAS NOT PROVIDING ANY AMENITIES OR FACILITIES TO THE TENANTS. IT IS A CASE OF SIMPLICITOR LETTING OUT OF SHOPS FOR EARNING RENT. IN RESPECT OF DISALLOWANCE OF DEPRECIATION, THE LD. AR SUBMIT TED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HOSH ANG D. NANAVATI VS. ASSTT. COMMISSIONER OF INCOME TAX IN ITA NO. 3567/MUM/2007 FOR THE ASSESSMENT YEAR 2003-04 DECIDED ON 18-03-2011 AND THE DECISION OF AHMEDABAD SPECIAL BENCH O F THE TRIBUNAL IN THE CASE OF VISHNU ANANT MAHAJAN VS. ASSISTAN T COMMISSIONER OF INCOME TAX REPORTED AS 137 ITD 189. TH E LD. AR PRAYED FOR DISMISSING THE APPEALS OF THE REVENUE AND U PHOLDING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ABOVE ISSUES. 7 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE. THE COMMON ISSUE RAISED IN THE APPEALS BY THE A SSESSEE AND THE REVENUE IS DISALLOWANCE U/S. 14A R.W. RULE 8D. THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 14A AND THE RELIEF GRANT ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) THEREON IS TABULATED HERE-IN- UNDER: A.Y. DISALLOWANCE MADE BY THE ASSESSING OFFICER DISALLOWANCE CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) RELIEF GRANTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 2008-09 ` 18,94,440/- ` 7,38,579/- ` 11,55,861/- 2009-10 ` 38,69,583/- ` 12,63,253/- ` 26,06,330/- 2010-11 ` 45,85,031/- ` 16,19,035/- ` 29,65,996/- 8. THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEARS HAS EARNED INCOME FROM SHARE IN THE PARTNERSHIP FIRMS. THE SAID INCOME WAS CLAIMED BY THE ASSESSEE AS EXEMPT U/S. 10(2A) OF THE ACT. THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE IN RESPECT OF TAX FREE INCOME EARNED. AS PER THE CONTENTIONS OF THE ASSESSEE, THE AS SESSEE IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS FOR MAKING INVESTMENT. THE REFORE, THE PROVISIONS OF RULE 8D WOULD NOT APPLY. THE LD. AR HAS FURT HER SUBMITTED THAT IN ANY CASE THE DISALLOWANCE CANNOT BE MO RE THAN THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE IN THE PROFIT AN D LOSS ACCOUNT. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPT ED THE LATTER SUBMISSION OF THE ASSESSEE AND BY FOLLOWING THE TRIB UNALS DECISION RENDERED IN THE CASE OF GILLETTE GROUP INDIA (P.) LT D. VS. ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA) RESTRICTED TH E DISALLOWANCE U/S. 14A R.W. RULE 8D TO THE EXTENT OF TOTAL E XPENDITURE 8 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 ACTUALLY CLAIMED IN THE PROFIT AND LOSS ACCOUNT BY THE ASS ESSEE. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDIN GS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT RECORDED THE SATISFACTION IN ACCO RDANCE WITH THE PROVISIONS OF SECTION 14A(2) OF THE ACT, BEFORE INVOKING T HE PROVISIONS OF RULE 8D. THE DEPARTMENT IS IN APPEAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN PARTLY DELE TING THE DISALLOWANCE MADE U/S. 14A R.W. RULE 8D. 9. IT IS A TRITE LAW THAT INVOKING OF RULE 8D TO COMPUTE D ISALLOWANCE U/S. 14A OF THE ACT IS NEITHER AUTOMATIC, NOR IT CAN BE INV OKED MERELY ON THE EXISTENCE OF A EXEMPT INCOME IN THE HANDS OF THE ASSESSEE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT REPORTED AS 328 ITR 81 (BOM) AND THE HON'BLE D ELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. & ORS. VS. CIT REPORTED AS 247 CTR 162 (DEL) HAS HELD THAT FOR APPLYING THE PROVISION S OF SECTION 14A R.W. RULE 8D THERE HAS TO BE A PROXIMATE CAUSE FOR DISALLOWANCE BETWEEN TAX EXEMPT INCOME AND THE EXPENDITURE. IT IS A WELL SETTLE D LAW THAT THE BURDEN IS ON THE ASSESSING OFFICER TO PROVE NEX US BETWEEN THE EXPENDITURE DISALLOWED AND NON-TAXABLE INCOME. THE DELHI B ENCH OF THE TRIBUNAL IN THE CASE OF WIMCO SEEDLINGS LTD. VS. DCIT REPORTED AS 293 ITR 216 HAS HELD THAT ONLY EXPENDITURE FACTUALLY IN CURRED ON NON- TAXABLE RECEIPT IS TO BE DISALLOWED. EXPENDITURE ASSUMED O R DEEM TO BE INCURRED ON NON-TAXABLE RECEIPT CANNOT BE DISALLOWED. THE BURDEN IS ON THE ASSESSING OFFICER TO PROVE THE NEXUS BETWEEN THE EXPENDITURE DISALLOWED AND NON-TAXABLE RECEIPTS UNDER THE PROVISIONS OF SECTION 1 4A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF ACI T VS. EICHER LTD. REPORTED AS 101 TTJ 369 (DELHI). 9 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 10. IN THE PRESENT CASE THE CONTENTIONS OF THE ASSESS EE IS THAT THE ASSESSEE IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS. THE IN VESTMENTS ARE MADE IN THE PARTNERSHIP FIRMS FROM INTEREST INCOME, REM UNERATION RECEIVED FROM THE PARTNERSHIP FIRMS AND SHARE OF PROFITS. T HE LD. AR IN SUPPORT OF HIS SUBMISSIONS HAS ALSO PLACED ON RECORD THE DETAILS OF INVESTMENT IN PARTNERSHIP FIRM, CAPITAL ACCOUNT AND LOANS AND BORROWINGS FOR ALL THE THREE IMPUGNED ASSESSMENT YEARS. A PERUSAL OF THE SAME SHOWS THAT THE ASSESSEE IS HAVING SUFFICIENT OWN INTEREST FREE FUNDS FOR MAKING INVESTMENTS. THE DETAILS OF THE INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT OF THE ASSESSEE AND LOAN S AND BORROWINGS FURNISHED BY THE LD. AR BEFORE THE TRIBUNAL ARE REPRODUCED HERE-IN-BELOW FOR READY REFERENCE: FIGS IN LACS FINANCIAL YEAR 2007-08 (A.Y. 2008-09) DETAILS OF INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT AND LOANS AND BORROWINGS 01.04.2007 31.03.2008 SR. NO. PARTICULARS RS. RS. RS. RS. 1. INVESTMENT IN PARTNERSHIP FIRMS 1129.30 6270.41 2. CAPITAL ACCOUNT 3167.05 8738.38 3. LOANS AND BORROWINGS 528.71 4 52.33 A) INTEREST FREE UNSECURED LOANS 446.16 385.19 B) SECURED LOANS FROM BANKS I) HOME LOAN 39.81 30.71 II) CAR LOAN 42.74 36.43 4. LANDS (CURRENT ASSETS) 2067.95 1779.35 ___________________________________________________ ________________________ DETAILS OF INVESTMENTS IN PARTNERSHIP FIRMS SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 1129.30 2. ADD : 5336.53 SHARE IN FIRMS LAND REVALUATION 2022.18 SHARE IN INCOME FROM PARTNERSHIP FIRMS 3314.35 ____________ 6465.83 3. CAPITAL CONTRIBUTION WITHDRAWN FROM THE PARTNERS HIP FIRMS 195.42 4. CLOSING BALANCE 6270.41 10 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 DETAILS OF CAPITAL ACCOUNT SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 3167.05 2. ADD : 5977.22 SHARE IN FIRMS LAND REVALUATION 2022.18 NET PROFIT MADE DURING THE YEAR 3955.04 ____________ 9144.27 3. LESS WITHDRAWAL 405.89 4. CLOSING BALANCE 8738.38 FIGS IN LACS FINANCIAL YEAR 2008-09 (A.Y. 2009-10) DETAILS OF INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT AND LOANS AND BORROWINGS 01.04.2008 31.03.2009 SR. NO. PARTICULARS RS. RS. RS. RS. 1. INVESTMENT IN PARTNERSHIP FIRMS 6270.41 8995.4 3 2. CAPITAL ACCOUNT 8738.38 11646.52 3. LOANS AND BORROWINGS 452.33 345.98 A) INTEREST FREE UNSECURED LOAN 385.19 239.19 B) SECURED LOANS FROM BANKS I) HOME LOAN 30.71 20.52 II) CAR LOAN 42.74 86.27 4. LANDS (CURRENT ASSETS) 1779.35 1515.99 ___________________________________________________ ________________________ DETAILS OF INVESTMENTS IN PARTNERSHIP FIRMS SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 6270.41 2. ADD : 2552.46 SHARE IN FIRMS LAND REVALUATION 2552.46 ____________ 6465.83 3. CAPITAL CONTRIBUTION WITHDRAWN FROM THE PARTNERS HIP FIRMS -172.56 4. CLOSING BALANCE 8995.43 DETAILS OF CAPITAL ACCOUNT SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 8738.38 2. ADD : 3019.97 NET PROFIT MADE DURING THE YEAR 3019.97 ____________ 11758.35 3. LESS WITHDRAWAL 111.83 4. CLOSING BALANCE 11646.52 11 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 FIGS IN LACS FINANCIAL YEAR 2009-10 (A.Y. 2010-11) DETAILS OF INVESTMENT IN PARTNERSHIP FIRMS, CAPITAL ACCOUNT AND LOANS AND BORROWINGS 01.04.2009 31.03.2010 SR. NO. PARTICULARS RS. RS. RS. RS. 1. INVESTMENT IN PARTNERSHIP FIRMS 8995.43 8364.1 4 2. CAPITAL ACCOUNT 11646.52 13825.95 3. LOANS AND BORROWINGS 345.98 215.55 A) INTEREST FREE UNSECURED LOAN 239.19 165.44 B) SECURED LOANS FROM BANKS I) HOME LOAN 20.52 9.19 II) CAR LOAN 86.27 40.92 4. LANDS (CURRENT ASSETS) 1779.35 1228.73 ___________________________________________________ ________________________ DETAILS OF INVESTMENTS IN PARTNERSHIP FIRMS SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 8995.43 2. ADD : 4027.74 SHARE IN INCOME FROM PARTNERSHIP FIRMS 4027.7 ____________ 13023.17 3. REVERSAL OF SHARE IN FIRMS LAND REVALUATION 202 2.2 4. CAPITAL CONTRIBUTION WITHDRAWN FROM THE PARTNERSHIP FIRMS 2636.85 4659.03 4. CLOSING BALANCE 8364.14 DETAILS OF CAPITAL ACCOUNT SR. NO. PARTICULARS AMOUNT AMOUNT RS. RS. 1. OPENING BALANCE 11646.52 2. ADD : 5135.27 NET PROFIT MADE DURING THE YEAR 5135.3 ____________ 16781.79 3. LESS: REVERSAL OF SHARE IN FIRMS LAND REVALUATION 2022.2 WITHDRAWAL 933.65 4. CLOSING BALANCE 13825.95 A PERUSAL OF THE ABOVE TABLES WOULD SHOW THAT THE ASSES SEE HAS NOT TAKEN ANY LOANS FOR INVESTMENT PURPOSE. THE LOANS A RE TAKEN FOR PERSONAL AND SPECIFIC PURPOSE VIZ. CAR LOAN AND HOUSE LOAN. THUS, IT IS EVIDENT THAT INTEREST BEARING FUNDS WERE NOT UTILIZED BY T HE ASSESSEE FOR 12 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 THE PURPOSE OF INVESTMENT. THE LD. DR HAS NOT CONTROV ERTED THE ABOVE INFORMATION FURNISHED BY THE ASSESSEE. 11. ALTHOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICE R HAS STATED THAT HE IS NOT SATISFIED WITH THE WORKING OF DISALLOWA NCE BY THE ASSESSEE, HOWEVER, THE SAID OBSERVATIONS OF THE ASSESSING OFFICER ARE NOT SUBSTANTIATED BY ANY COGENT REASON. A MERE BALD A SSERTION WITHOUT ANY OBJECTIVE ANALYSIS OF THE ACCOUNTS BY THE ASSESSIN G OFFICER IS MEANINGLESS. THE ROAD TO RULE 8D PASSES THROUGH SUB-SE CTION (2) OF SECTION 14A OF THE ACT. A PERUSAL OF SUB-SECTION (2) WOULD SHOW THAT THE ASSESSING OFFICER HAS TO RECORD HIS SATISFACTION WITH RE GARD TO THE ACCOUNTS OF THE ASSESSEE. IF THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THEN ONLY THE PROVISIONS OF RULE 8D CAN BE INVOKED. IN THE PRESENT CASE NO SUCH S ATISFACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER AFTER ANALYZING TH E ACCOUNTS OF THE ASSESSEE. OUR THIS VIEW IS SUPPORTED BY THE DECISIO N OF CO-ORDINATE BENCH IN THE CASE OF ASSTT. COMMISSIONER OF INCOME TAX VS . M/S. MAGARPATTA TOWNSHIP DEVELOPMENT & CONSTRUCTION COMPANY LTD. (SUPRA). THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL READS AS UNDE R: 10. PERTINENTLY, WE FIND NO SUCH REASONS TO DISTRA CT FROM THE AFORESAID FINDINGS OF THE CIT(A) WHICH ARE CLEARLY BORNE OUT BY THE MATERIAL ON RECORD. IN-FACT, DISCUSSION IN THE ASSESSMENT ORDER , WHICH HAS BEEN REFERRED TO BY THE LEARNED CIT-DR BEFORE US DOES NO T SHOW AS TO HOW THE CATEGORICAL ASSERTIONS OF THE CIT(A) ARE WRONG. THO UGH, THE ASSESSING OFFICER DOES SAY THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF EXPENDITURE MADE BY THE ASSESSEE SO HOWEVER, TH E SAME IS MERELY A BALD ASSERTION, DEVOID OF ANY OBJECTIVE ANALYSIS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE, A MANDATORY REQUIREMENT OF SUB-SECTION (2) OF SECTION 14A OF THE ACT. THEREFORE, IN THE ABSENC E OF ADHERENCE TO THE REQUIREMENTS OF SECTION 14A(2) OF THE ACT, THE ASSE SSING OFFICER COULD NOT HAVE PROCEEDED TO INVOKE RULE 8D OF THE RULES AND S UBJECT THE IMPUGNED INTEREST EXPENDITURE FOR DISALLOWANCE AS PER CLAUSE (II) OF RULE 8D OF THE 13 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 RULES. SIMILARLY, THE CIT(A) RECORDS ANOTHER FINDIN G WHICH IS TO THE EFFECT THAT THE DIVIDEND RECEIPT HAS BEEN DIRECTLY CREDITE D INTO THE BANK ACCOUNT OF THE ASSESSEE, THUS LEAVING NO SCOPE FOR INCURRI NG ANY OTHER EXPENSES FOR EARNING EXEMPT INCOME BY THE ASSESSEE. FOR THE SAID REASON, THE INDIRECT EXPENDITURE SOUGHT TO BE DISALLOWED BY INV OKING CLAUSE (III) TO SUBRULE (2) OF RULE 8D OF THE RULES HAS ALSO BEEN F AULTED BY THE CIT(A). ON THIS ASPECT, WE ARE IN AGREEMENT WITH THE CIT(A) TH AT UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING RULE 8D OF THE RULES IN ORDER TO COMPUTE THE DISALLOWANCE U/S 14A(1) OF THE ACT. IN VIEW OF THE AFORESAID DISCUSSION, WE HEREBY AFFIRM THE ACTION OF THE CIT(A) IN DELETI NG THE DISALLOWANCE OF RS.20,66,011/- MADE BY THE ASSESSING OFFICER INVOKI NG SECTION 14A OF THE ACT. THUS, ON THIS ASPECT, REVENUE FAILS AND AC CORDINGLY THE GROUNDS OF APPEAL NO.1 TO 3 ARE DISMISSED. 12. ANOTHER FACET WHICH HAS TO CONSIDER BEFORE INVOKING RULE 8D IS SUFFICIENT AVAILABILITY OF INTEREST FREE FUNDS. THE HON'BLE BOMBA Y HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. RELIANCE UTILITIES AND POWER LTD. (SUPRA) HAS HELD THAT IF SUFFICIENT INTEREST-FRE E FUNDS ARE AVAILABLE WITH THE ASSESSEE TO MEET ITS INVESTMENTS AND A T THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST-FREE FUNDS AVAILABLE. TH E HON'BLE HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD. (SUPRA) H AS HELD THAT WHERE ASSESSEES CAPITAL, PROFIT RESERVES, SURPLUS AND CUR RENT ACCOUNT DEPOSITS WERE HIGHER THAN THE INVESTMENT IN TAX-FREE SEC URITIES IT WOULD HAVE TO BE PRESUMED THAT INVESTMENT MADE BY THE ASSE SSEE WOULD BE OUT OF THE INTEREST FREE FUNDS AVAILABLE WITH ASSESSEE AND NO DISALLOWANCE IS WARRANTED U/S. 14A. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE LAW LAID DOWN BY THE HON'BLE HIGH COURTS AS DISCUSSED ABOVE WE ARE OF THE CO NSIDERED VIEW THAT THE DISALLOWANCE MADE U/S. 14A R.W. RULE 8D IS NOT SU STAINABLE AND IS LIABLE TO BE SET ASIDE. ACCORDINGLY, THE APPEALS OF T HE ASSESSEE 14 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 ARE ALLOWED AND THE CORRESPONDING GROUND ASSAILING THE FIND INGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE DISALLOWANCE U/ S. 14A R.W. RULE 8D IN THE APPEALS BY THE DEPARTMENT ARE REJECTED. 13. IN ITA NO. 431/PN/2014 FOR ASSESSMENT YEAR 2009-1 0 THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOM E TAX (APPEALS) IN HOLDING THAT THE RENT FROM SHOPS IS TO BE ASSE SSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON THE CONTRA RY, CONTENTION OF THE REVENUE IS THAT SINCE THE SHOPS WERE HELD AS STOCK -IN-TRADE, THE RENTAL INCOME FROM LETTING OUT OF THE SHOPS SHOULD BE TREA TED AS BUSINESS INCOME. 14. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS GIVEN SHOPS ON RENT WITHOUT ANY AMENITIES OR FACILITIES. IT IS NOT A CASE, WHERE THE DOMINANT INTENTION OF THE ASSESSEE IS TO EXPLOIT A COMMERCIAL ASSET BY CARRYING ON A COMMERCIAL ACTIVITY. THE FACTS IN THE PRESENT CASE SHOW THAT IT IS A CASE OF SIMPLICITOR RENTING OUT OF SHOPS. THE COMMISSIONER O F INCOME TAX (APPEALS) AFTER PLACING RELIANCE ON THE DECISION OF HON'B LE SUPREME COURT OF INDIA IN THE CASE OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. VS. COMMISSIONER OF INCOME TAX REPORTED AS 4 2 ITR 49 (SC) AND AFTER ANALYZING THE FACTS OF THE CASE HAS OBSERVED AS UNDER: 3.11 THE LEASE AGREEMENT BETWEEN THE APPELLANT AND THE TENANTS CLEARLY REVEALS THAT THE ONLY OBJECT AND INTENTION OF THE A SSESSEE WHILE EXPLOITING THE SAID PROPERTY WAS TO LET OUT THE PROPERTY ON A MONTHLY RENT AND THERE WAS NO COMPLEX COMMERCIAL ACTIVITY INVOLVED IN THE LETTING OUT OF THE PROPERTY. THUS THE LEASE RENT RECEIVED BY THE APPEL LANT WAS ONLY BECAUSE OF BARE LETTING OF THE PROPERTY I.E. THE SHOPS AND THE SAID CHARACTER CANNOT CHANGE AND THE INCOME DOES NOT CHANGE OR BEC OME INCOME FROM BUSINESS OR PROFESSION. THE APPELLANT HAS MERELY LE ASED THE PROPERTY AND IN MY CONSIDERED OPINION THIS ACTIVITY CANNOT B E TERMED AS A BUSINESS ACTIVITY AS HELD BY THE A.O. AND HENCE THE LEASE RENT RECEIVED 15 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 BY THE APPELLANT FOR THE SHOPS HAS TO BE ASSESSED A S INCOME FROM HOUSE PROPERTY. GROUND OF APPEAL NO. 1 RAISED BY THE APPE LLANT IS, THEREFORE, LIABLE TO BE ALLOWED. 15. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REV ENUE TO CONTROVERT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE. THUS, WE ARE OF THE CONSIDERED OPINION THAT IN COME FROM LETTING OUT OF SHOPS IN THE PRESENT CASE HAS TO BE ASSE SSED AS INCOME FROM HOUSE PROPERTY AND NOT AS BUSINESS INCOME. WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APP EALS) ON THE ISSUE. ACCORDINGLY, THIS GROUND RAISED BY THE REV ENUE IN THE APPEAL IS DISMISSED. 16. IN ITA NO. 559/PN/2014 FOR THE ASSESSMENT YEAR 20 10-11, THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 14A CA NNOT BE APPLIED FOR MAKING DISALLOWANCE OF DEPRECIATION CLAIMED WHEN DEPRECIATION IS AN INDIRECT EXPENDITURE. THE LD. AR OF THE A SSESSEE HAS POINTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF AHMEDABAD SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF VISHNU ANANT MAHAJAN VS. ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA). SPECIAL BENCH OF THE TRIBUNAL WHILE DEALING WITH THIS ISSUE HAS OBSERVED AS UNDER: 8. COMING TO THE QUESTION REGARDING DEPRECIATION B EING AN EXPENDITURE OR NOT, IT HAS BEEN HELD IN THE CASE OF HOSHANG D. NANAVATI (SUPRA) THAT SECTION 14A DEALS ONLY WITH THE EXPEND ITURE AND NOT ANY STATUTORY ALLOWANCE ADMISSIBLE TO THE ASSESSEE. THE DECISION HAS BEEN ARRIVED AT AFTER CONSIDERING THE DECISION IN THE CA SE OF NECTAR BEBVERAGES PVT. LTD. VS. DCIT (2009) 314 ITR 314. THE LD. CIT (DR) HAS NOT BEEN ABLE 16 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 TO DISPLACE THE RATIO OF THESE CASES. THUS, ON CONS IDERATION, WE FIND THAT SECTION 14A USES THE WORDS 'EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME'. A STATUTORY ALLOWANCE UNDER SE CTION 32 IS NOT AN EXPENDITURE. THEREFORE, WE ARE IN AGREEMENT WITH TH E DECISION OF THE DIVISION BENCH IN THE CASE OF HOSHANG D. NANAVATI. THIS ISSUE WAS CONSIDERED BY THE MUMBAI BENCH OF THE TRIB UNAL IN THE CASE OF HOSHANG D. NANAVATI VS. ASSTT. COMMISSIONER OF INCOME TAX (SUPRA), WHEREIN THE TRIBUNAL AFTER PLACING RELIANCE ON T HE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF NECTAR BEVERAGES P. LTD. VS. DY. COMMISSIONER OF INCOME TAX REPORTED AS 314 I TR 314 (SC) OBSERVED AS UNDER: 5. HAVING CONSIDERED THE RIVAL CONTENTIONS AND HAV ING PERUSED THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW T HAT THE DISALLOWANCE UNDER SECTION 14A CANNOT INDEED COVER DEPRECIATION INASMUCH AS WHAT CAN BE DISALLOWED UNDER SECTION 14A IS ONLY EXPENDI TURE INCURRED BY THE ASSESSEE AND NOT ALLOWANCE ADMISSIBLE TO HIM. HONB LE SUPREME COURT IN THE CASE OF NECTAR BEVERAGES P. LTD (SUPRA) HAVE CLEARLY NOTED THE DISTINCTION BETWEEN AN EXPENDITURE AND ALLOWANCE AN D THE SAME PRINCIPLE AND HELD THAT THE EXPRESSION EXPENDITURE WILL NOT INCLUDE ALLOWANCES SUCH AS DEPRECIATION ALLOWANCE. THIS PRI NCIPLE, WHICH WAS APPLIED BY THEIR LORDSHIPS IN RESPECT OF TAXABILITY UNDER SECTION 41(1), APPLIES TO THE FACTS SITUATION BEFORE US AS WELL. D EPRECIATION IS ADMITTEDLY IN THE NATURE OF ALLOWANCE AND, THEREFORE, IT CANNO T BE SUBJECT MATTER OF DISALLOWANCE UNDER SECTION 14A, WHICH MUST REMAIN C ONFINED TO EXPENDITURE INCURRED BY THE ASSESSEE. SIMILARLY, AS FAR AS DEDUCTION UNDER SECTION 80D IS CONCERNED, IT CANNOT BE SUBJEC T MATTER OF DISALLOWANCE UNDER SECTION 14A EITHER. THE DEDUCTIO N UNDER SECTION 80D IS NOT ADMISSIBLE BECAUSE IT IS AN EXPENDITURE FOR THE PURPOSE OF EARNING AN INCOME BUT BECAUSE, BY VIRTUE OF SPECIFIC PROVIS ION UNDER SECTION 80D, PAYMENT OF PREMIUM OF HEALTH INSURANCE, WHICH IS IN HERENTLY PERSONAL EXPENSES OF THE ASSESSEE, IS ADMISSIBLE AS DEDUCTIO N. THIS DEDUCTION CANNOT, THEREFORE, BE SUBJECT MATTER OF DISALLOWANC E UNDER SECTION 14A, WHICH, AS WE HAVE NOTED EARLIER, IS CONFINED TO EXP ENDITURE INCURRED FOR THE PURPOSE OF AN INCOME WHICH IS NOT INCLUDIBLE IN TOTAL INCOME OF THE ASSESSEE. AS FAR AS QUESTION OF PAYMENT OF RS 9,000 TO ROTARY CLUB IS CONCERNED, WE FIND THAT DEDUCTION HAS BEEN CLAIMED UNDER SECTION 37(1) OF THE ACT AND, THEREFORE, ONE HAS TO PROCEED ON TH E BASIS THAT THESE 17 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 EXPENSES ARE IN THE NATURE OF BUSINESS EXPENDITURE. THE PLEA THAT EXPENSES ARE IN THE NATURE OF COST INCURRED ON SOCI AL CAUSE IS NOT SUPPORTED BY ANY MATERIAL ON RECORD, AND WE ARE, TH EREFORE, UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE SO FAR AS INC LUSION OF ROTARY CLUB MEMBERSHIP FROM DISALLOWANCE UNDER SECTION 14A IS C ONCERNED. COMING TO THE QUESTION AS TO THE BASIS ON WHICH REMAINING EXPENSES ARE TO BE APPORTIONED BETWEEN THE EXPENDITURE INCURRED FOR TH E PURPOSE OF PROFIT SHARE AND EXPENDITURE INCURRED FOR THE PURPOSE OF E ARNING REMUNERATION FROM PARTNERSHIP FIRM, WE ARE UNABLE TO SEE MUCH GU IDANCE FROM SECTION 16(1) AS IT IS STOOD AT THE RELEVANT POINT OF TIME. IN OUR CONSIDERED VIEW THE PURPOSE OF STANDARD DEDUCTION UNDER SECTION 16( 1) WAS TO GRANT DEDUCTION IN RESPECT OF INCIDENTAL EXPENDITURE INCU RRED IN CONNECTION WITH EARNING THE SALARY INCOME, WHICH INVOLVED ATTENDING OFFICE OR PLACE OF EMPLOYMENT. HOWEVER, IN THE PRESENT CASE, SINCE THE ASSESSEE EARNS REMUNERATION INCOME AS ALSO PROFIT SHARE FROM THE S AME ACTIVITY OF ATTENDING OFFICE, IT WOULD NOT BE FAIR TO TREAT ALL SUCH INCIDENTAL EXPENDITURE ONLY FOR THE PURPOSE OF EARNING REMUNER ATION INCOME. IN OUR CONSIDERED VIEW AND PARTICULARLY HAVING REGARD TO T HE SMALLNESS OF THE AMOUNT INVOLVED IT WOULD BE JUSTIFIED TO ALLOCATE T HESE EXPENSES IN THE SAME RATIO IN WHICH THESE EXPENSES WERE ALLOCATED B Y THE ASSESSING OFFICER. AS WE DO SO, WE MAKE IT CLEAR THAT WE HAVE ADOPTED THIS METHOD ON THE PECULIAR FACTS OF THIS CASE AND HAVING REGAR D TO THE SMALLNESS OF THE AMOUNT INVOLVED AND THE SAME CRITERIA SHOULD NO T BE CONSTRUED ON UNIVERSAL APPLICATION IN THE CASES WHERE THE ASSESS EE HAS EARNED INCOME FROM PROFIT SHARE AS ALSO FROM REMUNERATION FROM TH E SAME FIRM. IN EFFECT, THUS, WHILE AMOUNTS OF RS 78,733, BEING DEPRECIATIO N ON CAR, AND RS 6,471, BEING ADMISSIBLE DEDUCTION UNDER SECTION 80 D IN RESPECT OF HEALTH INSURANCE PREMIUM, ARE EXCLUDED FROM AMOUNTS WHICH CAN BE CONSIDERED FOR DISALLOWANCE UNDER SECTION 14 A, OUT OF THE REMAINING AMOUNT CLAIMED AS DEDUCTION I.E. RS 47,707 ( RS 1,3 2,911 RS 78,733- RS 6,471) 76.19% ( I.E. 46,17,600X100/ 46,17,600+ 1 4,43,000) ARE TO BE DISALLOWED UNDER SECTION 14 A OF THE ACT. 17. THE LD. DR HAS NOT PLACED ON RECORD ANY JUDGMENT C ONTRARY TO THE DECISIONS OF THE CO-ORDINATE BENCH AND THE SPECIAL BE NCH ON THIS ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION RENDERED IN THE CASE OF HOSHANG D. NANAVATI VS. ASSTT. COMMISSIONER OF IN COME TAX (SUPRA) AND THE DECISION OF SPECIAL BENCH, WE UPHOLD THE FINDIN GS OF 18 ITA NOS.159, 266, 431, 559 & 577/PN/2014, A.YS. 2008-09 TO 2010-11 COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THIS GROUND RAISED IN THE APPEAL OF THE REVENUE. 18. IN THE RESULT, THE APPEALS OF THE ASSESSEE I.E. ITA NO S. 159 & 577/PN/2014 ARE ALLOWED AND THE APPEALS OF THE REVENUE I.E. ITA NOS. 266, 431 & 559/PN/2014 ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 08 TH DAY OF JANUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 08 TH JANUARY, 2016 RK *+,$-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- , / ITAT, PUNE
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