VIJAY NARANJI KATARI A, MUMBAI V. ITO 13(1)(3), MUMBAI

ITA 6083/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3186 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 04-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ./ I.T.A. NO. 6083/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) SHRI VIJAY NARANJI KATARIA 67, CHAKALA STREET, MUMBAI-400 003. / VS. THE INCOME TAX OFFICER 13(1)(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. ./ ./PAN/GIR NO. AGSPK 3020G ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI SUMIT KUMAR / DATE OF HEARING : 04/02/2016 !'# / DATE OF PRONOUNCEMENT : 24/08/2016 $% / O R D E R PER SANDEEP GOSAIN, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 24, DATED 09 .07.2013 ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 2 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.25.200/- ASSESSED AS PROPERTY INCOME BY ESTIMATING INCOME OF FLAT AT LONAVALA AT RS.36,000/-. (B) THE LEARNED ASSESSING OFFICER HAS ERRED IN EST IMATING THE RATABLE VALUE AT RS.36,000/- WITHOUT ANY DETAILS WHICH IS ARBITRARY AND HENCE TH E ESTIMATE MADE IS BAD IN LAW AND IT SHOULD BE DELETED. (C) THE APPELLANT PRAYS THAT, ADDITION OF RS.25,20 0/- MADE BE DELETED. WITHOUT PREJUDICE, THE ADDITION BEING MADE ON ADHOC BASIS AND IT SHOULD BE DELETED. 2. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1,57,500/-- AS INCOME FROM VIJAY GUEST HOUSE. THE APPELLANT PRAYS THAT, ESTIMATE MADE BE DELETED. (B) THE LEARNED ASSESSING OFFICER AND THE CIT(A) H AS ESTIMATED INCOME FROM THE GUEST HOUSE, WHICH IS CONTRARY TO THE FACTS AND EVIDENCE ON RECORD AND HENCE IT SHOULD BE DELETED. (C) THE LEARNED CIT(A) ERRED IN OBSERVING THAT, TH E APPELLANT HAS NOT GIVEN DETAILS AND EVIDENCE. THE LEARNED ASSESSING OFFICER AND THE CIT(A) ERRED IN ESTIMATING OCCUPANCY RATE AND CHARGES PER DAY WITHOUT ANY DETAILS BEING BROUGHT O N RECORD WHICH IS BASED ON CONJECTURES AND BEING ARBITRARY THE SAME SHOULD BE DELETED. (D) THE APPELLANT PRAYS THAT, THE ADDITION OF RS.1 ,57,500/- BE DELETED. WITHOUT PREJUDICE, THE ESTIMATE OF INCOME BEING ON HIGHER SIDE IT BE REDUCED. 3. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) ERRED IN MAKING ADDITION ULS.L4A OF RS.L,56,763/- AND CIT(A) ERRED IN CONFIRMING THE SAME, WHICH ADDITION BE DELETED. (B) THE LEARNED ASSESSING OFFICER, FAILED TO APPRE CIATE THAT, THE PROVISIONS OF SECTION 14A ARE NOT ATTRACTED AND THE ADDITION MADE BE DELETED. THE APPELLANT PRAYS THAT, THE ADDITION OF RS.L,56,7 63/- BE DELETED. WITHOUT PREJUDICE, THE ADDITION BE REDUCED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS.8,49,990/- WAS FILED ON 24.02.2010. TH E RETURN WAS PROCESSED U/S 3 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO 143(1) OF THE ACT AND LATER ON THE CASE WAS SELECTE D FOR SCRUTINY UNDER CASS. AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY FROM TH E ASSESSEE, AN ORDER OF ASSESSMENT THEREBY ESTIMATING RATEABLE VALUE OF FLA T AT LONAVALA AT RS.36,000/- AND ALSO ESTIMATED INCOME FROM GUEST HOUSE AT JAMNAGAR HAS PASSED. IN ADDITION, THE AO IN THE ASSESSMENT ORDER HAS ALSO HELD THAT SINCE THE ASSESSEE HAS RAISED LOANS AND INVESTED THE MONEY IN THE PARTNERSHIP FIRM AND BY VIRTUE OF SAID INVESTMENT HAD EARNED 2 TYPES OF INCOME, I.E. SALARY OF RS.3,6 2,000/- AND PROFIT EXEMPT RS.9,19,303/- THEREFORE WHILE CALCULATING THE SAID AMOUNT HAS DISALLOWED RS.1,56,763/- ON ACCOUNT OF EXPENSES FOR EARNING OF EXEMPT INCOME U/S 14A AND ADDED THE SAME TO THE TOTAL INCOME. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED THE APPEAL BEFORE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF THE AS SESSEE PARTLY ALLOWED THE APPEAL VIDE ORDER DATED 09.07.2013. 4. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE FI LED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. 5. AT THE VERY OUTSET, WHEN THE CASE WAS CALLED FOR HEARING, NONE HAS APPEARED ON BEHALF OF ASSESSEE AND ON THE PERUSAL OF ORDER S HEET WE HAVE NOTICED THAT 4 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO NOBODY WAS APPEARING EVEN ON BEHALF OF ASSESSEE ON THE LAST DATE. ALTHOUGH THE NOTICES WERE ALSO SERVED UPON THE ASSESSEE FOR APPE ARING BEFORE US, BUT EVEN THEN THE ASSESSEE HAS NOT PREFERRED TO APPEAR AND EVEN N O APPLICATION FOR ADJOURNMENT WAS MOVED BEFORE US. ON THE OTHER HAND LD. DR IS P RESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEE D WITH THE HEARING OF THE CASE EX-PARTE WITH THE ASSISTANCE OF THE LD. DR AND THE MATERIAL ON RECORD. GROUND NO.1 6. THIS GROUND RELATES TO MAKING OF ADDITION OF RS. 25,200/- ASSESSED AS PROPERTY INCOME BY ESTIMATING INCOME OF FLAT AT LON AVALA AT RS.36,000/-. WHILE DEALING WITH THE SAID GROUND THE CIT(A) HAS PASSED DETAILED ORDER THE OPERATIVE PARA 4.3 IS REPRODUCED BELOW: 4.3 DECISION:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAS ESTIMATED THE ANNUAL LET OUT VALUE OF THE PROPERTY LOCATED AT BANGROLI VILLAGE, MAVAL TALUKA, LONAVALA DISTRICT. IT APPEARS, THE ASSESSEE HAS NOT DECLARED ANY RENTAL INCOME FROM TH IS PROPERTY. THE ASSESSING OFFICER, AFTER CONSIDERING REPLY SUBMITTED BY THE A SSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS ESTIMATED THE PROPERTY'S RATABLE VA LUE AT RS. 36,000/- P.A. HE HAS ALSO ALLOWED THE STANDARD DEDUCTION @ 30% ON THIS A MOUNT. THE ASSESSEE DURING THE APPELLATE PROCEEDINGS HAS STATED THAT THE PROPE RTY COULD NOT BE LET OUT DURING THE YEAR AND IT WAS LYING VACANT. HE FURTHER SUBMIT TED THAT THE MUNICIPAL TAXES PAID ON THIS PROPERTY WERE ONLY RS. 3,050/- P.A. CO NSIDERING THE MUNICIPAL TAXES PAID AT 1J3RD OF THE TOTAL RENTAL INCOME EARNED DUR ING THE YEAR THE RENT THAT WOULD HAVE BEEN RECEIVED WORKS OUT TO RS. 9,150/- AND SUB MITTED THAT THE ASSESSING OFFICER HAD TAKEN UNREASONABLY HIGH VALUE WHILE EST IMATING THE PROPERTY INCOME. IT IS SEEN FROM THE FACTS ON RECORD THAT THE ASSESS EE RELIED ONLY ON THE MUNICIPAL TAXES PAID AS BASIS FOR ESTIMATION OF RENTAL INCOME . THIS .CANNOT BE A MEASURE TO ESTIMATE ALV OF THE PROPERTY, SINCE, FOR THE PURPOS E OF VALUATION OF THE PROPERTY TAX THE ASSESSEE OUGHT TO HAVE GIVEN THE MONTHLY/AN NUAL RENTAL INCOME FROM THE SAID PROPERTY. IT IS NOT ON RECORD WHAT HAS BEEN SU BMITTED BY THE ASSESSEE TO THE MUNICIPAL AUTHORITIES FOR PROPERTY TAX VALUATION. I N THE ABSENCE OF THIS FACTUAL INFORMATION, BESIDES AS THE ASSESSEE IS ALSO NOT KE EN TO PRODUCE ANY OTHER 5 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO SUPPORTING DOCUMENTS, IT IS HELD THAT THE ALV ESTIM ATED BY THE ASSESSING OFFICER CANNOT BE DISTURBED AND, THEREFORE, THE SAME IS CON FIRMED. THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 6.1 AFTER HEARING LD. DR PRESENT IN THE COURT AND A FTER PERUSAL OF DOCUMENTS AS AS WELL AS ORDERS PASSED BY LOWER AUTHORITIES WE FO UND THAT CIT(A) HAS PASSED A DETAILED ORDER THEREBY MENTIONED THAT THE ASSESSEE HAD RELIED ONLY ON THE MUNICIPAL TAXES PAID AS BASIS FOR ESTIMATION OF RENTAL VALUE AND SINCE THE PAYMENT OF MUNICIPAL TAXES IS NOT A MEASURE TO ESTIMATE THE AL V OF THE PROPERTY THEREFORE THE CIT(A) HAS HELD THAT IT IS NOT ON RECORD AS TO WHA T HAD BEEN SUBMITTED BY THE ASSESSEE TO THE MUNICIPAL AUTHORITIES FOR PROPERTY TAX VALUATION. SINCE THE ASSESSEE HAD NOT SUPPLIED ANY DOCUMENTARY PROOF THEREFORE TH E CIT(A) IN THE ABSENCE OF SUCH FACTUAL INFORMATION HAS HELD THAT THE ALV ESTI MATED BY ASSESSING OFFICER CANNOT BE DISTURBED. 6.2 NO NEW CIRCUMSTANCE HAS BEEN BROUGHT ON RECORD BEFORE US BY THE LEARNED DR IN ORDER TO CONTROVERT OR REBUT THE FINDINGS REC ORDED BY THE LEARNED CIT (A) ON THE BASIS OF THE REMAND REPORT. MOREOVER, THERE IS NO REASON FOR US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LEARNED CIT (A). THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS RECODED BY THE LEARNED CIT ( A) ARE JUDICIOUS AND ARE WELL REASONED. ACCORDINGLY, WE UPHOLD THE SAME. RESULTAN TLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 6 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO GROUND NO. 2 7. THIS GROUND RELATES TO MAKING OF ADDITION OF RS. 1,57,500/- AS INCOME FROM VIJAY GUEST HOUSE. WHILE DEALING WITH THE SAID GROU ND THE CIT(A) HAS PASSED DETAILED ORDER THE OPERATIVE PARA 5.3 IS REPRODUCED BELOW: 5.3 DECISION:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS MADE BY THE ASSESSEE. THIS GROUND IS RAISED AS THE ASSESSEE HAS BEEN AGGR IEVED BY THE ASSESSING OFFICER'S ESTIMATION OF INCOME FROM A GUEST HOUSE A T RS. 4,93,200/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLE D FOR THE DETAILS WITH REGARD TO AVAILABILITY OF ROOMS, LOCATION, OCCUPATION, RENT E TC. IN RESPONSE THE ASSESSEE SUBMITTED THAT THE SAID BUILDING WAS IN A DILAPIDAT ED CONDITION HAVING 6 ROOMS AND RS. 125/- PER DAY PER PERSON WAS BEING CHARGED AS THE TARIFF. HOWEVER, THE ASSESSING OFFICER, AS THE INFORMATION SUBMITTED BY THE ASSESSEE, IN HIS OPINION, WAS NOT SATISFACTORY HE ESTIMATED RENT PER DAY PER PERSON AT RS. 300/-. HE HAS ALSO TAKEN THE OCCUPANCY RATE AT 75% AND ACCORDINGL Y HE ESTIMATED RS. 4,93,200/- AS RENT RECEIVED FROM THE GUEST HOUSE. DURING THE A PPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER WHILE ESTIMATING THE INCOME AT RS. 4,93,200/- HAS NOT BROUGHT ANY MATERIAL ON RECORD B UT DECIDED THE ISSUE ON SURMISES AND IMAGINATION. IN ADDITION TO THIS, THE ASSESSEE ALSO SUBMITTED THE ELECTRICITY BILLS PAID BY THE ASSESSEE IN RESPECT O F THE ABOVE MENTIONED GUEST HOUSE IN SUPPORT OF HIS CLAIM THAT THE OCCUPANCY RATE OF THE GUEST HOUSE DURING THE RELEVANT PERIOD WAS NOT TO THE EXTENT OF 275 DAYS A S MENTIONED BY THE ASSESSING OFFICER. I HAVE CONSIDERED THE FACTS OF THE CASE AN D DETAILS SUBMITTED BY THE ASSESSEE AND FOUND THAT NEITHER THE ASSESSING OFFIC ER NOR THE ASSESSEE COULD CONCLUSIVELY PROVE THE STAND TAKEN BY THEM. THE ASS ESSING OFFICER HAS RESORTED TO THE ESTIMATION OF INCOME FROM THE GUEST HOUSE AS TH E ASSESSEE COULD NOT PROVIDE ANY EVIDENCE OR PHOTOGRAPH OF THE GUEST HOUSE. IN T HE ABSENCE OF THIS THE ASSESSING OFFICER SHOULD HAVE CARRIED OUT CERTAIN L OCAL ENQUIRIES BEFORE ARRIVING AT THE AMOUNT OF ADDITION. SIMILARLY, THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNTS WHICH INCLUDE CLIENT/CUSTOMER REGISTER IN SUPPORT OF HIS SUBMISSIONS WHICH WOULD HAVE GIVEN THE DETAILS OF THE OCCUPANCY RATE AND ALSO AMOUNT CHARGED PER PERSON PER DAY. IN THE ABSENCE OF THE C OMPLETE DETAILS BASED ON THE FACTS AVAILABLE ON RECORD, SUCH AS THE GUEST HOUSE SITUATED ADJACENT TO HIGH WAY, IN THE LIMITS OF THE CITY AND ALSO NEARER TO OIL RE FINERY OF RELIANCE INDUSTRIES LTD., THE RENT THE ASSESSEE WOULD HAVE RECEIVED HAS TO BE ARRIVED AT. HOWEVER, THE FACTORS SUCH AS LESSER AMOUNT OF ELECTRICITY CHARGE S PAID, LACK OF RUNNING WATER FACILITY AND THE DILAPIDATED CONDITION OF THE PROPE RTY ARE ALSO CONSIDERED FOR DECIDING THE INCOME WHICH THE ASSESSEE WOULD HAVE E ARNED FROM THE GUEST HOUSE DURING THE RELEVANT PERIOD. FOR THE ABOVE REASONS M ENTIONED, IN MY OPINION, THE OCCUPANCY RATE MAY BE TAKEN AT 50% PER ANNUM AND CH ARGES PER DAY PER PERSON PER ROOM MAY BE TAKEN AT RS. 150/-. THUS, THE AMOUN T WORKS OUT TO RS. 1,57,500/- 7 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO (150 X 6 X 175). THE ASSESSING OFFICER IS DIRECTED TO ADOPT THE ABOVE FIGURE FOR THE PURPOSE OF ESTIMATION OF INCOME FROM THE GUEST HOUSE. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 7.1 LD. CIT(A) HAS PASSED A DETAILED ORDER THEREBY OBSERVED THAT THE ASSESSING OFFICER HAS RESORTED TO THE ESTIMATION OF INCOME FR OM THE GUEST HOUSE AS THE ASSESSEE COULD NOT PROVIDE ANY EVIDENCE SUCH AS ACC OUNT BOOKS, REGISTERS ETC OR PHOTOGRAPH OF THE GUEST HOUSE. THE CIT(A) HAS RIGHT LY HELD THAT IN THE ABSENCE OF THIS THE AO SHOULD HAVE CARRIED OUT CERTAIN LOCAL E NQUIRIES BEFORE ARRIVING AT THE AMOUNT OF ADDITION. THEREFORE AFTER DISCUSSING THE ENTIRE CASE, THE CIT(A) HAS RIGHTLY COME TO THE CONCLUSION BY TAKING OCCUPANCY RATE AT 50% PER ANNUM AND CHARGES PER DAY PER PERSON PER ROOM BY TAKING @ RS. 150 PER DAY AND HAS WORKED OUT THE AMOUNT IN QUESTION WHICH COMES TO RS.1,57,5 00 (150 X 6X 175) AS DETAILED ABOVE. 7.2 NO NEW CIRCUMSTANCE HAS BEEN BROUGHT ON RECORD BEFORE US BY THE LEARNED DR IN ORDER TO CONTROVERT OR REBUT THE FINDINGS REC ORDED BY THE LEARNED CIT (A) ON THE BASIS OF THE REMAND REPORT. MOREOVER, THERE IS NO REASON FOR US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LEARNED CIT (A). THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS RECORDED BY THE LEARNED CIT (A) ARE JUDICIOUS AND ARE WELL REASONED. ACCORDINGLY, WE UPHOLD THE SAME. RESULTAN TLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED. 8 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO GROUND NO.3 8. THIS GROUND RELATES TO MAKING AN ADDITION US/ 14 A OF RS.1,56,763/-. THE LD. CIT(A) HAS DEALT WITH THIS ISSUE IN PARA NO.6.3 WH ICH IS REPRODUCED BELOW: 6.3 DECISION :- THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS R AISED A VERY INTERESTING ISSUE, I.E. THE SHARE OF PROFIT FROM THE FIRM WHICH IS EXE MPT U/S 10(2A) OF THE INCOME TAX ACT HAS BEEN TAKEN INTO CONSIDERATION FOR INVOKING PROVISIONS U/S 14A. THE ASSESSEE DURING THE YEAR RECEIVED SALARY OF RS. 3,6 2,000/- AND PROFIT OF RS. 9,19,303/- FROM THE FIRM. THE ASSESSEE CLAIMED INTE REST OF RS. 2,18,485/- AS DEDUCTION IN THE COMPUTATION. THE ASSESSING OFFICER HAS CALCULATED THE DISALLOWABLE EXPENSES ON ACCOUNT OF INTEREST AT RS. 1,56,763/- RELATABLE TO EARNING OF EXEMPT INCOME. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE SHARE OF PROFIT FROM PARTNERSHIP FIRM SHOULD NO T BE CONSIDERED FOR THE PURPOSES OF SEE. 14A, AS THE FIRM IS PAYING TAX ON TOTAL INCOME AND AS SUCH THE PROFIT RECEIVED BY THE PARTNER CANNOT BE TAXED, AS IT AMOUNTS TO DOUBLE TAXATION. I HAVE CONSIDERED THE FACTS OF THE CASE AND ALSO THE SUBMISSIONS MADE BY THE ASSESSEE. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS RAISED LOANS AND ADVANCED THE SAME TO THE PARTNERSHIP FIRM. AS F AR AS THIS FACT IS CONCERNED NEITHER THE ASSESSING OFFICER NOR THE ASSESSEE IS I N DISPUTE (IT IS NOT MENTIONED THAT THE QUANTUM OF AMOUNT GIVEN TO THE FIRM BY THE ASSESSEE). THE ASSESSEE ON THE SAID LOAN HAS PAID RS. 2,18,485/- AS INTEREST. THE SAME HAS BEEN CLAIMED AS DEDUCTION FROM THE INCOME RECEIVED BY THE ASSESSEE FROM THE FIRM. THE CASE OF THE ASSESSING OFFICER IS THAT THE ASSESSEE EARNED EXEMP TED INCOME ONLY BECAUSE HE INVESTED IN THE PARTNERSHIP FIRM. THEREFORE, ANY EX PENDITURE ON ACCOUNT OF INTEREST SHOULD BE SUBJECTED TO THE PROVISIONS OF SEE. 14A. THERE IS NO DISPUTE IN THE AMOUNTS ADVANCED AND ALSO THE PURPOSE FOR WHICH THE ADVANCE/LOAN WAS GIVEN. THERE IS ALSO NO MIXING OF FUNDS ADVANCED BY THE AS SESSEE TO THE FIRM. IT HAS ALSO BEEN OBSERVED BY THE ASSESSING OFFICER THAT FOR EXC LUSIVE PURPOSE OF INVESTMENT IN FIRM THE AFORESAID AMOUNTS WERE ADVANCED. I FIND TH AT THE REASONING GIVEN BY THE ASSESSING OFFICER IS WELL FOUNDED AND CORRECT. COMI NG TO THE ARGUMENT OF THE ASSESSEE THAT THE TAX HAS ALREADY BEEN PAID BY THE FIRM ON THE PROFITS DERIVED AND THE BALANCE AMOUNT ONLY HAS BEEN RECEIVED BY THE AS SESSEE AND ALSO OTHER PARTNERS AND IF ANY DISALLOWANCE IS MADE U/S 14A, W OULD AMOUNT TO DOUBLE TAXATION, IS NOT CORRECT FOR THE REASON THAT THE AS SESSING OFFICER HAS NOT TAXED THE SHARE OF PROFIT RECEIVED BY THE ASSESSEE FROM THE F IRM BUT HE HAS ONLY DISALLOWED THE EXPENSES WHICH ARE ATTRIBUTABLE TO THE EARNING OF EXEMPT INCOME. FURTHER, IT MAY BE POINTED OUT THAT THE DIVIDEND AND OTHER EXEM PT INCOMES AS PER SEE. 10(34) WOULD ALSO SUFFER DIVIDEND DISTRIBUTION TAX U/S 115 -0 OF THE INCOME TAX ACT; IT IS ALSO TO BE MENTIONED THAT THE COMPANY PAYS THE INCO ME TAX IN ADDITION TO DIVIDEND DISTRIBUTION TAX U/S 115-O. THEREFORE, THE ASSESSEE 'S ARGUMENT THAT EXPENDITURE RELATABLE TO THE EXEMPTED INCOME SHOULD NOT BE SUBJ ECTED TO ANY DISALLOWANCE IN THE HANDS OF THE RECIPIENT IS NOT CORRECT. HOWEVER, IT IS OBSERVED FROM THE 9 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO COMPUTATION OF TOTAL INCOME, THAT THE ASSESSING OFF ICER HAS DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE AND ALSO THE DISALLOWANCE M ADE U/S 14A. IN THE LIGHT OF ABOVE, THE CORRECT CLAIM OF THE ASSESSEE WOULD BE R S. 2,14,485/- (TOTAL INTEREST CLAIMED) - RS. 1,56,763/- (INTEREST CLAIMED PROPORT IONATE TO EXEMPT INCOME) = RS. 57,722/-. THUS, ONLY RS. 57,722/- IS ALLOWABLE AS E XPENDITURE ON ACCOUNT OF INTEREST. THUS, RS. 1,56,763/- TO BE ADDED TO TOTAL INCOME OF THE ASSESSEE. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 8.1 WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL O N RECORD. LD. CIT(A) HAS PASSED THE DETAILED ORDER AFTER TAKING INTO CONSIDE RATION THE ARGUMENTS RAISED BY THE BOTH THE PARTIES IN PARA NO.6.3 MENTIONED ABOVE . LD. CIT(A) AFTER DETAIL DISCUSSION HAS RIGHTLY OBSERVED FROM THE COMPUTATIO N OF TOTAL INCOME THAT THE AO HAS WRONGLY DISALLOWED THE INTEREST CLAIMED BY THE ASSESSEE AND ALSO THE DISALLOWANCE MADE U/S 14A. THEREFORE LD. CIT(A) MAD E CORRECT CLAIM OF THE ASSESSEE IN THE AFORE MENTIONED PARA AND DIRECTED T HE SAME TO BE ADDED TO TOTAL INCOME OF THE ASSESSEE. 8.2. AFTER ANALYZING THE AFORE MENTIONED ORDER WE F OUND THAT THE CIT(A) HAS DEALT WITH ALL THE ISSUES AND HAS PASSED JUDICIOUS AND WELL REASONED ORDER AND NO NEW CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US IN OR DER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE CIT(A). THEREFORE, WE SEE NO REASON TO DEVIATE OR INTERFERE INTO THE FINDINGS RECORDED BY THE CIT(A) AND HENCE, WE REJECT THESE GROUNDS RAISED BY THE ASSESSEE AND UPHOLD THE ORDER OF THE CIT(A). 9. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2016 10 ITA NO. 6083/MUM/2013(A.Y. 2009-10) VIJAY NARANJI KATARIA VS. ITO SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED : 24.08.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI