RASAYANI TRADERS P. LTD, MUMBAI V. ITO 5(3)(1), MUMBAI

ITA 6220/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2507 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 24-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6220/M/2013 ASSESSMENT YEAR: 2010-11 M/S. RASAYANI TRADERS PVT. LTD., 602, PARAG, 6 TH FLOOR, 27 PADDER ROAD, MUMBAI 400 026 PAN: AABCR5408B VS. THE INCOME TAX OFFICER 5(3)(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NITESH JOSHI, A.R. REVENUE BY : SHRI VISHWAS JADHAV, D.R. DATE OF HEARING : 26.11.2015 DATE OF PRONOUNCEMENT : 26.11.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 14.08.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE ONLY ISSUE TAKEN BY THE ASSESSEE IS RELATING TO THE CONFIRMATION OF DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX AC T READ WITH RULE 8D2(I) OF THE INCOME TAX RULES IN RELATION TO THE DIRECT E XPENSES INCURRED BY THE ASSESSEE FOR EARNING OF EXEMPT INCOME. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS PO INTED OUT THAT SO FAR AS THE ADMINISTRATIVE AND MANAGERIAL EXPENSES ARE CONC ERNED, THE ASSESSEE HAD SUO-MOTO DISALLOWED A SUM OF RS.2,79,089/- UNDER RU LE 8D2(III) AS PER THE ITA NO.6220/M/2013 M/S. RASAYANI TRADERS PVT. LTD. 2 FORMULA PRESCRIBED THEREIN. IT IS THE CASE OF THE ASSESSEE THAT NO DIRECT EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FOR E ARNING OF TAX EXEMPT INCOME. HE HAS INVITED OUR ATTENTION TO THE WORKIN G OF DISALLOWANCE MADE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS T HE AO) IN THE ASSESSMENT ORDER IN QUESTION. WE FIND THAT THE AO HAD DISALLO WED THE MANAGERIAL REMUNERATION AT RS.4,25,000/-, ADMINISTRATIVE AND O THER EXPENSES AT RS.8,63,567/- DEPRECIATION CLAIM OF RS.73,741/- AND INTEREST EXPENDITURE OF RS.3,792/- INCURRED BY THE ASSESSEE FOR PRE-MATURE WITHDRAWAL OF FIXED DEPOSITS. NONE OF THE ABOVE EXPENSES ARE DIRECTLY RELATABLE TO THE EARNING OF EXEMPT INCOME. THE PART OF THE ABOVE EXPENSES HAVE ALREADY BEEN SUO-MOTO DISALLOWED BY THE ASSESSEE AS ADMINISTRATIVE AND MA NAGERIAL EXPENSES UNDER RULE 8D2(III) OF THE INCOME TAX RULES. THE LD. D.R. COULD NOT POINT OUT BEFORE US AS TO HO W THE ABOVE STATED EXPENSES CAN BE SAID TO BE DIRECTLY RELATABLE TO TH E EARNING OF EXEMPT INCOME. THE DISALLOWANCE MADE BY THE AO UNDER SUCH CIRCUMST ANCES CANNOT BE HELD TO BE JUSTIFIED AND THE SAME IS THEREFORE SET ASIDE. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.11.2015. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 26.11.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.6220/M/2013 M/S. RASAYANI TRADERS PVT. LTD. 3 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.