SHILPA SHETTY KUNDRA, MUMBAI V. DCIT CC 2(3), MUMBAI

ITA 6243/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5502 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 13-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CH ARUN KUMAR SINGH LD
• Assessee Lawyers: NARAYAN ATAL LD
• Keywords: Depreciation; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA 6243/MUM/2017 SHILPA SHETTY KUNDRA ASSESSMENT YEAR: 2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6243/MUM/2017 ( / ASSESSMENT YEAR: 2013-14) SHILPA SHETTY KUNDRA 57/A, PLOT NO. 3, OCEAN VIEW DR. R.S. JAIN MARG, GANDHI GRAM ROAD JUHU, MUMBAI 400 049. / VS. DEPUTY COMM ISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(3) 8 TH FLOOR, CGO BUILDING MUMBAI 400 020 ./ ./PAN/GIR NO. ACPPS-6622-P ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SH. NARAYAN ATAL - LD. AR REVENUE BY : CH. ARUN KUMAR SINGH - LD.DR !' / DATE OF HEARING : 28/01/2019 !' / DATE OF PRONOUNCEMENT : 05/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2013-14 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-48, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-48/I.T-12/DCCC-2(3)/2016-17 DATED 29/08/2017 QUA CONFIRMATION OF DISALLOWANCE U/S 14A. ITA 6243/MUM/2017 SHILPA SHETTY KUNDRA ASSESSMENT YEAR: 2013-14 2 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL AND A FILM ACTRESS BY PROFESSION WAS ASSESSED FOR IMPUGNED AY IN SCRUT INY ASSESSMENT U/S 143(3) ON 29/03/2016 BY LD. DEPUTY COMMISSIONER OF INCOME TAX-CENTRAL CIRCLE-2(3), MUMBAI [AO] WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.420.20 LACS AFTER SOL E DISALLOWANCE U/S 14A FOR RS.8.95 LACS AS AGAINST RETURNED INCOME OF RS.411.25 LACS E- FILED BY THE ASSESSEE ON 25/09/2013. THE DISALLOWANCE U/S 14A IS THE SOLE SUBJECT MATTER OF PRESENT APPEAL BEFORE US. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.9,08,198/- AGAI NST INVESTMENT OF RS.16.87 CRORES. THE LD. AO, NOTICING THAT NO DISAL LOWANCE AGAINST THE SAME WAS OFFERED BY THE ASSESSEE, COMPUTED EXPENSE DISALLOWANCE AS PER RULE 8D(2)(III) FOR RS.8.95 LACS COMPUTED AS 0. 5% OF AVERAGE INVESTMENTS OF RS.17.90 CRORES. ACCORDINGLY, THE SA ME WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITHOU T ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/08/2 017 WHEREIN THE ASSESSEE DREW ATTENTION TO THE ERRONEOUS CALCULATIO NS MADE BY LD. AO IN VIEW OF THE FACT THAT CERTAIN LOANS / DEPOSITS W ERE CONSIDERED AS INVESTMENTS BY LD. AO. HOWEVER, THIS PLEA GOT REJEC TED FOR WANT OF DOCUMENTARY EVIDENCES. THE LD. CIT(A), NOTICING THA T THERE WAS CHURNING OF FUNDS DURING IMPUGNED AY, CONCLUDED THA T THE PROVISIONS OF SECTION 14A WERE RIGHTLY INVOKED AND THE DISALLOWAN CE WAS JUSTIFIED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI NARAYAN ATAL, DRAWING OUR ATTENTION TO THE DOCUMENTS INCLUDING ITA 6243/MUM/2017 SHILPA SHETTY KUNDRA ASSESSMENT YEAR: 2013-14 3 ASSESSEES FINANCIAL STATEMENTS AS PLACED IN THE PAPER-BOOK, SUBMITTED THAT THE ASSESSEE HAD ALREADY OFFERED SUO-MOTO DISALLOWANCE OF RS.2,34,357/- U/S 14A IN HER COMPUTATION OF INCOME WHICH WAS MORE THAN ENOUGH TO COVER THE DISALLOWANCE AGAINST EXPEN SES DEBITED IN THE PROFIT & LOSS ACCOUNT. OUR ATTENTION IS FURTHER DRA WN TO THE FACT THAT EXPENSE DISALLOWANCE AGAINST THOSE INVESTMENTS WHIC H HAVE ACTUALLY YIELDED EXEMPT INCOME DURING IMPUGNED AY WORK OUT T O RS.0.85 LACS WHICH WAS FAR LESS THAN SUO-MOTO DISALLOWANCE OFFERED BY THE ASSESSEE. PER CONTRA, LD. DR, CH. ARUN KUMAR SINGH, SUPPORTED THE STAND OF FIRST APPELLATE AUTHORITY. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER- BOOK. IT IS OBSERVED THAT THE ASSESSEE HAS ALREADY OFFERE D SUO-MOTO DISALLOWANCE OF RS.2.34 LACS U/S 14A IN HER COMPUTA TION OF INCOME, WHICH HAS BEEN OVERLOOKED BY THE LOWER AUTHORITIES. ANOTHER UNDISPUTED FACT THAT EMERGES IS THAT DISALLOWANCE AGAINST AVER AGE INVESTMENTS WHICH HAVE ACTUALLY YIELDED EXEMPT INCOME DURING TH E IMPUGNED AY WORKS OUT TO RS.0.84 LACS WHICH IS LESS THAN SUO-MOTO DISALLOWANCE AS OFFERED BY THE ASSESSEE. IT IS FURTHER NOTED THAT T HE ASSESSEE HAS DEBITED VARIOUS EXPENDITURE AGGREGATING TO RS.59.53 LACS IN THE PROFIT & LOSS ACCOUNT. THE EXPENDITURE UNDER THE HEAD COMMISSION & DEPRECIATION AGGREGATE TO RS.54.24 LACS WHEREAS THE BALANCE EXPE NDITURE UNDER OTHER HEADS AGGREGATE TO RS.5.29 LACS. THE COMMISSION AND DEPRECIATION HAVE NO NEXUS WITH EARNING OF EXEMPT INCOME WHEREAS OUT OF BALANCE EXPENDITURE OF RS.5.29 LACS, THE ASSESSE E HAS ALREADY OFFERED SUO-MOTO EXPENDITURE OF RS.2.34 LACS. THE SAME, IN OUR OPINI ON, ITA 6243/MUM/2017 SHILPA SHETTY KUNDRA ASSESSMENT YEAR: 2013-14 4 WAS MORE THAN SUFFICIENT TO COVER UP THE REQUISITE DISALLOWANCE. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ADDITIONAL DISALLOWANCE OF RS.8.95 LACS AS MADE BY LD. AO COUL D NOT BE SUSTAINED. BY DELETING THE SAME, WE ALLOW THE APPEA L. 6. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2019. SD/- SD/- (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05.02.2019 PS / K. RAVI KUMAR / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. $$% ( ) / THE CIT(A) 4. $$% / CIT CONCERNED 5. & ''() , $) , / DR, ITAT, MUMBAI 6. ' +,- / GUARD FILE / BY ORDER, / % (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.