Shilpa Ajaykumar Parasrampuria, Ahmedabad V. ITO, Ward-3(3)(4), Ahmedabad

ITA 638/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9406 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 13-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Salary income; Earning of tax free income; Source of fund; Rule 8D
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO.638 AND 640/AHD/2018 / ASSTT. YEAR: 2012-13 AND 2014-15 SHILPA AJAYKUMAR PARASRAMPURIA B-104, SATELLITE CENTRE PREMCHANDNAGAR ROAD VASTRAPUR, AHMEDABAD. PAN : AAVPP 9655 P VS. ITO, WARD - 3(3)(4) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : NONE REVENUE BY : SHRI KEYUR PATEL, SR.DR / DATE OF HEARING : 14/06/2019 / DATE OF PRONOUNCEMENT: 05/07/2019 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE LD.CIT(A) HAS DECIDED TWO APPEALS OF THE ASSESS EE FOR THE ASSTT.YEARS 2012-13 AND 2014-15 BY WAY OF SEPARATE ORDERS PASSED ON 9.1.2018. THE ASSESSEE IS CHALLENGING BOTH THESE O RDERS IN THE PRESENT APPEALS. SOLE GRIEVANCE OF THE ASSESSEE IS THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.76,614/- AND 84,825/- WHICH WERE ADDED BY THE AO UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 RE AD WITH RULE 8D OF THE INCOME TAX RULES, 1962. 2. FACTS ON ALL VITAL POINTS ARE COMMON IN BOTH THE YEARS. THEREFORE FOR THE FACILITY OF REFERENCE WE TAKE UP THE FACTS MAIN LY FROM THE ASSTT.YEAR 2011- 12. ITA NO.638 AND 640/AHD/2018 2 3. THE ASSESSEE IS AN INDIVIDUAL AT THE RELEVANT TI ME. SHE WAS DERIVING INCOME FROM TRADING IN SHARES SECURITIES, DERIVATIV E TRANSACTION AND SALARY INCOME IN THE ASSTT.YEAR 2014-15. SHE HAS FILED HE R RETURN OF INCOME ON 29.9.2012 AND 29.9.2014 DECLARING TOTAL INCOME AT R S.38,30,550/- AND RS.13,11,800/- IN THE ASSTT.YEAR 2012-13 AND 2014-1 5. HER CASE IN BOTH THE ASSESSMENT YEARS WERE SELECTED FOR SCRUTINY AND NOT ICES UNDER SECTION 143(2) WERE SERVED UPON HER. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES, PPF ACC OUNT AND EARNED EXEMPT INCOME. HE NOTICED DIVIDEND INCOME OF RS.46,725/- AND INTEREST INCOME OF RS.29,989/- IN THE ASSTT.YEAR 2012-13. SIMILARLY, IN THE ASSTT.YEAR 2014-15, HE NOTICED DIVIDEND INCOME OF RS.75,225/- AND TRANS PORT ALLOWANCE OF RS.9,600/-. ACCORDING TO THE AO, THE ASSESSEE HAS INTEREST EXPENDITURE AND OTHER EXPENDITURE, AND THEREFORE, HE RESTRICTED THE DISALLOWANCE UNDER SECTION 14A EQUIVALENT TO THE EXEMPT INCOME, AND ACCORDINGL Y MADE ADDITION IN BOTH YEARS. ON APPEAL, THE LD.CIT(A) HAS CONFIRMED THE ADDITION. HIS FINDING VERBATIM SAME IN BOTH THE YEARS. 4. IN RESPONSE TO THE NOTICE OF HEARING, NONE HAS P RESENT ON BEHALF OF THE ASSESSEE. WITH THE ASSISTANCE OF THE LD.DR, WE HAV E GONE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE PAPER BOOK WOULD INDIC ATE THAT THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS IN BOTH THE YEARS. WE TA KE NOTE OF THE WRITTEN SUBMISSIONS, WHICH READ AS UNDER: ASSTT.YEAR 2012-13: RESPECTED SIR, REG: I.T.A. NO.638 /AHD/2018 FOR ASSESSMENT YEAR 2 012-13 IN THE MATTER OF SHILPA AJAYKUMAR PARASRAMPURIA SUB: WRITTEN SUBMISSION ITA NO.638 AND 640/AHD/2018 3 WITH REFERENCE TO THE ABOVE CAPTIONED SUBJECT, WE P LEA FOR THE FOLLOWING POINTS:- 1. ADDITION OF PPF INTEREST AMOUNTING TO RS. 29,9 89/-. WE HAVE RECEIVED PPF MATURITY AMOUNT OF RS. 6,27,59 5/- AS ON 08.11.2011. ( REFER PAGE NO. 36) THE PPF MATURITY P ASSBOOK ALSO MENTIONED AMOUNT OF RS. 6,27,595/-.(REFER PAGE NO. 36) THE BANK STATEMENT OF PPF DEPOSIT IS ATTACHED HEREWITH :- DATE TYPE OF TRANSACTION CHEQUE NUMBER AMOUNT PPF- PAGE NO. BANK- PAGE NO. 11-11- 2011 PPF ACCOUNT 00091 70,000/- 39 50 30-03- 2012 PPF ACCOUNT 114 30,000/- 39 54 THUS, WE HAVE MADE INVESTMENT IN PPF OUT OF PPF MAT URITY AMOUNT. HENCE THE ADDITION OF INTEREST EXPENDITURE QUA PPF INTEREST UNDER SECTION 14A IS WRONGLY ADDED TO OUR TAXABLE INCOME . 2. ADDITION OF DIVIDEND INCOME AMOUNTING TO RS.4 6,625/- WE HAD BALANCE IN THE PROPRIETOR'S CAPITAL ACCOUNT AMOUNTING TO RS.42,08,954/-.(MARGIN OF RS.15,84,498/-) DURING TH E ASSESSMENT YEAR 2012-13. (REFER PAGE NO. 25) THE BALANCE OUT STANDING IN MUTUAL FUND RS.5,48,000 /- AND IN SHARES RS.20,76,456/- ON 31.03.2012. (REFER PAGE NO.28) THUS, OUR CAPITAL ACCOUNT BALANCE AMOUNTING TO RS. 42,08,954/- IS FAR IN EXCESS OF MF/SHARES. THUS, INVESTMENT IS CRYSTAL CLEAR FROM OUR OWN CAPI TAL. HENCE ADDITION ON ACCOUNT OF THIS MAY BE DELETED. ASSTT.YEAR 2014-15: RESPECTED SIR, ITA NO.638 AND 640/AHD/2018 4 REG: I.T.A. NO.640/AHD/2018 FOR ASST. YEAR 2014-15 IN THE MATTER OF SHILPA AJAYKUMAR PARASRAMPURIA SUB: WRITTEN SUBMISSION WITH REFERENCE TO THE ABOVE CAPTIONED SUBJECT, WE P LEA FOR THE FOLLOWING POINTS:- 1. THE APPLICANT HAD EARNED TRANSPORT ALLOWANCE AMO UNTING OF RS. 9600/- DURING THE YEAR, WHICH IS MENTIONED IN PART- B OF FORM NO.L6.(REFER PAGE NO. 46) 2.THE SAME IS EXEMPT INCOME, WHICH WAS SHOWN AS DED UCTION FROM GROSS SALARY IN STATEMENT OF INCOME.(REFER PAGE NO. 6) 3. TRANSPORT ALLOWANCE IS EXEMPT U/S 10(14)(II). 4. AT THE TIME OF FILLING OF RETURN, PRESENTATION O F TRANSPORT ALLOWANCE WAS DONE WRONGLY AS EXEMPT INCOME, WHICH HADN'T AFF ECT ON TAXABLE INCOME OF ASSESSEE.(REFER PAGE NO. 0) 5. THERE IS NO RELEVANT GROUND FOR DISALLOW SUCH EX EMPT ALLOWANCE. 5. AS FAR AS ASSTT.YEAR 2012-13 IS CONCERNED, THE A SSESSEE HAS OBJECTED FOR DISALLOWANCE OF PPF INTEREST AMOUNTING TO RS.29 ,989/-. ACCORDING TO THE ASSESSEE, SHE HAS MADE INVESTMENT IN PPF ACCOUNT AF TER RECEIVING MATURITY AMOUNT EARLIER INVESTED. TO OUR MIND THE ASSESSEE HAS DEMONSTRATED THE SOURCE OF FUND AND NO DISALLOWANCE IS REQUIRED ON A CCOUNT OF ADMINISTRATIVE EXPENSES FOR MANAGING PPF ACCOUNT. THEREFORE, ADDI TION TO THE EXTENT OF RS.29,989/- DESERVES TO BE DELETED. WE DELETE ACCO RDINGLY. 6. AS FAR AS ADDITION OF RS.46,625/- ON ACCOUNT OF SHARE DIVIDEND IS CONCERNED, THE CONTENTIONS OF THE ASSESSEE IS THAT SHE HAS CAPITAL OF RS.42,08,954/- OUT OF WHICH IT CAN BE ALLEGED THAT SHE MADE INVESTMENT. SHE MADE REFERENCE TO PAGE NO.25 AND 28 OF THE PAPER BO OK. WE HAVE PERUSED IT. NO DOUBT ON PAGE NO.25 PROPRIETORS CAPITAL HAS BEE N SHOWN AT RS.42,08,954/- ITA NO.638 AND 640/AHD/2018 5 AS ON 31.3.2012, BUT HER INVESTMENTS ARE MORE THAN THIS. HER TOTAL INVESTMENT WAS AT RS.1,33,52,645/-. THE BREAK-UP OF THAT INVE STMENT IS AVAILABLE AT PAGE NO.28 IN SCHEDULE-4. AGAINST IMMOVABLE PROPERTIES SHE HAS SHOWN INVESTMENT OF RS.9,98,150/-. NOW WHAT ARE THESE IMMOVABLE PROP ERTIES, IS NOT ASCERTAINABLE, AND WHAT IS THE SOURCE OF THESE, IS ALSO NOT IDENTIFIABLE. HER INTEREST FREE FUND IS FAR LESS THAN THE INVESTMENT, AND THEREFORE, THE LD.AO HAS RIGHTLY HABOURED A BELIEF THAT INTEREST EXPENSES RE QUIRED TO BE CALCULATED ON THE INVESTMENT MADE BY THE ASSESSEE. ONE OF THE AR GUMENTS RAISED BY THE ASSESSEE BEFORE THE LD.REVENUE AUTHORITIES WAS THAT SINCE SHE WAS IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES, THERE FORE, NO DISALLOWANCE OUT OF INTEREST EXPENDITURE IS TO BE MADE. THIS ASPECT HA S BEEN SETTLED IN THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F GODREJ & BOYCE VS. CIT, 328 ITR 81 AS WELL AS IN THE CASE OF MAXOPP IN VESTMENT LTD V/S CIT 402 ITR 640 (SC) THAT IF THE ASSESSEE HAS BEEN TRADING IN SHARES AND EARNED INCIDENTAL INCOME ON SUCH TRADING IN THE SHAPE OF D IVIDEND THEN ALSO EXPENSES RELATABLE TO EXEMPT INCOME ARE REQUIRED TO BE CALCU LATED AND DISALLOWED. THEREFORE, IN THE ASSTT.YEAR 2012-13, WE ALLOW THE APPEAL OF THE ASSESSEE PARTLY AND CONFIRM THE DISALLOWANCE AT RS.46,625/-. 7. AS FAR AS ASSTT.YEAR 2014-15 IS CONCERNED, THE A SSESSEE FAILED TO GIVE ANY PLAUSIBLE EXPLANATION AS TO HOW THE EXPENSES AR E NOT REQUIRED TO BE DISALLOWED. THE LD.CIT(A) HAS EXAMINED THIS ISSUE I N DETAIL. SHE HAS MADE INVESTMENT IN THE MUTUAL FUND TO THE EXTENT OF RS.9 4,54,500/- IN THE FINANCIAL YEAR 2013-14. SHE HAS FAILED TO SHOW THAT SUCH INV ESTMENT WAS MADE OUT OF INTEREST FREE FUNS. THE AO HAS RIGHTLY WORKED OUT THE DISALLOWANCE UNDER SECTION 14A. THE ONLY AMOUNT WHICH REQUIRES TO BE EXCLUDED IS ALLOWANCE OF RS.9600/- WHICH HAS BEEN RECEIVED BY THE ASSESSEE A S TRANSPORT ALLOWANCE. THEREFORE, WE RESTRICT THE DISALLOWANCE IN THE ASST T.YEAR 2014-15 AT ITA NO.638 AND 640/AHD/2018 6 RS.75,255/-. WITH THE ABOVE OBSERVATIONS, BOTH THE APPEALS ARE PARTLY ALLOWED. 8. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH JULY, 2019 AT AHMEDABAD. S D / - (AMARJIT SINGH) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) JUDICIAL MEMBER