HARIVALLABH P. MUNDHRA, MUMBAI V. ASST MCIT RG 4(3), MUMBAI

ITA 6432/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100968 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 11-05-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUSUM BANSALDR
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Earning of tax free income; Proportionate interest
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6432/MUM/2013 ASSESSMENT YEAR: 2010-11 HARIVALLABH P. MUNDHRA, 91/92, SUNITA CO-OP HSG SOCIETY, 98, CUFFE PARADE, MUMBAI-400005 / VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-4(3), MUMBAI ( !'# $ /ASSESSEE) ( % / REVENUE) P.A. NO. AAAPM8378D !'# $ / ASSESSEE BY SHRI SANJAY R PARIKH % / REVENUE BY SHRI KUSUM BANSAL-DR %& ' $ ( / DATE OF HEARING : 09/09/2015 ' $ ( / DATE OF ORDER: 28/09/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 27/08/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THE APPEAL PERTAINS TO CO NFIRMING THE DISALLOWANCE OF RS.2,09,378/- MADE U/S 14A OF T HE ACT. THE CRUX OF ARGUMENT ADVANCED BY SHRI SANJAY R PARI KH, LD. COUNSEL FOR THE ASSESSEE, IS THAT NO EXPENSES WERE CLAIMED BY HARIVALLABH P MUNDHRA ITA NO.6432/MUM/2013 2 THE ASSESSEE AND REASONABLE EXPENSES HAD ALREADY BE EN DISALLOWED BY THE ASSESSEE ITSELF IN HIS COMPUTATIO N OF INCOME. THE LD. COUNSEL INVITED OUR ATTENTION TO P AGES 3 & 6 OF THE PAPER BOOK. ON THE OTHER HAND, MS. KUSUM BAN SAL, LD. DR, STRONGLY DEFENDED THE CONCLUSION ARRIVED AT IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT, DURING ASSESSMENT PROCEEDINGS, IT WAS NOT ICED BY THE ASSESSING OFFICER THAT THE ASSESSEE RECEIVED TA X FREE DIVIDEND INCOME OF RS.1,52,118/- AND ASSESSEE HAS N OT COMPUTED ANY EXPENSES ATTRIBUTABLE TO EARNING SUCH EXEMPT INCOME. THE ASSESSEE WAS ASKED TO FURNISH THE COMPL ETE DETAILS OF INVESTMENT ON WHICH THE ASSESSEE CLAIMED TO HAVE DERIVED EXEMPT INCOME AND ALSO AS WHY DISALLOWANCE MAY NOT BE MADE U/S 14A OF THE ACT ALONG WITH RULE 8D OF TH E INCOME TAX RULES, 1962 (HEREINAFTER THE RULES). THE STAND OF THE REVENUE IS THAT THE ASSESSEE CANNOT EARN DIVIDEND I NCOME WITHOUT SYSTEMATIC MANAGEMENT. IN TURN, THE ASSESSE E PLACED RELIANCE UPON THE DECISION IN CHEMINVEST LTD. VS IT O 317 ITR 86 (AT) AND SOUTHERN PETRO CHEMICALS LTD. (3 SOT 15 7), ACIT VS CITICORPN FINANCE INDIA LTD. 108 ITD 457 AND ITO VS DAGA CAPITAL MANAGEMENT PVT. LTD. (ITA NO.8057/MUM/2003) . THE ASSESSING OFFICER MADE DISALLOWANCE U/S 14A AT RS.2,09,372/- AND ADDED TO THE INCOME OF THE ASSESS EE. WE HAVE PERUSED THE COMPUTATION AS WELL AS THE REASONI NG CONTAINED IN THE ASSESSMENT ORDER/IMPUGNED ORDER BY HARIVALLABH P MUNDHRA ITA NO.6432/MUM/2013 3 KEEPING THEM IN JUXTAPOSITION WITH COMPUTATION OF I NCOME AND THE CASES CITED BY THE LD. COUNSEL FOR THE ASSE SSEE. IF THE TOTALITY OF FACTS ARE CONSIDERED, WE ARE OF THE CON SIDERED OPINION THAT AT BEST RS.48,511/- CAN BE CONFIRMED A S PER THE PROPORTIONATE INTEREST OF EXPENDITURE COMPUTATION I N ACCORDANCE WITH THE FORMULA GIVEN IN RULE 8D (2)(II ) OF THE RULES. SINCE, NO EXPENDITURE HAS BEEN CLAIMED BY T HE ASSESSEE AND REASONABLE EXPLANATION HAS BEEN PROVID ED AT PAGE 6 OF THE PAPER BOOK CONTAINING PROFIT & LOSS A CCOUNT FOR THE YEAR ENDED 31/03/2010, THEREFORE, THE AMOUNT OF RS.1,60,861/- IS DIRECTED TO BE DELETED. THUS, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 09/09/2015. SD/ - (RAJESH KUMAR) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & MUMBAI; * DATED : 28/09/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 3$ ( ,- ) / THE CIT, MUMBAI. 4. 2 2 3$ / CIT(A)- , MUMBAI 5. 5%6 0$ ! , 2 ,-( ,! 7 , & / DR, ITAT, MUMBAI HARIVALLABH P MUNDHRA ITA NO.6432/MUM/2013 4 6. 8' 9& / GUARD FILE. / BY ORDER, 15-$ 0$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI