CHANDBIBI ZAIDI, MUMBAI V. ITO 5(1)(2), MUMBAI

ITA 6520/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9912 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 07-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: N R AGRAWAL LD
• Keywords: Business income; Salary income; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO 6520/MUM/2016 CHANDBIBI ZAIDI ASSESSMENT YEAR 2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 6520/MUM/2016 ( / ASSESSMENT YEAR: 2013-14) CHANDBIBI ZAIDI KENEDY HOUSE, 4 TH FLOOR, GOREGAONKAR, ROAD MUMBAI 400 007 / VS. INCOME TAX OFFICER 5(1)(2) 5 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI -400 020 ! ./ ./PAN/GIR NO. AAAPZ-1431-A ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : N.R.AGRAWAL, LD. AR REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 17/08/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2013-14 ASSAILS THE ORDER OF LD. COMMISSIONER OF IN COME TAX ITA NO 6520/MUM/2016 CHANDBIBI ZAIDI ASSESSMENT YEAR 2013-14 2 (APPEALS)-10 [CIT(A)], MUMBAI DATED 23/08/2016 QUA CONFIRMATION OF DISALLOWANCE U/S 14A FOR RS.1,72,506/-. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ASSESSED U/S 143(3) ON 29/01/2016 AT RS.91,68,930/- AS AGAINST RETURNED INCOME OF RS.81,53,920/- E-FILED BY THE ASSESSEE ON 22/07/2013 WHICH WAS LATER REVISED TO RS.79,49,580/ - ON 29/07/2014. THE SOLITARY ISSUE INVOLVED UNDER APPEAL IS DISALLO WANCE U/S 14A. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.22.32 LACS AND LONG TERM CAPITAL GAINS ON SALE OF SHARES FOR RS.55.70 LACS, WHICH CALLED FOR DISALLOWANCE U/S 14A. IT WAS FURTHER NOTED THAT THE ASSESSEE REFLECTED HONORARIUM INCOME OF RS.2,60,000/- UNDER THE HEAD BUSINESS / PROFESSIONAL INCOME AND CLAIMED EXPENDITURE OF RS.3,50,835/- AGAINST THE SAME RESULTING INTO LOSS OF RS.90,836/- UNDER T HE HEAD BUSINESS / PROFESSIONAL INCOME . THE EXPENSES OF RS.3,50,835/- COMPRISED OF PROFESSIONAL FEES PAID FOR RS.1,06,652/- & OTHER EXPENSES OF RS.2,44,183/-. THE CLAIM OF PROFESSIONAL FEES WAS D ISALLOWED BY PLACING RELIANCE ON TRIBUNALS DECISION IN AY 2003-04 ON TH E PREMISES THAT NO EXPENSES COULD BE ALLOWED AGAINST SALARY INCOME. PR OCEEDING FURTHER, THE LD.AO WORKED OUT DISALLOWANCE U/S 14A U/R 8D(2) (III) @0.5% OF AVERAGE INVESTMENT WHICH CAME TO RS.3,34,782/- BUT RESTRICTED THE SAME TO RS.2,44,183/-, BEING OTHER EXPENSES CLAIMED BY THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 23/08/2 016 WHERE THE LD. CIT(A) DIRECTED THE APPORTIONMENT OF TOTAL EXPENSES OF RS.3,50,835/- IN ITA NO 6520/MUM/2016 CHANDBIBI ZAIDI ASSESSMENT YEAR 2013-14 3 THE RATIO OF EXEMPT INCOME AND TAXABLE INCOME. STIL L AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] SUBMITTED THAT THE APPORTIONMENT IN THE AFORESAID MANNER WAS NOT JUSTI FIED SINCE THE EXPENSES WERE MAINLY RELATED WITH EARNING OF HONORARIUM AND NOT TO EARN EXEMPT INCOME . PER CONTRA, LD. DR PLACED RELIANCE ON THE STAND OF LOWER AUTHORITIES. 5. HEARD & PERUSED RELEVANT MATERIAL ON RECORD. WE FIND THAT MATTER TO BE A FACTUAL ONE. WE NOTE THAT THE LD. AO BY PLA CING RELIANCE ON THE DECISION OF TRIBUNAL IN AY 2003-04, CAME TO A CONCL USION THAT NO EXPENSES VIS--VIS SALARY INCOME COULD BE ALLOWED T O THE ASSESSEE, BUT STRANGELY ASSESSED THE SAME UNDER THE HEAD BUSINESS INCOME / PROFESSIONAL INCOME. NEVERTHELESS, TO SETTLE THE CONTROVERSY AND FOR EASE OF CALCULATIONS, INSTEAD OF COMPUTING DISALLOW ANCE U/S 14A, WE ESTIMATE THE INCOME FROM HONORARIUM @25% WHICH, IN OUR OPINION, IS FAIR TO BOTH THE SIDES. ACCORDINGLY, THE LD. AO IS DIREC TED TO RE-COMPUTE THE TOTAL INCOME OF THE ASSESSEE BY TAKING 25% OF HONORARIUM INCOME OF RS.2.60 LACS AS BUSINESS INCOME / PROFESSIONAL INCOME . 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ITA NO 6520/MUM/2016 CHANDBIBI ZAIDI ASSESSMENT YEAR 2013-14 4 ! / 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