ASST CIT 16(2), MUMBAI V. JANAK DILIP DWARKADAS, MUMBAI

ITA 6575/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7995 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Assessee Lawyers: SUNIL LALA
• Keywords: Earning of tax free income; Set aside
• Section: 143(3); 14A; 154

Judgement Text

1 ITA 6575/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO. 6575/MUM/2017 (ASSESSMENT YEAR : 2014-15) ACIT-16(2), MUMBAI VS SHRI JANAK DILIP DWARKADAS 3 RD FLOOR, MULLA HOUSE 51, M.G. ROAD, FORT, MUMBAI-400 001 PAN : AAEPD8303R APPELLANT RESPONDEDNT APPELLANT BY SHRI RAJIV GUBGOTRA RESPONDENT BY SHRI SUNIL LALA DATE OF HEARING 09-07-2019 DATE OF PRONOUNCEMENT 17-07-2019 O R D E R PER PAWAN SINGH, JM : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF CIT(A)-5, MUMBAI DATED 10-08-2017. THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.4,84,69 3/- ON ACCOUNT OF EXPECTED REASONABLE RENT AS PER SECTION 23(1) OF THE INCOME TAX ACT, WHICH IS CALCULATED @ 8% OF THE VALUE OF PROPERTY AS PER BAL ANCE SHEET VALUE, AS WIDELY HELD BY DIFFERENT COURTS. B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE LD. CIT(A) HAS ERRED IN DELETING DISALLOWANCES OF RS. 83,57,117/- BEING 0.5% OF AVERAGE VALUE OF INVESTMENT U/S 14A R.W.R. 8D (2) (III) FOR THE EXEMPT INCOME EARNED BY THE ASSESSEE. 2 ITA 6575/MUM/2017 THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN ADVOCATE BY PROFESSION, FILED HIS RETURN OF INCOME FOR AY 2014-15 DECLARING TOTAL INCOME OF RS.34,82,69,670. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 143(3) ON 27-12-2016. THE AO, WHILE PASSING THE ASSESSMENT ORDER, MADE ADDITION ON ACCOUNT OF N OTIONAL RENTAL VALUE IN RESPECT OF HOUSE PROPERTY, I.E. FARM HOUSE BUNGALOW IN PUNE OF RS.4,21,694 AT RS. 5,40,000 THEREBY MADE TOTAL ADDITION OF RS.9,61 ,494 ON ACCOUNT OF INCOME FROM HOUSE PROPERTY. THE AO ALSO MADE ADDITION / DISALLOWANCE U/S 14A R.W.R. 8D OF RS.87,61,355 BEING 0.5% OF AVERAGE VALUE OF I NVESTMENT U/R 8D(2)(IIII). THE ASSESSEE FILED AN APPLICATION U/S 154 SEEKING R ECTIFICATION OF CERTAIN MISTAKES IN THE ASSESSMENT ORDER VIDE APPLICATION D ATED 5 TH JANUARY,2017 STATING THAT WHILE CALCULATING NOTIONAL RENT FROM P UNE FARM HOUSE AND BUNGALW, THE DEDUCTION WAS NOT GIVEN IN RESPECT OF NOTIONAL RENT OF RS.60,000 AND RS.3,90,000 RESPECTIVELY, SUO MOTO OFFERED BY A SSESSEE IN HIS RETURN OF INCOME. THE AO, AFTER CONSIDERING THE CONTENTION O F ASSESSEE RECTIFIED THE MISTAKE AND COMPUTED THE INCOME FROM HOUSE PROPERTY IN THE FOLLOWING MANNER:- 1. PUNE FARM HOUSE 3 ITA 6575/MUM/2017 NOTIONAL RENT RECEIVED RS.6,02,419/- LESS: SUO MOTO OFFERED BY ASSESSEE RS. 60,000/- RS.5,42,419/- LESS : DEDUCTION @30% OF ANNUAL VALUE U/S 24(A) RS.1,62,726/- INCOME FROM HOUSE PROPERTY RS.3,79,693/- =========== 2. BUNGALOW AT PUNE NOTIONAL RENT RECEIVED RS.5,40,000/- LESS: SUTO MOTO OFFERED BY ASSESSEE RS.3,90,000/ - RS.1,50,000/- LESS: DEDUCTION @30% OF ANNUAL VALUE U/S 24(A) RS. 45,000/- RS.1,05,000/- 3. FURTHER, ON ACCOUNT OF DISALLOWANCE U/S 14A R.W. R.8D, THE ASSESSEE STATED THAT DEDUCTION OF RS.4,04,238 WAS NOT GIVEN WHILE CALCULATING DISALLOWANCE IN RESPECT OF SUO MOTO DISALLOWANCE OF FERED BY THE ASSESSEE. THE AO, THEREBY CORRECTED THE MISTAKE AND COMPUTED THE REVISED TOTAL INCOME AS UNDER:- INCOME AS PER ORDER 143(3) OF THE I.T. ACT, 1961 DATED 26.12.2013 RS.35,79,92,720/- LESS:INCOME FROM HOUSE PROPERTY RS. 4,77,0 18/- LESS: DISALLOWANCE U/S14A R.W.R.8D RS. 4, 04,238/- TOTAL INCOME RS.35,71,11,481/- ROUNDED OFF RS.35,71,11,480/- 4 ITA 6575/MUM/2017 AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE FILED A PPEAL BEFORE THE CIT(A). 4. THE LD.CIT(A) DELETED BOTH THE DISALLOWANCES / A DDITION MADE BY AO. BEING AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVE NUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. AT THE OUTSET OF HEARING, THE LD.AR FOR THE ASSE SSEE SUBMITS THAT BOTH THE GROUNDS OF APPEAL RAISED BY REVENUE ARE COVERED BY THE DECISION OF TRIBUNAL IN ASSESSES OWN CASE FOR AYS 2011-12 TO 2 013-14 IN ITA NOS.5200/MUM/2015 FOR AY 2011-12; ITA NO.4845/MUM/2 016 FOR AY 2012-13; AND ITA NO.5024/MUM/2017 FOR AY 2013-14. ON THE OT HER HAND, THE LD.DR SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. 7. GROUND 1 RELATES TO DELETING THE ADDITION ON ACC OUNT OF NOTIONAL RENTAL VALUE. THE LD.AR FOR THE ASSESSEE SUBMITS THAT THI S GROUND OF APPEAL IS SQUARELY COVERED BY THE DECISION OF TRIBUNAL FOR AY S 2011-12 TO 2013-14. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND FI ND THAT IN ASSESSEES OWN CASE FOR AY 2013-14, THE TRIBUNAL BY CONSIDERING TH E IDENTICAL GROUND OF APPEAL PASSED THE FOLLOWING ORDER:- 7. WITH REGARD TO THE FIRST ISSUE RELATING TO DETERMINATION OF ANNUAL LETTING VALUE OF PUNE FARM HOUSE PROPERTY, WE NOTICED THAT LEARNE D CIT(A) HAS FOLLOWED THE 5 ITA 6575/MUM/2017 BINDING DECISION RENDERED BY HON'BLE BOMBAY HIGH CO URT IN THE CASE OF M.V. SONAWALA (SUPRA) AND FURTHER WE NOTICED THAT THE VI EW TAKEN BY LD CIT(A) ON AN IDENTICAL ISSUE IN A.Y. 2012-13 HAS SINCE BEEN UPHE LD BY THE COORDINATE BENCH IN ITA NO. 4845/MUM/2016 (REFERRED SUPRA) WITH FOLLOWI NG OBSERVATIONS :- 6. WHEN THIS ORDER WAS CONFRONTED TO THE TEAMED SR . DEPARTMENTAL REPRESENTATIVE, HE RELIED ON THE ASSESSMENT ORDER A ND PARTICULARLY HE RELIED ON THE CONCESSION GIVEN BY ASSESSEE THAT RATABLE VA LUE OF PUNE BUNGLOW BE TAKEN AS F 5,46,000/-. WE FIND THAT THE TRIBUNAL FOLLOWING THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF MV SONAWAL A VS.CIT 246 ITR 1 77 (BOM.) DIRECTED THE AO TO COMPUTE THE INCOME OF THE ASSESSEE FROM HOUSE PROPERTY TAKING THE ALV ON THE BASIS OF MUNIC IPAL RATABLE VALUE. WE FIND THAT THE TRIBUNAL HAS DECIDED THE ISSUE AND TA KING CONSISTENT VIEW AND RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE ASSE SSING OFFICER ACCORDINGLY. THIS ISSUE OF REVENUE'S APPEAL IS DISMISSED. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT T HE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE DOES NOT CALL FOR ANY INTERFERENCE. 8. CONSIDERING THE DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2013-14 WHEREIN IDENTICAL ISSUE FOR EARLIER YEARS WAS CONSIDERED. NO VARIATION, IN FACT IS BROUGHT TO OU R NOTICE. THEREFORE, CONSIDERING THE DECISION OF CO-ORDINATE BENCH FOR P RECEDING ASSESSMENT YEAR, WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL RA ISED BY THE REVENUE. 9. GROUND 2 RELATES TO DISALLOWANCE U/S 14A. THE L D.AR SUBMITS THAT THIS GROUND OF APPEAL IS ALSO COVERED BY THE DECISION OF EARLIER YEARS, I.E. AYS 2010- 11 TO 2013-14. THE LD.DR ON THE OTHER HAND, RELIED UPON THE ORDER OF ASSESSING OFFICER. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF PARTIES A ND NOTED THAT SIMILAR DISALLOWANCE WAS MADE FOR AYS 2010-11, 2011-12 AND 2013-14. WE HAVE FURTHER NOTED THAT ON IDENTICAL GROUND OF APPEAL, T HE TRIBUNAL IN ASSESSEES 6 ITA 6575/MUM/2017 OWN CASE FOR AY 2013-14 BY FOLLOWING THE DECISION O F CO-ORDINATE BENCH FOR AY 2012-13 PASSED THE FOLLOWING ORDER:- 8. THE NEXT ISSUE RELATES TO DISALLOWANCE MADE U/S . 14A OF THE I.T. ACT. WE NOTICED THAT THE ASSESSEE DID NOT CLAIM ANY EXPENDI TURE RELATING TO SHARE INVESTMENT ACTIVITY IN HIS PROFIT AND LOSS ACCOUNT. THE ASSESSEE HAS CHARGED ALL EXPENDITURE RELATING TO SHARE INVESTMENT ACTIVITY T O HIS CAPITAL ACCOUNT. WHEN THE ASSESSEE DID NOT CLAIM ANY EXPENDITURE IN THE PROFI T AND LOSS ACCOUNT RELATING TO SHARE INVESTMENT ACTIVITY, IN OUR VIEW, THE QUESTIO N OF MAKING ANY DISALLOWANCE U/S. 14A OF THE ACT DOES NOT ARISE. WE NOTICED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE COORDINATE BENCH IN A.Y. 2012-13 (REFERRED SUPRA), AND IT HAS ALSO TAKEN VIEW THAT THE DISALLOWANCE U/S. 14A OF T HE ACT IS NOT CALLED FOR, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS, BEING IDENTICAL IN THIS YEAR ALSO, WE UPHOLD THE VIEW TAKEN BY LD CIT(A) ON THIS ISSUE BY FOLLOWING THE DECISION OF CO- ORDINATE BENCH RENDERED IN THE ASSESSEE'S OWN CASE, REFERRED SUPRA. CONSIDERING THE DECISION OF CO-ORDINATE BENCH ON ID ENTICAL GROUND OF APPEAL, WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL RA ISED BY THE REVENUE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-07-20 19. SD/- SD/- ( G. MANJUNATHA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 17 TH JULY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI