DINESH JAYANTILAL JAIN, MUMBAI V. ITO 21(1)(3), MUMBAI

ITA 6701/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1390 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 27-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMA
• Assessee Lawyers: DINESH JAYANTILAL JAIN
• Keywords: Earning of tax free income; Rule 8D; Capital Gains
• Section: 143(3); 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI VIKAS AWASTHY, JM ITA NO. 6701/MUM/2018 ( ASSESSMENT YEAR: 2013-14) DINESH JAYANTILAL JAIN, 208/209, JODIA MANSION, GANPATRAO KADAM MARG, MUMBAI. VS. I.T.O.-21(1)(3), MUMBAI. PAN/GIR NO.AABPJ 4702 F (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI DINESH JAYANTILAL JAIN REVENUE BY SHRI KUMAR PADMAPANI BORA (SR.DR) DATE OF HEARING 11/12/2019 DATE OF PRONOUNCEMENT 12/12/2019 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-48, MUMBAI DATED 19/09/2018 FOR THE A.Y. 201 3-14 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1 961 (IN SHORT, THE ACT). 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DI SALLOWANCE OF THE EXPENSES MADE U/S 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT, THE RULES). 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS EARNING INCOME FROM BUSINESS AND ITA NO. 6701/MUM/2018 DINESH JAYANTILAL JAIN VS ITO 2 CAPITAL GAINS. DURING THE COURSE OF SCRUTINY ASSESS MENT, THE A.O. FOUND THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 61,427/-, WHICH WAS CLAIMED AS EXEMPT. HE INVOKED PROVISIONS OF SEC TION 14A OF THE ACT AND COMPUTED THE DISALLOWANCE IN RESPECT OF INTERES T EXPENDITURE UNDER RULE 8D OF THE RULES, ACCORDINGLY, DISALLOWANCE OF RS. 6,57,235/- WAS MADE. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRM ED THE DISALLOWANCE, AGAINST WHICH THE ASSESSEE IS IN FURT HER APPEAL BEFORE THE ITAT. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM THE RECORD THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS DIVIDEND INCOME OF RS. 61,427/- WHICH WAS CLAIMED AS EXEMPT. THE A.O. FOUND THAT THE ASSESSEE HAS INCURRED INTEREST EXPENDITURE WHICH WAS CLAIMED AGAINST EXEMPT INCOME. ACCORDINGLY, HE INVOKED PROV ISIONS OF SECTION 14A OF THE ACT AND COMPUTED PROPORTIONATE DISALLOWA NCE UNDER RULE 8D OF THE RULES AMOUNTING TO RS. 6,57,235/-. IT IS NOW WELL SETTLED BY VARIOUS JUDICIAL PRONOUNCEMENTS THAT THE DISALLOWAN CE U/S 14A OF THE ACT CANNOT EXCEED THE EXEMPT INCOME. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PCIT VS STATE BANK OF PATIALA (2017) 393 ITR 476 (P&H) AND THE HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS CARAF BUILDERS & CONSTRUCTIONS (P) LTD. (2019) 414 ITR 12 2 (DEL) HAVE HELD THAT THE DISALLOWANCE U/S 14A OF THE ACT CANNOT EXC EED THE EXEMPT ITA NO. 6701/MUM/2018 DINESH JAYANTILAL JAIN VS ITO 3 INCOME. THE LD AR ALSO PLACED ON RECORD VARIOUS JUD ICIAL PRONOUNCEMENTS OF THE ITAT TO THE SAME EFFECT. WE HAD DELIBERATED ON THE VARIOUS JUDICIAL PRONOUNCEMENTS FOLLOWING THE PROPOSITION L AID DOWN THEREIN, WE DIRECT THE A.O. TO RESTRICT THE DISALLOWANCE U/S 14 A OF THE ACT TO THE EXTENT OF EXEMPT INCOME WHICH IS RS. 61,427/- IN TH E INSTANT CASE. WE DIRECT ACCORDINGLY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH DECEMBER, 2019. SD/- (VIKAS AWASTHY) SD/- (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 12/12/2019 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//