KAMLESH GALIA, MUMBAI V. ACIT 17(2), MUMBAI

ITA 7036/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3103 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Business income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J M AND SRI RAMIT KOCHAR , A M ITA NO . 70 3 6 /MUM/2013 (A.Y.:2010 - 11 ) KAMLESH GALIA, 149, AMRUT LABH, 2 ND FLOOR, HINDU COLONY, ROAD NO.6, DADAR, MUMBAI 400 014 VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 17(2) , PIRAMAL CHAMBERS, MUMBAI PAN: A ALPG 0836 D APPELLANT .. RESPONDENT APPELLANT BY SHRI PARESH SHAPARIA, AR RESPONDENT BY SHRI A. RAMACHANDRAN, DR DATE OF HEARING 14 - 06 - 2016 DATE OF PRONOUNCEMENT 17 - 0 6 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT (A) - 29 , MUMBA I DATED 13 - 09 - 2013 PASSED IN APPEAL NO.CIT (A) - 29 / RG. 17/ 115/ 12 13 RESTRICTING THE DISALLOWANCE AT RS.1,76,873/ - U/S 14A OF THE ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) READ WITH RULE 8D(2) (III) OF THE INCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE ACT) AS AGAINST THE DISALL OWANCE MADE BY THE AO AT RS.2,60,009/ - . ASSESS MENT IN THIS CASE WAS FRAMED BY TH E ACIT, CIRCLE - 17 (2 ), MUMBAI FOR ASSESSMENT YEA R 2010 - 11 VIDE HIS ORDER DATED 05 - 03 - 2013 U/S 143(3) OF THE ACT. 2. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO NOTED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.7,73,185/ - . THE AO WORKED OUT THE DISALLOWANCE IN RELATION TO EXEMPTED INCOME AT RS.2.60 LACS BEING 0.5% OF AVERAGE VALUE OF INVESTMENTS AS PER RULE 8D (2)(III) OF THE RULES. AGGRIEVED BY THE ACTION OF THE AO, THE ASSESSE E PREFERRED ITA NO. 7036 /MUM/20 1 3 2 APPEAL BEFORE THE LEARNED CIT (A), WHO RESTRICTED THE DISALLOWANCE AT RS.1,76,873/ - . AGGRIEVED, THE ASSESSEE CAME IN SECOND APPEAL BEFORE US. 3 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE ACCOUNTS OF THE ASSESSE E AND STATED THAT THE ASSESSEE BEING AN INDIVIDUAL DERIVING INCOME FROM BUSINESS, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE ASSESSEE FILED THE FOLLOWING PARTICULARS OF TAXABLE INCOME AND TAX FREE INCOME IN COMPARATIVE FORM: - TOTAL INCOME 4,62,11,9 78/ - EXEMPTED INCOME 20,03,182/ - TAXABLE INCOME 4,42,08,796/ - EXEMPTED INCOME AS A PERCENTAGE OF TOTAL INCOME 4.25% TAXABLE INCOME AS A PERCENTAGE OF TOTAL INCOME 95.75% HE HAS ALSO FILED THE FOLLOWING DETAILS: - PARTICULARS AY 2010 - 11 AY 2009 - 10 TAX FREE INCOME: DIVIDEND ON SHARES DIVIDEND ON MUTUAL FUNDS PPF INTEREST RS.6,68,315 RS.1,04,870 RS.1,32,107 RS.5,33,097 RS.68,677 RS.1,17,136 TOTAL: RS.9,05,292 RS.7,18,910 EXPENDITURE IN RELATION TO THE SAME : STT (DEBITED TO CAPITAL A/C) PORTF OLIO MANAGEMENT FEES (DEBITED TO CAPITAL A/C) SUO MOTO DISALLOWED BY APPELLANT (5% OF DIVIDEND INCOME) RS.2,89,663 RS.2,37,309 RS.38,659 RS.31,267 RS.10,000 (RS.5056+4,944) TOTAL: RS.5,65,631 RS.46,211 TAXABLE BUSINESS INCOME RS.2,91,63,801 RS. 53,15,577 OPENING VALUE OF TAX - FREE INVESTMENTS: 5.18 CRORES 7.32 CRORES CLOSING VALUE OF TAX FREE INVESTMENTS: 6.77 CRORES 5.18 CRORES % OF EXPENDITURE UNCLAIMED/DISALLOWED TO TOTAL TAX FREE INCOME: 62.5%(APPROX) 6.43%(APPROX) IT WAS CLAIMED THAT THE TOTAL EXPENSED DEBITED TO THE PROFIT & LOSS ACCOUNT ARE AMOUNTING TO RS.9,31,758/ - WHICH WERE INCURRED FOR EARNING OF BUSINESS INCOME ALONE . ACCORDING TO HIM, THE DIRECT EXPENDITURE INCURRED IN RELATIO N TO EARNING EXTRA INCOME WAS DEBITED TO THE CAPIT AL ACCOUNT OF THE ASSESSEE AND NOT CLAIMED IN THE PROFIT & LOSS ACCOUNT LIKE ITA NO. 7036 /MUM/20 1 3 3 SECURITY TRANSACTION TAX OF RS.2,89,663/ - AND MANAGEMENT FEE OF RS.2,37,309/ - . IN VIEW OF THESE FACTS, THE LEARNED COUNSEL ALSO EXPLAINED THAT THE ASSESSEE SUO MOTO DISALLOWED A S UM OF RS.38,659/ - DESPITE THE FACT THAT NOTHING IS REQUIRED TO BE DISALLOWED. WE FIND FROM THE ABOVE FACTS WHICH ARE VERY CLEAR THAT IN THIS CASE NO EXPENDITURE RELATABLE TO DIVIDEND INCOME IS ATTRIBUTABLE EXCEPT THE AMOUNT DISCLOSED BY THE ASSESSEE AND SU O MOTO DISALLOWED AT RS.38,659/ - , WE DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT (A) AND ALLOW THIS APPEAL OF THE ASSESSEE. 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON 17 /0 6 / 201 6 . SD/ - SD/ - ( RAMIT KOCHAR ) ( MAHAVIR SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 17 /6 / 201 6 LAKSHMIKANTA DEKA/SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI DATE INITIAL DICTATION PAD ATTACHED WITH THE DRAFT ORDER YES 1. DRAFT DICTATED ON 14 - 06 - 16 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 16 - 06 - 16 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECON D MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT ( A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//