SOUMYALATHA S. SHETTY, MUMBAI V. DCIT 5(1)(2), MUMBAI

ITA 7396/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8612 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 15-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JIVRAJ P JAIN
• Keywords: Salary income; Earning of tax free income; Revised return
• Section: 143(3); 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 7396 / MUM/20 16 ( ASSESSMENT YEAR : 2009 - 10 ) MS. SOUMYALATHA S. SHETTY 22, BHULABHAI DESAI ROAD MAHALAXMI CHAMBER MUMBAI 400 026 VS. DCIT 5(1)(2) AAYAKAR BHAVAN MUMBAI PAN/GIR NO. ABMPS8762L APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI JIVRAJ P JAIN REVENUE BY SHRI BIPIN J JAIN DATE OF HEARING 09 / 11 /201 7 DATE OF PRONOUNCEME NT 10 / 11 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 10, MUMBAI DATED 22/09/2016 FOR A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE ONLY GRIEVANCE OF ASSESSEE RELATES TO DISALLOWANCE MADE U/S.14A R.W.RULE 8D. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. T HE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAINS AND OTHER SOURCES. IT FURNISHE D ITS RETURN OF INCOME FOR A.Y.2009 - 10 ON 28/09/2009 DECLARING TOTAL INCOME OF RS.97,52,650/ - . THEREAFTER THE ASSESSEE HAS FILED REVISED RETURN ON ITA NO. 7396/MUM/2016 MS. SOUMYALATHA S SHETTY 2 30/09/2010 DECLARING TOTAL INCOME OF RS.97,89,200/ - . FURTHER, THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 23/1 1/2011 DETERMINING THE TOTAL INCOME OF RS.98,02,980/ - . SUBSEQUENTLY, CIT - 5, MUMBAI HAS PASSED AN ORDER U/S 263 HOLDING THAT THE ASSESSMENT PASSED U/S 143(3) OF THE ACT WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, NOTICE U/S 14 3(2) WAS ISSUED ON 05/03/2015 AND DULY SERVED ON THE ASSESSEE. THE AO HAS COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S.263 OF THE ACT DETERMINING THE TOTAL INCOME OF RS.1,00,14,050/ - ON 25/03/2015 BY MAKING THE ADDITIONS/ DISALLOWANCES U/S.14A R.W. RULE 8 D AMOUNTING TO RS.2,11,073/ - . 4. IT WAS ARGUED BY LEARNED AR THAT ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE TOWARDS EARNING OF THE EXEMPT INCOME, THEREFORE , NO DISALLOWANCE IS WARRANTED U/S. 14A. 5. I HAD CAREFULLY GONE THROUGH THE PROFIT AND LOSS ACCOUNT AND COMPUTATION OF INCOME SO FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND FOUND THAT NO EXPENDITURE WAS CLAIMED BY ASSESSEE TOWARDS EARNING OF THE DIVIDEND INCOME. EVEN AO HAS NOWHERE POINTED OUT ANY SUCH EXPENDITURE AND HE MERELY RELIED ON THE C OMPUTATION OF PROVISION CONTAINED UNDER RULE 8D. T HE LOGICAL INTERPRETATION OF SECTION 14A AND RULE 8D OF THE INCOME TAX RULES, IT IS THE REQUIREMENT OF THE LAW THAT FACTS OF EACH CASE HAVE TO BE EXAMINED BY THE ASSESSING OFFICER AND THE EXPENDITURE, AS IS RELATABLE TO THE EXEMPT INCOME, IS TO BE DISALLOWED. SUB - SECTION (1) OF SECTION 14A IS THE BASIC AND PRIMARY PROVISION, WHICH PROVIDES FOR DISALLOWANCE OF AN EXPENDITURE INCURRED IN RELATION TO EXEMPT ITA NO. 7396/MUM/2016 MS. SOUMYALATHA S SHETTY 3 INCOME. SUB - SECTION (2) IS ONLY SUPPLEMENTARY TO PROVI SIONS OF SUB - SECTION (1) AND CANNOT OVERRIDE THE SAME. IN ANY CASE LANGUAGE OF SUB - SECTION (2) ALSO MAKES IT CLEAR THAT RULE 8D CAN BE INVOKED ONLY IF THE ASSESSING OFFICER IS NOT SATISFIED AS REGARDS THE CLAIM OF THE ASSESSEE. IN THE CASE OF RAPTAKOS BRET T & CO. LTD.,(2015) 58, TAXMANN.COM 115, MUMBAI TRIBUNAL 10/06/2015, IT WAS HELD BY TRIBUNAL THAT ONCE ASSESSEE MAKES CLAIM BEFORE ASSESSING OFFICER THAT NO EXPENDITURE ATTRIBUTABLE TO EARNING OF DIVIDEND INCOME, ASSESSING OFFICER IS REQUIRED UNDER STATUTE TO SATISFY HIMSELF HAVING REGARD TO ACCOUNTS OF ASSESSEE ABOUT CORRECTNESS OF CLAIM OF ASSESSEE OTHERWISE HE CANNOT MECHANICALLY PROCEED TO MAKE DISALLOWANCE U/S.14A R.W.R. 8D . 6 . IN VIEW OF THE ABOVE DISCUSSION, SINCE NO EXPENDITURE WAS CLAIMED BY ASSESS EE TOWARDS EARNING OF EXEMPT INCOME, THE DISALLOWANCE MADE BY THE AO IS NOT TENABLE. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 10 / 11 /2017 S D/ - ( RAM LAL NEGI ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 10 / 11 /201 7 KARUNA SR. PS ITA NO. 7396/MUM/2016 MS. SOUMYALATHA S SHETTY 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CI T 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//