SHRI Kamal Kumar Lath, Burhanpur V. THE ACIT, Khandwa

ITA 756/IND/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4398 (ITAT-INDORE)
• Duration Of Justice: 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI KAMAL KUMAR LATH PROPRIETOR M/S. KAMAL CORPORATION, SHAH BAZAAR , BURHANPUR (MP) PAN:ABAPL6738R VS. ASSISTANT COMMISSIONER OF INCOME TAX KHANDWA APPELLANT RESPONDENT APPELLANTS BY SHRI S. S. DESHPANDE, CA RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 03.08.2016 DATE OF PRONOUNCEMENT 03.08.2016 O R D E R PER O.P. MEENA ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II, INDORE [HE REINAFTER REFERRED TO AS THE CIT(A)] DATED 29.04.2016 AND PER TAINS TO ASSESSMENT YEAR 2012-13 AS AGAINST APPEAL DECIDED I N ASSESSMENT ORDER U/S.143(3) OF INCOME TAX ACT,1961( HEREIN AFTER REFERRED TO AS 'THE ACT) DATED OF ACIT KHANDWA [HEREINAFTER REFERRED TO AS THE AO]. I.T.A. NO. 756/IND/2016 ASSESSMENT YEAR: 2012-13 ITA NO.756/IND/AY:12-13 KAMAL KUMAR LATH PAGE 2 OF 6 2 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READS A S UNDER :- 1. THE LEANED COMMISSIONER OF INCOME-TAX (APPEALS)-II, INDORE (MP) ERRED IN LAW AND ON FACTS WHILE CONFIRMING THE ORDER OF LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, KHANDWA (MP). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 50,000/-(OUT OF RS. 1,80,000/-) LUMP-SUM IN HOUSE HOLD EXPENSES IGNORING THE FACTS THAT THE HOUSE HOL D EXPENSES OF THE YEAR UNDER CONSIDERATION IS 39% HIGHER THAN IMMEDIATELY PRECEDING YEAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, DISALLOWANCE OF RS. 10,63,062/- U/S. 14A BY INVOKING RULE 8D IS BAD IN LAW. 3. THE GROUND NO.1 IS GENERAL IN NATURE AND DOES NO T REQUIRE ADJUDICATION. 4. THE GROUND NO.2 RELATES TO DISALLOWANCE OF HOUSE HO LD EXPENSES OF WHICH FACTS APROPOS ARE THAT THE ASSESSE E HAS SHOWN WITHDRAWAL FOR HOUSE HOLD AT RS.1,20,000/- WHIC H WERE CONSIDERED TO BE LOW, HENCE FOR WHICH REASON WERE ASKED FOR. IT WAS EXPLAINED THAT THE FAMILY OF THE ASSESSE E IS CONSISTING 6, OUT OF WHICH 5 ARE EARNING MEMBERS AND TOTAL WITHDRAWALS OF THE ASSESSEE AND FAMILY MEMBERS ARE A T RS.3,34,000/-. HOWEVER, THE A.O. NOTED THAT THE AS SESSEE HAS ITA NO.756/IND/AY:12-13 KAMAL KUMAR LATH PAGE 3 OF 6 3 NOT FURNISHED DETAILS OF EXPENSES INCURRED ON MESS, MEDICAL, EDUCATION, CONVEYANCE AND FUNCTIONS, THEREFORE , TH E A.O. HAS ESTIMATED HOUSE HOLD EXPENSES AT RS.25,000/- PER MO NTH AND MADE RESULTANT ADDITION OF RS. 1,80,000/- [25000X12=3,00,000-1,20,000]. IN APPEAL, THE LD. C IT(A), NOTED THAT THE A.O. HAS FAILED TO CONSIDER THE OTHE R FAMILY MEMBERS WITHDRAWALS OF RS. 3,34,000/- AND OTHER DISALLOWANCE OF EXPENSES @20% WHICH ALSO HAVING ELEME NT OF PERSONAL NATURE. THEREFORE, LD. CIT(A) OBSERVED THA T THE HUGE ESTIMATE IS NOT JUSTIFIED, ACCORDINGLY, HE RESTRICT ED THE ADDITION TO RS.50,000/- 5. THE LD. A.R. FOR THE ASSESSEE, SUBMITTED THAT HOUSE HOLD EXPENSES FOR THE UNDER CONSIDERATION ARE 39% H IGHER THAN IMMEDIATELY PRECEDING YEAR AND TOTAL FAMILY WIT HDRAWALS SHOWN BY THE ASSESSEE ARE MORE THAN THE ESTIMATE OF THE A.O., HENCE, LD. CIT(A) WAS NOT JUSTIFIED IN MAINTAINING T HE ADDITION AT RS.50,000/-. PER CONTRA, LEARNED DR , SUPPORTED THE ORDER OF CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. WE ITA NO.756/IND/AY:12-13 KAMAL KUMAR LATH PAGE 4 OF 6 4 FIND THAT DETAILS REGARDING MESS, FUNCTIONS, EDUCAT ION , CONVEYANCE ETC. WERE NOT FILED BY THE ASSESSEE, THER EFORE , ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT AVAILABLE WITH THE A.O.. FURTHER, TOTAL HOUSE HOLD EXPENSES AT RS.3,84,000 I.E. [3,34,000+50,000] INCLUDING THE AD DITION OF RS. 50,000/- AS RETAINED BY THE LD. CIT(A), FOR SIX MEMBER FAMILY APPEARS TO BE AS REASONABLE, HENCE, WE FIND NO REASON TO INTERFERE WITH ORDER OF CIT(A). THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 7. THE GROUND NO. 3 RELATES TO DISALLOWANCE OF RS. 10,63,062/- U/S. 14A READ WITH RULE 8D. 8. FACTS AS APROPOS OF THIS GROUND ARE THAT THE ASSESS EE HAS SHOWN INVESTMENT IN SHARES AND MUTUAL FUNDS AT RS.3,50,95,440/-ON WHICH DIVIDEND INCOME OF RS.7,35, 024/- HAS BEEN EARNED. SINCE THE ASSESSEE HAS SHOWN THE I NCOME NOT FORMING PART OF TOTAL INCOME , THEREFORE , THE ASSESSEE REQUIRED TO FURNISH WORKING OF DISALLOWANCE U/S. 14A OF THE ACT. HOWEVER, THE ASSESSEE HAS FAILED TO SATISFY T HAT INITIAL INVESTMENT MADE ON GAINING TAX FREE INCOME WAS FROM HIS OWN FUND AND UNSECURED LOANS WERE TAKEN FOR THE BUSINES S ITA NO.756/IND/AY:12-13 KAMAL KUMAR LATH PAGE 5 OF 6 5 PURPOSE. NOR ANY WORKING AS PER RULE 8D WAS FILED. ACCORDINGLY , THE A.O. WORKED OUT THE DISALLOWANCE A T RS.10,63,062/- CALCULATED IN ACCORDANCE WITH RULE 8D , AND ADDED THE SAME TOTAL INCOME. IN APPEAL , IT WAS CLAI MED THAT THE A.O. SHOULD HAVE CONSIDERED THE DEDUCTION OF RS.9,77,286/- AS INTEREST RECEIVED WHILE CALCULATING THE DISALLOWANCE AND BENEFIT OF NETTING OF INTEREST SHOU LD HAVE BEEN ALLOWED. THE ASSESSEE HAS ALSO FILED REVISED WO RKING OF DISALLOWANCE WHICH COMES TO RS. 5,74,317/-. BUT LD. C IT(A) WAS NOT SATISFIED WITH THIS EXPLANATION, HENCE, CONFI RMED THE SAME. AGGRIEVED WITH ORDER OF CIT(A), THE ASSESS EE IS FILED APPEAL BEFORE US. 9. THE LD. A.R. SUBMITTED THAT RULE8D PROVIDES DISALLOWANCE AT 1/2% OF AVERAGE INVESTMENT MADE DURI NG THE YEAR WHICH COMES TO RS. 5,74,317/- AS PER WORKING FIL ED BEFORE LD. CIT(A) AND NETTING OF INTEREST HAS TO BE ALLO WED. THE LD. A.R. ALSO PLACED RELIANCE ON THE DECISION OF THIS B ENCH OF TRIBUNAL DECIDED IN ITANO.264/IND/2016 FOR AY 2010- 11 IN ASSESSEE`S OWN CASE, WHEREIN, FOLLOWING THE DECISION O F HON'BLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS P VT. LTD. VS. ITA NO.756/IND/AY:12-13 KAMAL KUMAR LATH PAGE 6 OF 6 6 CIT 372 ITR 694(DEL) WAS SET-ASIDE TO FILE OF THE A. O. WITH A DIRECTION TO CONSIDER THE DECISION OF HON'BLE HIGH COURT AND DECIDE THE ISSUE ACCORDINGLY. WE RESPECTFULLY FOLLO WING THE SAID DECISION, RESTORED THE ISSUE TO FILE OF THE A.O. TO DECIDE THE ISSUE IN THE LIGHT OF AFORESAID DECISION . 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 3RD AUGUST,2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 3RD AUGUST, 2016. OPM* COPY FORWARDED TO:- 1. THE ASSESSEE/2. THE AO CONCERNED/3. THE LD. PCIT CONCERNED/4. THE LD. CIT(A)/5. THE LD. DR, INDORE/6 . THE GUARD FILE BY ORDER A.R. ITAT, INDORE