LEHRIKANT SUNDERJI BHADRA, MUMBAI V. ACIT 25(2), MUMBAI

ITA 7633/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3909 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A RAMCHANDRAN
• Keywords: Proportionate interest; Notional interest
• Section: 143(3); 142(1); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO 7633/ MUM/20 14 ( / ASSESSMENT YEAR : 2010 - 20 11 ) MR.LEHRIKANT SUNDERJI BHADRA, 201, BEACH APATMENT BALRAJ SAHANI ROAD, OPP NOVOTEL HOTEL JUHU MUMBAI - 400049 / VS. ASSTT. COMMISSIONER OF INCOME TAX - 25(2), MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AABPB7078G / APPELLANT BY: SHRI NONE / RESPONDENT BY SHRI A RAMCHANDRAN / DATE OF HEARING : 27.7 .201 6 / DATE OF PRONOUNCE MENT : 08. 08. 2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 35 , MUMBAI D A T ED 17.10.2014 PERTAINING TO A.Y 2010 - 11 . NONE APPEARED ON BEHALF OF T HE ASSESSEE DESPITE SERVICE OF NOTICE ISSUED AND SERVED UPON THE ASSESSEE AND THEREFORE, WE PROCEED TO DECIDE THE APPEAL EX - PARTE WITHOUT THE PRESENCE OF ASSESSEE, ON THE BASIS OF MATERIAL AVAILABLE BEFORE US AND AFTER HEARING THE LD.DR. 2. SOLE ISSUE RA ISED IN ALL THE GROUNDS IS AGAINST THE UPHOLDING THE ORDER OF AO QUA THE ADDITION MADE UNDER SECTION 14A R.W.RULE 8D OF THE INCOME TAX RULES, 1962 ON ACCOUNT OF NOTIONAL INTEREST TO THE TUNE OF RS.1,83,215/ - . ITA NO .7633/ M/1 4 2 3 . FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.51,99,101 / - . THE RETURN WAS PROCESSED U/S 143( 1 ) OF THE ACT . THEREAFTER, SCRUTINY PROCEEDINGS WERE IMITATED AGAINST THE ASSESSEE AND STATUTORY NOTICES UNDER SECTION S 143(2) AND 142(1) WERE IS SUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS RECEIVED DIVIDEND INCOME FROM SHARE OF RS.440/ - WHICH DID NOT FORM PART OF THE TOTAL TAXABLE INCOME OF THE ASSESSEE. THE AO FURTHER OBSERV ED THAT THE ASSESSEE HAS CLAIMED INTEREST OF RS.30,21,291 / - IN THE PROFIT AND LOSS ACCOUNT. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PROPORTIONATE INTEREST EXPENSES SHOULD NOT BE DISALLOWED UNDER RULE 8D ( 2 ) (II) & (III) OF THE INCOME TAX RULES, 1962 AND ACCORDINGLY DISALLOWED A SUM OF RS.1,83,250/ - COMPRISING RS.1,54,928/ - UNDER RULE 8D 2(II) AND RS.28,28,7/ - UNDER RULE 8D 2(III) AFTER REJECTING THE SUBMISSIONS OF THE ASSESSEE AND THUS FRAMED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT AT RS. 53,82,320/ - VIDE ORDER DATED 30.11.2012. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION RENDERED IN THE CASE OF GOD RE J AND B OYCE MANUFACTURING COMPANY LTD V/S DCIT REPORTED IN (2010) 194 TAXMANN 203 . AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 4 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL P LACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW . WE ITA NO .7633/ M/1 4 3 FIND FROM THE RECORDS BEFORE US THAT THE ASSESSEES OWN FUNDS WERE FAR MORE THAN THE INVESTMENTS MADE BY THE ASSESSEE IN SHARES AND SECURITIES. TH E OWN FUNDS OF THE ASSESSEE WERE RS.6,77,83,595 / - WHILE INTEREST FREE UNSECURE D LOANS WERE RS.2,48,74,877/ - AND TAX FREE INVESTMENTS MADE WERE ONLY RS.72,23,626/ - . WE, THEREFORE FIND MERIT IN THE C ASE OF THE ASSESSEE THAT THE DISALLOWANCE MADE BY THE AO UNDER RULE 8D 2(II) TO THE TUNE OF RS.1,54,928 / - WAS NOT CORRECT AND THEREFORE DESERVE D TO BE DELETED . THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS AND ISSUE DECIDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S RELIANCE UTILITIES AND POWER LTD. [2009] 313 ITR 340 (BOM) . HOWEVER, AS REGAR D RULE 8D (2) (III), THE PROVISION WAS RIGHTLY APPLIED BY THE AO AND UPHELD BY THE LD.CIT(A). WE, THEREFORE, CONSIDERING THE FACTS OF THE CASE HOLD THAT THE ORDER OF LD.CIT(A) ON THE CONFIRMATION OF ADDITION U/R 8D(2)(II) CANNOT BE SUSTAINED AND DIRECTED T O BE DELETED. THE AO IS DIRECTED ACCORDINGLY. 5 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON , 2016 . 8TH AUG, 2016 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 8 TH AUG , 2016 . . . ./ SRL , SR. PS ITA NO .7633/ M/1 4 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE CO PY (ASSTT. REGISTRAR) , /ITAT, MUMBAI