DILIP G SHAH ( PROP VISION CONSULTING GROUP), MUMBAI V. ASST CIT CIR 19(1), MUMBAI

ITA 7690/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101022 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN ,AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 7690 / MUM/20 1 2 ( / ASSESSMENT YEA R : 20 0 9 - 10 ) SHRI DILIP G S HAH , (PROP.VISION CONSULTING GROUP), C/O RC RESHAMWALA AND CO., CHARTERED ACCOUNTANTS , 323, VARMA CHAMBERS, 11, HOMJI STREET, FORT, MUMBAI - 400001 / VS. THE ASSTT.COMMISSIONER OF INCOME TAX CIRCLE 19 (1), PIRAMNAL CHAMBERS, PAREL, MUMBAI - 40001 2 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AACPS2430E / APPELLANT BY S /SH RI KIRIT S SANGHVI AND MANISH R RESHAMWALA / RSPONDENT BY SHRI KAILASH P GAIKWAD / DATE OF HEARING : 31.8 . 201 5 / DATE OF PRONOUNCEMENT: 11. 9. 201 5 / O R D E R P ER B .R.BASKARAN : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 04 - 09 - 2012 PASSED BY LD CIT(A) - 30, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN RESPECT OF THE FOLLOWING ISSUES: - ( A ) DISALLOWANCE OF 15% OF TRAVELLING EXPENSES ( B ) DISALLOWANCE MADE U/S 14A OF THE ACT. ITA NO. 7690 / MUM/20 1 2 2 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A CONSULTANT OF PHARMACEUTICAL INDUSTRY. THE FIRST ISSUE RELATES TO THE DISALLOWANCE MADE OUT OF TRAVELLING EXPENSES. THE ASSESSEE CLAIMED A SUM OF RS.3,21,913/ - AS TRAVELLING EXPENSES. SINCE T HE ASSESSEE COULD NOT JUSTIFY THE EXPENSES AND THE ELEMENT OF PERSONAL TRAVEL COULD NOT BE RULED OUT, THE AO DISALLOWED 20% OF THE EXPENSES AND THE SAME WAS CONFIRMED BY LD CIT(A). 3. BEFORE US, THE LD A.R VEHEMENTLY CONTENDED THAT THE TRAVELLING WAS UND ERTAKEN ON PROFESSIONAL WORK AND HENCE NO DISALLOWANCE WAS CALLED FOR. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE HAS FAILED TO FURNISH THE RELEVANT DETAILS. SINCE THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS OF TRAVELLING EXPENSES, WE ARE ALSO OF THE VIEW THAT THE POSSIBILITY OF INVOLVEMENT OF PERSONAL ELEMENT CANNOT BE RULED OUT. HOWEVER, CONSIDERING THE VOLUME OF EXPENDITURE, WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE AT 20% IS ON THE HIGHER SIDE. ACCORDINGLY, WE MODIFY THE ORDER OF LD CIT(A) AND DIRECT THE AO TO SUSTAIN THE DISALLOWANCE AT 10% OF THE TRAVELLING EXPENSES. 4. THE NEXT ISSUE RELATES TO THE DISALLOWANCE MADE U/S 14A OF THE ACT. THE ASSESSEE DID NOT MAKE ANY DISALLOWANCE. THE AO COMPUTED THE DISALLOWANCE AS PER R ULE 8D AT RS.98,817/ - AND THE SAME WAS CONFIRMED BY LD CIT(A). 5. THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER DID NOT RECORD SATISFACTION ABOUT THE CLAIM MADE BY THE ASSESSEE THAT HE DID NOT INCUR ANY EXPENDITURE TO EARN EXEMPT INCOME. HE SUBMITTED THAT THE AO CANNOT RESORT TO WORK OUT THE DISALLOWANCE UNDER RULE 8D WITHOUT RECORDING SATISFACTION. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. TAIKISHA ENGINEERING INDIA LTD (2015)(54 T AXMANN.COM 109). THE LD A.R FURTHER SUBMITTED THAT ITA NO. 7690 / MUM/20 1 2 3 THE ASSESSING OFFICER HAS TAKEN INTO ACCOUNT THE INVESTMENT MADE IN SHARES OF OVERSEAS COMPANY AND ALSO THE INVESTMENT MADE IN PPF ACCOUNT ALSO FOR WORKING OUT AVERAGE VALUE OF INVESTMENTS. ACCORDINGLY, T HE LD A.R SUBMITTED THAT THE WORKING OF DISALLOWANCE OF 0.5% OF AVERAGE VALUE OF INVESTMENT IS NOT CORRECT. 6. THE LD D.R, ON THE CONTRARY, SUBMITTED THAT THE SATISFACTION OF THE AO IS DISCERNIBLE FROM THE ASSESSMENT ORDER. WITH REGARD TO THE ALTERNATIV E CLAIM OF THE ASSESSEE TO EXCLUDE THE VALUE OF OVERSEAS INVESTMENTS AND PPF, THE LD D.R SUBMITTED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO FOR EXAMINATION. 7. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. AS OBSERVED BY HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P) LTD (358 ITR 593), THERE IS NO SPECIFIC METHOD OR FORM FOR RECORDING SATISFACTION U/S 14A OF THE ALSO. AS SUBMITTED BY THE LD D.R, IN OUR VIEW ALSO, THE SATISFACTION CAN BE ASCERTAINED FROM THE OBSERVATIONS MADE BY THE AO. IN THE INSTANT CASE, THE ASSESSEE DID NOT MAKE ANY DISALLOWANCE U/S 14A OF THE ACT, EVEN THOUGH HE HAS MADE INVESTMENT IN SHARES. HENCE THE AO PROCEEDED TO COMPUTE THE DISALLOWANCE AS PER RULE 8D OF IT RULES. HENCE, IN OUR VIEW, THE SATISFACT ION OF THE AO IS DISCERNIBLE IN THIS CASE. 8. IN THE ALTERNATIVE, THE ASSESSEE SUBMITTED THAT THE VALUE OF OVERSEAS INVESTMENTS SHOULD NOT BE TAKEN INTO ACCOUNT TO WORK OUT AVERAGE VALUE OF INVESTMENTS, SINCE THE DIVIDEND EARNED FROM THOSE INVESTMENTS IS NOT EXEMPT. HE FURTHER SUBMITTED THAT THE INVESTMENTS MADE IN PPF SHOULD ALSO NOT BE CONSIDERED. IN OUR VIEW, THESE CLAIMS REQUIRE FRESH EXAMINATION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE ABOVE SAID CLAIM OF THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. ITA NO. 7690 / MUM/20 1 2 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 11TH SEPT, 2015. 11TH SEPT , 2015 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 11TH SEPT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWAR DED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR ) , /ITAT, MUMBAI