CHETAN SHIVJI VORA, MUMBAI V. ITO WD 18(2)(1), MUMBAI

ITA 7691/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9118 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURINDER JIT SINGH
• Assessee Lawyers: MADAN DEDHIA
• Section: 14A

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R.K.GUPTA , J M ITA NO. 7691 / MUM/ 20 1 1 ( ASSESSMENT Y EAR : 200 7 - 20 08 ) CHETAN SHIVJI VORA, SHOP NO.2, SHREE BUILDING, RANADE ROAD, DADAR (W) , MUMBAI - 28 VS. ITO WD 18(2)(1) , MUMBAI PAN/GIR NO. : A AAPV 6970 C ( APPELLANT ) .. ( RESPONDENT ) /A SSESSEE BY : MR. MADAN DEDHIA /RE VENUE BY : MR. SURINDER JIT SINGH DATE OF HEARING : 6 TH DEC ., 2012 DATE OF PRONOUNCEMENT : 14 TH DEC. ,2012 O R D E R THIS IS AN A PPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 12 - 8 - 2011 OF LEANED CIT(A) - 29 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 7 - 08 . 2 . THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS AGAINST CONFIRMING THE DISALLOWANCE OF RS. 1,06,304/ - , DISALLOWED BY T HE ASSESSING OFFICER UNDER SECTION 14A . ITA NO. 7691 /20 1 1 2 3 . DURING THE ASSESSMENT, THE ASSESSING OFFICER NOT ICED THAT THE ASSESSEE HAS SHOWN ITS INCOME AS SHARE FROM THE PARTNERSHIP FIRM WHICH IS EXEMPT UNDER SECTION 10(2A) OF THE ACT. IT WAS ALSO SEEN THAT THE ASSESSEE HAS ALSO SOME DIVIDEND INCOME, THEREFORE, THE INTEREST PAID ON THE AMOUNT OF LOAN TAKEN FOR THE PURPOSE OF BUYING SHARES IS ALSO NOT ALLOWABLE. ACCORDINGLY, HE DISALLOWED THE VARIOUS EXPENSES I.E. CLAIMED ON ACCOUNT OF PROFESSIONAL TAX, CONVEYANCE, PROFESS IONAL FEES AND INTEREST PAID, TOTALING TO RS. 1,06,340 UNDER SECTION 14A OF THE ACT. 4 . LEARNED CIT(A) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSES SEE DESERVES TO SUCCEED ON THIS ISSUE IN PART. I NOTED THAT THE LOAN BORROWED FROM BANK ON WHICH INTEREST IS PAID WAS INVESTED IN THE FIRM FOR BUSINESS PURPOSES . THEREFORE, THE INTEREST PAID ON BORROWED FUND FOR THE BUSINESS PURPOSES CANNOT BE DISALLOWED U NDER SECTION 14A. I FURTHER NOTED THAT THE ASSESSEE IS HAVING OTHER INCOME ALSO AND HAS PAID INTEREST ALSO. THE COMPUTATION OF INCOME IS PLACED ON RECORD AND IT IS NOTICED THAT THERE IS AN INCOME FROM INTEREST; THERE IS AN INCOME FROM SHORT TERM CAPITAL GA IN; THERE IS AN INCOME FROM PARTNERSHIP FIRM AND REMUNERATION INCOME. THE CONVEYANCE IS PAID FOR THE BUSINESS PURPOSE , THEREFORE, CONVEYANCE CHARGES CANNOT BE DISALLOWED UNDER SECTION 14A. LIKEWISE, PROFESSIONAL TAX , WHICH IS COMPULSORY TO RUN THE BUSINESS AND THE SAME IS PAID TO THE ITA NO. 7691 /20 1 1 3 GOVERNMENT, CANNOT BE DISALLOWED UNDER SECTION 14A. LIKEWISE, PROFESSIONAL FEES PAID TO THE PROFESSIONALS CANNOT BE DISALLOWED UNDER SECTION 14A. NOW, THE ONLY AMOUNT REMAINS I.E. INTEREST WHICH CAN BE CONSIDERED FOR THE PURPOS E OF DISALLOWANCE UNDER SECTION 14A ON THE AMOUNT OF FUND INVESTED FOR BUYING SHARES ON WHICH DIVIDEND HAS BEEN EARNED BY THE ASSESSEE. I NOTED THAT TOTAL INTEREST PAID BY THE ASSESSEE IS AT RS. 2, 02,889/ - AND THERE IS AN INTEREST INCOME ALSO WHICH IS AT R S. 56,485/ - . BOTH HAVE TO BE NETTED OFF . THE MAJOR AMOUNT ON WHICH INTEREST HAS BEEN PAID IS PERTAINING TO FUNDS WHICH WERE INVESTED IN THE PARTNERSHIP FIRM AND INTEREST PAID TO THE BANK. THEREFORE, ON THAT ACCOUNT ALSO, DISALLOWANCE MADE IS NOT CORRECT. HO WEVER, SINCE THE RECONCILIATION IS NOT AVAILABLE , THEREFORE, I FEEL THAT IF A DISALLOWANCE OF RS. 25,000/ - IS CONFIRMED UNDER SECTION 14A, KEEPING IN MIND THAT CERTAIN AMOUNT HAS BEEN INVESTED IN THE FUNDS USED FOR BUYING SHARES FOR EARNING OF DIVIDEND , THA T WILL MEET THE END OF JUSTICE . ACCORDINGLY, I CONFIRM THE ADDITION OF RS. 25,000/ - AND THE REMAINING IS DELETED. I ORDER ACCORDINGLY. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF DEC. 2012. 2012 SD/ - ( ) ( R. K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 14 /12 / 2012 . ITA NO. 7691 /20 1 1 4 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI