Appeal details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 4233 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 7 month(s) 10 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-07-2013
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
27-06-2013
Assessment Year
2008-2009
Appeal Filed On
30-11-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO.8026/M/2011 ASSESSMENT YEAR : 2008-09 KUNJAL HEMANT SHAH 6 TH FLOOR, 23-F/AKRUTI DOONGERSHEY ROAD WALKESHWAR MUMBAI-400 006. PAN NO. AAGPS 9693 B VS. DCIT, CENTRAL CIRCLE - 36 AAYAKAR BHAVAN M.K. ROAD MUMBAI-20 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANUJ KISNADWALA REVENUE BY : SHRI MANO J KUMAR DATE OF HEARING : 27.06.2013 DATE OF PRONOUNCEMENT : 10 .07.2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN ASSESSEES APPEAL AGAINST THE ORDERS OF CIT(A)-36 DATED 29.09.2011. THE ISSUE IN THIS APPEAL IS WITH REFERE NCE TO DISALLOWANCE OF RS.2,71,653/- U/S. 14A. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS RECEIVED L EASE RENT FROM ICICI BANKING CORPORATION TO AN EXTENT OF RS.39,88, 480/- DURING THE YEAR. AS AGAINST THIS LEASE RENT RECEIVED, THE ASSE SSEE CLAIMED LEASE RENT PAID TO MARATHA MANDIR ON THE PROPERTY AT RS.5,61,6 00/-. THE NET AMOUNT OF RS.34,26,880/- WAS OFFERED AS INCOME UNDE R THE HEAD INCOME ITA NO.8026/M/11 A.Y.08-09 KUNJAL HEMANT SHAH 2 FROM OTHER SOURCES WITHOUT CLAIMING ANY OTHER EXPE NDITURE. THE ASSESSEE OFFERED TOTAL INCOME OF RS.31,70,040/- AFT ER CLAIMING DEDUCTION U/S. 80C AND 80G. IN THE RETURN THE ASSESSEE CLAIM ED EXEMPTION OF PPF INTEREST AT RS.1,00,610/- EXEMPT U/S.10(11) AND DIV IDEND OF RS.2,03,94,545/- U/S. 10(34). AO INVOKING PROVISION S OF SECTION 14A AND RULE 8D STATED THAT THE ASSESSEE DEBITED AN EXPENSE OF RS.4,19,604/- IN THE CAPITAL ACCOUNT AND THEREFORE, AN AMOUNT OF RS. 2,71,653/- WAS TO BE DISALLOWED ON THE BASIS OF AVERAGE INVESTMENT U/R. 8D. HE DISALLOWED THE AMOUNT AND ADDED TO THE INCOME RETURNED. THE LD. CI T(A) CONFIRMED THE SAME ON THE BASIS OF THE SPECIAL BENCH DECISION OF THE ITAT IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. WITHOUT EXAMINING THE FACTS. THEREFORE, THE ASSESSEE IS AGGRIEVED. 3 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE IN THE COMPUTATION OF I NCOME AND SUB-LEASE RENT WAS RECEIVED AND THE GROSS AMOUNT WAS OFFERED BY CLAIMING ONLY LEASE RENT PAID TO THE OWNER OF THE PROPERTY. IT IS FURTHER SUBMITTED THAT THE EXPENSES DEBITED IN THE CAPITAL ACCOUNT TO AN E XTENT OF RS.4,19,604/- ARE NOT CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCOME AND THESE WERE CHARGED TO THE CAPITAL ACCOUNT DIRECTLY, THERE FORE AO WAS NOT CORRECT IN CONSIDERING THE AMOUNT WHICH WAS NOT CLAIMED AS EXPENDITURE, FOR DISALLOWANCE U/S. 14A. THE LD. DR RELIED ON THE OR DERS OF AO AND CIT(A). 4. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RE CORD. AS BRIEFLY STATED, THE ASSESSEE OFFERED INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES ON THE RENT RECEIVED ON LEASED PROPERTY. T HE ASSESSEE IS NOT OWNER OF THE PROPERTY, THEREFORE, ON THE GROSS RECE IPTS OF RS.39.88 LACS ASSESSEE CLAIMED RS.5.61 LACS RENT PAID AND OFFERED NET AMOUNT OF RS.34,26,880/- AS INCOME UNDER THE HEAD INCOME FR OM OTHER SOURCES. SINCE THERE IS NO OTHER EXPENDITURE TO BE CLAIMED, THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE AND WHATEVER INTEREST PAID WAS DEBITED TO THE ITA NO.8026/M/11 A.Y.08-09 KUNJAL HEMANT SHAH 3 PERSONAL ACCOUNT AND WAS NOT CLAIMED AS DEDUCTION I N THE COMPUTATION OF INCOME. SINCE THERE IS NO EXPENDITURE INCURRED, INVOKING PROVISIONS OF SECTION 14A DOES NOT ARISE. SECTION 14A IS AS UNDER :- EXPENDITURE INCURRED IN RELATION TO INCOME NOT INC LUDIBLE IN TOTAL INCOME. 14A. (1) FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS A CT.] (2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOUN T OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE ASSESSING OFFICER, HAVING REG ARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATISFIED WITH THE CORRECTN ESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELA TION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL ALSO AP PLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE H AS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NO T FORM PART OF THE TOTAL INCOME UNDER THIS ACT . PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHA LL EMPOWER THE ASSESSING OFFICER EITHER TO REASSESS UNDER SECTION 147 OR PASS AN ORDER ENHANCING THE ASSESSMENT OR REDUCING A REFUND ALREADY MADE OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESS EE UNDER SECTION 154 , FOR ANY ASSESSMENT YEAR BEGINNING ON OR BEFORE TH E 1ST DAY OF APRIL, 2001. (E MPHASIS SUPPLIED) 4.1 ONLY IN THE EVENT OF EXPENDITURE BEING INCURRED BY ASSESSEE, THEN ONLY ATTRIBUTION OF EXPENDITURE TO THE EXEMPT INCOM E WILL ARISE. SINCE THERE IS NO EXPENDITURE CLAIMED, AND ONLY LEASE REN T CLAIMED IS DIRECTLY RELATABLE TO LEASE RENT RECEIVED, DISALLOWANCE PER SE DOES NOT ARISE. AO AND CIT(A) ARE WRONG IN INVOKING THE PROVISIONS OF SECTION 14A ON THESE ITA NO.8026/M/11 A.Y.08-09 KUNJAL HEMANT SHAH 4 FACTS. AO IS DIRECTED TO DELETE THE SAME. ACCORDING LY, ASSESSEES GROUNDS ARE ALLOWED. 5. IN THE RESULT, ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY 2013. SD/- SD/- (VIVEK VARMA ) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 10 TH JULY 2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.
