SHAKEEL AFZAL LADAK, MUMBAI V. CIT NFAC, DELHI

ITA 85/MUM/2023

AI Insights

The case involves Shakeel Afzal Ladak, the appellant, who contested the treatment of his rental income and an addition made under Section 14A of the Income Tax Act by the assessing officer. The Income Tax Appellate Tribunal in Mumbai heard the appeal against the order of the CIT(A), which had dismissed the appellant's earlier appeal. The primary contention was the incorrect classification of rental income as income from house property instead of business income, and an arbitrary addition of expenses related to earning exempt income. The Tribunal noted the absence of compliance from the appellant in previous hearings and remanded the case back to the CIT(A) for a detailed examination and decision based on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131292 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 14-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 10-01-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Earning of tax free income
• Section: 14A; 143(2)

Judgement Text

Page | 1 ITA No. 85/Mum/2023 Shakeel Afzal Ladak Vs. CIT, NFAC IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 85/Mum/2023 (A.Y.2013-14) Shakeel Afzal Ladak 603, Lands ends Apartments, B.J. Road, Opp. Café Seaside Bandra (West), Mumbai – 400050 Vs. Commissioner of Income Tax, NFAC, Delhi स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAPL3836D Appellant .. Respondent Appellant by : None Respondent by : Krishna Kumar Date of Hearing 15.03.2023 Date of Pronouncement 27.03.2023 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by the NFAC, Delhi dated 11.10.2022 for A.Y. 2013-14. The assesse has raised the following grounds before us: “1. On the facts and in the circumstances of the case the learned CIT(A) erred in law as well on facts in dismissing all the grounds of appeals of your appellant. 2. On the facts and in the circumstances of the case the learned CIT(A) erred in law as well on facts in treating business Income of your appellant as Income from House Property without giving any reasons for his doing so and thereby confirming the addition made by the ACIT amounting to Rs.14,07,420/-. The CIT(A) should have considered the nature of receipt and should have accordingly pronounced his order. 3. The Learned ACIT was highly unjustified in making an arbitrary addition of Rs.45,408/- by applying the provisions of Section 14A with rule 8D Page | 2 ITA No. 85/Mum/2023 Shakeel Afzal Ladak Vs. CIT, NFAC Your appellant never earned any exempted income on the investments so made and therefore, this addition should not have been made. The appellant further craves the leave to put in additional grounds of appeal if any at the time of hearing.” 2. The fact in brief is that return of income declaring total income of Rs.67,70,930/- was filed on 28.10.2013. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 03.09.2014. During the course of assessment the assessing officer noticed that assessee has shown rent receipt from property to the amount of Rs.20,10,600/- under the head business income. Out of the aforesaid rent receipt after claiming expenditure the assesse has shown profit of Rs.10,40,460/-. However, the A.O has treated the aforesaid receipt as income from house property and after allowing 30% of deduction determined the income from house property at Rs.14,07,420/-. During the course of assessment the A.O has also noticed that assessee has made investment in shares and mutual funds of Rs.90,81,500/-, therefore, determined disallowance u/s 14A r.w.rule 8D to the amount of Rs.45,408/- being the expenditure attributable to earning exempt income. 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee reiterating the facts reported by the A.O. 4. Heard both the sides and perused the material on record. The ld. CIT(A) stated that in spite of issuing repeated notices no detail has been filed by the assessee. In the form of 35 filed before the ld. CIT(A) the assesse has categorically claimed that his case is covered by the decision of ITAT as in the earlier year the similar issue of rent receipt on identical facts was adjudicated in favour of the assessee wherein it is held that rent received is business income. However, the ld. CIT(A) Page | 3 ITA No. 85/Mum/2023 Shakeel Afzal Ladak Vs. CIT, NFAC has dismissed the claim of the assesse stating that assessee has not filed any copy of ITAT decision. 5. Looking to the above facts and circumstances we observe that the ld. CIT(A) ought to have called report from the assessing officer for adjudicating the contention of the assessee that in the earlier years the identical issue was adjudicated by the ITAT in favour of the assessee for deciding the issue on merit as per material available on record. Therefore, we remand this matter back to the file of the ld. CIT(A) for adjudication on merit after providing opportunity to the assesse. The assessee is also directed to make compliance before the ld. CIT(A) without any failure in order to adjudicate his appeal on merit. In case the assessee is again failed to make compliance the ld. CIT(A) may adjudicate the case on merit as per material available in the assessment record. Therefore, the appeal of the assessee is allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 27.03.2023 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 27.03.2023 Rohit: PS Page | 4 ITA No. 85/Mum/2023 Shakeel Afzal Ladak Vs. CIT, NFAC आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.