ALKA M BHARUCHA, MUMBAI V. ASST CIT WD 11(2), MUMBAI

ITA 8763/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92649 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AZGHAR ZAIN
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , , BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 8763/MUM/2011 ( / ASSESSMENT YEAR : 2008 - 09 MRS. ALKA M. BHARUCHA, 7 - E ON 7 TH FLOOR, HARBOUR HEIGHTS ACO. OP. HSG. SOC. LTD., N.A. SAVANT MARG, COLABA, MUMBAI - 400 005 / VS. THE ACIT, WARD 11(2), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AABPB 5063D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI NISHANT THAKKER / RESPONDENT BY : SHRI AZGHAR ZAIN / DATE OF HEARING : 13 . 0 5 .2015 / DATE OF PRONOUNCEMENT : 13 .0 5 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 3 , MUMBAI DT. 19.10.2011 PERTAINING TO ASSESSMENT YEAR 200 8 - 0 9 . ITA. NO. 8763/M/2011 2 2. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE DISALLOWANCE OF RS. 1,45,249/ - WHICH REPRESENT 1/6 TH OF DEPRECIATION ON MOTOR CAR, DEPRECIATION ON MOBILE, PROFESSIONAL TRAVEL EXPENSES AND CAR INSURANCE EXPENSE BY CONSIDERING THE SAME AS PERSONAL EXPENSES. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE IS RESTRICTING HIS ARGUME NTS ONLY IN RESPECT OF THE DISALLOWANCE OF DEPRECIATION ON MOTOR CAR. THE LD. COUNSEL POINTED OUT THAT THE ASSESSING OFFICER HAS DISALLOWED 1/6 TH OF RS. 3,07,009/ - WHICH IS THE DEPRECIATION ON MOTOR CAR. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE STATEMENT OF FACTS AND POINTED OUT THAT THE ASSESSEE HAD SUO MOTO DISALLOWED 20% OF THE COST OF MOTOR CAR ON ACCOUNT OF PERSONAL NATURE IN THE YEAR OF PURCHASE AND HAS CLAIMED DEPRECIATION ONLY ON 80% OF THE COST. 4. WE HAVE CAREFULLY PERUSED THE STATE MENT OF FACTS. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING FACTS ON RECORD. SINCE THE ASSESSEE HAS ALREADY DISALLOWED 20% OF THE COST OF THE MOTOR CAR ANY FURTHER DISALLOWAN CE WOULD BE UNJUSTIFIED. WE, THEREFORE, DIRECT THE AO TO DELETE THE DISALLOWANCE OF DEPRECIATION ON MOTOR CAR. AS THE ASSESSEE HAS NOT PRESSED OTHER DISALLOWANCES, THE SAME ARE DISMISSED. GROUND NO. 1 IS PARTLY ALLOWED. 4. GROUND NO. 2 AND 2,1 RELATE TO THE DISALLOWANCE MADE U/S. 14A OF THE ACT. 5. WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO NOTICED THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES AND UNITS OF MUTUAL FUNDS FOR THE ITA. NO. 8763/M/2011 3 AGGREGATE AMOUNT OF RS. 4,66,38,012/ - . THE ASSESSEE HAS ALSO R ECEIVED DIVIDEND INCOME OF RS. 64,80,905/ - WHICH WAS CLAIMED EXEMPT. THE AO OBSERVED THAT THE ASSESSEE HAS NOT OFFERED ANY DISALLOWANCE U/S. 14A R.W. RULE 8D. THE ASSESSEE EXPLAINED THAT THERE WERE NO BORROWINGS FOR PURCHASE OF SHARES/MUTUAL FUNDS AND NO INTEREST EXPENDITURE HAS BEEN INCURRED. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO WHO PROCEEDED BY COMPUTING THE DISALLOWANCE AT RS. 2,33,190/ - . 6. BEFORE THE LD. CIT(A), THE ASSESSEE REITERATED HER CLAIM BUT WITHOUT ANY SUCCESS. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ONLY EXPENDITURE WHICH THE ASSESSEE HAS CLAIMED ARE DEPRECIATION ON MOTOR CAR, PROFESSIONAL TRAVEL EXPENSES, MOTOR CAR INSURANCE AND DEPRECIATION ON MOBILE. IT IS THE SAY OF THE LD. COU NSEL THAT NONE OF THESE EXPENDITURES HAVE ANYTHING TO DO WITH THE EARNING OF EXEMPT INCOME. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE LOWER AUTHORITIES. UNDISPUTEDLY, THE EXPENDITURES HAVE BEEN CLAIMED ARE DEPRECIATION, PROFESSIONAL TRAVEL EXPENSES, MOTOR CAR INSURANCE AND DEPRECIATION ON MOBILE. IN OUR CONSIDERED OPINION, T HESE EXPENDITURES DO NOT HAVE EVEN REMOTE CONNECTION WITH THE EARNING OF EXEMPT INCOME. WITHOUT POINTING OUT ANY DEFECT IN THE CLAIM OF THE ASSESSEE, THE AO SHOULD NOT PROCEED TO COMPUTE THE DISALLOWANCE AS PER RULE 8D. WE, THEREFORE, DO NOT FIND ANY REAS ON FOR THE DISALLOWANCE OF RS. 2,33,190/ - U/S. 14A OF THE ACT. WE, ACCORDINGLY, DIRECT THE AO TO DELETE THE ADDITION ITA. NO. 8763/M/2011 4 MADE U/S. 14A OF THE ACT. GROUND NO. 2 AND 2.1. ARE ACCORDINGLY ALLOWED. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOW ED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 13 TH MAY , 2015 SD/ - SD/ - ( D.MANMOHAN ) (N.K. BILLAIYA) /VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 13 TH MAY , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI