JASWANTLAL J . SHAH, MUMBAI V. DCIT CEN CIR 32, MUMBAI

ITA 9062/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70857 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 26-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENC H, MUMBAI . . '# '# '# '# , $ $ $ $ % % % % BEFORE SHRI VIJAY PAL RAO, JM, AND SHRI N. K. BILLAIYA, AM /. I.T.A. NO.9062 /MUM/2010 ( & & & & '& '& '& '& / ASSESSMENT YEAR: 2007-08) SHRI JASWANT J. SHAH, 60, BAPU KHOTE CROSS LANE, OPP. 2 ND BHOIWADA, MUMBAI- 400 003 / VS. DY. C.I.T., CENTRAL CIRCLE-32, MUMBAI ( $ /. ) /. PAN/GIR NO. : AADPS2464H ( (* / APPELLANT ) : ( +,(* / RESPONDENT ) /. I.T.A. NO.8609 /MUM/2010 ( & & & & '& '& '& '& / ASSESSMENT YEAR: 2007-08) ACIT, CENTRAL CIRCLE-32, ROOM NO. 32(2), GROUND FLOOR, AAYKAR BHAWAN, M.K. ROAD, MARINE LINES, MUMBAI- 400 020. / VS. SHRI JASWANT J. SHAH, 60, BAPU KHOTE CROSS LANE, OPP. 2 ND BHOIWADA, MUMBAI- 400 003. ( $ /. ) /. PAN/GIR NO. : AADPS2464H ( (* / APPELLANT ) : ( +,(* / RESPONDENT ) (* - / ASSESSEE BY : SHRI RAJIV KUMAR +,(* - / REVENUE BY : SHRI CHANDRAJIT SINGH /$ / DATE OF HEARING : 26.08. 2013 12' /$ /DATE OF PRONOUNCEMENT : 26.08. 2013 2 ITA 9062 AND ITA 8609 M 2010 (AY-2007-08) 3 3 3 3 / O R D E R PER : N.K. BILLAIYA (AM) THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENU E ARE DIRECTED AGAINST THE VERY SAME ORDER OF THE CIT (A)-41, MUMBAI, DATED 01.10.2 010. AS BOTH THESE APPEALS WERE HEARD TOGETHER, THEY ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NO. 9062/MUM/2010 2. THE SOLE GRIEVANCE OF THE ASSESSEE RELATES TO T HE ADDITION OF RS. 2,40,000/- BEING THE ANNUAL LET OUT VALUE OF THE PROPERTY. DURING TH E COURSE OF SCRUTINY ASSESSMENT PROCEEDING, THE AO OBSERVED THAT THE ASSESSEE HAS S HOWN HOUSE PROPERTY AT DEOLALI, WHICH IS IN ADDITION TO SELF OCCUPIED HOUSE PROPERT Y IN MUMBAI. THE AO SOUGHT EXPLANATION FROM THE ASSESSEE AS TO WHY DEEMED RENT U/S 23 OF THE ACT SHOULD NOT BE CHARGED AND ADDED TO THE INCOME OF THE ASSESSEE. TH E ASSESSEE STRONGLY OBJECTED TO THIS MOVE BY THE AO. STATING THAT DEEMED RENT IS NOT APP LICABLE ON FACTS OF THE CASE. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND CALC ULATED THE RENT AT THE RATE OF RS. 20,000/- PER MONTH AND AFTER ALLOWING STATUTORY DED UCTION OF 30% COMPUTING THE ALV AT RS. 1,68,000/- AND ADDED TO THE INCOME OF THE AS SESSEE. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A), BUT WITHOUT ANY SUCCESS. 3. BEFORE US, THE COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE AO HAS NOT GIVEN ANY BASIS FOR ADOPTING THE FAIR RENT AT RS. 20,000/- PE R MONTH. THE DR STRONGLY SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDER OF THE LOWER AUTHORITIES. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS HAVING A HOUSE PROPERTY AT DEOLALI, WHICH WAS IN ADDITION TO HIS SELF OCCUPIED PROPERTY AT MUMBAI. THEREFORE, THE ASSESSEE IS LIABLE TO PAY TAX ON THE ANNUAL LET OUT VALUE OF THIS PROPERTY. HOWEVER, AT THE SAME TIME, WE FIND THAT THE AO HAS NOT GIVEN ANY BASIS F OR ARRIVING THE MONTHLY RENT OF RS. 3 ITA 9062 AND ITA 8609 M 2010 (AY-2007-08) 20,000/- THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY WE RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO ADOPT T HE FAIR RENT AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR THE STATISTICAL PURPOSE. ITA NO. 8609/MUM/2010 6. REVENUES GRIEVANCE RELATES TO THE DISALLOWANCE U/S 14A R.W.R 8D. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDING, THE A O NOTICED THAT THE ASSESSEE HAS SHOWN EXEMPT INCOME OF RS. 68,82,667/-. THE ASSESSE E WAS ASKED TO FURNISH DETAILS OF EXPENDITURE TO BE DISALLOWED U/S 14A OF THE ACT R.W .R 8D. THE ASSESSEE FILED A REPLY SUBMITTING THAT PROVISIONS OF RULE 8D ARE NOT APPLI CABLE FOR THE YEAR UNDER CONSIDERATION. THE AO DID NOT ACCEPT THE SUBMISSION S MADE BY THE ASSESSEE FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF M/S. DAGA CAPITAL MANAGEMENT PVT. LTD. AND WENT ON TO DISALLOW A SUM OF RS. 17,41,199/-. THE ASSESSEE CARRIED THIS MATTER BEFORE THE CIT(A). 7. THIS ISSUE HAS BEEN DISCUSSED BY THE CIT(A) WHI LE DISPOSING OF GROUND NO. 6 OF THE APPEAL BEFORE HIM AT PARA-6.1 AND AT PARA 6.3 H ELD THAT RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. 328 ITR 81. ACCORDINGLY THE CIT(A) DIRECTED THE AO TO ADOPT REASONABLE BASIS FO R MAKING ANY DISALLOWANCE U/S 14 A OF THE ACT. 8. THE REVENUE IS AGGRIEVED BY THIS FINDING OF THE CIT(A). THE DR STRONGLY SUPPORTED THE ASSESSMENT ORDER PER CONTRA THE COUNS EL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDER OF THE LOWER AUTHORITIES. IT IS NOW WELL SETTLED THAT APPLICABIL ITY OF RULE 8D IS W.E.F AY 2008-09, THEREFORE, ANY DISALLOWANCE U/S 14A HAS TO BE MADE ON A REASONABLE BASIS WITHOUT 4 ITA 9062 AND ITA 8609 M 2010 (AY-2007-08) INVOKING THE PROVISIONS OF RULE 8D. WE, THEREFORE, DO NOT FINDING ANY REASON TO INTERFERE WITH THE FINDING OF THE CIT(A). THE AO IS DIRECTED TO MAKE DISALLOWANCE U/S 14A ON A REASONABLE BASIS WITHOUT INVOKING THE PROV ISIONS OF RULE 8D AND AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. /5 6789:/ / ;' ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF AUGUST, 2013. 3 12' $ 5 26. 08. 2013 2 = SD/- SD/- ( VIJAY PAL RAO ) ( N. K. BILLAIYA ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI: DATED : 26.08.2013 . /. PRAMOD KUMAR, PS 3 3 3 3 +/ +/ +/ +/ >'/ >'/ >'/ >'/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT 3. ? ) ( / THE CIT(A); 4. ? / THE CIT CONCERNED; 5. @= +/ , , / DR, ITAT, MUMBAI; 6. =A& B / GUARD FILE 3 3 3 3 / BY ORDER, 7 77 7 / ; ; ; ; (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI