Shri Milind Pralhad Bhandarkar,, Pune v. Dy. CIT, Pune

ITA 2272/PUN/2012 | misc
Pronouncement Date: 30-10-2013 | Result: Dismissed

Appeal Details

RSA Number 227224514 RSA 2012
Assessee PAN AAVPB4583E
Bench Pune
Appeal Number ITA 2272/PUN/2012
Duration Of Justice 11 month(s) 15 day(s)
Appellant Shri Milind Pralhad Bhandarkar,, Pune
Respondent Dy. CIT, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-10-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-10-2013
Date Of Final Hearing 17-07-2013
Next Hearing Date 17-07-2013
Assessment Year misc
Appeal Filed On 14-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.2272/PN/2012 (ASSESSMENT YEAR : 2009-10) SHRI MILIND PRALHAD BHANDARKAR 1102 SAI VILLA LAKAKI ROAD PUNE 411 016 PAN : AAVPB4583E . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 2 PUNE. . RESPONDENT APPELLANT BY : MR. M. K. KULKARNI RESPONDENT BY : MR. SANTOSH KUMAR ORDER PER G. S. PANNU AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II PUNE DATED 17.07.2012 WHICH IN TURN HAS ARISEN FROM AN ORDER DATED 12.12.2011 PAS SED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL THE SOLITARY DISPUTE RAISED BY T HE ASSESSEE IS WITH REGARD TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O F RS.15 60 967/- INVOKING SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INC OME TAX RULES 1962 (IN SHORT THE RULES). 3. IN BRIEF THE FACTS ARE THAT ASSESSEE IS AN INDI VIDUAL WHO FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 DECLARING TOT AL INCOME OF RS.97 08 110/- WHICH INTER-ALIA INCLUDED INCOME FROM THE BUSINESS AND INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER NO TED THAT ASSESSEE HAD MADE INVESTMENTS IN BONDS/DEPOSITS/MUTUAL FUNDS/SHA RES WHICH YIELD ITA NO.2272/PN/2012 A.Y. 2009-10 DIVIDEND/INTEREST INCOME WAS EXEMPT FROM TAX. THERE FORE HE INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT TO DISALLOW EX PENDITURE INCURRED IN RELATION TO THE INCOME WHICH WAS EXEMPT FROM TAX AND IN TERM S OF RULE 8D OF THE RULES COMPUTED THE DISALLOWANCE AT RS.15 60 967/- WHOSE BREAK-UP IS AS UNDER :- (A) IN TERMS OF RULE 8D(2)(II) OF THE RULES RS.1 3 05 631/- (B) IN TERMS OF RULE 8D(2)(III) OF THE RULES RS. 2 55 335/- THE AFORESAID DISALLOWANCE HAS BEEN AFFIRMED BY THE CIT(A) AGAINST WHICH ASSESSEE IS FURTHER IN APPEAL BEFORE US. 4. THE FIRST POINT MADE OUT BY THE CIT(A) IN ORDER TO SUSTAIN THE DISALLOWANCE IS THAT THE ASSESSEE AGREED TO THE AFO RESAID ADDITION BEFORE THE ASSESSING OFFICER. IN THIS REGARD THE ASSESSING OF FICER IN PARA 5 OF THE ASSESSMENT ORDER HAS OBSERVED THAT THE ASSESSEE IN HIS WRITTEN SUBMISSIONS DATED 09.12.2011 AGREED THAT HE WAS HIT BY THE PROV ISIONS OF SECTION 14A OF THE ACT. 5. ON THIS POINT THE LEARNED COUNSEL FOR THE ASSES SEE POINTED OUT THAT EVEN BEFORE THE CIT(A) IN THE WRITTEN SUBMISSIONS I T WAS ASSERTED THAT ASSESSEE NEVER AGREED TO ANY PROPOSAL FOR IMPUGNED ADDITION BEFORE THE ASSESSING OFFICER. AT THE TIME OF HEARING LEARNED COUNSEL REFERRED TO A COMMUNICATION DATED 13.01.2012 IN PURSUANCE TO RECT IFICATION APPLICATION MADE UNDER SECTION 154 OF THE ACT WHICH IS MADE AF TER THE RECEIPT OF THE ASSESSMENT ORDER WHEREIN ASSESSEE POINTED OUT THAT THE CALCULATION AS PER RULE 8D OF THE RULES WAS GIVEN AT THE TIME OF HEARI NG ON 09.12.2011 ONLY ON THE INSISTENCE OF THE ASSESSING OFFICER AND THAT T HE ASSESSEE NEVER AGREED TO THE ADDITION. THE LEARNED COUNSEL FURTHER POINTED O UT THAT THE PLEA OF THE ASSESSEE HAS BEEN UNJUSTLY DISREGARDED BY THE CIT(A ). THE LEARNED COUNSEL FURTHER POINTED OUT THAT IF AT ALL ANY ADDITION UND ER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES IS TO BE SUSTAINED THERE WAS NO JUSTIFICATION FOR THE ITA NO.2272/PN/2012 A.Y. 2009-10 DISALLOWANCE OF RS.13 05 631/- MADE IN TERMS OF RUL E 8D(2)(II) OF THE RULES INASMUCH AS THERE WAS NO INTEREST EXPENDITURE WHICH COULD NOT BE DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME WHEREAS THE CASE OF THE ASSESSEE WAS THAT THE ENTIRE INTEREST EXPENDITURE OF RS.21 40 95 4/- WAS RELATED TO EARNING OF INCOME OTHER THAN THE EXEMPT INCOME. ON THIS ASPECT THE LEARNED COUNSEL SUBMITTED THAT BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) ASSESSEE HAD POINTED OUT THAT THERE WERE SUFFICIENT INTEREST -FREE FUNDS AVAILABLE WITH THE ASSESSEE SO AS TO COVER THE INVESTMENTS MADE IN THE IMPUGNED BONDS/DEPOSITS/MUTUAL FUNDS/SHARES WHICH YIELDED EX EMPT INCOME AND THEREFORE IT CAN BE PRESUMED THAT SUCH INVESTMENTS ARE OUT OF INTEREST-FREE FUNDS FOLLOWING THE RATIO OF THE JUDGEMENT OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. (2009) 313 ITR 340. THE LEARNED COUNSEL FURTHER POINTED OUT THAT IN THE FAC E OF THE AFORESAID PROPOSITION NO DISALLOWANCE OUT OF INTEREST EXPENDITURE CAN BE MADE UNDER SECTION 14A OF THE ACT HAVING REGARD TO THE JUDGEMENT OF THE HONB LE GUJARAT HIGH COURT IN THE CASE OF CIT VS. UTI BANK LTD. (2013) 32 TAXMANN .COM 370 (GUJARAT). 6. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESEN TATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDERS OF THE AUTHORIT IES BELOW BY POINTING OUT THAT THE CIT(A) HAS CATEGORICALLY POINTED OUT THAT EVEN DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD MADE FRESH INVESTMENTS I N BONDS/DEPOSITS/ MUTUAL FUNDS/SHARES AND THAT THERE WAS NO MATERIAL OR EVIDENCE TO SHOW THAT SUCH INVESTMENTS WERE OUT OF INTEREST-FREE FUNDS. T HEREFORE ACCORDING TO HIM THE DISALLOWANCE HAS BEEN APPROPRIATELY SUSTAINED B Y THE CIT(A) AND NO INTERFERENCE THEREOF IS CALLED FOR. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO N. THE RELEVANT DISCUSSION IN THE ASSESSMENT ORDER REVEALS THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS SHOW-CAUSED AS TO WHY THE DISALLOWANCE UNDER SECTION 14A OF THE ACT COULD NOT BE MADE CONSIDERI NG THAT ASSESSEE HAD ITA NO.2272/PN/2012 A.Y. 2009-10 DECLARED BOTH TAXABLE AS WELL AS EXEMPT INCOME. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT IN THE WRITTEN SUBMISSION DA TED 09.12.2011 ASSESSEE AGREED THAT HE WAS HIT BY THE PROVISIONS OF SECTION 14A OF THE ACT. ACCORDINGLY THE ASSESSING OFFICER WORKED OUT THE D ISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES AMOUN TING TO RS.15 60 967/- AS DETAILED IN PARA 5 OF THE ASSESSMENT ORDER. ON THIS BASIS THE STAND OF THE REVENUE IS THAT THE ASSESSEE AGREED TO THE ADDITION AS MADE BY THE ASSESSING OFFICER. 8. THE ASSESSEE CONTESTED THE AFORESAID BEFORE THE CIT(A) BY POINTING OUT THAT THERE WAS NO SUCH AGREEMENT AND IN SUPPORT OF THE SAID PROPOSITION THE LEARNED COUNSEL HAS REFERRED TO A COMMUNICATION DAT ED 13.01.2012 ADDRESSED TO THE ASSESSING OFFICER. THE SAID COMMUNICATION IS AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS AND IS IN RELATION TO A RECT IFICATION APPLICATION MOVED BY THE ASSESSEE UNDER SECTION 154 OF THE ACT ON VAR IED ISSUES A COPY OF WHICH HAS BEEN PLACED ON RECORD. IN THE SAID COMMUN ICATION IT IS STATED THAT THE CALCULATION AS PER RULE 8D OF THE RULES AND R.W .S. 14A OF THE ACT WAS FURNISHED AT THE TIME OF HEARING ON 08.12.2011 ON T HE INSISTENCE OF THE ASSESSING OFFICER. THE POINT MADE OUT BY THE ASSESS EE IS THAT HE DID NOT AGREE TO THE ADDITION AND THEREFORE HE WAS VERY MUC H COMPETENT TO AGITATE THE SAID DISALLOWANCE IN APPEAL BEFORE THE CIT(A) AND T HAT THE CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE ON THE AFORESAID ACCOUN T. 9. IN THE COURSE OF HEARING THE LEARNED COUNSEL HA S FURNISHED A COPY OF WRITTEN SUBMISSION DATED 08.12.2011 ADDRESSED TO TH E ASSESSING OFFICER WHEREBY A CALCULATION OF DISALLOWANCE UNDER SECTION 14A OF THE ACT WAS FURNISHED. A PERUSAL OF THE SAME DOES NOT SHOW ANY SPECIFIC ASSERTION BY THE ASSESSEE THAT HE AGREED TO ANY DISALLOWANCE UNDER S ECTION 14A OF THE ACT. IN-FACT CONSIDERING THE EXPLANATION RENDERED BY TH E ASSESSEE WE FIND THAT THE ITA NO.2272/PN/2012 A.Y. 2009-10 CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE AGREED TO THE ADDITION. 10. IN SO FAR AS THE MERITS OF THE DISALLOWANCE ARE CONCERNED IN OUR VIEW THE CIT(A) MADE NO MISTAKE IN UPHOLDING THE DISALLO WANCE IN TERMS OF DISCUSSION IN PARA 3.4 OF THE IMPUGNED ORDER. THE A SSESSEES ASSERTION THAT THE ENTIRE INTEREST EXPENDITURE WAS ATTRIBUTABLE TO BUSINESS INCOME AND THEREFORE IT COULD NOT BE CONSIDERED FOR DISALLOWAN CE IN TERMS OF RULE 8D(2)(II) OF THE RULES IN OUR VIEW IS DEVOID OF ANY FACTUAL SUPPORT. IN-FACT THE CIT(A) HAS REJECTED THE SAID PLEA ON THE GROUND THAT THE S AME WAS NOT BACKED BY ANY EVIDENCE OR MATERIAL ON RECORD . OSTENSIBLY THE SAID POSITION CONTINUES EVEN BEFORE US INASMUCH AS THERE IS NO MATERIAL TO SAY THAT THE ENTIRE INTEREST EXPENDITURE IN QUESTION OF RS.21 40 954/- WAS ATTRI BUTABLE TO THE EARNING OF BUSINESS INCOME ALONE. 11. IN-FACT THE OTHER PLEA OF THE ASSESSEE THAT HE WAS HAVING SUFFICIENT INTEREST-FREE FUNDS TO COVER THE INVESTMENTS IN QUE STION IS ALSO NOT BORNE OUT OF RECORD. IN THE PAPER BOOK FILED ASSESSEE HAS PL ACED A COPY OF FINANCIAL STATEMENTS NAMELY BALANCE-SHEET AND PROFIT & LOSS ACCOUNT WITH ANNEXURES. FROM THE AFORESAID WE ARE UNABLE TO MAKE OUT AS TO HOW THE AFORESAID PROPOSITION IS SOUGHT TO BE JUSTIFIED. THEREFORE F ACTUALLY SPEAKING THE PROPOSITION CANVASSED BY THE ASSESSEE BASED ON THE JUDGEMENT OF THE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SUPRA) IS NOT APPLICABLE IN THIS CASE. THEREFORE FOR THE REASONS ADVANCED IN THE IMPUGNED ORDER AND ALSO ON THE BASIS OF MATERIAL ON RECORD WE FIND NO REASONS TO INTERFERE WITH THE DISALLOWANCE OF RS.15 60 967/- C OMPUTED BY THE ASSESSING OFFICER IN TERMS OF RULE 8D OF THE RULES R.W.S. 14A OF THE ACT. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DI SMISSED. ITA NO.2272/PN/2012 A.Y. 2009-10 ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 30 TH OCTOBER 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II PUNE; 4) THE CIT-II PUNE; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE