Shri Gaurang M.Doshi, Ahmedabad v. The ACIT.,Cent.Circle-2(1),, Ahmedabad

ITA 2321/AHD/2010 | 2006-2007
Pronouncement Date: 25-03-2021 | Result: Partly Allowed

Appeal Details

RSA Number 232120514 RSA 2010
Bench Ahmedabad
Appeal Number ITA 2321/AHD/2010
Duration Of Justice 10 year(s) 8 month(s) 12 day(s)
Appellant Shri Gaurang M.Doshi, Ahmedabad
Respondent The ACIT.,Cent.Circle-2(1),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 25-03-2021
Date Of Final Hearing 06-02-2020
Next Hearing Date 06-02-2020
Last Hearing Date 02-12-2019
First Hearing Date 02-12-2019
Assessment Year 2006-2007
Appeal Filed On 13-07-2010
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI RAJPAL YADAV VICE-PRESIDENT AND SHRI AMARJIT SINH ACCOUNTANT MEMBER ITA NO.2321/AHD/2010 / ASSTT.YEAR : 2006-07 GAURANG M. DOSHI 26 SAMASTA BRAHMKSHTRIYA SOCIETY NARAYANANAGAR ROAD PALDI AHMEDABAD 380 007. VS. ACIT CENT.CIR.2(1) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI S.N. DIVETIA AR REVENUE BY : SHRI S.S.SHUKLA SR.DR / DATE OF HEARING : 24/03/2021 / DATE OF PRONOUNCEMENT: 25 /03/2021 !'/ O R D E R PER RAJPAL YADAV VICE-PRESIDENT: PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE A SSESSEE AGAINST ORDER OF THE LD.CIT(A)-III AHMEDABAD DATED 17.5.20 210 PASSED FOR THE ASSTT.YEAR 2004-05 TO 2006-07. ASSESSMENT YEAR INVOLVED IN THE PRESENT APPEAL IS 2006-07. 2. THE ASSESSEE HAS RAISED AS MANY AS EIGHT GROUNDS IN THE GROUNDS OF APPEAL ATTACHED IN THE FORM NO.36. HOWEVER LD. COUNSEL FOR THE ASSESSEE HAS PRESSED ONLY GROUND NO.3.1 VIDE WHICH THE ASSESSEE HAS AGGRIEVED BY ACTION OF THE LD.CIT(A) IN PARTLY CONF IRMING THE DISALLOWANCE UNDER SECTION 14A TO RS.35 956/-. THER EFORE WE TAKE ONLY THIS ISSUE FOR ADJUDICATION AND DISPOSE OF THE APPEAL. ITA NO.2321/AHD/2010 2 3. BRIEF FACTS NECESSARY FOR DISPOSAL OF THIS ISSUE IS THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN SHARE TRADING. HE HAS FILED RETURN OF INCOME ON 12.7.2007 DECLARING TOTAL INCOME AT RS .4 01 330/-. THE RETURN WAS THEREAFTER SELECTED FOR SCRUTINY ASSESSM ENT BY ISSUANCE OF NOTICE UNDER SECTION 143(2). DURING THE ASSESSMEN T PROCEEDINGS THE LD.AO NOTICED THAT THE ASSESSEE HAS CLAIMED DIVIDEN D INCOME OF RS.1 19 854/- AS EXEMPT INCOME. TO THE SHOW CAUSE BY THE LD.AO AS TO WHY DISALLOWANCE UNDER SECTION 14A SHOULD NOT BE MADE IN RESPECT OF EXEMPT INCOME THE ASSESSEE SUBMITTED THAT SINCE THIS INCOME AND RELATED WERE REFLECTED IN THE PROFIT & LOSS ACCOUNT NO DISALLOWANCE WAS CALLED FOR. THE LD.AO HOWEVER TREATED 30% OF S UCH DIVIDEND INCOME ON AN ESTIMATE BASIS AS DISALLOWANCE UNDER S ECTION 14A OF THE ACT AND ACCORDINGLY MADE ADDITION OF RS.35 956/- BE ING 30% OF RS.1 19 854/-. THIS ISSUE WAS AGITATED BEFORE THE LD.FIRST APPELLATE AUTHORITY WITHOUT SUCCESS. ASSESSEE IS NOW BEFORE THE TRIBUNAL. 4. BEFORE US THE LD.COUNSEL FOR THE ASSESSEE REITER ATED SUBMISSIONS AS WERE MADE BEFORE THE REVENUE AUTHORITIES. HE FU RTHER SUBMITTED THAT SINCE THE ISSUE RELATED TO THE ASSESSMENT YEAR 2006-07 AND AS SUCH ESTIMATION OF DISALLOWANCE WITHOUT ANY BASIS IS NOT JUSTIFIED. ON THE OTHER HAND THE LD.DR SUPPORTED THE ORDERS OF THE R EVENUE AUTHORITIES. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. WE FIND THAT THE ASSESSEE HAS CL AIMED EXEMPT INCOME WHICH WAS NOT DISPUTED BY THE AO DISPUTE IS WITH REGARD TO REASONABLENESS OF THE AO IN ESTIMATING QUANTUM OF D ISALLOWANCE. PRIOR TO 1.4.2007 THERE WAS NO METHODOLOGY FOR CAL CULATION OF DISALLOWANCE UNDER SECTION 14A OF THE ACT. THEREAF TER RULE 8D WAS ITA NO.2321/AHD/2010 3 INSERTED SO AS TO PROVIDE THE MANNER AND METHOD IN WHICH THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOM E IS TO BE DETERMINED BY THE ASSESSING OFFICER. IN THE INSTAN T CASE ASSESSMENT YEAR INVOLVED IS 2006-07 AND THE ASSESSEE EARNED A SMALL AMOUNT OF RS.1 19 854/-BY WAY OF EXEMPT INCOME. SECTION 14A PROVIDES THAT EXPENSES INCURRED CAN BE ALLOWED ONLY TO THE EXTENT THEY ARE RELATABLE TO THE EARNING OF TAXABLE INCOME. THE ASSESSING OFF ICER HAS DETERMINED THE DISALLOWANCE UNDER SECTION 14A OF THE ACT ON ES TIMATION BASIS WHICH IN OUR VIEW IS VERY MUCH ON THE HIGHER SIDE M ORE SO IN THE ABSENCE OF ANY DETAILS FOR DETERMINING QUANTUM OF D ISALLOWANCE. THE AO HAS NOT DISPUTED MEAGER EXEMPT INCOME EARNED BY THE ASSESSEE AND HAS NOT ADOPTED A REASONABLE METHOD FOR EFFECTI NG THE IMPUGNED DISALLOWANCE. THEREFORE ADHOC DISALLOWANCE WITHOUT ANY BASIS CANNOT BE JUSTIFIED. THUS BY TAKING A PRAGMATIC VIEW WE INCLINE TO REDUCE THE DISALLOWANCE MADE BY THE REVENUE TO THE EXTENT OF RS.15 956/-. IN OTHER WORDS THE ASSESSEE WOULD GET A FURTHER RE LIEF OF RS.20 000/- AND RESTRICT DISALLOWANCE TO RS.15 956/-. THUS WE PARTLY ALLOW THIS GROUND OF THE APPEAL. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 25 TH MARCH 2021 AT AHMEDABAD. SD/ - (AMARJIT SINGH) ACCOUNTANT MEMBER SD/ - (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 25/03/2021