Shri Omprakash Khandelwal, Indore v. The ACIT,, Indore

ITA 285/IND/2010 | 2007-2008
Pronouncement Date: 30-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 28522714 RSA 2010
Assessee PAN ACSPK9694E
Bench Indore
Appeal Number ITA 285/IND/2010
Duration Of Justice 1 year(s) 6 month(s) 20 day(s)
Appellant Shri Omprakash Khandelwal, Indore
Respondent The ACIT,, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 30-11-2011
Assessment Year 2007-2008
Appeal Filed On 10-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARM A A.M. PAN NO. : ACSPK9694E I.T.A.NO. 285/IND/2010 A.Y. : 2007-08 SHRI OMPRAKASH KHANDELWAL ACIT 1(2) INDORE. 541 APOLO TOWER VS 2 M.G. ROAD INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C.P. RAWKA F.C.A. RESPONDENT BY : SHRI ARUN DEWAN SR. DR DATE OF HEARING : 20.09.2011 DATE OF PRONOUNCEMENT : 30.11.2011. O R D E R PER R. C. SHARMA A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-I INDORE DATED 02.03.2010 FOR THE ASSE SSMENT YEAR 2007-08. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE : - -: 2: - 2 1. THAT THE LD. CIT(A) ERRED IN LAW AND THE FACTS OF T HE CASE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME FROM HOUSE PROPERTY AT RS. 1 82 400/- WITHOUT CONSIDERING FULL FACTS AND REASONING. THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) IS TOTALLY WRONG AND ILLEGAL ON THE FACTS OF THE CASE. 2. THAT THE LD. CIT(A) ERRED IN LAW AND THE FACTS O F THE CASE AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A AT RS. 16 17 570/- WITHOUT CONSIDERING FULL FACTS AND LAW. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) IS TOTALLY WRONG AND ILLEGAL ON THE FACTS OF THE CASE. 3. FIRST GRIEVANCE OF THE ASSESSEE RELATES TO ADDITIO N ON ACCOUNT OF INCOME FROM HOUSE PROPERTY AT RS.1 82 40 0/-. THE AO OBSERVED THAT AS PER BALANCE SHEET FILED BY THE ASSESSEE -: 3: - 3 ASSESSEE OWNS EIGHT SHOPS IN APOLLO TOWERS FOR WHIC H NO INCOME HAS BEEN DECLARED. BY INVOKING PROVISIONS OF SECTION 23(1) THE AO ESTIMATED THE RENTAL INCOME OF THE PR OPERTY AT RS. 1 82 400/- AND THE SAME WAS CONFIRMED BY THE LD . CIT(A). 4. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT SHOPS WERE UNAUTHORIZEDLY CONSTRUCTED IN THE B ASEMENT OF APOLLO TOWERS WHICH COULD NOT BE LET OUT NOR THE SAME WAS LET OUT AT ANY POINT OF TIME NOR THE ASSESSEE WAS I N RECEIPT OF ANY RENT IN ANY OF THE YEAR THEREFORE NEITHER ANY INCOME ACCRUED NOR RECEIVED BY ASSESSEE FROM THESE UNAUTHO RIZED SHOPS. 5. ON THE OTHER HAND THE LD. SENIOR D.R. RELIED ON TH E ORDER OF LOWER AUTHORITIES. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE ASSESSEE HAS UNDERTAKEN UNAUTHORIZED CONSTRUCTION OF SHOPS IN THE BASEMENT OF APOLLO TOW ERS. SINCE THE SHOPS WERE UNAUTHORIZED THE SAME COULD NOT BE LET OUT NOR THE SAME WAS ACTUALLY LET OUT AND THE ASSESSEE WAS NOT IN RECEIPT OF ANY INCOME OUT OF THE SAME. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY JUSTIFICATION FOR TAKING THE -: 4: - 4 ESTIMATED VALUE OF RENT WHICH NEITHER ACCRUED NOR R EALIZED SINCE THE SHOPS WERE UNAUTHORIZEDLY CONSTRUCTED WH ICH COULD NOT BE LET OUT NOR COULD BE USED BY THE ASSESSEE AS PER LAW OF LOCAL AUTHORITIES. 7. NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOW ANCE OF INTEREST EXPENDITURE U/S 14A OF THE INCOME-TAX A CT 1961. 8. FROM THE RECORD WE FOUND THAT THE ASSESSEE HAS INVESTED A SUM OF RS. 22.33 LAKHS IN SHARES AND RS. 2.20 CRORES AS CAPITAL IN PARTNERSHIP FIRM M/S. SWATANTR A BUILDERS. BY APPLYING RULE 8-D THE AO COMPUTED THE INTEREST EXPENDITURE TO BE DISALLOWED AFTER TAKING INTO CONS IDERATION THE INTEREST OF RS. 16 17 570/- AND THE SAME WAS CO NFIRMED BY THE LD. CIT(A) NOW THE ASSESSEE IS BEFORE US. 9. IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATI VE THAT SINCE THE ASSESSEE HAS NOT RECEIVED ANY EXEMPT INCOME DURING THE YEAR NO DISALLOWANCE SHOULD BE MADE U/S 14A READ WITH RULE 8-D OF THE INCOME-TAX ACT 1961. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM RECORD THAT THE ASSESSEE HAD CAPITAL OF RS. 11.27 LAKHS WHEREAS HE HAS INVESTED CAPITAL OF RS. 2.20 C RORES IN THE -: 5: - 5 PARTNERSHIP FIRM INCOME OF WHICH WAS EXEMPT AND RS . 22.33 LAKHS IN SHARES DIVIDEND INCOME OF WHICH WAS EXEMP T FROM TAXATION. DURING THE YEAR THE ASSESSEE HAD PAID IN TEREST OF RS. 16 49 395/- AND RECEIVED INTEREST OF RS. 5 46 223/- . THUS THE NET EXPENDITURE ON ACCOUNT OF INTEREST WORKS OUT TO RS. 11 03 172/- ( 16 49 395/- - 5 46 223/-). MAXIMUM DISALLOWANCE WHICH CAN BE MADE IS THE NET INTEREST EXPENDITURE CLAIMED BY ASSESSEE. ACCORDINGLY WE DI RECT THE AO TO DISALLOW A SUM OF RS. 11 03 172/- AS INTEREST EXPENDITURE U/S 14A OF THE INCOME-TAX ACT 1961. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30TH NOVEMBER 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH NOVEMBER 2011. CPU* 3011