M/S. HOSHANG D. NANAVATI, MUMBAI v. THE ACIT 11(2), MUMBAI

ITA 3567/MUM/2007 | 2003-2004
Pronouncement Date: 18-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 356719914 RSA 2007
Assessee PAN AACPN9963F
Bench Mumbai
Appeal Number ITA 3567/MUM/2007
Duration Of Justice 3 year(s) 10 month(s) 9 day(s)
Appellant M/S. HOSHANG D. NANAVATI, MUMBAI
Respondent THE ACIT 11(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 18-03-2011
Date Of Final Hearing 07-03-2011
Next Hearing Date 07-03-2011
Assessment Year 2003-2004
Appeal Filed On 09-05-2007
Judgment Text
ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BEFORE SHRI R V EASWAR HONBLE PRESIDENT AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 HOSHANG D NANAVATI .. APPELLANT C/O MULLA & MULLA CRAIGIE BLUNT AND CAROE MULLA HOUSE 51 MAHATMA GANDHI ROAD FORT MUMBAI 400 001 PAN : AACPN9963F VS. ASSTT COMMISSIONER OF INCOME TAX CIRCLE 11(2) MUMBAI .. RESPONDENT APPEARANCES: S E DASTUR AND NISHANT THAKKAR FOR THE APPELLANT R S SRIVASTAVA FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR : 1. THE SHORT ISSUE THAT WE ARE REQUIRED TO ADJUDICA TE IN THIS APPEAL IS WHETHER OR NOT THE CIT(A) WAS JUSTIFIED IN UPHOLDING DISALL OWANCE OF RS 1 01 265 UNDER SECTION 14 A OF THE INCOME TAX ACT 1961 FOR THE A SSESSMENT YEAR 2003-04. 2. THE ISSUE IN APPEAL LIES IN A NARROW COMPASS OF MATERIAL FACTS. THE ASSESSEE AN ADVOCATE AND SOLICITOR BY PROFESSION IS A PARTNER IN A LAW FIRM BY THE NAME OF MULLA & MULLA CRAIGIE BLUNT AND CAROE. DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE RECEIVED RS 14 43 000 TOWARDS R EMUNERATION AS A WORKING PARTNER AND RS 46 17 600 TOWARDS SHARE OF PROFIT IN THE PARTNERSHIP FROM THE SAID LAW FIRM. THERE IS NO DISPUTE THAT THE REMUNER ATION SO RECEIVED FROM PARTNERSHIP FIRM IS TAXABLE AS PROFITS AND GAINS F ROM BUSINESS AND PROFESSION THE ASSESSEE IS THEREFORE ENTITLED TO NORMAL ADMI SSIBLE DEDUCTION FROM THE SAID ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 2 OF 8 INCOME. HOWEVER WHEN ASSESSEE CLAIMED DEDUCTIONS A GGREGATING TO RS 1 32 911 FROM REMUNERATION SO RECEIVED FROM THE LA W FIRM THE ASSESSING OFFICER DID NOT ALLOW THE SAME IN ENTIRETY. HE INV OKED SECTION 14 A WHICH PROVIDES FOR DISALLOWANCE OF EXPENDITURE INCURRED I N RELATION TO INCOME EXEMPT FROM TAX AND HELD THAT SINCE PROFIT SHARE RECEIVED BY THE ASSESSEE FROM THE PARTNERSHIP FIRM IS NOT EXEMPT FROM TAX IN THE HAND S OF THE ASSESSEE EXPENSES INCURRED BY THE ASSESSEE IN RELATION TO SUCH INCOME ARE TO BE DISALLOWED UNDER SECTION 14 A. THE ASSESSING OFFICER FURTHER HELD TH AT IN THE ABSENCE OF SPECIFIC DETAILS OF EXPENSES INCURRED TO EARN SUCH INCOME T HE TOTAL EXPENSES TO BE DISALLOWED IN THE SAME RATIO WHICH PROFIT SHARE IN THE FIRM BEARS TO THE TOTAL RECEIPTS FROM THE FIRM I.E. ON ACCOUNT OF PROFIT SH ARE AS ALSO REMUNERATION. THE DISALLOWANCE THUS WORKED OUT TO RS 1 01 265. AGGRIE VED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 3. LEARNED COUNSEL SUBMITS THAT IN THE CASE OF THE PARTNERSHIP FIRM UNLIKE IN THE CASE OF A CORPORATE ENTITY TAXES ON PROFITS OF THE PARTNERSHIP FIRM ARE BORNE BY THE PARTNERS INASMUCH THESE TAXES DIRECTLY AFFE CT THE PROFITS CREDITED TO THE PARTNERS ACCOUNTS AND THE EXISTENCE OF FIRM IS NO T INDEPENDENT OF ITS PARTNERS. IT IS SUBMITTED THAT IT IS THUS WRONG TO PROCEED ON TH E BASIS THAT PROFIT SHARE FROM A PARTNERSHIP FIRM IS NOT A TAXABLE INCOME AND SECTI ON 10 (2A) IS NO MORE THAN CLARIFICATORY IN NATURE. EVEN WITHOUT SECTION 10(2A ) LEARNED COUNSEL CONTENDS PROFIT SHARE FROM PARTNERSHIP FIRM CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE AS IT WOULD AMOUNT TO DOUBLE TAXATION OF AN INCOME. LEARNED COUNSEL HOWEVER SUBMITS THAT SINCE THERE IS A CLEAVAGE OF OPINION B Y COORDINATE BENCHES ON THIS ISSUE AND LOOKING TO THE SMALLNESS OF AMOUNT HE D OES NOT WISH TO CARRY THIS MATTER TO A SPECIAL BENCH WHICH WILL BE INEVITABLE IN VIEW OF THE CONFLICTING VIEWS EXPRESSED BY THE COORDINATE BENCHES. IT IS FOR THIS REASON ACCORDING TO LEARNED COUNSEL THAT HE DOES NOT PRESS THIS GRIEVANCE BEFO RE US EVEN THOUGH HE FIRMLY BELIEVES THAT THE ASSESSEE DESERVES TO SUCCEED ON T HIS PRELIMINARY ISSUE ITSELF. HE HOWEVER HASTENS TO ADD THAT EVEN AS HE DOES NO T PRESS THIS GRIEVANCE IT SHOULD NOT BE CONSTRUED AS HIS HAVING CONCEDING THE APPEAL ON THIS ISSUE. 4. LEARNED COUNSEL THEN SUBMITS THAT DEPRECIATION WHICH HAS BEEN INCLUDED IN DISALLOWANCE UNDER SECTION 14A IS NOT AN EXPEND ITURE BUT AN ALLOWANCE ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 3 OF 8 AND FOR THIS REASON DISALLOWANCE UNDER SECTION 14 A CANNOT BE INVOKED IN RESPECT OF DEPRECIATION. HE INVITES OUR ATTENTION TO HON BLE SUPREME COURTS JUDGMENT IN THE CASE OF NECTAR BEVERAGES P. LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX (314 ITR 314) WHEREIN THEIR LORDSHIPS HAVE INTER ALIA OBSERV ED THAT DEPRECIATION IS NEITHER A LOSS NOR AN EXPENDI TURE NOR A TRADING LIABILITY.. IT IS THEN POINTED OUT IN TERMS OF THE PROVISIONS OF S ECTION 14A WHAT CAN BE DISALLOWED IS ONLY AN EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO AN INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. IT IS THUS PLEADED THAT SINCE DEPRECIATION IS NOT AN EXPENDITU RE AND SINCE THE DISALLOWANCE UNDER SECTION 14A IS CONFINED TO EXPENDITURE ALONE NO DISALLOWANCE CAN BE MADE IN RESPECT OF DEPRECIATION. IT IS THEN POINTE D OUT THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF RS 6 471 UNDER SECTION 80D OF THE ACT WHICH IS IN RESPECT OF HEALTH INSURANCE PREMIUM PAID BY THE ASSESSEE AND T HAT THIS DEDUCTION ALSO CANNOT BE HIT BY DISALLOWANCE UNDER SECTION 14A AS IT IS NOT AN EXPENDITURE FOR EARNING ANY INCOME BUT A PERMISSIBLE DEDUCTION FROM GROSS TOTAL INCOME UNDER CHAPTER VIA. IT IS THEN POINTED OUT THAT THE ASSES SEE HAS PAID RS 9000 TO ROTARY CLUB IN RESPECT OF WHICH DEDUCTION IS CLAIMED BUT T HEN THE SAID EXPENDITURE IS INCURRED ON A SERVICE CLUB WHICH IS PRIMARILY A CON TRIBUTION FOR EXPENDITURE ON THE PUBLIC GOOD AND THE EXPENDITURE FOR SO INCURRED CAN NOT BE ACCORDING TO LEARNED COUNSEL SAID TO BE FOR THE PURPOSE OF EARNING ANY INCOME. IT IS THUS URGED THAT THIS EXPENDITURE SHOULD ALSO BE KEPT OUT OF EXPENDI TURE WHICH CAN BE CONSIDERED FOR DISALLOWANCE UNDER SECTION 14A. AS REGARDS THE REMAINING EXPENSES I.E. RS 9 594 IN RESPECT OF BOOKS AND READING MATERIAL RS 16 168 IN RESPECT OF INSURANCE TO CAR RS 14 766 IN RESPECT OF REPAIRS TO CAR AND RS 4 800 IN RESPECT OF COMPUTER EXPENSES LEARNED COUNSEL INVITES OUR ATTENTION TO SECTION 16(1) AS IT IS STOOD AT THE RELEVANT POINT OF TIME WHICH PERMITTED A STAND ARD DEDUCTION OF RS 20 000 IN RESPECT OF SALARY EARNING FOR MORE THAN RS 3 LAKHS. HE SUBMITS THAT EXPENDITURE OF RS 20 000 WHICH WAS ALLOWED STANDARD DEDUCTION A T THE RELEVANT POINT OF TIME WAS CONSIDERED REASONABLE EXPENDITURE INCURRED TO E ARN SALARY INCOME AND ACCORDINGLY THE SAME SHOULD BE TREATED AS ATTRIBUT ABLE TO HAVING EARNING SALARY INCOME. AS FOR THE AMOUNT LEFT OUT AFTER THE SAID DEDUCTION LEARNED COUNSEL ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 4 OF 8 SUBMITS THAT ON PRINCIPLE OF PROPORTIONATE ALLOCATI ON IN THE SAME RATIO AS ADOPTED BY THE ASSESSING OFFICER THE EXPENDITURE CAN BE AT TRIBUTED FOR EARNING REMUNERATION FORM FIRM AND FOR EARNING PROFIT SHARE FORM THE FIRM. HE ONCE AGAIN EMPHASIZED THAT EVEN THOUGH HE IS HAVING A STRONG C ASE ON MERITS ON THE SORT GROUND THAT NO PART OF THIS EXPENDITURE CAN BE SAID TO BE ATTRIBUTABLE TO EARNING PROFIT SHARE HE IS NOT PRESSING THE SAID POINT BEC AUSE OF THE PRACTICAL DIFFICULTY BEFORE THE DIVISION BENCH IN THE SENSE THAT THE MAT TER WILL HAVE TO BE REFERRED TO SPECIAL BENCH AND CONSIDERING THE SMALLNESS OF THE AMOUNT SUCH AN EXERCISE IS NOT PERHAPS WARRANTED. ON THE STRENGTH OF THESE ARG UMENTS LEARNED COUNSEL URGES US TO MODIFY THE IMPUGNED DISALLOWANCE UNDER SECTION 14 A OF THE ACT. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT TH ERE IS NO DISPUTE THAT THESE ARE DISTINCT STREAM OF RECEIPTS I.E. RECEIPT ON RE MUNERATION AND THE PROFIT RECEIPT FROM PARTNERSHIP FIRM AND THAT SOME ALLOCATION HAS TO BE DONE FOR THE EXPENSES INCURRED TO EARN THESE INCOMES. HE ALSO POINTS OUT THAT DETAILS WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER AS IS EVIDEN T FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN PARAGRAPH 4.3 OF THE AS SESSMENT ORDER. LEARNED DEPARTMENTAL REPRESENTATIVE TAKES US THROUGH THE OR DERS OF THE AUTHORITIES BELOW TO JUSTIFY AND SUPPORT THE SAME. IT IS HIS CONTENT ION THAT ONLY PRACTICAL METHOD OF APPORTIONING OF COMMON EXPENSES BETWEEN EXPENSES I NCURRED TO EARN PROFIT SHARE FORM THE FIRM AND THE REMUNERATION FROM THE F IRM IS TO APPORTION THE EXPENSES INCURRED BY THE ASSESSEE IS IN THE RATIO O F EARNING OF THE ASSESSEE FROM THESE DISTINCT SOURCE AND ONCE THE EXERCISE IS CARR IED OUT IT WOULD NOT BE APPROPRIATE TO EXCLUDE SOME ITEMS OF EXPENDITURE. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THERE IS NO DISPUTE THA T CAR IS USED FOR THE PURPOSE OF EARNING THE PROFIT SHARE AS ALSO REMUNERATION FROM FIRM AND IT IS THEREFORE ONLY FAIR THAT ALL EXPENSES INCURRED ON CAR AND RELATED DEDUCTIONS I.E. DEPRECIATION REPAIRS AND INSURANCE SHOULD BE REASONABLY ALLOCATE D BETWEEN TO THESE STREAMS OF INCOME I.E. PROFIT SHARE AND THE REMUNERATION. IT IS ALSO SUBMITTED THAT IN THE ABSENCE OF ANY OTHER SPECIFIC BASIC ALLOWANCE OF EX PENDITURE THE ASSESSING OFFICER HAD NO OPTION BUT TO ALLOCATE THE EXPENSE I N THE RATIO OF EARNINGS. OUR ATTENTION IS ALSO INVITED TO THE DECISION OF THE A CO-ORDINATE BENCH OF THIS TRIBUNAL ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 5 OF 8 IN THE CASE OF ACIT V. CITICORP FINANCE INDIA PVT L TD (108 ITD 457) WHEREIN THE PRINCIPLE OF PROPORTIONATE DISALLOWANCE UNDER SECTI ON 14A HAS BEEN APPLIED. WE ARE THUS URGED TO UPHOLD THE DISALLOWANCE MADE BY T HE ASSESSING OFFICER WHICH HAS BEEN CONFIRMED BY THE CIT(A) AS WELL. IN HIS BR IEF REJOINDER LEARNED COUNSEL SUBMITS THAT IT IS INCORRECT TO SAY THAT REQUISITE DETAILS WERE NOT FURNISHED AT THE ASSESSMENT STAGE. HE FURTHER POINTS OUT THAT AS A REFERENCE TO THE OBSERVATION MADE BY THE ASSESSING OFFICER IN PARAGARPH 4.3 THE REFERENCE FOR DETAILS OF EXPENDITURE ATTRIBUTABLE TO THE SHARE OF PROFIT AND NOT THE DETAILS OF EXPENDITURE PER SE . IT IS POINTED OUT THAT SINCE NO EXPENDITURE WAS INCURRED FOR THE PURPOSE OF EARNING PROFIT SHARE THE ASSESSEE COULD NOT FURNIS H ANY DETAILS OF THE SAME. HOWEVER THE ASSESSEE HAD FURNISHED ALL THE NECESSA RY DETAILS NOT ONLY DURING ASSESSMENT PROCEEDINGS BUT ALSO BY WAY OF APPROPRIA TE DISCLOSURE IN THE INCOME TAX RETURN ITSELF - BY WAY OF NOTE ATTACHED TO THE RETURN. OUR ATTENTION IS INVITED TO NOTE TO THE RETURN OF INCOME DATED 20.10.2003 A C OPY OF WHICH WAS FILED BEFORE US AND IN WHICH ALL THE RELEVANT DETAILS WERE SET O UT. LEARNED COUNSEL ONCE AGAIN REITERATED HIS SUBMISSIONS AND URGES US TO DELETE T HE IMPUGNED DISALLOWANCE OR MODIFY THE SAME. 5. HAVING CONSIDERED THE RIVAL CONTENTIONS AND HAVI NG PERUSED THE MATERIAL ON RECORD WE ARE OF THE CONSIDERED VIEW THAT THE D ISALLOWANCE UNDER SECTION 14A CANNOT INDEED COVER DEPRECIATION INASMUCH AS WHAT C AN BE DISALLOWED UNDER SECTION 14A IS ONLY EXPENDITURE INCURRED BY THE ASS ESSEE AND NOT ALLOWANCE ADMISSIBLE TO HIM. HONBLE SUPREME COURT IN THE CA SE OF NECTAR BEVERAGES P. LTD (SUPRA) HAVE CLEARLY NOTED THE DISTINCTION BETWEEN AN EXPEN DITURE AND ALLOWANCE AND THE SAME PRINCIPLE AND HELD THAT THE EXPRESSION EXPENDITURE WILL NOT INCLUDE ALLOWANCES SUCH AS DEPRECIATION ALLOWAN CE. THIS PRINCIPLE WHICH WAS APPLIED BY THEIR LORDSHIPS IN RESPECT OF TAXABILITY UNDER SECTION 41(1) APPLIES TO THE FACTS SITUATION BEFORE US AS WELL. DEPRECIATIO N IS ADMITTEDLY IN THE NATURE OF ALLOWANCE AND THEREFORE IT CANNOT BE SUBJECT MATT ER OF DISALLOWANCE UNDER SECTION 14A WHICH MUST REMAIN CONFINED TO EXPENDIT URE INCURRED BY THE ASSESSEE. SIMILARLY AS FAR AS DEDUCTION UNDER SEC TION 80D IS CONCERNED IT ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 6 OF 8 CANNOT BE SUBJECT MATTER OF DISALLOWANCE UNDER SECT ION 14A EITHER. THE DEDUCTION UNDER SECTION 80D IS NOT ADMISSIBLE BECAU SE IT IS AN EXPENDITURE FOR THE PURPOSE OF EARNING AN INCOME BUT BECAUSE BY VI RTUE OF SPECIFIC PROVISION UNDER SECTION 80D PAYMENT OF PREMIUM OF HEALTH INS URANCE WHICH IS INHERENTLY PERSONAL EXPENSES OF THE ASSESSEE IS ADMISSIBLE AS DEDUCTION. THIS DEDUCTION CANNOT THEREFORE BE SUBJECT MATTER OF DISALLOWANC E UNDER SECTION 14A WHICH AS WE HAVE NOTED EARLIER IS CONFINED TO EXPENDITURE I NCURRED FOR THE PURPOSE OF AN INCOME WHICH IS NOT INCLUDIBLE IN TOTAL INCOME OF T HE ASSESSEE. AS FAR AS QUESTION OF PAYMENT OF RS 9 000 TO ROTARY CLUB IS CONCERNED WE FIND THAT DEDUCTION HAS BEEN CLAIMED UNDER SECTION 37(1) OF THE ACT AND TH EREFORE ONE HAS TO PROCEED ON THE BASIS THAT THESE EXPENSES ARE IN THE NATURE OF BUSINESS EXPENDITURE. THE PLEA THAT EXPENSES ARE IN THE NATURE OF COST INCURR ED ON SOCIAL CAUSE IS NOT SUPPORTED BY ANY MATERIAL ON RECORD AND WE ARE TH EREFORE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE SO FAR AS INCLUSION OF R OTARY CLUB MEMBERSHIP FROM DISALLOWANCE UNDER SECTION 14A IS CONCERNED. COMING TO THE QUESTION AS TO THE BASIS ON WHICH REMAINING EXPENSES ARE TO BE APPORTI ONED BETWEEN THE EXPENDITURE INCURRED FOR THE PURPOSE OF PROFIT SHAR E AND EXPENDITURE INCURRED FOR THE PURPOSE OF EARNING REMUNERATION FROM PARTNERSHI P FIRM WE ARE UNABLE TO SEE MUCH GUIDANCE FROM SECTION 16(1) AS IT IS STOOD AT THE RELEVANT POINT OF TIME. IN OUR CONSIDERED VIEW THE PURPOSE OF STANDARD DEDUCTI ON UNDER SECTION 16(1) WAS TO GRANT DEDUCTION IN RESPECT OF INCIDENTAL EXPENDI TURE INCURRED IN CONNECTION WITH EARNING THE SALARY INCOME WHICH INVOLVED ATTENDING OFFICE OR PLACE OF EMPLOYMENT. HOWEVER IN THE PRESENT CASE SINCE TH E ASSESSEE EARNS REMUNERATION INCOME AS ALSO PROFIT SHARE FROM THE S AME ACTIVITY OF ATTENDING OFFICE IT WOULD NOT BE FAIR TO TREAT ALL SUCH INCI DENTAL EXPENDITURE ONLY FOR THE PURPOSE OF EARNING REMUNERATION INCOME. IN OUR CON SIDERED VIEW AND PARTICULARLY HAVING REGARD TO THE SMALLNESS OF THE AMOUNT INVOLV ED IT WOULD BE JUSTIFIED TO ALLOCATE THESE EXPENSES IN THE SAME RATIO IN WHICH THESE EXPENSES WERE ALLOCATED BY THE ASSESSING OFFICER. AS WE DO SO W E MAKE IT CLEAR THAT WE HAVE ADOPTED THIS METHOD ON THE PECULIAR FACTS OF THIS C ASE AND HAVING REGARD TO THE SMALLNESS OF THE AMOUNT INVOLVED AND THE SAME CRITE RIA SHOULD NOT BE CONSTRUED ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 7 OF 8 ON UNIVERSAL APPLICATION IN THE CASES WHERE THE ASS ESSEE HAS EARNED INCOME FROM PROFIT SHARE AS ALSO FROM REMUNERATION FROM TH E SAME FIRM. IN EFFECT THUS WHILE AMOUNTS OF RS 78 733 BEING DEPRECIATION ON C AR AND RS 6 471 BEING ADMISSIBLE DEDUCTION UNDER SECTION 80 D IN RESPECT OF HEALTH INSURANCE PREMIUM ARE EXCLUDED FROM AMOUNTS WHICH CAN BE CONSIDERED F OR DISALLOWANCE UNDER SECTION 14 A OUT OF THE REMAINING AMOUNT CLAIMED A S DEDUCTION I.E. RS 47 707 ( RS 1 32 911 RS 78 733- RS 6 471) 76.19% ( I.E. 46 17 600X100/ 46 17 600+ 14 43 000) ARE TO BE DISALLOWED UNDER SECTION 14 A OF THE ACT. 6. WITH THESE OBSERVATION WE RESTRICT THE DISALLOW ANCE UNDER SECTION 14A IS RESTRICTED TO RS 36 348. THE ASSESSEE GETS THE RELI EF ACCORDINGLY. WE ONCE AGAIN EMPHASIZE THAT THIS DECISION IS RENDERED ON THE PEC ULIAR FACTS OF THIS CASE AND HAVING REGARD TO THE SMALLNESS OF AMOUNTS INVOLVED AND THEREFORE IT CANNOT BE CONSTRUED AS LAYING DOWN PROPOSITIONS OF LAW OF GEN ERAL APPLICATIONS. THE BROAD LEGAL ISSUES URGED BY THE LEARNED COUNSEL REMAIN OP EN FOR ADJUDICATION IN AN APPROPRIATE CASE. 7. IN THE RESULT APPEAL IS PARTLY ALLOWED IN THE T ERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH 2011. SD/- SD/- (R V EASWAR ) (PRAMOD KUMAR) PRESIDENT A CCOUNTANT MEMBER MUMBAI; 18 TH DAY OF MARCH 2011 . COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER MUMBAI CITY XI MUMBAI 4. COMMISSIONER (APPEALS) XI MUMBAI 5. DEPARTMENTAL REPRESENTATIVE H BENCH MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI ITA NO. 3567/MUM/07 ASSESSMENT YEAR: 2003-04 PAGE 8 OF 8