PRAKASH K. SHAH, MUMBAI v. ACIT 17(2), MUMBAI

ITA 4566/MUM/2018 | 2012-2013
Pronouncement Date: 11-11-2019 | Result: Allowed

Appeal Details

RSA Number 456619914 RSA 2018
Assessee PAN AACPS8291F
Bench Mumbai
Appeal Number ITA 4566/MUM/2018
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant PRAKASH K. SHAH, MUMBAI
Respondent ACIT 17(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 11-11-2019
Last Hearing Date 19-08-2019
First Hearing Date 19-08-2019
Assessment Year 2012-2013
Appeal Filed On 23-07-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI BEFORE SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO . 4566 & 4567 / MUM . /2018 ( ASSESSMENT YEAR : 20 12 13 & 2013 14 ) SHRI PRAKASH K. SHAH 8B RAJABHADUR MANSION 11/43 RAMARIND LANE FOR MUMBAI 400 023 PAN AACPS8291F . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 17(2) MUMBAI . RESPONDENT ASSESSEE BY : SHRI N.R. AGARWAL REVENUE BY : SHRI CHAITANYA ANJARIA DATE OF HEARING 19 .0 8 .2019 DATE OF ORDER 11.1 1.2019 O R D E R THESE ARE APPEALS BY THE ASSESSEE AGAINST COMMON ORDER 20 TH JUNE 2018 PASSED BY THE LEARNED COMMISSIONER (APPEALS) 25 MUMBAI PERTAINING TO ASSESSMENT YEAR 2012 13 AND 2013 14 . 2. THERE ARE TWO COMMON ISSUES RAISED IN THESE APPEALS. THE 1 ST COMMON ISSUE RAISED RELATES TO DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT 1961 (FOR SHORT 'THE ACT' ). 2 SHRI PRAKASH K. SHAH 3. THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE IN THIS CASE UNDER SECTION 14A OF THE ACT FOR THE EXPENDITURE INCURRED FOR EARNING EXEMPT IN COME. THE ASSESSING OFFICER IN THIS REGARD HAS APPLIED PROVISIONS OF RULE 8D. THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS) HAVE NOT FOLLOWED DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S HDFC BANK LTD. [2014 ] 366 ITR 505 (BOM.) FOR THE PROPOSITION THAT IF ASSESSEES OWN FUNDS ARE MORE THAN THE INVESTMENT WHICH EARNED EXEMPT INCOME NO DISALLOWANCE FOR INTEREST IS REQUIRED UNDER SECTION 14A OF THE ACT. 4. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORD I AM OF THE CONSIDERED OPINION THAT IT WILL BE GROSS JUDICIAL MISCONDUCT IF I STATE THAT DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HDFC BANK LTD. (SUPRA) NEEDS NOT BE FOLLOWED. I FIND THAT HON'BLE JURISDICTIONAL HIGH COURT HAS DULY HELD THAT IF OWN FUNDS ARE MORE THAN INVESTMENT WHICH EARNED EXEMPT INCOME NO DISALLOWANCE UNDER SECTION 14A OF THE ACT IS REQUIRED. THE SAME VIEW WAS FOLLOWED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR. ACCORDINGLY I DIRECT THE ASSES SING OFFICER TO EXAMINE THIS ISSUE AND IF THE OWN FUNDS/NON - INTEREST - BEARING FUNDS ARE MORE THAN INVESTMENT IN EXEMPT INCOME NO DISALLOWANCE FOR INTEREST UNDER SECTION 14A OF THE ACT IS REQUIRED. IT IS THE FURTHER CONTENTION OF ASSESSEE IN THIS CASE THAT 3 SHRI PRAKASH K. SHAH THE DISALLOWANCE UNDER SECTION 14A OF THE ACT SHOULD BE CONSIDERED ONLY WITH RESPECT TO THOSE INVESTMENTS WHICH HAVE EARNED EXEMPT INCOME. IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE UPON THE SPECIAL BENCH DECISION OF THE TRIBUNAL DELHI BENCH IN ACI T V/S VIREET INVESTMENT S PVT. LTD. [2017] 82 TAXMANN.COM 415 (DEL.) (SB) . FURTHERMORE IT IS THE CONTENTION OF THE ASSESSEE THAT THE DISALLOWANCE UNDER SECTION 14A OF THE ACT CANNOT EXCEED THE EXEMPT INCOME. UPON CAREFUL CONSIDERATION I FIND THAT THESE CONTENTION S OF THE ASSESSEE ARE COGENT AND DULY SUPPORTED BY HIGHER JUDICIAL AUTHORITIES. HENCE I DIRECT THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFTER ALSO TAKING INTO ACCOUNT THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN VI REET I NVESTMENT S PVT . LTD. (SUPRA) AND ALSO TO LIMIT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME EARNED . 5. A NOTHER COMMON ISSUE RAISED IS WITH REGARD TO THE ESTIMATE OF NOTIONAL RENT ON PROPERTIES WHICH REMAIN VACANT BY ESTIMATING 7% RETURN. 6. UPON HEARING BOTH THE LEARNED COUNSEL FOR THE ASSESSEE AND PERUSED THE RECORDS I FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CIT V/S TIP TOP TYPOGRAPHY [2015] 368 ITR 330 (BOM.) HAS EXPOUNDED THAT MUNICIPAL RATEABLE VALUE CANNOT BE BRUSHED ASIDE UNLESS THE ASSESSING OFFICER IS ABLE TO BRING ON RECORD THAT THERE IS 4 SHRI PRAKASH K. SHAH EFFORT ON THE PART OF ASSESSEE TO SUPPRESS THE RENTAL INCOME. I FIND IT APPROPRIATE TO REMIT THIS ISSUE TO THE FILE OF ASSESSING OFFICER . THE ASSESSING OFFICER SHALL CONSIDER THE ASSESSEES REQUEST OF ADOPTING MUNICIPAL RATEABLE VALUE ON THE TOUCHSTONE OF THE HON'BLE JURISDICTIONAL HIGH COURT DECISION AS ABOVE . 7. I N THE RESULT ASSESSEES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 11.11.2019 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI DATED: 11.11.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT MUMBAI CITY CONCERNED; (5) THE DR ITAT MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT MUMBAI