PREM BEHARI VAID, MUMBAI v. ACIT 14(3), MUMBAI

ITA 5494/MUM/2009 | 2005-2006
Pronouncement Date: 09-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 549419914 RSA 2009
Assessee PAN AACPV9521F
Bench Mumbai
Appeal Number ITA 5494/MUM/2009
Duration Of Justice 1 year(s) 11 month(s) 2 day(s)
Appellant PREM BEHARI VAID, MUMBAI
Respondent ACIT 14(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 09-09-2011
Date Of Final Hearing 09-08-2011
Next Hearing Date 09-08-2011
Assessment Year 2005-2006
Appeal Filed On 07-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 5494/MUM/2009 (ASSESSMENT YEAR: 2005-06) SHRI PREM BEHARI VAID A C I T - 14(3) 43 RAMWADI 3TD FLOOR MUMBAI KALBADEVI ROAD VS. MUMBAI 400002 PAN - AACPV 9521 F APPELLANT RESPONDENT APPELLANT BY: SHRI SATISH R. MODY RESPONDENT BY: SHRI ALEXANDER CHANDY DATE OF HEARING: 09.08.2011 DATE OF PRONOUNCEMENT: 09.09.2011 O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- XV MUMBAI DATED 16.07.2009. 2. ASSESSEE HAS RAISED TWO GROUNDS WITH REFERENCE TO T WO ISSUES COMPUTATION OF LONG TERM CAPITAL GAIN AND CLAIM OF PORTFOLIO MANAGEMENT CHARGES. THESE ARE CONSIDERED AND DECIDED AS UNDER. ISSUE OF COMPUTATION OF LONG TERM CAPITAL GAIN 3. ASSESSEE RAISED DETAILED GROUNDS FROM 1(A) TO 1(G) ON THIS ISSUE. THE FACTS LEADING TO THE ISSUE ARE THAT ASSESSEE SOLD A PROPERTY AT PUNE AND OFFERED THE CAPITAL GAINS. ASSESSEE HAS SHOWN THE S ALES CONSIDERATION AT ` 8 39 240/- FROM SALE OF LAND AT PUNE AS HIS SHARE. THE A.O. OBTAINED THE DOCUMENTS FROM THE SUB-REGISTRAR MULSHI UNDER SECT ION 133(6) AND NOTICED THAT ASSESSEES NAME FIGURES IN THREE SALES DOCUMEN TS AND THE TOTAL CONSIDERATION WAS SHOWN AT ` 16 78 481/- ` 4 20 000/- AND ` 13 12 500/-. ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 2 THEREFORE THE A.O. CONSIDERED HALF SHARE OF THE FIR ST TWO DOCUMENTS AND 1/3 SHARE OF THE THIRD DOCUMENT AND BROUGHT TO TAX AMOU NT OF RS .14 86 740/- AND ALSO DENIED COST OF ACQUISITION THEREBY LONG T ERM CAPITAL GAIN WAS TAXED ON THE ENTIRE SALES CONSIDERATION SO ARRIVED AT. I T WAS ASSESSEES CONTENTION THAT THE PROPERTY WAS PURCHASED ALONG WITH THREE OT HERS I.E. (1) MADAN MOHAN SHARMA (2) CHANDRAKANT PUNAMCHAND BHANDARI AND (3) NITIN KUMAR SHASHIKANT BAMB OF A TOTAL 3 HECTARE 48 ARS. 20 ARES WAS SOLD IN 2003. OUT OF THE BALANCE ASSESSEE AND SHRI M.M. SHA RMA HAD 50% SHARE IN THE SAID PROPERTY AT 1 HECTARE 64 ARS SOLD BY THE J OINT SALE DEED. AS PER THE SALES DEED ASSESSEE SOLD HIS 25% SHARE (ALONG WITH SHRI M M SHARMA) OF THE TOTAL LAND TO ONE CO-OWNER I.E. NITAN KUMAR S. BAMB ON WHICH CAPITAL GAINS WERE OFFERED. WITH REFERENCE TO THE OTHER DOCUMENTS IT WAS SUBMITTED THAT ASSESSEE IS FIGURING AS A CONSENTING PARTY AS THE P ROPERTY WAS UNDIVIDED AND THE SELLERS ARE RESPECTIVE PARTIES WHO HAVE RECEIVE D THE SALE CONSIDERATION. AS ASSESSEE HAS ONLY SHARE IN THE PROPERTY AND TH E SAME WAS ASSIGNED TO OTHER CO-OWNER HE HAS CORRECTLY OFFERED THE CAPITA L GAINS ON HIS PART OF SALE CONSIDERATION RECEIVED. THE A.O. HOWEVER DID NOT A GREE AND CONSIDERED THAT ASSESSEE HAS SIGNED IN ALL THE THREE DOCUMENTS AND THEREFORE THE RESPECTIVE SHARES ARE TO BE ASSESSED IN HIS HANDS. BEFORE THE CIT(A) ASSESSEE HAS REITERATED THE SAME SUBMISSIONS ALONG WITH EVIDENCE WITH REFERENCE TO ACQUISITION OF THE PROPERTY. THE CIT(A) HOWEVER W HILE GRANTING BENEFIT OF COST OF ACQUISITION AGREED WITH THE A.O. THAT ASSE SSEE HAS SOLD THE PROPERTIES BY WAY OF THREE DOCUMENTS AND SO HIS NAM ES FIGURES IN ALL THE THREE DOCUMENTS THEREFORE ASSESSING OFFICERS ACT ION HAS TO BE CONFIRMED. 4. CONTESTING THE ABOVE FINDINGS OF THE AUTHORITIES THE LEARNED COUNSEL SUBMITTED THAT THERE WAS A DEVELOPMENT AGREEMENT BE TWEEN THE PARTIES AND THREE PARTIES DECIDE TO ASSIGN TO ONE CO-OWNER SHRI N.K. BAMB AND ENTERED INTO AGREEMENTS ACCORDINGLY. SHRI N.K. BAMB ALSO AS SIGNED THE PROPERTY TO OUTSIDE PARTY SO THE OUTGOING PARTIES ALSO SIGNED T HE DOCUMENT IN FAVOUR OF THIRD PARTY THEREFORE THERE ARE THREE DOCUMENTS AN D DREW OUR ATTENTION TO VARIOUS DOCUMENTS PLACED IN THE PAPER BOOK AND THE DETAILS OF THE TRANSACTIONS AS UNDER: - ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 3 1. REGN. NO. 140/2005 NAME OF OWNERS/VENDORS MR. MADAN MOHAN SHARMA MR. PREM BEHARI VAID (ASSESSEE) NAME OF DEVELOPERS/PURC. SHRI NITIN KUMAR BUMB CONSENTING PARTY SHRI CHANDRAKANT PUNAMCHAND BHANDA RI DETAILS OF AREA SOLD UNDIVIDED SHARE OF EACH VENDOR. THUS THE SHARE OF EACH VENDOR IS 37.75 ARES OUT OF S.NO. 251/2/1. 44.25 ARES OF EACH VENDOR I.E. TOTAL OF 82 ARES OUT OF S. NO. 259/2/1 TOTAL AREA 164 ARES I.E. 1 HECTARE 64 ARES EACH PERSONS SHARE IS 8 ARES AMOUNT OF SALE PRICE ` 16 78 480/- SHARE OF ASSESSEE ` 8 39 240 2. REGN. NO. 142/2005 NAME OF OWNERS/VENDORS MR. CHANDRAKANT PUNAMCHAND B HANDARI NAME OF DEVELOPERS/PURC. SHRI NITIN KUMAR BUMB CONSENTING PARTY SHRI MADAN MOHAN SHARMA SHRI PREM BEHARI VAID DETAILS OF AREA SOLD 1 / 8 UNDIVIDED SHARE OF THE VENDOR 37.75 ARES OUT OF 251/2/1 & 4.50 ARES OUT OF 259/2/1 TOTALLY 42.25 ARES AMOUNT OF SALE PRICE ` 4 20 000/- OF C P BHANDARI 3. REGN. NO. 144/2005 NAME OF OWNERS/VENDORS MR. CHANDRAKANT PUNAMCHAND BHANDARI SHRI MADAN MOHAN SHARMA SHRI PREM BEHARI VAID ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 4 NAME OF DEVELOPERS/PURC. SHRI ASHVIN KRISHNAKANT GIRME SMT. HEMANGI ASHWIN GIRME CONSENTING PARTY SHRI NITIN KUMAR SHASHIKANT BUMB DETAILS OF AREA SOLD 60 ARES OUT OF SURVEY NO. 259 HISS NO. 2/1 AMOUNT OF SALE PRICE ` 13 12 500/- OF N.K. BAMB 5. REFERRING TO THE ABOVE IT WAS SUBMITTED THAT THE P ROPERTY WAS ORIGINALLY PURCHASED BY THE FOUR PERSONS AND ONE OF THE PARTY SHRI NITIN KUMAR S. BAMB HAS INVESTED MONEYS FOR DEVELOPMENT O F THE PROPERTY AND THEREFORE THE OTHER CO-OWNERS DECIDED TO ASSIGN IT TO SHRI NITIN KUMAR BAMB. HE REFERRED TO THE RECITALS IN THE DOCUMENT O F DEVELOPMENT AGREEMENT ENTERED BETWEEN THE ASSESSEE AND OTHERS ( SHRI M.M. SHARMA SHRI C P BHANDARI) WITH SHRI N.S. BAMB WHEREIN IT WAS STAT ED AS UNDER: - AND WHEREAS DUE TO VARIOUS REASONS THE VENDORS/OWN ERS DECIDED TO SELL THE SAID LAND. THE SAID LAND BEING FAR AWAY FROM THE MAIN ROAD AND SINCE NO PROPER ACCESS OR ROAD WAS AVAILA BLE AND DUE TO THESE AND SEVERAL OTHER REASONS THE PROPER CONSIDER ATION/VALUE OF THE SAID LAND COULD NOT BE FETCHED SO THEREAFTER OWNERS JOINTLY DECIDED TO PROCURE PROPER RIGHTS OF ACCESS/ROAD FIRSTLY. AND A CCORDINGLY FOR PROCUREMENT OF THE RIGHTS OF THE ROAD MR. NITINKUMA R S. BAMB HAS TAKEN EFFORTS AND AS PER THE MUTUAL DECISION BETWEE N ALL OWNERS FOR THE PROCUREMENT OF THE RIGHTS OF THE ROAD AND FOR PREPARING THE ROAD MR. N.S. BAMB HAS PAID/SPENT AND HAS TO PAY/SPEND A BIG AMOUNT AND THE SAID AMOUNT WORKED OUT TO THE TUNE OF RS.20 .86 100/-. AS PER THE MUTUAL UNDERSTANDING REACHED BETWEEN THE OW NERS/VENDORS AND THE PRESENT DEVELOPER WHO IS ALSO ONE OF THE O WNERS MR. N.S. BAMB AND OTHER CO-OWNERS TOOK THE DECISION TO PROC URE THE RIGHTS OF THE ROAD AND RAISE ADDITIONAL FUNDS TOWARDS THE COS T OF MAKING A MOTORABLE ROAD. SHRI NITINKUMAR S. BAMB TOOK THE IM ITATIVE AND HAS PAID/SPENT ` 13.50 LAKHS TOWARDS THE AGREEMENTS OF PROCUREMENT O F RIGHTS OF THE ROAD AND HAS TO PAY THE BALANCE PAYME NT OF ` 61 100/- OF THE SAID AGREEMENTS FURTHER WRITTEN HEREUNDER. A CCORDINGLY THE VENDORS/OWNERS MENTIONED ABOVE HAVE TO PAY RS.10 43 050/- TO MR. NITINKUMAR S. BAMB TOWARDS THEIR SHARE OF THE TOTA L AMOUNT OF RS.20 86 100/- (COMPRISING OF RS.14 11 100/- FOR PR OCUREMENT OF ROAD RIGHTS AND RS.6 75 000/- FOR MAKING MOTORABLE ROAD). ACCORDINGLY OUT OF THE PAYMENTS THAT THE OWNERS/VEN DORS WILL BE RECEIVING THROUGH THIS DEVELOPMENT AGREEMENT AND FR OM THE DEVELOPER MENTIONED ABOVE THE VENDORS/OWNERS MENTIONED ABOVE HAVE TO PAY ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 5 RS.10 43 050/- TO MR. NITINKUMAR BAMB/DEVELOPER HER EIN TOWARDS THE REIMBURSEMENT OF THE EXPENSES INCURRED BY MR. N ITINKUMAR BAMB. AND WHEREAS THE VENDORS/OWNER OFFERED TO DEVELOP/SE LL THE SAID LAND TO THE PURCHASER/DEVELOPER AND THE PURCHASER/D EVELOPER AGREED FOR THE SAME AT AND FOR THE TOTAL CONSIDERATION OF RS.16 78 481/- NET AFTER DEDUCTION OF THE EXPENSES OF THEIR SHARE TOWA RDS PROCUREMENT OF ROAD RIGHTS AND FOR MAKING MOTORABLE ROAD. AND WHEREAS THE VENDORS HEREIN APPROACHED THE DEVEL OPER AND OFFERED TO GIVE RIGHTS TO DEVELOP OR SALE THE S AID LAND OR ESI/FAR WHICHEVER IS/WILL BE AVAILABLE TO DEVELOP THE SAID LAND (HEREINAFTER REFERRED TO AS THE SAID PROPERTY WHICH ARE DESCRIBE D IN DETAIL IN SCHEDULE II WRITTEN HEREUNDER ALONGWITH ALL THE RIG HTS TITLES CONNECTED THEREWITH FOR A TOTAL CONSIDERATION OF RS .16 78 481/- (RUPEES SIXTEEN LAKHS SEVENTY EIGHT THOUSAND FOUR H UNDRED EIGHTY ONE ONLY). 6. LIKEWISE THE OTHER CO-OWNER SHRI CHANDRAKANT BHAND ARI ALSO ENTERED INTO AGREEMENT WHEREIN SHRI M.M. SHARMA AND ASSESSE E HAVE JOINED AS CONSENTING PARTIES THUS IN EFFECT THE DEVELOPMENT AGREEMENT WAS GIVEN TO ONE OF THE CO-OWNER AND THE CONSIDERATION WAS ALSO SHARED AFTER ADJUSTING THE AMOUNT INVESTED BY SHRI NITIN KUMAR BAMB. THE T HIRD DOCUMENT IS OF SALE TO OUTSIDER PART OF THE LAND WHERE ALL THE PA RTIES WHO HAD OFFERED THE PROPERTY TO SHRI NITIN KUMAR BAMB FOR DEVELOPMENT H AS EXECUTED THE DOCUMENT WHEREIN SHRI NITIN KUMAR BAMB WAS CONSENTI NG PARTY AND REFERRED TO THE RECITAL WHERE THE CONSIDERATION REC EIVED THEREON WAS EXCLUSIVELY TAKEN BY SHRI NITIN KUMAR BAMB. 7. IT WAS HIS SUBMISSION THAT THE PROPERTY WAS BEING G IVEN FOR DEVELOPMENT AND SINCE UNDIVIDED SHARES WERE INVOLVE D EACH OF THE PARTIES ARE EITHER FIGURING AS SELLER/VENDOR OR AS CONSENTI NG PARTY FOR THE SAME OR THE OTHER PORTION AND THEREFORE A.O. HAS TAKEN WR ONGLY THE FACTS OF THE CASE AND BROUGHT TO TAX THE AMOUNTS WHICH WERE NOT SUPPO SED TO BE RECEIVED BY HIM. THE AMOUNT RECEIVED IN THE TRANSACTION WAS OFF ERED TO TAX. THE CIT(A) ALSO AGREED ABOUT PURCHASE OF PROPERTY AND ITS COS T OF ACQUISITION BUT SOMEHOW DID NOT ACCEPT ASSESSEES CONTENTION ABOUT THE ASSIGNING/ SALE OF PROPERTY. ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 6 8. THE LEARNED D.R. HOWEVER SUBMITTED THAT ASSESSEE S NAME WAS FIGURING IN ALL THE THREE DOCUMENTS AND SO THE A.O. WAS RIGHT IN CONSIDERING THE CONSIDERATION AS DETERMINED. 9. WE HAVE CONSIDERED THE ISSUE RIVAL CONTENTIONS AND EXAMINED THE DOCUMENTS PLACED ON RECORD. THERE IS NO DOUBT WITH REFERENCE TO THE PURCHASE OF PROPERTY JOINTLY BY THE FOUR PERSONS. T HERE IS ALSO NO DOUBT THAT THE ASSESSEE AND HIS OTHER CO-SHAREHOLDER SHRI M.M . SHAH HAS ASSIGNED TO ONE CO-OWNER SHRI NITIN KUMAR BAMB WHO HAS TAKEN S TEPS TO DEVELOP THE PROPERTY BY INVESTING MONEY. IN THE DOCUMENT WHICH THE ASSESSEE HAS ASSIGNED THE PROPERTY ALONG WITH SHRI M.M. SHARMA T O SHRI N.K. BAMB THE OTHER CO-OWNER SHRI CHANDRAKANT P. BHANDARI HAS AL SO SIGNED AS CONSENTING PARTY. LIKEWISE WHEN SHRI C.P. BHANDARI HAD SOLD/ASSIGNED HIS SHARE TO SHRI NITIN KUMAR BAMB THE TWO PARTIES M .M. SHAH AND ASSESSEE WERE FIGURING AS CONSENTING PARTIES. SO THEREFORE RECEIVING SHARE IN THE SHARE SOLD BY CHANDRAKANT P. BHANDARI DOES NOT ARIS E AS ASSESSEE IS NOT SELLER BUT ONLY A CONSENTING PARTY IN ASSIGNING OF UNDIVIDED PROPERTY. WITH REFERENCE TO THE SALE OF 60 ARES OUT OF SURVEY NO. 259/2/1 TO OUTSIDE PARTIES THIS DOCUMENT ACTUALLY WAS A TRANSACTION BETWEEN NI TIN KUMAR BAMB AND THE DEVELOPER WHEREIN THE THREE PARTIES I.E. OUT G OING PARTIES OF (SHRI) CHANDRAKANT P. BHANDARI M.M. SHARMA AND ASSESSEE W ERE TO EXECUTE DOCUMENTS FOR TRANSFERRING THE PROPERTY TO THE OTHE R DEVELOPER. THIS DOCUMENT EVEN THOUGH EXECUTED BY THE THREE PARTIES FOR THEIR SHARE THE CONSIDERATION WAS RECEIVED BY NITIN KUMAR BAMB WHO ALREADY RECEIVED THE FULL SHARE IN THE PROPERTY BY VIRTUE OF EARLIER TWO AGREEMENTS. RELEVANT AGREEMENT DEED INDICATES THESE FACTS CLEARLY. IN VI EW OF THIS WE ARE UNABLE TO UPHOLD ASSESSING OFFICERS CONTENTION THAT ASSES SEE RECEIVED 1/3 CONSIDERATION OF THE DOCUMENT WHEN THE RECITALS ITS ELF INDICATES THAT THE ENTIRE PROPERTY WAS TRANSFERRED TO ONE OF THE CO-SH AREHOLDERS BY THE EARLIER DOCUMENTS AND THE TRANSACTION IS ENTERED ONLY TO LE GALISE THE TRANSFER OF ABOUT 60 ARS TO THE OUTSIDE PARTY IN THE BUSINESS O F PROPERTY DEVELOPMENT. BY PURSUING ALL THE DOCUMENTS WE ARE OF THE OPINIO N THAT BOTH THE A.O. AND THE CIT(A) WERE WRONG IN TAKING THAT ASSESSEE HAS S OLD BY WAY OF THREE DOCUMENTS. THE CONJOINT READING OF ALL THE THREE DO CUMENTS INDICATE THAT ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 7 ASSESSEE HAS SOLD HIS 1 / 3 UNDIVIDED SHARE TO NITIN KUMAR BAMB ON WHICH HE RECEIVED SALE CONSIDERATION AND OFFERED THE SAME TO TAX. BALANCE OF THE TWO DOES NOT PERTAIN TO ASSESSEE AS IN ONE DOCUMENT OF SHRI C P BHANDARI AS VENDOR ASSESSEE IS A CONSENTING PARTY ALONG WITH SH RI M.M. SHARMA IN ASSIGNING SHARE TO SHRI N K BAMB AND IN ANOTHER ALL THREE OUT GOING PARTIES SIGNED THE DOCUMENT IN THE TRANSACTION WITH OUTSIDE PARTY (SHRI A.K. GIRME AND SHRI H.K. GIRME) WITH SHRI N K BAMB. IN ORDER T O WARD OFF ANY FUTURE COMPLICATIONS IN PURCHASING UNDIVIDED SHARE OF THE PROPERTY THE PARTIES INSIST ON INCLUSION OF THE NAMES OF OTHER CO-OWNERS AS CONSENTING PARTIES BUT THAT DOES NOT MEAN THAT THE CONSENTING PARTIES ALSO SOLD THE PROPERTY WHICH THEY DO NOT FULLY OWN. THEREFORE WE ARE NOT IN A POSITION TO UPHOLD THE ACTION OF THE A.O. OF BRINGING TO TAX SHARE I N THE PROPERTY SOLD BY SHRI CHANDRAKANT P. BHANDARI AND 1 / 3 OF THE PROPERTY BEING SOLD BY SHRI NITIN KUMAR BAMB FOR WHICH THESE THREE PARTIES EXECUTED T HE DOCUMENT. THE ASSESSEE HAS CORRECTLY OFFERED HIS SHARE OF IN TH E PROPERTY ASSIGNED BY THE DOCUMENT REGN NO. 140/2005 TO SHRI N.K. BAMB. IN VI EW OF THIS THE A.O. IS DIRECTED TO EXCLUDE THE AMOUNT OF ` 2 10 000/- AND ` 4 37 500/- BROUGHT TO TAX WHILE COMPUTING CAPITAL GAINS. ASSESSEES GROU NDS ARE ACCORDINGLY ALLOWED. ISSUE OF PORTFOLIO MANAGEMENT CHARGES 10. GROUND NO. 2 PERTAIN TO THE ISSUE OF CLAIM OF PORTF OLIO MANAGEMENT CHARGES OF ` 55 338/-. BEFORE THE A.O. ASSESSEE DID NOT FURNISH ANY EVIDENCE WITH REFERENCE TO THE CLAIM OF THE EXPENDITURE. THE REFORE A.O. HAS NOT ALLOWED THE AMOUNT IN THE COMPUTATION. BEFORE THE C IT(A) ASSESSEE CLAIMED THAT THE EXPENDITURE WAS WITH REFERENCE TO THE TRAN SACTION IN MUTUAL FUNDS UNDERTAKEN BY ASSESSEE AND WAS PAID TO BARCLAYS BA NK TOWARDS PROFESSIONAL CHARGES. IT WAS THE CONTENTION THAT TH ESE CHARGES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF DOING TRA NSACTIONS IN MUTUAL FUNDS AND THEREFORE AN ALLOWABLE DEDUCTION AS THE AMOUN TS WERE BROUGHT TO TAX. THE CIT(A) DID NOT ALLOW THE CONTENTIONS WHILE DEC IDING AS UNDER: - 9. I HAVE CONSIDERED THIS ISSUE CAREFULLY AND HAVE ALSO GONE THROUGH THE SUBMISSION AND DECISION OF MADRAS HIGH COURT CITED SUPRA. I FIND THAT FACTS HAD NOT BEEN CORRECTLY REF LECTED EITHER IN ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 8 ASSESSMENT ORDER OR IN WRITTEN SUBMISSION OF LD. AR . IT CAN BE SEEN FROM PAGE NO. 66 AND 67 OF THE PAPER BOOK SUBMITTED THROUGH LETTER DATED 20.02.2009 BEING SECOND REVISED STATEMENT OF COMPUTATION OF TOTAL INCOME THAT APPELLANT HAS SHOWN DIVIDEND ON M UTUAL FUNDS OF BARCLAYS BANK OF RS.1 52 724/- AND HAS REDUCED PORT FOLIO MANAGEMENT CHARGE OF RS.55 338/- AND THEREAFTER BAL ANCE OF RS.97 386/- HAS BEEN INCLUDED IN GROSS TOTAL INCOME . BELOW THE COMPUTATION OF INCOME TOTAL DIVIDEND OF RS.13 44 83 3/- RECEIVED DURING THE YEAR HAS BEEN CLAIMED AS EXEMPT U/S 10 O F THE INCOME TAX ACT. NO ORIGINAL COMPUTATION OF INCOME HAS BEEN SUB MITTED IN PAPER- BOOK. THE ABOVE FACT REVEALS THAT THIS IMPUGNED MAN AGEMENT CHARGES IS RELATED WITH THE INCOME WHICH IS EXEMPT FROM THE TAXATION HENCE APPLICABILITY OF LAW U/S 14A CANNOT BE RULED OUT. IN THE CASE OF ITO VS. DAGA (P) LTD. (2008) 119 TTJ (MUM) SPECIAL BENCH 289 ITAT MUMBAI SPECIAL BENCH IT HAS BEEN HELD THAT SUCH EX PENDITURE IS NOT ALLOWABLE. THE EXPENSES FALLING UNDER ANY HEAD OR S ECTION WHICH ARE OTHERWISE DEDUCTIBLE AS BUSINESS EXPENDITURE OR OTH ER RESPECTIVE HEAD WOULD CALL FOR DISALLOWANCE IN VIEW OF THE SPE CIFIC PROVISION OF LAW U/S 14A TO THE EXTENT SUCH EXPENSE HAS BEEN INC URRED IN RELATION TO THE INCOME EXEMPT FROM THE TAX. FURTHER IT IS W ORTHWHILE TO MENTION THAT APPELLANT HAS NOT DEMONSTRATED WITH AN Y EVIDENCE AS TO HOW PORTFOLIO MANAGEMENT CHARGE WAS IN RELATION WIT H TRANSFER OF ASSETS RESULTED IN THE CAPITAL GAIN OR LOSS THEREF ORE FROM THIS ANGLE ALSO ARGUMENT OF LD. AR IS NOT TENABLE. THE CASE LA W RELIED UPON BY THE LD. AR IN THE CASE OF CIT VS. BRADFORD TRADING CO. PVT. LTD. 125 TAXMAN 632 (MAD) IS NOT RELEVANT TO THE FACTS OF TH E CASE. IN THAT CASE APPELLANT COMPANY WAS TO PAY AN ADVANCE OF RS.5 00 000/- AND 2500 SHARES WERE TO BE TRANSFERRED TO THAT ASSESSEE AND AFTER CONSTRUCTION OF HOTEL IT WAS TO BE SOLD TO THE ASS ESSEE WHO HAD ENTERED INTO AN AGREEMENT WITH OTHER COMPANY ITC LT D. FOR SALE OF ENTIRE UNDERTAKING. MEANWHILE SOME SORT OF DISPUTES AROSE BETWEEN THE PARTIES AND THEREAFTER MATTER WAS SETTLED BY CO MPROMISE WHEREBY THAT ASSESSEE WAS REQUIRED TO TRANSFER 2500 SHARES HELD BY HIM TO WIFE OF CHAIRMAN OF THAT ASSESSEE COMPANY FO R WHICH A CONSIDERATION OF RS.2 50 000/- WAS FIXED HENCE THAT COMPANY HAD TO PAY IN ADVANCE FOR SETTLEMENT OF THE CLAIM. IN THIS SETTLEMENT A SUM OF RS.2 00 000/- WAS PAID AS FULL AND FINAL SETTLEMENT OF THE CLAIM. HOWEVER ITC LTD. AGREED TO REIMBURSE AN AMOUNT OF RS.1 50 000/- TO THE ASSESSEE FOR PAYMENT OF RS.2 00 000/- MADE TO T HE OTHER PARTY. IN THAT SET OF FACTS THE ASSESSEE COMPANY CLAIMED I N ITS RETURN OF INCOME THAT RS.2 00 000/- WAS AN EXPENDITURE INCURR ED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE SAID SALE WHICH WAS FOUND ALLOWABLE BY THE HON'BLE MADRAS HIGH COURT. BUT HE RE THE SET OF FACTS AS MENTIONED ABOVE IS ALTOGETHER DIFFERENT AS THIS CASE LAW IS NOT APPLICABLE. THEREFORE CONSIDERING THE FULL FAC TS AND CIRCUMSTANCES OF THE CASE DISALLOWANCE OF RS.55 338/- IS CONFIRME D AS NOT ALLOWABLE EXPENDITURE. THEREFORE GROUND NO. 2 FAILS. ITA NO. 5494/MUM/2009 SHRI PREM BEHARI VAID 9 11. BEFORE US THE LEARNED COUNSEL REITERATED THE SUBMIS SIONS WHEREAS THE LEARNED D.R. SUPPORTED THE ORDER OF THE CIT(A). AS RIGHTLY POINTED OUT BY THE CIT(A) THE CLAIM WAS NOT JUSTIFIED AS ASSESSEE HAS NOT FURNISHED COMPLETE DETAILS. SINCE THE EXPENDITURE ALSO PERTAINS TO THE EXEMPT INCOMES PROVISIONS OF SECTION 14A ALSO MAY BE APPLICABLE. S INCE ASSESSEE HAS NOT JUSTIFIED THE CLAIM WE ARE OF THE OPINION THAT THE RE IS NO NEED TO DIFFER FROM THE FINDINGS OF THE CIT(A). ACCORDINGLY ASSESSEES GROUND IS REJECTED. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 9 TH SEPTEMBER 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XV MUMBAI 4. THE CIT XIV MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.