ITO 2(2)(2), MUMBAI v. KALIMATI INVESTMENTS P.LTD, MUMBAI

ITA 6854/MUM/2012 | 2009-2010
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 685419914 RSA 2012
Assessee PAN AAACT2803M
Bench Mumbai
Appeal Number ITA 6854/MUM/2012
Duration Of Justice 2 year(s) 8 month(s) 22 day(s)
Appellant ITO 2(2)(2), MUMBAI
Respondent KALIMATI INVESTMENTS P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-07-2015
Date Of Final Hearing 20-07-2015
Next Hearing Date 20-07-2015
Assessment Year 2009-2010
Appeal Filed On 08-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ITA NO.6854/M/2012 ASSESSMENT YEAR: 2009-10 DCIT-2(3) R.NO.552 5 TH FLOOR AAYAKAR BHAVAN MUMBAI VS. M/S. TATA STEEL LTD. (SUCCESSOR TO M/S. KALIMATI INVESTMENT CO. LTD.) BOMBAY HOUSE 24 HOMI MODI STREET FORT MUMBAI -400001 PAN: AAACT2803M (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJ A. KAPADIA A.R. REVENUE BY : SHRI VIKRAM BATRA D.R. DATE OF HEARING : 20.07.2015 DATE OF PRONOUNCEMENT : 31.07.2015 O R D E R PER SANJAY GARG JUDICIAL MEMBER: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST ORDER DATED 01 . 08.2012 PASSED BY THE COMMISSIONER OF INCOME TAX ( APPEALS) HEREINAFTER REFERRED TO AS CIT(A) RAISING THE FOLLOWING GROUND S OF APPEAL:- 1.(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING ASSESSEES APPEAL WITHOUT ADJUDIC ATING THE DETAILED EVIDENCES GATHERED BY THE AO. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE AO TO COMPUTE THE INCOME FROM HOUS E PROPERTY ON THE BASIS OF MUNICIPAL VALUE EVEN THOUGH THE PREVAILING MARKET V ALUE IN THAT AREA WAS MUCH HIGHER. ITA NO.6854/M/2012 M/S. TATA STEEL LTD. (SUCCESSOR TO M/S. KALIMATI IN VESTMENT CO. LTD.) 2 2(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S.14A R.W. RULE 8D IGNORING THE FACT THAT THE RULE 8DIS APPLICABLE FROM F.Y.2007-08. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE MADE BY THE AO ADOP TING METHOD OF CALCULATION PROVIDED IN RULE 8D THEREBY OVERLOOKING THE CRUCIAL FACT THAT THAT THIS METHOD OF CALCULATION HAS BEEN PRESCRIBED BY THE STATE AND HE LD AS A REASONABLE METHOD BY THE HONBLE BOMBAY HIGH COURT IN GODREJ & BOYCE MFG . CO. LTD. 328 ITR 81 (BOM). 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE OWNS A FLAT IN DELHI WHICH WAS LEASED OUT TO THE PARENT COMPANY AT A MONTHLY R ENT OF RS. 60 000/-.IT HAS RECEIVED INTEREST FREE SECURITY OF RS. 75 00 000/-F ROM THE SAID COMPANY. THE ASSESSEE HAS DIVIDEND INCOME OF RS. 20 82 32 286/- AND TOTAL EXPENSES OF RS. 4 77 399/- CHARGED TO THE PROFIT AND LOSS ACCOUNT DURING THE YEAR. THE ASSESSEE SUE MOTTO DISALLOWED RS. 4 77 399/- U/S 14A. 3. THE ISSUE RAISED IN THIS GROUND NO 1 OF APPEAL I S THAT THE ANNUAL VALUE OF THE PROPERTY WAS DETERMINED BY THE AO ON THE BASIS OF RENT RECEIVED AND NOTIONAL INTEREST ON THE INTEREST FREE SECURITY REC EIVED FROM THE TENANT. THE LD. AO DETERMINED THE ALV OF THE SAID PROPERTY AT RS. 1 50 000/- PER MONTH. THE MUNICIPAL RATEABLE VALUE OF THE SAID FLAT WAS RS. 12 26 300/-. THE CIT(A) WHILE RELYING UPON THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR DELETED THE ADDITION B Y OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE. THE ASSES SEE OWNS PROPERTY BEING FLAT NO.4C AT 23 PRITHVIRAJ ROAD NEW DELHI. THE SAID F LAT WAS GIVEN ON LEASE TO THE PARENT COMPANY TATA STEEL LTD. SINCE MARCH 1994. THE ASSESSEE HAS RECEIVED RENT OF RS.7 20 000/- FROM THE TENANT AND ALSO INTEREST FREE DEPOSITS OF RS.75 00 000/-. THE AO HAS TAKEN INTO ACCOUNT NOTIONAL INTEREST ON INTEREST FREE DEPOSIT AND HAS ADOPTED ALV FOR RS.18 00 000/- U/S.23(1)(A) OF THE I.T. ACT. ON THE IDENTICAL FACTS THE HONBLE ITAT MUMBAI IN ITA NO.2706/MUM/2010- A Y 2004-05 ITA NO.4508/MUM/2010 AY 2005-06 ITA NO.2552/MUM/2010 AY 2007-08 AND ITA NO.2553/MUM/2011 AY 2006-07 COMBINED ORDER DATED 0 9/05/2012 HAS HELD THAT THE MUNICIPAL VALUE SHOULD BE TAKEN AS ALV WITHOUT DEDUCTION OF ANY MUNICIPAL TAXES WHICH WERE BORNE BY THE TENANT. DURING THE YE AR MUNICIPAL VALUE OF THE PROPERTY IS RS.12 26 300/-. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE ITAT THE ITA NO.6854/M/2012 M/S. TATA STEEL LTD. (SUCCESSOR TO M/S. KALIMATI IN VESTMENT CO. LTD.) 3 AO IS DIRECTED TO TAKE RS.12 26 300/- AS ALV SUBJEC T TO STANDARD STATUTORY DEDUCTION BUT NOT ALLOWING ANY FURTHER DEDUCTION TO WARDS MUNICIPAL TAXES WHICH WERE PAID BY THE TENANT AND NOT BY THE ASSESSEE. TH US THIS GROUND IS PARTLY ALLOWED. 4. WE FURTHER FIND THAT THE ASSESSEE CASE IS COVERE D IN ITS OWN CASE BY THE JURISDICTIONAL HIGH COURT IN THE ASSESSMENT YEAR 2004-2005 2006 AND 2007-08 IN ITA NO 1308 1238 AND 1239 RESPECTIVELY. THUS WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE CIT(A) AND UPHOLD THE SAME. . IN VIEW OF THE ABOVE THE GROUND NO. 1 IS DISMISSED. 5. THE GROUND NO 2 IS AGAINST THE DISALLOWANCE OF RS.1 33 57 138/- UNDER SECTION 14A R.W. RULE 8D BY THE AO . THE CIT(A) RES TRICTED THE DISALLOWANCE TO RS. 4 77 399/- BY OBSERVING:- I HAVE CONSIDERED THE FACTS OF THE CASE. THE ASSES SEE HAS SHOWN DIVIDEND INCOME OF RS.20 82 32 286/-. THE ASSESSEE HAS DEBITED THE TOTAL EXPENDITURE OF RS.4 77 399/- TO P & L ACCOUNT WHICH HAS BEEN DISAL LOWED U/S.14A OF THE ACT. HOWEVER THE AO HAS INCREASED THIS DISALLOWANCE WH ICH EXCEEDED TO THE TOTAL EXPENDITURE DEBITED TO THE P & L ACCOUNT. IT HAS BE EN HELD BY THE HONBLE DELHI ITA IN THE CASE OF GILLETE GROUP INDIA (P) LTLD. V/S. A CIT (2012) 22 TAXMANN.CO. 61 (DELHI- TRIB) THAT DISALLOWANCE U/S 14A CANNOT EXCEED THE E XPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE. 6. THE REVENUE RELIED UPON THE ORDER OF AO WHEREAS THE ASSESSEE VEHEMENTLY ARGUED THAT THE CASE IS COVERED BY THE D ECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GILLETE GROUP INDIA (P) LTD. V/S. ACIT (2012) 22 TAXMANN.CO. 61 (DELHI-TRIB). WE HAVE CONSIDERED THE RIVAL ARGUMENTS AND FOUND THAT THE CIT(A) HAS RIGHTLY RESTRICTED THE DI SALLOWANCE TO RS. 4 77 399/- AS THE DISALLOWANCE CAN NOT EXCEED THE TOTAL EXPENS ES CLAIMED IN THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE AND THUS WE FIND NO IN FIRMITY IN THE ORDER OF CIT(A) AND THEREFORE THE GROUND NO 2 IS DISMISSED. ITA NO.6854/M/2012 M/S. TATA STEEL LTD. (SUCCESSOR TO M/S. KALIMATI IN VESTMENT CO. LTD.) 4 7. IN VIEW OF THE DISMISSAL OF GROUND NO.1 & 2 GROU ND NO 3 BECOMES IN FRUCTUOUS. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 31.07.2015. * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.