MUKESH MITTAL,DELHI vs. ITO, WARD- 58(3), DELHI

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ITA 1396/DEL/2022Status: DisposedITAT Delhi18 January 2023AY 2020-214 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that exempt income from dividend and PPF interest, when disclosed separately and deducted from business income, cannot be added back as business income. The Tribunal relied on a previous decision in the assessee's own case for an earlier assessment year.

What were the facts?

The assessee declared income including exempt dividend and PPF interest. The AO treated these exempt incomes as business income, leading to a higher total income and demand. The NFAC upheld the AO's order.

What were the issues?

Whether exempt dividend and PPF interest income can be treated as business income by the Assessing Officer during the processing of the return.

Which sections of the Income-tax Act were involved?

Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

For Appellant: Shri Anuj Maheshwari, C.A
For Respondent: Shri Om Prakash, Sr. D.R
Hearing: 15.12.2022Pronounced: 18.01.2023

ORDER

PER ANIL CHATURVEDI, AM:

1.

This appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), Delhi, No. dated 28.05.2022 in DIN and Order ITBA/NFAC/S/250/2022-23/1043237109(1), relating to the A.Y. 2020-21 passed under section 250 of the I.T. Act, 1961.

2.

Brief facts of the case as culled out from the material on record are as under:-

Mukesh Mittal vs ITO 2 3. Assessee is an individual who is stated to have filed his return of income for A.Y. 2020-21 declaring an income of Rs.9,18,610/-. The said returned income included a business income of Rs.3,55,097/-. Assessee received intimation u/s 143(1) of the Act vide order dated 03.11.2021 wherein the total income was determined at Rs.10,70,110/- as against the income declared of Rs.9,18,610/- thereby raising a demand of Rs.48,390/-. Aggrieved by the order of AO, assessee filed appeal before the National Faceless Appeal Centre (NFAC) who vide order dated 28.05.2022 in DIN and Order No. ITBA/NFAC/S/250/2022- 23/1043237109(1) dismissed the appeal of the assessee. Aggrieved by the order passed by NFAC, assessee is now in appeal and has raised the following grounds:

1. “The AO has made serious error in treating exempt income of interest on PPF of Rs.98,427/- as his business income.

2. The AO has made serious error in treating exempt income of Dividend income of Rs.53,417/- as his business income.”

4. Before me, Learned AR submitted that during the year under consideration assessee had earned exempt dividend income of Rs.53,417/- and exempt income from PPF interest of Rs. 98,427/-. While computing the business income, assessee had reduced the exempt dividend income and PPF interest and the exempt income was disclosed under the appropriate head as well as considered while computing the taxable income. He submitted that while processing the income tax return, the exempt income declared by the assessee on account of PPF and dividend was considered as business income and accordingly the demand was raised. He submitted that against the demand

Mukesh Mittal vs ITO 3 raised, assessee had filed an appeal before NFAC and to support his contentions, he had uploaded the relevant documents but without considering the submissions of the assessee, the order of AO was upheld. He submitted that since the interest on PPF and dividend income was duly disclosed in the exempt income, the same cannot be added to the income of the assessee. He further submitted that identical issue arose in assessee’s own case in A.Y. 2018-19 and Co-ordinate Bench of Tribunal vide order dated 25.08.2022 in has deleted the addition. He placed on record at page 35 to 38 the copy of the aforesaid order. He, therefore, submitted that since the facts of the case in the year under consideration are identical to that of A.Y. 2018-19, the addition made by AO and upheld by NFAC be deleted.

5.

Learned DR on the other hand supported the order of lower authorities.

6.

I have heard the rival submissions and perused the material on record. The issue in the present appeal is about the addition of exempt income from dividend and PPF interest as business income.

7.

Before me, assessee has filed the computation of income a copy of which is placed at page 7 of the paper book which reveals that while computing the profit and gains from business and profession, the assessee had reduced the dividend of Rs.53,417/- and interest on PPF of Rs.98,427/- and the exempt income was Mukesh Mittal vs ITO 4 disclosed separately at appropriate places. I find that in the intimation issued u/s 143(1) of the Act, the exempt interest on PPF and dividend income has been considered as business income and accordingly tax demand has been raised. I further find that assessee during the appellate proceedings had filed the documents to support his contentions but the same have not been considered appropriately. Before me, Revenue has not placed any material on record to controvert the submission made by assessee. In such a situation, I find merit in the submissions of the assessee. I further find that identical issue arose in assessee’s own case in A.Y. 2018-19 wherein the Co-ordinate Bench of Tribunal has decided the issue in favour of the assessee. I therefore direct the AO to delete the addition of Rs.98,427/- on account of exempt income on PPF, Rs.53,417/- on account of dividend income from business income. Thus the ground of assessee is allowed.

In the result, appeal of the assessee is allowed. 8.

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