DR VENKATRAMANI SUMANTRAN,CHENNAI vs. ACIT, NON CORP CIR 15, CHENNAI

PDF · subscribers
ITA 251/CHNY/2019Status: DisposedITAT Chennai28 November 2019AY 2014-155 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 Section 14A read with Rule 8D cannot be invoked when investments and their income are not part of the books of account maintained for professional activity, and no expenditure related to such investments was claimed.

What were the facts?

The assessee admitted various incomes including salary, consultancy, and capital gains. The Assessing Officer disallowed Rs. 6,79,094 under Section 14A read with Rule 8D for investments not reflected in the books of account maintained for professional income.

What were the issues?

Whether Section 14A read with Rule 8D can be applied to disallow expenditure on investments not reflected in the books of account for professional income, when no expenditure was claimed.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI DUVVURU RL REDDY & SHRI S. JAYARAMAN

Hearing: 12.09.2019Pronounced: 28.11.2019

आयकर अपील सं./ Year: 2014-15 Dr.Venkatramani Sumantran, Vs. The ACIT, Plot No.67, 19th Street, Non-Corporate Circle 15, Venkateswara Nagar, Kottivakkam, Chennai. Chennai – 600 042. PAN: AAKPS5105J (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri S. Nagarajan, CA ��यथ� क� ओर से /Respondent by : Shri J. Pavitran Kumar, JCIT सुनवाई क� तार�ख/Date of Hearing : 12.09.2019 घोषणा क� तार�ख /Date of Pronouncement : 28.11.2019 आदेश / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER:

The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-16, Chennai in dated 10.12.2018 for the assessment year 2014-15.

2 - 2. Shri V. Sumantran, the assessee, an individual admitted income from salary, consultancy services, short term capital gains, long term capital gains with indexation and income from other sources. While making the assessment for the assessment year 2014-15, the Assessing Officer invoked the jurisdiction U/s.14A r.w.r. 8D and made a disallowance of Rs.6,79,094/- U/s. 8D(iii). Aggrieved against that order, the assessee filed an appeal before the CIT(A). The ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal.

3.

The ld.AR submitted that the assessee is maintaining books of account only for his professional income i.e., consultancy services. Since the gross receipts exceeded the limits mentioned in Section 44AB, the books of account have been audited in respect of the professional income and the tax audit report in Form 3CA and 3CB has been submitted before the Assessing Officer along with return. The assessee has been making investments from his personal account which is being monitored by him directly by his wealth advisors. In this regard, the assessee does not employ any staff or use other infrastructure towards such activity. The investments as well as the income from them are not included in the books of account maintained 3 - for professional activity. The ld.AR invited our attention to Para 3.4 to 3.6 of the order of the appellate order, which is extracted as under:- 3.4 The Appellant would like to submit the details of the assets as per the balance sheets submitted to the Assessing Officer, as per the table given below:

Details of Assets As at 31.3.2014 As at 31.3.2013 Fixed Assets 25,64,309 14,95,702 Current Assets Tax payments pending 2,97,60,185 2,26,20,915 adjustment Sundry Debtors 1,53,540 1,38,318 Bank Balances 1,28,045 1,75,950 Rental Advance 2,00,000 2,00,000 Salary Advance - 10,000 Total Assets 3,28,06,079 2,46,40,885 3.5 As already submitted, the Appellant is not maintaining the accounts relating to the investment activity in the books of accounts maintained and audited for professional activity. From the details of the balance sheet given above, and also copy enclosed to these submissions, it can be seen that neither the value of investments nor its income is included in the assets and income of the accounts maintained for professional purposes.

3.6 The opening and closing value of the investments, which are not included in the books of accounts relating to professional activity, was furnished by the assessee during the course of the assessment proceedings and the Assessing Officer has made the impugned 4 - disallowance calculated at one half per cent of the average of the opening and closing value of investments.

Inviting our attention to the above, the ld.AR submitted that it is clear from the above that the assessee is not maintaining the accounts relating to the investment activity in the books of account maintained and audited for professional activity. Neither the value of investments nor its income was included as the assets or income of the accounts maintained for professional purposes. Therefore, the Assessing Officer should not have invoked the provisions of Section 14A r.w.r.8D, when the assessee has not claimed any expenditure related to these investments in the accounts maintained for professional activity. Per contra, the ld.DR supported the order of the ld.CIT(A).

4.

We heard the rival submissions and gone through the relevant material. It is clear from the above that the assessee has maintained books of account only for professional income. The assessee has made the investments from his personal account which was being monitored by him directly by his wealth advisors and he did not engage any staff or use other infrastructure towards the investment activity. Since, the investments as well as the income from such investments were not included in the books of account maintained for 5 - professional activity and the expenditure related to such activity was also not claimed by the assessee, the Assessing Officer cannot invoke the jurisdiction U/s.14A r.w.r.8D with regard to the books of account maintained for professional income. We also find from the order of the Assessing Officer that he has not even mentioned the above facts in the order but merely invoked the jurisdiction U/s.14A r.w.r.8D. In the facts and circumstances, the addition made by the Assessing Officer and as upheld by the ld.CIT(A) are not sustainable and hence, we delete the addition.

5.

In the result, the assessee’s appeal is allowed.

Order pronounced in the Court on 28th November, 2019 in Chennai.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →