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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assesseeby: Shri Sunil Hirawat Revenue by: ShriC. S. Sharma सुनवाईकीतारीख / Date of Hearing: 22.11.2016 घोषणाकीतारीख /Date of Pronouncement: 01.02.2017 आदेश / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 07.12.2015passed by the Commissioner of Income Tax (Appeals) - 3, Mumbai [hereinafter referred to as the “CIT(A)”]relevant to the assessment year 2010-11. A.Y.2010-11
The assessee has raised the following grounds:-
1(a).On the facts and in law, the learned Commissioner of Income-tax (Appeals) [hereinafter referred to as “Ld. CIT(A)] had erred in not directing the Learned Assessing Officer (LAO) to reduce the amount of service tax of Rs.1,10,657/- while computing rent received from M/s. Sports and Leisure Apparel Ltd. in respect of property located at Mylapore Chennai declared under the head “Income from House Property . Under the facts and circumstances of the matter, the Ld. CIT(A) ought to have directed the LAO to reduce the amount of service tax of Rs.1,10,657/- while computing rent received from M/s. Sports and Leisure Apparel Ltd. 1(b) On the facts and in law, the Ld. CIT(A) had erred in confirming the addition of Rs.1,10,657/- without asking for explanation regarding payment of Service Tax.
2. On facts and in law, the Ld. CIT(A) had erred in upholding the disallowance of Rs.1,64,180/- being expenditure incurred under the following heads even though explanation in this regard were submitted vide Paper Book dated 14.07.2015. Sr. Expense Head Amount (In Rs.) No.
1. Advertisement expenses 18,900 2. Legal and Professional fees 1,33,043 3. Miscellaneous expenses 12,237 Total 1,64,180 Under the facts and circumstances of the matter, the Ld. CIT(A) ought to have deleted the said disallowance of Rs.1,64,180/- 3. On facts and in law, the Ld. CIT(A) had erred in confirming the disallowance of Rs.1,64,180/- u/s.14A even knowing the fact that the said sum had already been disallowed by him under Grounds of Appeal No.2 of his order. Under the facts and circumstances of the matter, the A.Y.2010-11 Ld. CIT(A) ought to have deleted the said disallowance of Rs.1,64,180/- 4. On the facts and in law, the Ld. CIT(A) had erred in not directing the LAO to exclude the investment which did not yield any dividend income while computing the disallowance u/s.14A read with rule 8D. Under the facts and circumstances of the matter, the Ld. CIT(A) ought to have directed the LAO to exclude the investment which did not yield any dividend income while computing the disallowance u/s.14A read with rule 8D.
5. On the facts and in law, the Ld. CIT(A) had erred in confirming the disallowance of Rs.3,13,372/- u/s.12A made by the LAO while computing the Book Profit u/s.115JB. Under the facts and circumstances of the matter, he ought to have deleted the said disallowance of Rs.3,13,372/-.
On facts and in law, the Ld. CIT(A) had erred in confirming the disallowance of Rs.18,674/- being Securities Transaction Tax made by the LAO while computing the Book Profit u/s.115JB. Under the facts and circumstances of the matter, he ought to have deleted the said disallowance of Rs.18,674/- 7. The appellant craves leave to add, alter, vary omit, substitute or amend the above grounds of appeal
, at any time before or at the time of hearing of the appeal, so as to enable the Hon. ITAT to decide this appeal according to law.
3. The brief facts of the case are that the assessee has filed the return of income on 14.10.2010 declaring total income to the tune of Rs.19,35,012/-. The return was processed u/s.143(1) of the Income Tax Act, 1961( in short “the Act”) on 21.05.2011. The case was selected for scrutiny and accordingly, notice u/s.143(2) of the Act was issued on 27.09.2011 and served upon the assessee on 28.09.2011. A.Y.2010-11 Subsequently, notice u/s.142(1) of the Act was issued on 09.07.2011 and 17.07.2011. The assessee is having the income from investment in the shares and securities and rental income from immovable properties. The assessee has shown the income from the house property which was taken into consideration of Assessing Officer without reducing the service tax. The Assessing Officer has disallowed the expenditure to the tune of Rs.1,64,180/- and disallowed an amount of Rs.3,13,372 u/s.14A of the Act while computing book profit u/s.115JB of the Act. The said addition was confirmed by the CIT(A), therefore the assessee has filed the present appeal before us. ISSUE NO.1:- 4. Under issue no.1 the assessee has claimed the reduction of the amount of service tax of Rs.1,10,657/- while computing rent received from M/s. Sports and Leisure Apparel Ltd. The rent received by the assessee from M/s. Sports and Leisure is not in dispute but the assessee raised the claim of service tax which includes in that amount. The assessee filed the statement of service tax and challans of service tax paid which lies at page 7,9,13 and 14 of the paper book. The statement of service tax and the challans of service tax paid nowhere discussed by the Assessing Officer as well as CIT(A) specifically in the circumstances when the assessee has undertook before us that the said documents were placed before the CIT(A). Any how the said statement of service tax and challans of service tax paid requires A.Y.2010-11 verification on the part of the Assessing Officer, hence we set aside the finding of the CIT(A) on this issue and restore the file to the Assessing Officer to verify the claim of the assessee in view of the above said documents by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.2:- 5. Under this issue the assessee has challenged the disallowance of advertisement expenses, legal and professional fees and miscellaneous expenses total to the tune of Rs.1,64,180/-. The assessee has produced the details of the expenditure before the CIT(A) in view of the certificate dated 04.10.2016. Accordingly, the advertisement expenses has been shown at page 7 and 15 of the paper book which nowhere discussed in the said order. The expenses are in connection with the audit fees, advertisement fees and miscellaneous fees paid for the filing of appeal before the ITAT. The claim of the assessee nowhere examined and discussed by the CIT(A) in his order. No doubt the expenses has been incurred to maintain the establishment, therefore, the same is liable to allowable in view of the law settled in Rampur Timber and Turney Co. Ltd. (1981) 129 ITR 58, 59 (All.) and Ganga Properties Ltd. (1993) 199 ITR (Cal.) 94,95 and Chinai & Co. Pvt. Ltd. (1994) 206 ITR 616, 617 (Bom). Since the material produced before the CIT(A) has not been discussed or examined, A.Y.2010-11 therefore in the similar circumstances this issue is required to be examined at the end of the Assessing Officer in accordance with law. In the said circumstances we set aside the order of the CIT(A) in question on this issue and remand this issue before the Assessing Officer to decide the matter a fresh by considering the evidence adduced by the assessee and by giving an opportunity of being heard to the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.3 TO 5:- 6. Issue no. 3to 5 relates to the disallowance u/s.14A of the Act. The assessee received dividend income of Rs.7,74,483/- and claimed to the same as exempt. The assessee disallowed the sum of Rs.60,000/- u/s.14A of the Act in the return of income. However, the Assessing Officer computed disallowance as per Rule 8D(2)(iii) of the Income Tax Rules at Rs.3,13,372/-. In the appellate proceedings the learned CIT(A) confirmed the disallowance in principle but directed the Assessing Officer to re-compute the disallowance by reducing the expenditure by Rs.65,954/-, being the relief granted by him in respect of another disallowance. The assessee is aggrieved by the decision of the learned CIT(A).
We have heard the parties and perused the record. A perusal of Balance sheet furnished by the assessee would show that the assessee A.Y.2010-11 has held shares in a company named Money Matter Advisory Ltd and units in two schemes of LIC Mutual Fund as its opening balance of investment. During the year under consideration the assessee has purchased shares of Pipavav Shipyard Ltd. and sold part of units held in LIC Mutual Fund. As stated earlier the assessee had received dividend income of Rs.7,74,483/- during the year. Except these transactions, the assessee has not done anything in respect of investments held by it. Under the set of facts we are of the view that the disallowance of Rs.60,000/- made by the assessee in its return of income appears to be reasonable in terms of section 14A of the Act. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to restrict the addition u/s.14A of the Act of Rs.60,000/- made by the assessee. The same amount is required to be added to the book profit computed u/s.115JB of the Act, since the decision rendered by Hon’ble Delhi Bench of Tribunal in the case of Goetze (India) Ltd. Vs. CIT 32 SOT 101 has been reversed by the Hon’ble Delhi High Court, the same case reported in 361 ITR 505. ISSUE NO.6:- 8. Issue no.6 is not pressed by the assessee, therefore nowhere required to be adjudication. ISSUE NO.7:- A.Y.2010-11
Issue no.7 is general in nature which nowhere required adjudication.
In the result, the appeal filed by the assessee is hereby Allowed.
Order pronounced in the open court on 1st February, 2017. (B.R.BASKARAN) (AMARJIT SINGH) लेखासद" / ACCOUNTANT MEMBER "ाियकसद"/JUDICIAL MEMBER मुंबई Mumbai; िदनांकDated : February, 2017 MP