Janak D. Dwarkadas v. Addl. CIT, Range 11(2), Mumbai
[Citation -2016-LL-0916-98]

Citation 2016-LL-0916-98
Appellant Name Janak D. Dwarkadas
Respondent Name Addl. CIT, Range 11(2), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 16/09/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags computation of income • capital account • estimate basis
Bot Summary: At the outset, the Ld. A.R. of the assessee has submitted that the assessee has claimed the expenditure which was directly relatable to the earning of the professional income. The assessee s P L account reflected expenses only related to the assessee s profession and no other expenses against exempt income. The Ld. A.R. has further submitted that the assessee did not use his office for the purpose of activities to earn exempt income and no expenses such as Computer, Electricity, Stationery, Telephone expenses etc. The assessee s Portfolio Managers looked after his investments portfolio for which they were paid PMS fees which was debited to the assessee s Capital Account. The Ld. A.R. has further brought our attention to the order dated 06.04.2016 of the Ld. CIT(A) in relation to subsequent assessment year 2012- 13 wherein the similar contentions were raised by the assessee and the Ld. CIT(A) considering the same has accepted the appeal of the assessee. Considering the above submissions of the assessee, we do not find justification 3 ITA No.6763/M/2014 M/s. Janak D. Dwarkadas on the part of lower authorities for making the disallowance as per the formula prescribed under rule 8D totally ignoring the above contentions of the assessee. In view of the above submissions of the assessee and overall facts and circumstances of the case, the disallowance, in this case is restricted to that has been suo-moto offered by the assessee.


IN INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA No.6763/M/2014 Assessment Year: 2010-11 Shri Janak D. Dwarkadas, Addl. CIT, Mulla House, 3rd Floor, Range 11(2), Vs. 51, Mahatma Gandhi Road, Aayakar Bhavan, 4th Floor, Mumbai 400 001 M.K. Marg, PAN: AAEPD 8303R Mumbai - 400020 (Appellant) (Respondent) Present for: Assessee by : Shri Pradip J. Joshi, A.R. Revenue by : Shri Prakash Patnade, D.R. Date of Hearing : 22.06.2016 Date of Pronouncement : 16.09.2016 ORDER Per Sanjay Garg, Judicial Member: present appeal has been preferred by assessee against order dated 19.09.2014 of Commissioner of Income Tax (Appeals) [hereinafter referred to as CIT(A)] relevant to assessment year 2010-11. 2. sole issue raised by assessee in this appeal is against confirmation of disallowance of sum of Rs.3896520/- under section 14A of Income Tax Act read with Rule 8D of Income Tax Rules, 1962 in relation to expenditure supposed to be incurred for earning of tax free dividend income. assessee is advocate by profession and during year has shown professional receipts of Rs.24.81 crores whereas expenditure claimed against said receipts was at Rs.82.61 lakhs. Assessing Officer (hereinafter referred to as AO) observed that assessee during year had earned tax exempt income of Rs.3,76,66,541/-. However, assessee had not offered disallowance under section 14A as per 2 ITA No.6763/M/2014 M/s. Janak D. Dwarkadas formula as prescribed under rule 8D of Income Tax Rules. He, therefore, made impugned disallowance. 3. Ld. CIT(A) confirmed said disallowance made by AO. assessee, thus, has come in appeal before us. 4. At outset, Ld. A.R. of assessee has submitted that assessee has claimed expenditure which was directly relatable to earning of professional income. It has been further submitted on behalf of assessee that no expenses were claimed by assessee against either dividend income or exempt capital gains. It has also been submitted that Scrutiny Transaction Tax and Custodian and other PMS charges were debited to assessee s capital account and no deduction was claimed for such expenses either from tax free or taxable income. assessee s P& L account reflected expenses only related to assessee s profession and no other expenses against exempt income. Ld. A.R. has further submitted that assessee did not use his office for purpose of activities to earn exempt income and no expenses such as Computer, Electricity, Stationery, Telephone expenses etc. were incurred to earn exempt income. assessee s Portfolio Managers looked after his investments portfolio for which they were paid PMS fees which was debited to assessee s Capital Account. However, assessee had suo moto offered sum of Rs.15,000/-as disallowance on estimate basis u/s.14A of Act,1961 in Computation of Income for assessment year under consideration. assessee even did not incur any expenditure by way of interest during year as he had no borrowing/loan funds. Ld. A.R. has further brought our attention to order dated 06.04.2016 of Ld. CIT(A) in relation to subsequent assessment year 2012- 13 wherein similar contentions were raised by assessee and Ld. CIT(A) considering same has accepted appeal of assessee. department has not filed any appeal against said order of Ld. CIT(A). Considering above submissions of assessee, we do not find justification 3 ITA No.6763/M/2014 M/s. Janak D. Dwarkadas on part of lower authorities for making disallowance as per formula prescribed under rule 8D totally ignoring above contentions of assessee. Even on identical facts Ld. CIT(A) has deleted disallowance in subsequent year. 5. In view of above submissions of assessee and overall facts and circumstances of case, disallowance, in this case is restricted to that has been suo-moto offered by assessee. 6. In result, appeal of assessee is hereby allowed. Order pronounced in open court on 16.09.2016. Sd/- Sd/- (G.S. Pannu) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 16.09.2016. Kishore, Sr. P.S. Copy to: Appellant Respondent CIT, Concerned, Mumbai CIT (A) Concerned, Mumbai DR Concerned Bench //True Copy// [ By Order Dy/Asstt. Registrar, ITAT, Mumbai. Janak D. Dwarkadas v. Addl. CIT, Range 11(2), Mumbai
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