Shirin Soli Contractor, Mumbai vs Assessee

आयकर अपील य अ धकरण, मुंबई यायपीठ "ई" मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL" E" BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं अ मत शु ला, या यक सद य के सम

आयकर अपील सं./I.T.A. No.4840/Mum/2012 ( नधारण वष / Assessment Year :2008-09)

Shirin Soli Contractor, बनाम/ Commissioner of Income Tax -

Flat No.75, Jehangir Mansion Vs. 11(3), Room No.446, Huges Road, Aayakar Bhavan, Chowpatty, M K Road, Mumbai-400007 Mumbai-400020 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAGPC8816N

अपीलाथ ओर से / Assessees by Shri Nishit Gandhi यथ क ओर से/Revenue by Shri N V Nadkarni

सुनवाई क तार ख / Date of Hearing : 22.4.2015 घोषणा क तार ख /Date of Pronouncement : 24.4.2015

आदे श / O R D E R

PER B.R. BASKARAN (AM)

The assessee has filed this appeal challenging the order dated 09- 05-2012 passed by ld CIT(A)-2, Mumbai and it relates to the assessment year 2008-09. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the disallowance made by the AO u/s 14A of the Act.

2. The Ld A.R submitted that the assessee is a doctor and during the year under consideration, the assessee earned exempted income to the tune of Rs.2.38 crores, which included Long term Capital gain of Rs.2.08 crores and dividend/tax free interest of Rs.0.30 crore. The assessee did not incur any expenditure in earning the above said income and hence she 2 I T A N o . 4 8 4 0 / Mu m / 2 0 1 2

did not make any disallowance u/s 14A of the Act. The assessing officer, however, disallowed a sum of Rs.3,65,751/- u/s 8(2)(iii) of the Act, i.e., 0.5% of the average value of investments. Inviting our attention to the Profit and Loss account of the assessee, the ld A.R submitted that all the expenses claimed by the assessee were related to her professional income and accordingly he submitted that the assessing officer was not justified in making the disallowance as per Rule 8D of the Act without examining the claim of the assessee with reference to the accounts. He further contended that the ld CIT(A) was not justified in confirming the disallowance without properly appreciating the contentions of the assessee.

3. The Ld D.R, on the other hand, submitted that the disallowance u/s 14A r.w. Rule 8D is applicable to the year under consideration and since the assessee has earned exempted income, the AO has computed the disallowance. She further submitted that the assessee has claimed expenditure in her Profit and loss account and hence the disallowance was made.

4. In the rejoinder, the Ld A.R submitted that the assessee had agreed for an adhoc disallowance of Rs.30,000/- before the AO and accordingly he prayed that the disallowance may be restricted to that amount. He further submitted that the co-ordinate bench of the Tribunal in the case of Dr. Kirtikumar L Upadhayaya (ITA No.6670/Mum/2011 dated 13.8.2014) has expressed the view that the disallowance made by the assessing officer without examining the accounts of the assessee is not correct.

5. We have heard the rival contentions and perused the record. A perusal of the profit and loss account furnished by the assessee would show that there is some merit in the contentions of the assessee that the 3 I T A N o . 4 8 4 0 / Mu m / 2 0 1 2

expenses claimed therein are related to the professional income of the assessee. We notice that the assessing officer/Ld CIT(A) did not examine the claim of the assessee by having regard to the accounts maintained by the assessee and hence they were not justified in invoking Rule 8D for computing disallowance u/s 14A of the Act. However, it cannot also be denied that the assessee could not have earned the exempted income without indirectly utilizing the infrastructure and other facilities relating to the Profession. Hence, we are of the view that this issue would meet the ends of justice, if the disallowance out of expenses is made at Rs.50,000/- (Rupees Fifty thousand). Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the assessing officer to restrict the disallowance u/s 14A of the Act to Rs.50,000/-, as stated above.

6. In the result, the appeal filed by the assessee is partly allowed. The above order was pronounced in the open court on 24th Apr, 2015.

th घोषणा खल ु े यायालय म दनांकः 24 Apr, 2015 को क गई ।

Sd sd (अ मत शु ला / AMIT SHUKLA) (बी.आर.बा करन / B.R. BASKARAN) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER

मुंबई Mumbai: 24th Apr,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मंब ु ई/ DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, True copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मंब ु ई /ITAT, Mumbai