9911796707
TMI Blog2014 (1) TMI 1394X X X X Extracts X X X X X X X X Extracts X X X X ..... red in directing the Assessing Officer to re-compute the disallowance u/s 14A of the Income Tax Act, 1961 without appreciating the facts that (a) the personal books of accounts of the assessee were separately maintained from the books of account of his business (b) no expenditure whatsoever was incurred by the assessee (c) no deduction was claimed by him while computing the total income and (d) the Assessing Officer did not compute the disallowance u/s 14A by applying Rule-8D of the Income Tax Rules, 1962. 4.0. The Ld CIT (A) erred in confirming the addition of Rs. 3,00,000/- made by the AO on account of estimated annual rent of assessee's flat at Marol Maroshi Road, Andheri (E), Mumbai without considering the fact that the said flat was used by the assessee for his business purposes. 5.0. The Ld CIT (A) erred in confirming the disallowance of Rs. 5,960/- made by the AO on account of property maintenance expenses without considering the fact that no such expenditure was incurred by the assessee and claimed as a deduction. In doing so, he was not correct in stating that the assessee did not press for the ground of appeal. 6.0. The Ld CIT(A) erred in confirming the that taxation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here. Referring to the said ground, Ld Counsel for the assessee explained relevant facts and stated that the assessee was searched on 3.1.2008. During the search proceedings, the jewellary of the family of the assessee was valued by the Government Approved Valuer and Annexure J is relevant here. On comparison of the values available on the Wealth Tax returns of the family members, they arrived at the difference of Rs 65 lakhs. There is no dispute on the quantitative particulars of the jewellary items and difference is only with regard to the values of the items. Before us, Ld Counsel summed up factors contributed to the said difference of Rs 65 lakh and details are: i) Govt Valuer valued the jewellary considering the value of the items as on the date of search and they compared with the value figures of the items as per the WT returns as on 31.3.2006 and 2007; ii. The jewellary belonging to his daughter ie Ritu Agarwal, who is separately assessed to tax was included despite repeated submissions during the search action; iii. A solitaire diamond ring of 9.41 cts was valued at Rs 50.08 lakhs by the Government valuers in the search despite the evidences produced to them demonstrating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d proper assessment u/s 143(3) of the Act and to be carried by the disputed statements and affirmation letters. In our opinion, it is in the interest of the administration of justice, the evidences furnished at some stages should not be ignored. Therefore, Ld Counsel seeks directions of the Bench to the AO to consider the assessee's explanation carefully and to re-adjudicate the issue. On hearing the submissions and prayer of the Ld Counsel for the assessee for remanding the matter to the files of the AO as well as the no objection from the Ld DR, we remand the matter to the files of AO to re-adjudicate the issue afresh after providing a reasonable opportunity of being heard to the assessee. AO is directed to consider the relevant WT returns properly and examine them for details of the particulars of cost of investment in each of the item of the jewellery before making addition in the year under consideration. Further, on the disputed issue of the impugned 'Solitaire Diamond Ring', we direct the AO to examine the impugned invoice dated 20.7.2004 and accept the cost of the same at Rs 13, 64,450/- in place of Rs 50.08 lakhs when the assessee demonstrates the bonafide of the said invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free funds are more than borrowed funds, when hybrid funds are maintained the benefit of doubt that the interest free funds have gone into the investments, which yielded exempt income, should be considered in favour of the assessee and sought direction of the Tribunal to the AO to examine the issue afresh. On the other hand, Ld DR relied on the orders of the Revenue Authorities and stated that the invoking of the said provisions of rule 8D is mandatory. 10. We have heard both the parties on this issue. We find there is no dispute on the earning of the exempt income and maintaining of mixed funds for investment and the business activities. On hearing the submissions as well as the prayer of the Ld Counsel, we find there is finding of fact on the claim of the assessee that the assessee has excess interest free funds adequate to earn the impugned exempt income. Therefore, we are of the considered the opinion that the matter should be remanded to the files of the AO to re-adjudicate the issue afresh after affording a reasonable opportunity of being heard to the assessee and grant relief, if any following the binding judgment cited above. Assessee is directed to demonstrate that the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
