TMI Blog2015 (6) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... o delete the impugned additions and compute the income from house property under section 23(1)(a) of the Act. The assessee gets the relief accordingly. Even if the Ld. DR argued that the property is in question was different in A.Ys. 2003-04 to 2005-06 but as per the Tribunal's order description of the property is the same as mentioned by the Assessing Officer. Moreover the Tribunal has, on principle, decided this issue by directing the Assessing Officer that the municipal ratable valuation may be adopted. We, accordingly, remit the issue to the file of the Assessing Officer for the limited purpose to work out the annual value of the property u/s. 23(1)(a) as per the municipal valuation submitted by the assessee - Decided in favour of assessee. Disallowance u/s. 14A - professional fees and interest - Held that:- We fail to understand if any expenditure is claimed against the taxable income how the same can be disallowed by invoking the provisions of Sec. 14A. Admittedly, the assessee has declared the interest income to the extent of ₹ 7,863,257/-. In fact the Assessing Officer could have verified the said claimed u/s. 57(iii) and not u/s. 14A. The assessee has also file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act. The Assessing Officer took the help of the portal on the website namely magicbricks.com and accordingly worked out the ALV of 5-6 properties which are given in Para No. 6.4 of the assessment order. As per the working made by the Assessing Officer the deemed income of those properties were to the extent of ₹ 7,84,665/-. The Assessing Officer gave the set off of the ALV declared by the assessee of ₹ 15,208/- and made the addition of ₹ 7,69,457/-. The assessee challenged the addition before the Ld. CIT(A) but without successes. Now, the assessee is in appeal before us. 3. We have heard the parties and perused the record. The Ld. Counsel submits that there is no dispute about the fact that those properties are used by the firm in which the assessee is a partner. He submits that the issue of annual value of those properties had come for the consideration before the Tribunal in the assessee's own case in the A.Ys. 2003-04, 2004-05 and 2005-06 (ITA Nos. 1135, 1136 1138/PN/2007) and the Hon'ble Tribunal has directed the Assessing Officer to work out the annual value as per the Municipal valuation. The Ld. Counsel referred to copy of the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions. He proceeded to compute the income under the head 'income from house property' by adopting the rent received last year as 'the sum on which property can be reasonably be expected to be let out from year to year'. Aggrieved, assessee carried the matter in appeal but without any success. The CIT(A) observed that the fact of the matter is that property is let out and that 'rent receivable was foregone because of some Understanding between the brothers which was never brought on record' and that 'the fact that no rent was received by the appellant because of some understanding between brothers is of no relevance for deciding the annual value of the property'. The action of the Assessing Officer was thus confirmed. Aggrieved by the stand so taken by the CIT(A), the assessee is in further appeal before us. 3. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 4. In our considered view, there is no dispute about the elementary position that neither any rent was received in the relevant previous years, no is anything on record to suggest t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee in relation to such income which did not form part of total Income. The Assessing Officer also found that the assessee had claimed expenditure on account of professional fees of ₹ 22,613/- and also incurred interest expenses of ₹ 5,00,461/- on an O/D account in HDFC bank. The explanation sought by the Assessing Officer remained unanswered by the assessee with respect to the utilization of the O/D funds and also the detail of sources of fund for all investment, capital contribution to firms etc. was also not furnished by the assessee before the Assessing Officer. The Assessing Officer thus worked out the disallowance as per the provision of Rule 8D(2) at ₹ 16,67,798/- which was added to the total income. The Assessing Officer had discussed the issue in Para No. 7 of the order. 7. In sum and substance the Assessing Officer made the total disallowance of ₹ 16,67,798/-. The assessee challenged the said addition made by the Assessing Officer before the Ld. CIT(A) and Ld. CIT(A) accepted the plea of the assessee that disallowance cannot be made more than expenditure claimed by the assessee. The operative part of the findings of the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re being any need to express satisfaction and incorrectness of such a claim. That apart, in the .present case the appellant is paying professional fees and interest on O/D account and not able to justify the utilization and also not furnished the details of sums of fund for all investment, capital contribution to firms, in such a situation disallowances u/s 14A can indeed be made. The earning of dividend income has emanated from the investments made by the appellant and so is the case with the earning of agricultural income. Further provision of sec 14A apply to disallow expenditure incurred on earning share income of a partnership firm as was held by the Special bench of Ahemdabad ITAT in the case of Vishnu Anant Mahajan Vs ACIT (2012) 16 ITR (Trib) 621 (Ahd) 147 TTJ 142 (Ahd) SB. 4.3 At this juncture I consider it appropriate to reproduce Rule 8D of the IT Rules which is as follows: (1) Where the Assessing Officer having regard to the accounts of the assessee of a previous year, is not satisfied with (a) The correctness of the claim of expenditure made by the assessee; or (b) The claim made by the assessee that no expenditure has been Incurred, in relation to income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Group India P Ltd Vs ACIT cited supra wherein the Delhi ITAT has held that the disallowance u/s 14A cannot exceed the expenditure actually claimed by the assessee. The tribunal held as under: 'Disallowance, for the expenditure incurred for earning of exempt income can be made under sub-section (1) of s. 14A. In the case under appeal, from the perusal of the assessee's profit loss account, it is evident that the total expenditure incurred was ₹ 49,04,028/- only. Thus, the assessee claimed the deduction for the expenditure of ₹ 49,04,028/- which is debited to the profit loss account The disallowance cannot exceed the expenditure actually claimed by the assessee. Therefore, the disallowance made by the A.O. and sustained by the CIT(A) in excess of total expenditure debited to profit loss account was unjustified................... 4.4 In view of the ratio of the above decision the Assessing Officer is directed to restrict the disallowance to the extent of expenditure actually claimed by the assessee which is ₹ 22,613/- on account of professional fees at ₹ 5,00,461/- as interest expenditure totaling to ₹ 5,23,074/-. Now, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the claim made by the assessee in relation to income which does not form part of the total income under the Act, he can determine the amount of expenditure in relation to such income in accordance with the provisions of sub rule (2) of Rule 8D. 10. We have already narrated the facts here-in-above. We find that the assessee has claimed the following expenditure in his computation: i. Professional fees Rs.22,613/- ii. Interest paid Rs.5,00,461/- In respect of interest paid while computing the income under the head income from other sources', we have allowed the same but confirmed the professional fees of ₹ 22,613/-. No other expenditure is claimed by the assessee. The scope of Sec. 14A has come for the consideration before ITAT, Delhi in the case of Gillette Group India (P) Ltd. Vs. ACIT, 16 ITR (Trib) 57 and it is held as under: 6. From the above, it is evident that as per sub-section (1) of Section 14A, no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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