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2015 (11) TMI 1057 - ITAT MUMBAI

2015 (11) TMI 1057 - ITAT MUMBAI - TMI - Deduction u/s 54(1) denied - Held that:- The assessee had booked the flat with the builder and an allotment letter was given to the assessee. The house was under construction. Under such circumstances it can be safely presumed that the assessee had invested the money for construction of the house through the builder. So the money invested by the assessee within three years from the date of transfer is allowable as deduction under section 54 of the Act. Th .....

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extent of bank charges and accounting charges. Considering the overall facts and circumstances of the case, we find that apart from the suo-moto disallowance of ₹ 5,40,188/-, the further disallowance which can be added is in relation to bank charges of ₹ 5,426/- and accounting expenses of ₹ 71,500/-. So considering the overall facts and circumstances of the case, the disallowance under section 14A is restricted to the suo-moto disallowance made by the assessee of ₹ 5,40,1 .....

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assessee.

Disallowance of 1/6 of interest on motor car loan and motor car insurance - Held that:- The assessee himself has disallowed 1/6 car expenses but left out to disallow the expenses related to interest on car loan and insurance on car which are very much part of the car expenses. We do not find any infirmity in the order of the lower authorities in making the above disallowance - Decided against the assessee. - ITA Nos. 5329 & 6293/M/2012 - Dated:- 6-11-2015 - Shri G. S. Pannu .....

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the appeals, hence, they are taken together and are being disposed of with this common order. For the sake of convenience, the facts have been taken from ITA No.5329/M/2012 for A.Y. 2008-09. ITA No.5329/M/2012 for A.Y. 2008-09 2. The assessee has taken the following grounds of appeal: 1. The Learned Commissioner of Income tax [CIT(A)] has erred in confirming the action of the Assessing Officer in not allowing any deduction u/s 54(1) of the Act. On the facts and in the circumstances of the case L .....

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e appellant's claim of deduction u/s.54(1) of ₹ 25,46,760/-, being the amount utilised by the appellant for acquiring the residential property on or before the due date of filing the return of income, ought to be allowed. 3. Learned CIT(A) has erred in confirming the disallowance u/s.14A of ₹ 7,69,490/under section 14A of the Act read with rule 8D of the Income Tax Rules, 1962. On the facts and in circumstances of the case, disallowance made ought to be deleted or in the alternat .....

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isallowance ought to be deleted. 5. The appellant craves leave to add, alter, amend and/or rescind any grounds of appeal during the course of the hearing. Ground No.1 & 2 3. Ground No.1 & 2 relates to deduction under section 54(1) of the Act. The brief facts of the case are that the assessee had sold one flat on 17.12.07 for a sale consideration of ₹ 1.65 crores on which the capital gains had been computed at ₹ 61,38,810/-. The assessee claimed deduction of ₹ 16,81,790/ .....

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se of the said flat and the total amount of sale consideration was settled at ₹ 43,35,850/-. The AO noticed that the assessee had neither executed any agreement of purchase of the flat nor had furnished any certification of completion or occupation of the said flat. The assessee had not taken possession of the flat till December 2010. Considering the above facts, he rejected the claim of deduction under section 54(1) of the Act. 4. In appeal before the Ld. CIT(A), the assessee submitted th .....

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nstruction of residential house within a period of three years from the date of transfer of original asset. The assessee claimed that the assessee had invested an amount of ₹ 25,46,760/- till the due date of filing of return of income. The assessee also furnished a chart giving details of payment beginning from the date of 22.03.07 and ending on 15.03.12 and submitted that the purchase deed had been completed on 16.03.12. 5. The Ld. CIT(A), after considering the submissions of the assessee .....

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f the house by the assessee. He held that the assessee had not acquired interest in the house which was allegedly purchased on a subsequent date. Hence, the AO rightly disallowed the claim of the deduction under section 54(1) of the Act. Being aggrieved by the order of the Ld. CIT(A), the assessee has come in appeal before us. 6. We have considered the rival contentions. We find that in a very recent decision, the Hon ble Karnataka High Court in the case of CIT vs. B.S. Shantakumari in ITA No.16 .....

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sidential house in the plot so acquired. A bare perusal of said provision does not even remotely suggest that it intends to convey that such construction should be completed in all respects in three years and/or make it habitable. The essence of said provision is to ensure that assessee who received capital gains would invest same by constructing a residential house and once it is established that consideration so received on transfer of his Long Term capital asset has invested in constructing a .....

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ove decision of the Hon ble Karnataka High Court (supra), we examine the facts of the present case and find that the assessee had booked the flat with the builder and an allotment letter was given to the assessee. The house was under construction. Under such circumstances it can be safely presumed that the assessee had invested the money for construction of the house through the builder. So the money invested by the assessee within three years from the date of transfer is allowable as deduction .....

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and jurisdiction of the Ld. CIT(A) are coterminous with that of AO. The Hon ble Bombay High Court, in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) while relying upon the various decisions of the Hon ble Supreme Court and other Hon ble High Courts, has held that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon ble Bom .....

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rictions or limitations, if any, prescribed by statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be rai .....

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the appellate authority which could not have been claimed before the AO. The Hon ble Bombay High Court has further observed that the decision of Hon ble Supreme Court in the case of Goetze (India) Limited v. CIT (2006) 157 Taxman 1, regarding the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additi .....

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come Tax Rules. During the appellate proceedings, the AO noted that the assessee had made investments for earning of tax exempt income. He accordingly computed the disallowance as per the provisions of rule 8D of the Income Tax Rules. 11. In appeal before the Ld. CIT(A), the assessee contended that the assessee is a doctor by profession and has earned exempt income of ₹ 81,21,676/-. The assessee had incurred Demat expenditure of ₹ 19,381/-, advisory services charges of ₹ 3,28,7 .....

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The Ld. A.R. has further submitted that except the expenses suo-moto disallowed by the assessee, no other expenditure was incurred for earning of exempt income. The Ld. CIT(A), however, did not agree with the contentions raised by the assessee. He observed that the assessee had debited bank charges of ₹ 5,426/-, miscellaneous expenses of ₹ 1,53,706/- which included accounting expenses of ₹ 71,500/-, printing and stationary expenses of ₹ 71,931/-, insurance and office expe .....

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ives of the parties. It may be observed that in the case of Godrej & Boyce Manufacturing Co. Ltd. (supra), the Hon'ble Bombay High Court has held that Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable and also not retrospective and applies from A.Y. 2008-09. It has been further held that under section 14A of the Income Tax Act, resort can be made to Rule 8D of the Income Tax Rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied wit .....

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In a situation where the accounts of the assessee furnish an objective basis for the Assessing Officer to arrive at a satisfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rules. An objective satisfaction contemplates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and recording of reasons by the Assessing Officer in the event t .....

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visions of section 14A of the Income Tax Act. The ld. CIT(A) also ignored the mandate of the provisions of section 14 A, while confirming the disallowance. 14. Coming to the facts of the case in hand, we find that in this case the assessee suo-moto has disallowed expenditure of ₹ 5,40,188/- which he has claimed to have incurred on Demat charges, advisory services and security transactions tax. The Ld. A.R. of the assessee has submitted that no expenditure was incurred in relation to exempt .....

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nce to the extent of bank charges and accounting charges. Considering the overall facts and circumstances of the case, we find that apart from the suo-moto disallowance of ₹ 5,40,188/-, the further disallowance which can be added is in relation to bank charges of ₹ 5,426/- and accounting expenses of ₹ 71,500/-. So considering the overall facts and circumstances of the case, the disallowance under section 14A is restricted to the suo-moto disallowance made by the assessee of  .....

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; 56,54,905/-. The assessee suo-moto allowed an amount of ₹ 1,32,619/- incurred towards Demat expenditure, advisory services and security transaction tax. The assessee in the P&L Account has debited bank charges of ₹ 1,680/- and accounting expenses. 17. In view of our observations made above while deciding the appeal of the assessee for A.Y. 2008-09, we restrict the disallowance under section 14A to the extent of suo-moto disallowance made by the assessee + bank charges + account .....

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