Income Tax Appellate Tribunal - MumbaiAshishkumar J Bairagra, Mumbai vs Assessee on 7 November, 2013आयकर अपीलीय अिधकरण,
                                          अिधकरण "," खंडपीठ मुंबई
                INCOME TAX APPELLATE TRIBUNAL,MUMBAI - 'A' BENCH.

                    सव[ौी बी.
                          बी.आर.
                             आर.िमƣ
                                िमƣल, Ûयाियक सदःय/
                                             सदःय एवं ौी राजेÛि,ले
                                                              ि लेखा सदःय
           Before S/Sh. B.R. Mittal, Judicial Member & Rajendra, Accountant Member
       आयकर अपील सं/.ITA No.5730/Mum/2012,िनधा[
                                          िनधा[रण वष[/Assessment Year-2009-10
          Ashishkumar J Bairagra                 ITO 14(2)(2)
          F-11, 3rd Floor, Manek Mahal,          Earnest House, 3rd Floor,
          90 Veer Nariman Road, Churchgate Vs    Nariman Point
          Mumbai-400020                          Mumbai-400021
                                    PAN: AAIPB6211G

                  (अपीलाथȸ/ Appellant)             (ू×यथȸ / Respondent)

                िनधा[ǐरती ओर से / Appellant by                  : Rakhi Oswal
                 राजःव कȧ ओर से/Revenue by                      : Shri Surendra Kumar
                  सुनवाई कȧ तारȣख/ Date of Hearing               : 07-11-2013
                  घोषणा कȧ तारȣख / Date of Pronouncement : 13-11-2013
                आयकर अिधिनयम,
                     अिधिनयम 1961 कȧ धारा ( 1 ) 254 के अ Ûतग[ त आ दे श
                    Orderu/s.254(1)of the Income-tax Act,1961(Act)


PER RAJENDRA, AM:Challenging the order dated 02.07.2012 of CIT(A)-25,Mumbai,Assessee has filed following
grounds of appeal:1. The Learned CIT(A) erred in confirming the disallowanceu/s 14Aas per rule 8D, even though he
        had given the finding that no expenses including interest are incurred for making investment in
        the shares and earning the dividend income.2. The appellant company craves to add to, alter or amend the foregoing grounds, which are without
        prejudice to one another, at the time of hearing.2.Assessee,an individual,filed his return of income on 16.9.2009 declaring total income at Rs.6.65
lacs.Assessing Officer (AO) finalised the assessment on 14.11.2011u/s 143(3)of the Act determi-ning the total income of the assessee at Rs. 8.81 lacs.During the assessment proceedings,AO
found that assessee had claimed exemptionu/s 10of the Act for the dividend income (Rs.1,18,
723/-) and share of profit from firm (Rs.18,89,167/-),that expenses relating to the earning of the
exempt income were not disallowed by the assessee.He asked the assessee to explain as to why
the expenditure incurred for earning of dividend income should not be disallowedu/s.14Aof the
Act r.w.Rule 8D of Income-tax Rule 1962(Rules).Invoking the provisions of Rule 8D of the Rules
AO made a disallowance of Rs.2,15,719/-.2.1.Assessee preferred an appeal before the FAA.It was submitted before him that assessee had
own fund of Rs. 2.28 Crores that was utilised for investing in shares (Rs.1.6 Crors), that borrowed
fund was only Rs. 29.77 lacs on which interest amounting to Rs. 2.22 lacs was paid, that assessee
had earned interest of Rs.4.57 lacs from lending made by him during the year under consideration,
that assessee did not carry out any proprietary business activity, that he had not claimed any
expenditure, that he had paid interest @ 10% whereas he received interest @ 12%,that interest
                                        2                     ITA No. 5730/Mum/2012 Ashishkumar J Bairagra
..expenses claimed by him were incurred wholly and exclusively for the purpose of earning interest
income,that interest income was disclosed under the head 'Income from Other Sources', that there
was direct nexus between the borrowing and its utilization.Alternatively, it was argued that
interest expense should be excluded from the working of disallowance under Rule 8D of the
Rules.2.2.Assessee preferred an appeal before the First Appellate Authority(FAA).After considering his
submissions and the assessment order,FAA held that that the assessee had not claimed any other
business expenses,that he had disclosed interest income under the head income from other sources
that it was not reasonable to attribute interest expense of Rs.2.20 lacs with the investment in
shares.2.3.Before us Authorised Representative(AR)submitted that assessee had not incurred any expend-iture for earning exempt income,that he had sufficient funds to make investment,that interest
income was offered for taxation under the appropriate head,that FAA had directed the AO to
make disallowanceu/s.14Aof the Act after holding that no expenditure was incurred by the
assessee to earn dividend income.Departmental Representative(DR)supported the order of the
FAA to that extent.2.4.We have heard the rival submissions and perused the material before us.We find that while
deciding the appeal,FAA had held that the assessee was not carrying out any proprietary business
activity,that he had not claimed any other business expenses,that he had disclosed interest income
under the head income from other sources and had claimed interest expense of Rs.2.20 lacs
against the interest income,that he had own capital of Rs.2.28 Crores whereas he had made
investment of Rs. 1.44 Crores in shares and mutual funds,that it was not reasonable to attribute
interest expense of Rs.2.20 lacs with the investment in shares.We further find that after giving the
finding that there was no nexus between the investment and the interest expenditure incurred by
him,he directed the AO to compute disallowanceu/s.14Aof the Act.We are unable to understand
as how any other disallowance can be made,as directed by the FAA,when assessee had not
claimed any expenditure for earning exempt income or had not borrowed any money for making
investment in shares.In our opinion,FAA was not justified in partly allowing the appeal filed by
the assessee.He should have given relief as prayed by the assessee.Therefore, reversing his order,
to that extent,we decide ground no.1 in favour of the assesse,in part.AO is directed not to make
any disallowanceu/s.14Aof the Act r.w.rule 8D.As a result,Appeal filed by the assessee stands partly allowed.पǐरणामतः िनधा[ǐरती Ʈारा दाǔखल कȧ गई अपील आंिशक Ǿप से मंजूर कȧ जाती है .Order pronounced in the open court on 13th November,2013.आदे श कȧ घोषणा खुले Ûयायालय मɅ Ǒदनांक 13 uoEcj, 2013 को कȧ गई ।Sd/-                                                  Sd/-

        बी.आर
        बी आर.् िमƣल.B.R.Mittal)
       (बी      िमƣल                                             राजेÛि/Rajendra)
                                                                (राजे ि

Ûयाियक सदःय /JUDICIAL MEMBER                        लेखा सदःय /ACCOUNTANT MEMBER

मुंबई/Mumbai,Ǒदनांक/Date: 13th November,2013
SK
आदे श कȧ ूितिलǒप अमेǒषत/Copy
                     षत         of the Order forwarded to :
                                     3                   ITA No. 5730/Mum/2012 Ashishkumar J Bairagra
.
.

1. Assessee /अपीलाथȸ                              2. Respondent /ू×यथȸ3. The concerned CIT (A) /संबƨ अपीलीय आयकर आयुƠ, 4. The concerned CIT /संबƨ आयकर आयुƠ5. DR "A" Bench, ITAT, Mumbai /ǒवभागीय ूितिनिध , खंडपीठ,आ.अ.Ûयाया.मुब
                                                                    ं ई6. Guard File/गाड[ फाईल

                                         स×याǒपत ूित //True Copy//

                                                       आदे शानुसार/ BY ORDER,

                                                 उप/सहायक पंजीकार Dy./Asst. Registrar

                                           आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai