TaxTMI 
TaxTMI 
2020 (12) TMI 863
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....ppeal No.CIT(A)-52/IT/DC-CC-4(2)/645/2016-17 dated 05/02/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/11/2016 by the ld. Dy. Commissioner of Income Tax, Central Circle - 4(2), Mumbai (hereinafter referred to as ld. AO). ITA No.2983/Mum/2018 (AY :2014-15) Revenue appeal: This appeal in ITA No.2983/Mum/2018 for A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-52, Mumbai in appeal No.CIT(A)-52/IT/DC-CC-4(2)/645/2016-17 dated 05/02/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/11/2016 by the ld. Dy. Commissioner of Income Tax, Central Circle - 4(2), Mumbai (hereinafter referred to as ld. AO). Now, let us take up ITA No.2506/Mum/2018 (A.Y.2013-14) Assessee appeal 2. The first issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the addition made on account of notional house property income of Rs. 43,42,946/- in respect of Signature Villa in UAE owned by the assessee which was kept for self use in the ....
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....used for this year subject to making an increase of 10% over and above the income assessed in earlier assessment year. The ld. AO took the value shown by the assessee for A.Y.2011-12 at Rs. 51,27,445/- and applied 10% increase for A.Y.2012-13 thereon which came to Rs. 56,40,190/- and further applied 10% increase on Rs. 56,40,190/- and arrived at the notional rental income of Rs. 62,04,209/- for the year under consideration. The ld. AO however, granted statutory deduction of 30% for repairs u/s.24 and finally arrived at the taxable income of Rs. 43,42,946/- under the head income from house property' in respect of property at Palm Signature Villa, Dubai. Since, similar addition was confirmed by this Tribunal for A.Yrs. 2009-10 and 2010-11 in assessee's own case reported in 164 ITD 18, the ld. CIT(A) confirmed the said addition. 3.1. Before us, the ld. AR fairly stated that the issue of addition per se has been decided against the assessee by this Tribunal reported in 164 ITD 18 after taking into account all the contentions raised by the assessee. The ld. AR before us contested only for adoption of 10% increase made by the ld. AO on an adhoc basis from the valuation report submi....
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....obviously be utilized for the purpose of making investments earning exempt income. Accordingly, the ld. AO held that the entire expenses debited by the assessee in his profit and loss account cannot be conclusively considered for the purpose of earning his professional income alone and certainly some part of it should be made attributable for the purpose of investment activity of the assessee and since the same cannot be clearly identified, the computation mechanism provided in Rule 8D of the Rules need to be applied in the instant case. Accordingly, the ld. AO also observed that the disallowance voluntarily made by the assessee u/s.14A of the Act in the sum of Rs. 60,000/- was only made on a suomoto basis which is without any rationale and which is not supported by any workings thereon. Accordingly, the ld. AO proceeded to make disallowance by applying the third limb of Rule 8D(2) and arrived at the disallowance figure of Rs. 66,03,681/-. The ld. AO while making this disallowance did not even reduce amount already disallowed by the assessee in the sum of Rs. 60,000/-. 4.2. The ld. CIT(A) by following the decision of Special Bench decision of Delhi Tribunal in the case of Vireet....
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....rt in the case of Godrej & Boyce Manufacturing Company Ltd., reported in 394 ITR 449 does not come to the rescue of the assessee in the instant case as the ld. AO had indeed recorded objective satisfaction having regard to the accounts of the assessee. We find that the ld. CIT(A) had directed the ld. AO to consider only those investments which had actually yielded exempt income for the purpose of working out the disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) of the rules. This is in consonance with the Special Bench Delhi Tribunal in the case of Vireet Investments reported in 165 ITD 27. We are in complete agreement with such direction of the ld. CIT(A). We further direct the ld. AO that in any case, the disallowance made u/s.14A of the Act cannot exceed the exempt income earned by the assessee. From the disallowance so computed as per the aforesaid directions, needless to mention that voluntarily disallowance made by the assessee in the sum of Rs. 60,000/- is to be reduced by the ld. AO. Accordingly, the ground Nos. 4 & 5 raised by the assessee are partly allowed. 7. The ground No.6 raised by the assessee is general in nature and does not require any specific adjudication....