I.T. Appeal No. 4615 (Mum) of 2011 [Assessment Year 2007-08]. Case: Ashok C. Pratap Vs Additional Commissioner of Income-tax, Range-11(2), Mumbai. ITAT (Income Tax Appellate Tribunal)
| Case Number | I.T. Appeal No. 4615 (Mum) of 2011 [Assessment Year 2007-08] |
| Counsel | For Appellant: Y.P. Trivedi and P.D. Gandhi and For Respondent: P.K.B. Menon |
| Judges | G.E. Veerabhadrappa, President and I.P. Bansal, J.M. |
| Issue | Income-tax Act |
| Judgement Date | July 18, 2012 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
I.P. Bansal, J.M., (Mumbai 'A' Bench)
1. The present appeal preferred by the assessee, is directed against the impugned order dated 15th March 2011, passed by the learned Commissioner (Appeals)-III, Mumbai, for assessment year 2007-08, on the following grounds:-
"Addition u/s 56[1] and 56[2][vi] on account of receipts from dissolution of Sant Trust:
1.1 The Learned Commissioner of Income Tax [Appeals] misdirected herself in law and on facts in construing the provision of Sant Trust, settled by Mrs Vinodini C Pratap, mother of the Appellant.
1.2 The Learned Commissioner of Income Tax [Appeals] misdirected herself in law and on facts in construing the provisions of The Indian Trusts Act.
1.3 The Learned Commissioner of Income Tax [Appeals] erred in law and on facts in holding that the amount received by the Appellant constitute income in the hands of the Appellant and applying the provisions of Section 2[24][iva] read with provisions of Section 56[1] and 56[2][vi] of the Income Tax Act, 1961.
1.4 Without prejudice, the Learned Commissioner of Income Tax [Appeals] failed to appreciate that the Author, Trustees and Beneficiaries of the Trust are related to each other and if the Appellant has received money from them the same cannot constitute income u/s 56 [2][vi], as it is covered by the exemption clause.
2. The Learned Commissioner of Income Tax [Appeals] has erred in treating a sum of Rs. 10,417, on account of expenditure on legal and Technical books, as capital expenditure instead of treating it as a revenue expenditure.
3. The Learned Additional Commissioner of Income Tax [Appeals] has erred in disallowing expenses of Rs. 3,52,493 u/s 14A, without appreciation that no expenditure was incurred by the Appellant for earning exempt income.
2. The assessee, in the present case, is a Barrister and practices law. He is a proprietor of Ashok Pratap & Co., Barristers and Advocates, and has filed his return of income at Rs. 3,92,04,185, which has been assessed at an income of Rs. 5,31,87,920, by assessment order dated 30th December 2009, passed under section 143(3)(ii) of the Income Tax Act, 1961 (for short "the Act").
3. The main issue raised in this appeal is regarding addition of Rs. 1,36,00. 595, made on account of a trust dissolution proceedings which are added to the income of the assessee by applying the provisions of section 2(24)(iv)(a) r/w provisions of sections 56(1) and 56(2)(vi) of the Act.
4. The other issues which are raised in ground no. 2, have not been pressed by the learned Counsel for the assessee and, consequently, the same are dismissed as "not pressed".
5. With respect to ground no. 3, it was the submissions of the learned Counsel for the assessee that it relates to disallowance made under section 14A of the Act, which has been computed with reference to rule 8D, which is not applicable to the year under consideration and, therefore, this issue has to be restored to the file of Assessing Officer with a direction to re-compute the same in accordance with the judgment of Hon'ble Jurisdictional High Court rendered in Godrej & Boyce Mfg. Co. Ltd. v. DCIT [2010] 328 ITR 081 (Bom).
6. After hearing both the parties, we restore this issue to the file of the Assessing Officer and direct him to re-compute the disallowance under section 14A, in accordance with the judgment of Hon'ble Jurisdictional High Court in Godrej & Boyce Mfg. Co. Ltd. (supra). Consequently, this ground is allowed for statistical purposes.
7. We now left with the main issue which is expressed in ground no. 1. It is necessary to narrate few facts to understand the issue.
8. The Assessing Officer has discussed this issue in Para-6 of his order. A private Trust namely "Sant Trust" was created by Mrs. Vinodini C. Pratap, mother of the assessee by trust deed dated 19th January 1978. The trustees of the said trust were the assessee and his wife namely Mrs. Sandhya A. Pratap, and the beneficiaries were two daughters of the assessee namely Ms. Natasha and...
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