Dr. Ashok Seth, A 20, Geetanjali Enclave, New Delhi 110 017. Vs. DCIT, Circle 37 (1), New Delhi.
March, 16th 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `A' : NEW DELHI)
BEFORE SHRI G.C. GUPTA, VICE PRESIDENT
SHRI B.C. MEENA, ACCOUNTANT MEMBER
(ASSESSMENT YEAR : 2009-10)
(ASSESSMENT YEAR : 2010-11)
Dr. Ashok Seth, vs. DCIT, Circle 37 (1),
A 20, Geetanjali Enclave, New Delhi.
New Delhi 110 017.
(PAN : AARPS1432R)
ASSESSEE BY : Shri T.R. Talwar, Advocate
REVENUE BY : Ms. Y. Kakkar, Senior DR
Date of Hearing : 05.03.2015
Date of Pronouncement : 13.03.2015
PER B.C. MEENA, ACCOUNTANT MEMBER :
ITA No.554/Del/2013 filed by the assessee emanates from the order of
CIT (Appeals)-XXVIII, New Delhi dated 21.11.2012 for the assessment year
2. The assessee is a Doctor and earning income from salary/business/
profession/capital gain and other sources. The Assessing Officer has made
2 ITA Nos.554 & 5298/Del./2013
certain additions which have been confirmed by the CIT (A), against which, the
assessee is in appeal before us by taking the following grounds:-
"On the facts and circumstances of the case the learned CIT(A) has
1. a) In treating the membership expenses of Rs.1,25,618/- paid
by the appellant to the ITC Health Club & India Habitat Centre
Health Club purely in the nature of personal expenditure and not
relating to appellant's profession, as claimed.
b) In ignoring that the same were incurred wholly and
exclusively in the per-suit and for the purpose of the appellant's
profession as a cardiologist for monitoring / determining the
correlation between the cardio exercises and their effect on the
performance of heart functions.
2. a) In confirming the disallowance of a payment of
Rs.1,68,000 actually paid during the year to the Event
Management Services which was wholly and exclusively laid
out for the purpose of the appellant's profession due to non-
deduction of tax at source .
b) In not following the ITAT Special Bench Visakhapatnam's
decision in the case of Merilyn Shipping and Transporters V.
Addl. CIT (2012) 136 ITD 23 (SB)
3. a) In confirming the disallowance of Rs.3,54,086/- u/s 14A of
the IT Act r/w Rule 8D of the IT Rules, 1962, when no direct
and proximate nexus between the exempted income and the
expenditure claimed has been established.
b) In not following the ITAT Bombay bench decision in the
case of Justice Sam P Bharucha V. Additional CIT (2012) 53
SOT 192 (Mumbai) (URO)."
3. In the ground no.1(a) & 1(b), the assessee has challenged confirmation of
disallowance of Rs.1,25,618/- paid by the assessee to ITC Health Club and India
Habitat Centre Health Club.
3 ITA Nos.554 & 5298/Del./2013
4. The Assessing Officer held that Rs.1,25,618/- is purely personal
expenditure and not related to the profession of the assessee. The CIT (A) has
confirmed this addition. The CIT (A) has also concur with the Assessing Officer
that the membership fee paid to the clubs by the assessee is purely in the nature
of personal expenditure and not related to the profession.
5. Before us, the ld. AR has canvassed that the assessee is a very eminent
Doctor and he has taken the membership in order to visit the people who
undergo cardio training/exercise at the health clubs and monitor their
performance of heart functions in order to ascertain the necessity of cardio
exercises for the wellness of heart and also to determine the correlation between
the cardio exercise and its effect on the overall health of the people at these
health clubs. There is no documentary or any other evidence in support of such
pleadings. Assessee's plea is completely baseless and not convincing.
Therefore, we are unable to agree with this contention of the ld. AR. The
membership taken by the assessee is purely for his personal benefit and it has
nothing to do with the profession and business of the assessee. Therefore, we
dismiss this ground of assessee's appeal.
6. In the ground nos.2(a) & 2(b), the assessee has challenged the
disallowance of Rs.1,68,000/- actually paid to event management services. This
amount was paid without deducting the TDS .
7. Before us, ld. AR relied on the order of the ITAT, Special Bench,
Visakhapatnam's decision in the case of Merilyn Shipping and Transporters vs.
Addl. CIT (2012) 136 ITD 23 (SB). However, the ld. DR brought to our
4 ITA Nos.554 & 5298/Del./2013
notice the letter of ld. Authorised Representative dated 25.1.2011 placed at pages
9 & 10 of the paper book wherein the assessee himself has pleaded that these
expenses be disallowed and being offered for taxation by the assessee. Ld. DR
submitted that the assessee himself has agreed to this and now this has been
challenged without any reason.
8. We have heard both the sides on the issue. This amount for event
management services was paid without deducting TDS. Assessee himself had
given in writing that amount be offered for taxes. The assessee's submission
with regard to offering amount to taxes has in a way restricted Assessing Officer
to make further inquiry on these expenses. In these factual matrix of this case,
we find that the decision of ITAT, Special Bench in the case of Merilyn
Shipping and Transporters vs. Addl. CIT, cited supra, is not applicable to the
facts of the assessee's case. Therefore, we find no merits on this issue in the
assessee's appeal and the same is accordingly rejected.
9. In the ground no.3, the issue involved is confirming the disallowance of
Rs.3,54,086/-14A of the Act r/w Rule 8D of the Income-tax Rules, 1962.
10. Ld. AR submitted that no direct and proximate nexus between the
exempted income and the expenditure claimed was established. He relied on the
decision of ITAT, Mumbai Bench in the case of Justice Sam P Bharucha vs.
Addl. CIT (2012) 53 SOT 192 (Mumbai). Ld. AR submitted that the assessee
has earned only Rs.76,660/- as exempted income. Further, the assessee is having
personal drawings of Rs.27,97,024/- which is evident from the capital account of
the assessee placed at page 23 of the paper book. The STT charges and
5 ITA Nos.554 & 5298/Del./2013
brokerages have also been paid by the assessee from his personal account. The
revenue has failed to pinpoint any expenditure debited in the Income &
expenditure account for the profession of the assessee. He also pleaded that
since the assessee has not incurred any expenditure and revenue has failed to
pinpoint any specific instance, therefore, the conditions invoking the provisions
of section 14A r/w Rule 8D are not fulfilled. These provisions can be invoked
only when the Assessing Officer has satisfied himself that the correctness of the
claim of the assessee with regard to the expenditure that no expenditure has been
debited in the Income & expenditure account relating to exempted income.
11. Ld. DR relied on the orders of the authorities below.
12. We have heard both the sides on the issue. We find that the expenditure
related to the earning of exempted income like STT and brokerage were shown
in the withdrawals. The assessee is also having personal drawings of
Rs.27,97,024/- for the year under consideration. All these facts show that the
assessee is not debiting the expenditure related to the exempted income in its
Income& expenditure account and the revenue has failed to pinpoint any specific
instance in this regard. Therefore, we allow this ground of assessee's appeal.
13. In the result, the appeal of the assessee (ITA No.554/Del/2013) is partly
14. This appeal filed by the assessee emanates from the order of the CIT
(Appeals)-XXVIII, New Delhi dated 22.07.2013 wherein the only issue involved
6 ITA Nos.554 & 5298/Del./2013
is regarding the disallowance of Rs.2,54,149/- u/s 14A of the Income-tax Act,
1961 r/w Rule 8D of the Income-tax Rules, 1962.
15. The assessee claimed that there was no direct and proximate nexus
between the exempted income and the expenditure claimed. It was pleaded that
none of the expenditure incurred and claimed by the assessee is in relation to the
exempted income in its Income & expenditure account.
16. We have heard both the sides on the issue. For the similar reasons as
stated above in the assessment year 2009-10, we allow this ground of assessee's
appeal as the revenue is failed to pinpoint any expenditure in the Income &
expenditure account. Further, the assessee is incurring such expenses from his
personal drawings. Accordingly, this ground of assessee's appeal is allowed.
17. In the result, the appeal of the assessee (ITA No.5298/Del/2013) stands
18. To sum up : the appeal of the assessee being ITA No.554/Del/2013 is
partly allowed and the appeal filed by the assessee being ITA No.5298/Del/2013
Order pronounced in open court on this 13th day of March, 2015.
(G.C. GUPTA) (B.C. MEENA)
VICE PRESIDENT ACCOUNTANT MEMBER
Dated the 13th day of March, 2015
7 ITA Nos.554 & 5298/Del./2013
Copy forwarded to:
4.CIT(A) -XXVIII, New Delhi
5.CIT(ITAT), New Delhi.