ARIHANT ESTATES P. LTD, MUMBAI V. ITO 2(1)1, MUMBAI

CO 52/MUM/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4960 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DAYA SHANKAR
• Assessee Lawyers: P N SUBRAMANIAN
• Keywords: Condonation of delay
• Section: 37(1); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A, MUMBAI BEFORE SHRI S V MEHROTRA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5076/MUM/2009 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER WARD 2(1)(1), AAYAKAR BHAVAN, R NO.575,5 TH FL, M K ROAD, MUMBAI-400020 .APPELLANT VS ARIHANT ESTATES P.LTD KOTHARI HOUSE, 2 ND FL, 5/7 OAK LANE FORT MUMBAI-40001 PAN: AADCA6012E RESPONDENT CO NO. 52/MUM/2010 IN ITA NO. 5076/MUM/2009 (ASSESSMENT YEAR: 2005-06) ARIHANT ESTATES P.LTD ..CROSS-OBJECTOR V/S INCOME TAX OFFICER WARD 2(1)(1), RESPONDENT REVENUE BY : SHRI DAYA SHANKAR ASSESSEE BY : SHRI P N SUBRAMANIAN O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 05.06.2009 OF CIT(A)-II, MUMBAI FOR THE ASSE SSMENT ITA NO. 5076/MUM/2009 CO NO. 52/MUM/2010 2 YEAR 2005-06 AND ASSESSEE HAS ALSO FILED CROSS-OBJ ECTION THERETO. 2. THE REVENUE HAS RAISED VARIOUS GROUNDS IN THIS A PPEAL, HOWEVER, ONLY ISSUE ARISES FOR OUR CONSIDERATION AN D ADJUDICATION IS WHETHER IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE CIT(A) IS JUSTIFIED IN DELETING THE ADDI TION OF RS.2,77,81,765/- MADE U/S 37(1) OF THE INCOME TAX A CT, 1961 TOWARDS THE COMPENSATION PAID TO THE TENANTS FOR GE TTING THE PROPERTY VACATED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF PROJECT CALLED SKY COURT, SITUATED AT 46, S V N ROAD, MALAD WEST, MUMB AI- 400064. THE PROJECT WAS UNDERTAKEN FOR DEVELOPMEN T ON A PIECE OF LAND OWNED BY THE DIRECTORS OF ASSESSEE C OMPANY JOINTLY WITH ANOTHER OWNER SMT.NIRMAL M KOTHARI. THE ASSESSEE CLAIMED AN EXPENDITURE OF RS.2,77,83,530/- BEING PAID TO THE TENANT AS COMPENSATION FOR GETTING THE PROPERTY VACATED FROM THEM. THE AO DISALLOWED THE AMOUNT A ND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S 69 C OF THE ACT. 4. ON APPEAL, THE CIT(A) HAS PASSED THE REMAND ORD ER AND AFTER CONSIDERING THE REMAND REPORT ALLOWED THE CL AIM OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE ASSES SING OFFICER. ITA NO. 5076/MUM/2009 CO NO. 52/MUM/2010 3 5. BEFORE US, THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE THE TENANTS FOR CROSS-VE RIFICATION. EVEN THE ASSESSEE FAILED TO PROVE THAT THE AMOUNT PAID THROUGH CHEQUES WAS ACTUALLY RECEIVED BY THE TENANT S AND WHETHER THEY WERE REAL BENEFICIARIES OF THE PAYMEN TS. THE ASSESSEE HAS ALSO FAILED TO PROVE THAT THE ALLEGED PAYMENTS WAS WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE S. HE HAS THUS URGED THAT THE MATTER REQUIRES EXAMINATION AT THE LEVEL OF THE AO AND THEREFORE SUBMITTED THAT THE SAME SHOUL D BE REMITTED TO THE RECORD OF THE AO FOR PROPER VERIFI CATION AND EXAMINATION. HE HAS RELIED UPON THE ORDER OF THE AO. 6. ON THE OTHER HAND, THE LEARNED AR HAS SUBMITTED THAT THE ASSESSEE PRODUCED ALL THE DOCUMENTARY EVIDENCE IN ORIGINAL IN SUPPORT OF HIS CLAIM BEFORE THE CIT(A ). THE ASSESSEE ALSO FURNISHED PAN OF THE PAYEE, COPY OF B ANK STATEMENT OF THE COMPANY AS WELL AS THE DIRECTORS E VIDENCING CLEARANCE THROUGH BANKS, COPIES OF POSSESSION RECEI PTS RECEIVED FROM TENANTS, COPIES OF CONSENT TERMS FILE D IN THE COURT WERE ALSO PRODUCED. SINCE THE MAJORITY OF TH E PARTIES/TENANTS TO WHOM AMOUNTS WERE PAID HAVE EITH ER SHIFTED OUT OF STATION OR NOT TRACEABLE AT THE LAST KNOWN A DDRESS THEREFORE THE TENANTS COULD NOT BE VERIFIED IN PERS ONS. HOWEVER, THE EVIDENCE PRODUCED BY THE ASSESSEE ESTA BLISHED ITA NO. 5076/MUM/2009 CO NO. 52/MUM/2010 4 BEYOND DOUBT THAT THE ASSESSEE MADE THESE PAYMENTS FOR GETTING THE PROPERTY VACATED FROM THE TENANTS. HE HAS ALSO POINTED OUT THAT IN SOME OF THE CASES, THE MATTER W ENT TO THE COURT AND THE SETTLEMENT ARRIVED BETWEEN THE ASSESS EE AND THE TENANTS ON THE BASIS OF WHICH THE CONSENT DECREE WA S PASSED BY THE COURT. ALL THESE RECORDS WERE FILED BY THE ASSESSEE AND EXAMINED BY THE AO AS WELL AS THE CIT(A). 7. AFTER CONSIDERING THE RIVAL CONTENTIONS AND RELE VANT RECORD, WE FIND THAT DURING THE REMAND PROCEEDING T HE ASSESSEE HAS PRODUCED ALL THE RELEVANT RECORD THAT THE PAYMENT TO THE TENANTS HAVE BEEN MADE AND IN THE RE MAND REPORT, THE AO HAS ACCEPTED THE CORRECTNESS THAT THE PAYMENTS HAVE BEEN MADE THROUGH BANK CHANNEL BY WAY OF DEMAND DRAFTS. THE SAME WAS ALSO CONFIRMED BY THE BANK. THEREFORE, IT WAS FOUND BY THE AO THAT IT IS SUFFIC IENT EVIDENCE TO SUPPORT ALL THE TRANSACTIONS. ONCE THE AO WAS SA TISFIED WITH THE EVIDENCE PRODUCED BY THE ASSESSEE AND FOUND TH AT THE TRANSACTION IS CORRECT AND GENUINE THEN THERE IS NO REQUIREMENT OF THE FURTHER EXAMINATION OF THE ISSUE AS PLEADED BY THE LEARNED DR. MOREOVER, WHEN THE ASSESSEE WAS ENGAGED ONLY IN ONE BUSINESS OF DEVELOPMENT AND N O OTHER PROJECT OR BUSINESS WAS UNDERTAKEN BY THE ASSESSEE THEN THE EXPENDITURE FOR VACATING THE LAND INCURRED WAS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THEREFORE, WE DO NOT F IND ANY ITA NO. 5076/MUM/2009 CO NO. 52/MUM/2010 5 ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A). THE SAME IS UPHELD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. CO NO. 52/MUM/2010 9. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS CROSS- OBJECTION. 10. GROUND NOS.1,2 AND 3 PERTAIN TO THE OBJECTION O N THE POINT OF LIMITATION IN FILING OF THE APPEAL BY THE REVENUE. WHEREAS GROUNDS NO.4 TO 6 OF CROSS-OBJECTION ARE O NLY IN SUPPORT OF CIT(A)S ORDER. THEREFORE, IN VIEW OF T HE ORDER PASSED IN THE REVENUES APPEAL, GROUND NO.4 TO 6 OF THE CROSS-OBJECTION BECOME INFRUCTUOUS, AND DISMISSED ACCORDINGLY. 11. AS REGARDS, THE OBJECTION OF TIME BAR APPEAL O F THE REVENUE. WE HAVE TAKEN NOTE FROM THE RECORD THAT THE IMPUGNED ORDER WAS PASSED ON 05.06.2009 WHICH WAS S TATED TO HAVE BEEN RECEIVED ON 07.06.2009. THEREFORE, THE APPEAL SHOULD HAVE BEEN FILED BEFORE THE TRIBUNAL LATEST BY 06.08.2009. AS IT IS EVIDENT FROM THE RECORD THAT THE APPEAL WAS FILED BY THE REVENUE ON 04.09.2009, THEREFORE, THERE IS A DELAY IN FILING THE APPEAL BY THE REVENUE. AS NO P ETITION OR APPLICATION FOR CONDONATION OF DELAY HAS BEEN FILED BY THE REVENUE, THE APPEAL OF THE REVENUE IS HELD TO BE BA RRED BY LIMITATION. APART FROM MERITS, THE APPEAL OF THE RE VENUE IS ALSO NOT MAINTAINABLE AS TIME BARRED. ITA NO. 5076/MUM/2009 CO NO. 52/MUM/2010 6 12. IN THE RESULT, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. 13. IN SUM AND SUBSTANCE, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS-OBJECTION BY THE ASSESSEE IS P ARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24.06.2010 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 24 TH JUNE 2010 SRL:22610 COPY TO: 1. INCOME TAX OFFICER WARD 2(1)(1), AAYAKAR BHAVAN, R NO.575,5 TH FL, M K ROAD, MUMBAI-400020 2.ARIHANT ESTATES P.LTD KOTHARI HOUSE, 2 ND FL, 5/7 OAK LANE FORT MUMBAI-40001 2. CIT CITY-II,MUMBAI 3. 4. CIT(A)-II, MUMBAI 5. DR A BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI