M/s K.V. Narayan Builders Pvt. Ltd., Bangalore V. ITO, Bangalore

ITA 1005/BANG/2015

• Counselvise Citation: 100521114 RSA 2015
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2012-2013
• Appeal Filed On: 25-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Business income; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO. 1005/ BANG/20 15 (ASSESSMENT YEAR: 2012 - 13 ) M/S.K.V.NARAYAN BUILDERS PVT. LTD. SRIRAMA WHITE HOUSE, APARTMENT NO.A1, 405, 15 TH CRO SS, R T NAGAR, BANGALORE - 560 032. PAN: AAACK 8042 P VS. APPELLANT INCOME - TAX OFFICER, WARD 11(2), BANGALORE. RESPONDENT APPELLANT BY: SHRI RAVI SHANKAR, ADVOCATE. RESPONDENT BY: DR.P.K.SRIHARI, ADDL. CIT(DR). DATE OF HEARING : 16/12/2015 DATE OF PRONOUNCEMENT: 18 / 12 /2015 O R D E R IN THIS APPEAL BY THE ASSESSEE, ITS GRIEVANCE IS THAT BUSINESS LOSS OF RS.2,76,362 - CLAIMED WAS NOT ALLOWED. 2. FACTS APROPOS ARE THAT ASSESSEE, A PROPERTY DEVELOPER AND BUILDER, HAD FI LED ITS RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEAR DECLARING LOSS OF RS.16,020/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE PRODUCED BOOKS OF ACCOUNT AND OTHER DOCUMENTS CALLED FOR BY AO. ASSESSEE HAD CLAIMED LOSS OF RS.2,76,362/ - ON ACCOUN T OF VARIOUS EXPENDITURE INCURRED BY IT. AS PER AO, THERE WAS NO BUSINESS ACTIVITY CARRIED ON BY ASSESSEE DURING FINANCIAL YEAR RELEVANT TO THE IMPUGNED ITA NO . 1005 /BANG/201 5 M/S.K.V.NARAYAN BUILDERS PVT. LTD. PAGE 2 OF 4 ASSESSMENT YEAR. AO WAS OF OPINION THAT THERE WAS A C ESSATION OF BUSINESS. HE DISALLOWED THE CLAIM O F RS.2,76,362/ - AND COMPLETED THE ASSESSMENT. 3. ASSESSEE S APPEAL BEFORE CIT(A) DID NOT MEET WITH SUCCESS. ACCORDING TO CIT(A), ASSESSEE COULD NOT SHOW THAT IT HAD RE - STARTED ITS BUSINESS. RELYING ON DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN CASE OF HEMRAJ CANJI VS. ITO (2005) 2 SOT 689, DELHI BENCH OF TRIBUNAL IN ADASOFT (INDIA) P. LTD. VS. DCIT (2006) 9 SOT 31 AND HON BLE DELHI HIGH COURT DECISION IN MARVEL POLYMERS (P) LTD. VS. CIT (2007) (165 TAXMAN 618), CIT(A) UPHELD THE DISALLOWANCE. 4. NOW BEFORE US, LEARNED AR STRONGLY ASSAILING ORDERS OF AUTHORITIES BELOW SUBMITTED THAT ASSESSEE WAS FILING ITS RETURNS OF INCOME SINCE ASSESSMENT YEAR 2009 - 10. ACCORDING TO HIM, ASSESSEE HAD RETURNED INCOME OF RS.8,24,74,970/ - FROM BUSINESS AT FOR ASSESS MENT YEAR 2009 - 10. LEARNED AR SUBMITTED THAT EVEN FOR SUBSEQUENT ASSESSMENT YEARS 2013 - 14 AND 2014 - 15 ASSESSEE HAD DISCLOSED BUSINESS INCOME FROM PROPERTY DEVELOPMENT. THUS, ACCORDING TO LEARNED AR THERE WAS ONLY A LULL IN BUSINESS. JUST BECAUSE THERE WA S NO REVENUE IN ONE PARTICULAR YEAR, AS PER LEARNED AR, CLAIM OF GENUINE BUSINESS EXPENDITURE COULD NOT BE DISALLOWED. PER CONTRA, LEARNED DR STRONGLY SUPPORTED ORDER OF THE CIT(A). ITA NO . 1005 /BANG/201 5 M/S.K.V.NARAYAN BUILDERS PVT. LTD. PAGE 3 OF 4 5. I HAVE PERUSED ORDERS AND HEARD RIVAL CONTENTIONS. IT IS NOT DI SPUTED THAT ASSESSEE HAD FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10 WHICH RECORDED INCOME OF RS.8,24,74,970/ - FROM ITS BUSINESS . R EVENUE HAS NOT DISPUTED THAT ASSESSEE WAS HAVING ONLY ONE BUSINESS VIZ., AS A PROPERTY DEVELOPER AND BUILDER. EVEN F OR SUBSEQUENT PREVIOUS YEARS ENDING 31/3/2013 AND 31/3/2014, ASSESSEE HAD SHOWN BUSINESS OPERATIONS AND BUSINESS INCOME. EXPENDITURE CLAIMED WAS ON ACCOUNT OF ELECTRICITY CHARGES, COMMUNICATION EXPENDITURE, TRAVELLING AND CONVEYANCE EXPENDITURE, MIS CELLANEOUS EXPENDITURE, RENT, RATES AND TAXES, STAFF SALARY AND AUDIT FEE. ALL THESE EXPENDITURE, IN MY OPINION, WAS NECESSARY FOR ASSESSEE TO MAINTAIN ITS CORPORATE IDENTITY . SINCE ASSESSEE WAS HAVING REVENUE FROM ITS FIELD OF ACTIVITY IN EARLIER Y EARS AS WELL AS SUBSEQUENT YEAR, ABSENCE OF REVENUE IN IMPUGNED ASSESSMENT YEAR COULD NOT BE CONSIDERED AS A CESSATION OF BUSINESS. IT WOULD, AT BEST, BE A LULL IN THE BUSINESS. I AM OF THE OPINION THAT CLAIM OF EXPENDITURE OF RS.2,76,362/ - WAS UNJUSTLY DISAL LOWED. DISALLOWANCE STA NDS DELETED . 6. IN THE RESULT, APPEAL OF ASSESSEE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER , 201 5 . S D/ - (ABRAHAM P GEORGE) ACCOUNTANT MEMBER E KSRINIVASULU ,SPS ITA NO . 1005 /BANG/201 5 M/S.K.V.NARAYAN BUILDERS PVT. LTD. PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RES PONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANG ALORE