Deputy Commissioner of Income-tax, Bangalore V. M/s KRS Enterprises Pvt Ltd, Bangalore

ITA 1100/BANG/2014

• Counselvise Citation: 110021114 RSA 2014
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Business income; Revised return
• Section: 143(3); 260A; 147; 148; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T . A. NO S . 1100 TO 1102 /BANG/20 1 4 (ASSESSMENT YEAR S : 200 6 - 07, 2008 - 09 & 2010 - 11 ) DY. COMMISSIONER OF I NCOME TAX, CIRCLE 11(5), BANGALORE - 560 0 01 . APPELLANT. VS. M/S. K.R.S. ENTERPRISES PVT. LTD., NO.337/1A, 18 TH CROSS, UPPER PALACE ORCHARDS, BANGALORE - 560 080 . .. RESPONDENT. APPELLANT BY : DR. P.K. SRIHARI, ADDL. CIT (D.R.) R E SPONDENT BY : SHRI NARENDRA SHARMA, ADVOCATE. DATE OF H EARING : 22.12.2014. DATE OF P RONOUNCEMEN T : 23.1. 201 5 . O R D E R P ER BENCH : THESE APPEALS BY REVENUE ARE DIRECTED AGAINST THE COMBINED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - I, BANGALORE DT.29.5.2014 FOR ASSESSMENT YEARS 2006 - 07, 2008 - 09 & 2010 - 11. CONNECTED ISSUES BEING INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UND ER : - 2.1 THE ASSESSEE COMPANY , IN THE BUSINESS OF PROPERTY DEVELOPMENT, LEASING, PROVIDING MAINTENANCE SERVICES, INFRASTRUCTURAL FACILITIES, ETC. , FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2006 - 07, 2008 - 09 & 2010 - 11 AS UNDER : - 2 IT A NO S . 1100 TO 1102 /BANG/201 4 ASST. YEAR DA TE OF FILING THE RETURN OF INCOME INCOME DECLARED (RS.) 2006 - 07 30.11.2006 NIL. 2008 - 09 30.9.2008 83,50,010 2010 - 11 15.10.2010 30.12.2012 (REVISED RETURN OF INCOME) 72,28,390. 2.2 THE RETURNS OF INCOME FOR THE ABOVE THREE ASSESSMENT YEARS WERE PRO CESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). IN THE RETURNS OF INCOME FILED FOR THE IMPUGNED THREE ASSESSMENT YEARS, THE ASSESSEE HAD DECLARED THE RENTAL INCOME RECEIVED ON LEASING OUT OF ITS PROPERTY UNDER THE HEAD INCO ME FROM HOUSE PROPERTY AND MAINTENANCE CHARGES RECEIVED FROM ITS TENANTS AS INCOME FROM BUSINESS. THE DETAILS ON RECORD ARE AS UNDER : PARTICULARS ASSESSMENT YEAR 2006 - 07 (RS.) ASSESSMENT YEAR 2008 - 09 (RS.) ASSESSMENT YEAR 2010 - 11 (RS.) RENTAL INCOME 1,58,43,734 2,66,52,084 2, 40,59,055 MAINTENANCE CHARGES 1,17,15,775 1,22,03,553 89,77,857 2,75,59,509 3,86,55,637 3,30,36,912 THE ASSESSEE'S CASE WAS SELECTED FOR SCRUTINY FOR ASSESSMENT YEAR 2010 - 11 AND NOTICE UNDER SECTION 143( 2 ) OF THE ACT WAS ISSU ED TO THE ASSESSEE ON 19.9.2011. SUBSEQUENTLY, IN THE CASE OF ASSESSEE FOR ASSESSMENT YEARS 2006 - 07 AND 2008 - 09, PROCEEDINGS U NDER SECTION 147 OF THE ACT WERE INITIATED AND NOTICES UNDER SECTION 148 OF THE ACT WERE ISSUED TO THE ASSESSEE ON 26.3.2012 AN D 22.3.2012 RESPECTIVELY FOR THE ABOVE TWO YEARS IN ORDER TO ASSESS THE ENTIRE RENTAL RECEIPTS RECEIVED FOR LETTING OUT OF ITS PROPERTY AND THE MAINTENANCE CHARGES RECEIVED BY THE ASSESSEE FROM THE TENANTS OF THE LET OUT PROPERTY AS INCOME FROM HOUSE PROPE RTY . THE ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT VIDE ORDERS DT.25.2.2013 FOR ASSESSMENT YEARS 2006 - 07 & 2008 - 09 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED 3 IT A NO S . 1100 TO 1102 /BANG/201 4 AT RS.1,32,96,793 AND RS.2,43,38,363 RESPECTIVELY. FOR ASSESS MENT YEAR 2010 - 11, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DT.25.2.2013 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1,33,79,952. 2.3 AGGRIEVED BY THE ORDERS OF ASSESSMENT FOR ASSESSMENT YEARS 2006 - 07, 2008 - 09 & 2010 - 11 ALL DT.25.2.2013, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (APPEALS) I, BANGALORE. THE LEARNED CIT (APPEALS) DISPOSED THE ASSESSEE'S APPEALS VIDE THE IMPUGNED COMMON ORDER DT.29.5.2014 GRANTING THE ASSESSEE PARTIAL RELIEF AND ALLOWING THE ASSESSEE'S CLAIM THAT THE MAINTENANCE CHARGES RECEIVED BY THE ASSESSEE FORM TENANTS BE TREATED AND ASSESSED AS INCOME FROM BUSINESS. 3. AGGRIEVED BY THE IMPUGNED COMMON ORDER OF THE CIT (APPEALS) I, BANGALORE DT.29.5.2014 FOR ASSESSMENT YEARS 2006 - 07, 2008 - 09 & 2010 - 11, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. THE GROUNDS RAISED BY REVENUE IN ALL THE THREE APPEALS ARE COMMON, EXCEPT FOR AN ADDITIONAL GROUND NO.7 RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2010 - 11. WE, THEREFORE, EXTRACT HEREUNDER T HE GROUNDS RAISED BY REVENUE FOR ASSESSMENT YEAR 2010 - 11 : - 1. THE ORDER OF THE CIT (APPEALS) IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN HOLDING THAT MAINTENANCE CHARGES IN RESPECT OF THE LET OUT PROPE RTIES SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME FOLLOWING THE DECISIONS OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR THE A.Y. 2005 - 06 IN ITA NOS. 1040/BANG/2009 DT.27.2.2010 AND 1047/BANG/2009 DT.20.4.2012 AND A.Y. 2009 - 10 IN ITA NO.966(B)/2013 DT.4.4 .2014 WITHOUT APPRECIATING THE FACT THAT THE ORDERS OF THE ITAT HAVE NOT BEEN ACCEPTED AND APPEALS UNDER SECTION 260A ARE PREFERRED. 3. THE CIT (APPEALS) ERRED IN HOLDING THAT MAINTENANCE CHARGES IN RESPECT OF THE LET OUT PROPERTIES SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME FOLLOWING THE DECISIONS OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR THE A.Y. 2005 - 06 IN ITA NOS. 1040/BANG/2009 DT.27.2.2010 AND 1047/BANG/2009 DT.20.4.2012 AND A.Y. 2009 - 10 IN ITA NO.966(B)/2013 DT.4.4.2014 WITHOUT APPRECIATING THE FACT THAT THE ITAT ERRED IN CHANGING ITS OPINION BY RECALLING THE EARLIER ORDER DT.27 TH FEB., 2010 IN ITA NOS.1040/BANG/2009 WHEREIN A 4 IT A NO S . 1100 TO 1102 /BANG/201 4 SPECIFIC FINDING WAS RECORDED THAT THE MAINTENANCE CHARGES SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES DESPITE THE FACT THAT NO FRESH FACTS WERE BROUGHT BEFORE THE ITAT WHILE DECIDING THE APPEAL IN ITA NO.1047/BANG/2009. 4. THE CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THE ASSESSEE HAD BASICALLY RENTED OUT THE CONCERNED PREMISES ALONG WITH FURNITU RE AND FIXTURES AND THE TWO SEPARATE AGREEMENTS ENTERED INTO DID NOT HAVE A PROPER BASIS, HAVING REGARD TO THE COMPARATIVELY LOWER RENT DISCLOSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY , IN RELATION TO THE RENT RECEIVED FOR THE PREMISES LET OUT TO THE OTHER TENANT IN THE SAME BUILDING. 5. THE CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT IN A PROPERTY WHICH HAS BEEN CONSTRUCTED FOR COMMERCIAL LETTING OUT, CERTAIN TYPES OF FURNITURE, FIXTURES AND SUPPORT SYSTEM ARE A NECESSITY AND SUCH SUPPORT SYSTEM BECOMES AN INTEGRAL PART OF THE PROPERTY AND THE FURNITURE AND FIXTURES ALONG WITH THE SUPPORT SYSTEM COULD NOT HAVE BEEN LET OUT INDEPENDENTLY. 6. THE CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE ISSUE IS SETTLED NOT ONLY BY THE SUP REME COURT BUT ALSO BY THE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS NAMELY : - EAST INDIA HOUSING & LAND DEVELOPMENT TRUST LTD. VS. CIT (1961) 42 ITR 59 (SC). - CIT V IDEAL GARDEN COMPLEX PVT. LTD. (2012) 340 ITR 609 (MAD) - CIT V CHENNAI PROPERTIES & INVESTMENTS LTD. (2004) 266 ITR 685 (MAD) - UNIVERSAL PLAST LTD. V CIT (1999) 237 ITR 454 (SC) - GUNT UR MERCHANTS COTTON PRESS CO. LT D. V. CIT (1999) 237 ITR 454 (SC). 7. THE CIT (APPEALS) ERRED IN RESTRICTING THE DISALLOWANCE OF THE DIRECTORS REMUNER ATION OF RS.3,62,754 MADE BY THE A.O. TO RS.2,64,174 BY HOLDING THAT THE DISALLOWANCE IS ON A HIGHER SIDE WITHOUT APPRECIATING THAT THE A.O. HAD MADE THE DISALLOWANCE AS A PERCENTAGE OF THE RENTAL INCOME AS DIRECTORS REMUNERATION IS NOT AN ALLOWABLE EXPEN DITURE IN COMPUTING THE INCOME FROM HOUSE PROPERTY 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT (APPEALS) BE REVERSED AND THT OF THE ASSESSING OFFICER BE RESTORED. 9. THE A PPELLANT CRAVES LEAVE TO ADD TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. THE GROUNDS AT S.NOS.1, 7 & 8 FOR ASSESSMENT YEARS 2006 - 07 AND 2008 - 09 AND THE GROUNDS AT S.NOS.1, 8 AND 9 FOR AS SESSMENT YEAR 2010 - 11 BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLED FOR THEREON. 5 IT A NO S . 1100 TO 1102 /BANG/201 4 5. GROUNDS NO.2 TO 6 RAISED BY REVENUE ARE IDENTICAL FOR ALL THE THREE IMPUGNED ASSESSMENT YEARS 2006 - 07, 2008 - 09 AND 2010 - 11. FOR THE SAKE OF CONVENIENCE THEY ARE EXTRACTED HEREUNDER : - 2. THE CIT (APPEALS) ERRED IN HOLDING THAT MAINTENANCE CHARGES IN RESPECT OF THE LET OUT PROPERTIES SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME FOLLOWING THE DECISIONS OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR THE A.Y. 200 5 - 06 IN ITA NOS. 1040/BANG/2009 DT.27.2.2010 AND 1047/BANG/2009 DT.20.4.2012 AND A.Y. 2009 - 10 IN ITA NO.966(B)/2013 DT.4.4.2014 WITHOUT APPRECIATING THE FACT THAT THE ORDERS OF THE ITAT HAVE NOT BEEN ACCEPTED AND APPEALS UNDER SECTION 260A ARE PREFERRED. 3 . THE CIT (APPEALS) ERRED IN HOLDING THAT MAINTENANCE CHARGES IN RESPECT OF THE LET OUT PROPERTIES SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME FOLLOWING THE DECISIONS OF THE ITAT IN THE ASSESSEE'S OWN CASE FOR THE A.Y. 2005 - 06 IN ITA NOS. 1040/BANG/ 2009 DT.27.2.2010 AND 1047/BANG/2009 DT.20.4.2012 AND A.Y. 2009 - 10 IN ITA NO.966(B)/2013 DT.4.4.2014 WITHOUT APPRECIATING THE FACT THAT THE ITAT ERRED IN CHANGING ITS OPINION BY RECALLING THE EARLIER ORDER DT.27 TH FEB., 2010 IN ITA NOS.1040/BANG/2009 WHERE IN A SPECIFIC FINDING WAS RECORDED THAT THE MAINTENANCE CHARGES SHOULD BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES DESPITE THE FACT THAT NO FRESH FACTS WERE BROUGHT BEFORE THE ITAT WHILE DECIDING THE APPEAL IN ITA NO.1047/BANG/2009. 4. THE CIT (A PPEALS) ERRED IN NOT APPRECIATING THE FACT THE ASSESSEE HAD BASICALLY RENTED OUT THE CONCERNED PREMISES ALONG WITH FURNITURE AND FIXTURES AND THE TWO SEPARATE AGREEMENTS ENTERED INTO DID NOT HAVE A PROPER BASIS, HAVING REGARD TO THE COMPARATIVELY LOWER REN T DISCLOSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY , IN RELATION TO THE RENT RECEIVED FOR THE PREMISES LET OUT TO THE OTHER TENANT IN THE SAME BUILDING. 5. THE CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT IN A PROPERTY WHICH HAS BEEN CONSTRU CTED FOR COMMERCIAL LETTING OUT, CERTAIN TYPES OF FURNITURE, FIXTURES AND SUPPORT SYSTEM ARE A NECESSITY AND SUCH SUPPORT SYSTEM BECOMES AN INTEGRAL PART OF THE PROPERTY AND THE FURNITURE AND FIXTURES ALONG WITH THE SUPPORT SYSTEM COULD NOT HAVE BEEN LET O UT INDEPENDENTLY. 6. THE CIT (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE ISSUE IS SETTLED NOT ONLY BY THE SUPREME COURT BUT ALSO BY THE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS NAMELY : - EAST INDIA HOUSING & LAND DEVELOPMENT TRUST LTD. VS. CIT (1961) 42 ITR 59 (SC). - CIT V IDEAL GARDEN COMPLEX PVT. LTD. (2012) 340 ITR 609 (MAD) - CIT V CHENNAI PROPERTIES & INVESTMENTS LTD. (2004) 266 ITR 685 (MAD) - UNIVERSAL PLAST LTD. V CIT (1999) 237 ITR 454 (SC) - GUNT UR MERCHANTS COTTON PRESS CO. LT D. V. CIT (1999) 237 ITR 454 (SC). 6 IT A NO S . 1100 TO 1102 /BANG/201 4 5.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED IN SUPPORT OF THE GROUNDS RAISED AND SUPPORTED THE ORDERS OF THE ASSESSING OFFICER ON THE ISSUE OF THE TREATMENT OF THE MAINTENANCE CHARGES RECEIVED BY THE ASSESSEE AS INCOME FR O M HOUSE PROPERTY. 5.3 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ISSUE FOR CONSIDERATION IN THE PRESENT APPEALS ARE SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS T RIBUNAL IN THE ASSESSEE'S OWN CASE IN ITA NOS.1040 & 1047/BANG/2009 DT.27.4.2012 FOR ASSESSMENT YEAR 2005 - 06 AND IN ITA NO.966/BANG/2013 DT.4.4.2014 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN IT WAS HELD THAT THE MAINTENANCE CHARGES RECEIVED BY THE ASSESSEE FR OM ITS TENANTS ARE TO BE TREATED AND ASSESSED AS INCOME FROM BUSINESS AND NOT AS INCOME FROM HOUSE PROPERTY AS ASSESSED BY THE ASSESSING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT REVENUE S APPEAL AGAINST THE ORDER OF THE CO - ORD INATE BENCH OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2005 - 06 IN ITA NO.1040/BANG/2009 PREFERRED BEFORE THE HON'BLE KARNATAKA HIGH COURT HAS BEEN DISMISSED IN ITS ORDER IN ITA NO.305/2012 DT.14.11.2014. THE LEARNED AUTHORISED REPRESEN TATIVE PRAYED THAT SINCE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL AND THE HON'BLE JURISDICTIONAL HIGH COURT, REVENUE S GROUNDS RAISED ON THIS ISSUE ARE LIABLE TO BE DISMISSED. 5.4 WE HAVE HEA RD THE RIVAL SUBMISSIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL DECISIONS CITED AND PLACED RELIANCE UPON. AS CONTENDED BY THE LEARNED AUTHORISED REPRESENTATIVE, THE ISSUE REGARDING WHETHER THE MAINTENANCE CHARG ES RECEIVED BY THE ASSESSEE FROM ITS TENANTS IS TO BE TREATED AND ASSESSED AS INCOME FROM 7 IT A NO S . 1100 TO 1102 /BANG/201 4 BUSINESS AS DECLARED BY THE ASSESSEE OR AS INCOME FROM HOUSE PROPERTY AS CONTENDED BY THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO - O RDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2005 - 06 IN ITA NO.1040 & 1047 /BANG/2009 DT.20.4.2012. IN THIS DECISION, THE CO - ORDINATE BENCH OF THIS TRIBUNAL HELD THAT MAINTENANCE CHARGES RECEIVED BY THE ASSESSEE FROM ITS TENANTS WAS TO BE ASSESSED AS BUSINESS INCOME . THIS DECISION OF THE CO - ORDINATE BENCH HAS BEEN UPHELD BY THE HON'BLE HIGH COURT OF KARNATAKA IN ITS ORDER IN ITA NO.305/2012 DT.14.11.2014 WHILE DISMISSING REVENUE S APPEAL. RESPECTFULLY, FOLLOWING THE DECISION O F THE HON'BLE HIGH COURT OF KARNATAKA (SUPRA) AND THE CO - ORDINATE BENCHES OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2005 - 06 AND 2009 - 10 (SUPRA); WE UPHOLD THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE FOR ALL THREE ASSESSMENT YEARS 2006 - 07, 2008 - 09 AND 2010 - 11. CONSEQUENTLY, THE GROUNDS AT S.NOS.2 TO 6 RAISED BY REVENUE S ARE DISMISSED. 6 . GROUND NO.7 FOR ASSESSMENT YEAR 2010 - 11 ONLY. 6.1 IN GROUND NO.7, REVENUE ASSAILS THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN RESTRICTIN G THE DISALLOWANCE OF THE DIRECTORS REMUNERATION OF RS.3,62,754 MADE BY THE ASSESSING OFFICER TO RS.2,64,174 , WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER MADE THE DISALLOWANCE AS A PERCENTAGE OF THE RENTAL INCOME AS DIRECTORS REMUNERATION IS NOT AN ALLOWABLE EXPENDITURE IN COMPUTING INCOME FR O M HOUSE PROPERTY. THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS HEARD IN SUPPORT OF THE GROUND RAISED. 6.2 PER CONTRA, THE LEARNED AUTHORISED REPRESENTATIVE SUPPORTED THE DECISION OF THE LEARNED C IT(A) IN THE IMPUGNED ORDER FOR ASSESSMENT YEAR 2010 - 11. IT WAS SUBMITTED THAT THE 8 IT A NO S . 1100 TO 1102 /BANG/201 4 REMUNERATION PAID TO THE DIRECTOR IS FOR THE BUSINESS PURPOSES OF THE ASSESSEE AND THAT APART FROM EARNING OF RENTAL INCOME, THE ASSESSEE IN TH IS YEAR WAS ALSO IN THE BUSIN ESS OF HOTEL AND LODGING AND HAD DECLARED TURNOVER FROM HOTEL SALES AT RS.1,01,12,534 AND THEREFORE THE PAYMENT OF REMUNERATION TO THE DIRECTORS FOR SERVICES RENDERED IN MANAGING THE BUSINESS AFFAIRS OF THE ASSESSEE COMPANY WAS ALLOWABLE AS CLAIMED. THE LEARNED AUTHORISED REPRESENTATIVE RELIED ON AND PLACED SUPPORT O N THE IMPUGNED ORDER OF THE LEARNED CIT(A). 6.3 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT THE LEARNED CIT(A) AT PARA 7.4 OF THE IMPUGNED O RDER HAS SUSTAINED THE DISALLOWANCE OF RS.3,62,754 MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.2,64,174 HOLDING AS UNDER : - I HAVE CONSIDERED THE APPELLANT S SUBMISSION ALSO GONE THROUGH THE DETAILS FURNISHED AT THE TIME OF APPEAL HEARING. A PERU SAL THE SAID DETAILS REVEALS THAT THE APPELLANT CLAIMED DIRECTOR S REMUNERATION OF RS.4,80,000 ALSO CLAIMED SIMILAR AMOUNT IN IMMEDIATE PROCEEDINGS ASSESSMENT YEAR. FURTHER IT IS ALSO SEEN THAT EXPENDITURE CLAIMED TOWARDS SALARY AND OTHER BENEFIT AMOUNTING TO RS.33,07,744 WHEREAS NO SUCH CLAIM WAS MADE IN IMMEDIATE PROCEEDINGS PREVIOUS YEAR. THEREFORE, CLAIMED OF DIRECTOR S REMUNERATION CANNOT BE CONSTRUCTED FOR BUSINESS PURPOSE (MAINTENANCE & OTHER ACTIVITIES) ONLY. HOWEVER, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS HIGHER SIDE. ; IF IT WOULD BE CONSIDERED ON PROPORTIONATE INCOME BASE THAN RATIO WOULD BE 2,40,59,055 : 2,96,55,774 I.E. RS.2,64,174 THEREFORE, DISALLOWANCE UNDER THIS HEAD IS CONFIRMED TO THE EXTENT OF RS.2,64,174 ONLY. ON C AREFUL CONSIDERATION OF THE MATERIAL ON RECORD, WE FIND THAT REVENUE APART FROM RAIS ING THIS GROUND HAS NOT BEEN ABLE TO CONTROVERT THE DECISION OF THE LEARNED CIT (APPEALS) (SUPRA). IN THIS FACTUAL MATRIX, WE ARE OF THE CONSIDERED OPINION THAT THE REAS ONING RENDERED BY THE LEARNED CIT(A) WHILE REDUCING THE DISALLOWANCE FROM RS.3,62,754 TO RS.2,64,174 APPEARS TO BE FAIR AND REASONABLE AND THEREFORE FINDING NO REASON TO INTERFERE THEREIN, UPHOLD THE ORDER OF THE CIT (APPEALS) ON THIS ISSUE. CONSEQUENTLY GROUND NO.7 OF REVENUE S APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS DISMISSED. 9 IT A NO S . 1100 TO 1102 /BANG/201 4 7. IN THE RESULT, REVENUE S APPEALS FOR ASSESSMENT YEARS 2006 - 07, 2008 - 09 AND 2010 - 11 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JAN., 2015. SD/ - SD/ - ( P. MADHAVI DEVI ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, BANGALORE