M/s. Mangal Tirth Estates Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1144/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64377 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Assessee Lawyers: M VISWANATHAN
• Keywords: Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A.NO.1144/MDS/2012 ASSESSMENT YEAR : 2007-08 M/S. MANGAL TIRTH ESTATES LTD., SPENCER PLAZA, 769 ANNA SALAI, CHENNAI - 600 002. PAN AAACM4614R VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE IV(1), CHENNAI - 34. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. VISWANATHAN, CA RESPONDENT BY : DR. S. MOHARANA, IRS, CIT DATE OF HEARING : 15 TH OCTOBER, 2012 DATE OF PRONOUNCEMENT : 16 TH OCTOBER, 2012 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE A SSESSMENT YEAR 2007-08. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)VI AT CHENNAI D ATED ITA 1144/12 :- 2 -: 29.2.2012 WHICH ARISES OUT OF THE ASSESSMENT COMPLE TED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1961. 2. IN ITS COMPUTATION OF INCOME, THE ASSESSEE HAS C LAIMED A DEDUCTION OF ` 2,67,20,732/- TOWARDS REPAIRS AND MAINTENANCE. THE ASSESSEE STATED THAT SPENCER PLAZA BUILDING HAS BEEN CONSTRUCTED BY IT IN THREE PHASES OVER A PERIOD OF 15 YEARS AND IN THE COURSE, THE ASSESSEE HAD INCURRED EXPENSES IN S TRENGTHENING CERTAIN PART OF SPENCER PLAZA BUILDING TO AVOID DAM AGES AND TO FULFILL ITS LEGAL OBLIGATIONS TO PROVIDE BUILDING F REE FROM DEFECTS. THE EXPENDITURE HAS BEEN MAINLY INCURRED FOR THE AB OVE SAID PURPOSES. THE ASSESSEE ARGUED THAT THE EXPENSES RE LATE TO COMMON AREAS AND STRUCTURES WHICH IS DIFFERENT FROM THE LEASED PROPERTIES AND THEREFORE, THE EXPENSES NEED TO BE A LLOWED AS REVENUE EXPENDITURE. 3. THE ASSESSING OFFICER OBSERVED THAT BASED ON THE PROPORTION OF AREA GIVEN ON LEASE, 70% OF THE CLAI M ALONE CAN BE ALLOWED AND 30% OF THE CLAIM HAS TO BE DISALLOWED, AS THAT AREA RELATED TO LET OUT PROPERTY, OUT OF WHICH THE ASSES SEE HAS RETURNED INCOME FROM HOUSE PROPERTY. THUS, THE ASSESSING OF FICER DISALLOWED A SUM OF ` 80,16,220/-. IN FIRST APPEAL, THIS ADDITION HAS BEEN CONFIRMED BY THE COMMISSIONER OF INCOME- ITA 1144/12 :- 3 -: TAX(APPEALS). IT IS AGAINST THE ABOVE THAT THE ASS ESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. IT IS THE CASE OF THE ASSESSEE THAT THE EXPENSES CLAIMED BY THE ASSESSEE BY WAY OF REPAIRS AND MAINTENANCE AMOU NTING TO ` 2,67,20,732/- WERE INCURRED FOR THE COMMON AREAS IN CLUDING BASEMENTS. IT IS STATED THAT IN RESPECT OF PROPERT Y LET OUT TO THE TENANTS, THE ASSESSEE HAS CLAIMED STATUTORY DEDUCTI ON OF 30% AND THE IMPUGNED EXPENDITURE CANNOT BE MIXED UP WIT H, AS DONE BY THE ASSESSING OFFICER. 5. WE HEARD SHRI M. VISWANATHAN, CHARTERED ACCOUNTA NT APPEARING FOR THE ASSESSEE AND DR. S. MOHARANA, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E. AFTER HEARING BOTH SIDES, WE FIND THAT THE ASSESSING OFFI CER IS JUSTIFIED IN LAW IN STATING THAT LET OUT PORTION OF THE BUILD ING CANNOT CLAIM ANY MORE EXPENDITURE OVER AND ABOVE THE STATUTORY D EDUCTION OF 30%. THEREFORE, AS RIGHTLY POINTED OUT BY HIM, A P ORTION OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE TOWARDS REPAIRS AND MAINTENANCE HAS TO BE EXCLUDED ON THE GROUND THAT T HE SAID PORTION OF EXPENDITURE RELATED TO THAT PART OF THE PROPERTY LET OUT TO THE TENANTS, OUT OF WHICH THE ASSESSEE IS OFFERING INCOME FROM HOUSE PROPERTY. ON THIS POINT, THERE CANNOT BE TWO OPINIONS. ITA 1144/12 :- 4 -: 6. NOW, THE QUESTION IS HOW THE PORTION RELATING TO LET OUT PROPERTY COULD BE FOUND OUT FOR THE PURPOSE OF DISA LLOWING A PORTION OF THE EXPENDITURE. IT IS THE CASE OF THE ASSESSEE THAT IT HAS FURNISHED SPACE-WISE DETAILS. BUT THE ASSESSIN G OFFICER HAS ADOPTED THE AREA METHOD. WE FIND THAT THE METHOD F OLLOWED BY THE ASSESSING OFFICER IS REASONABLE AND TRANSPARENT . THEREFORE, WE UPHOLD THE DISALLOWANCE MADE BY THE LOWER AUTHOR ITIES. 7. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 16 TH OF OCTOBER, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 16 TH OCTOBER, 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR