M/s. Rani Shaver Poultry Breeding Farms Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 12/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58857 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAMTA KOCHAR
• Assessee Lawyers: P N MEHTA
• Keywords: Depreciation; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI T.S. KAPOOR ITA NO. 12/DEL/2012 ASSESSMENT YEAR: 2008-09 RANI SHAVER POULTRY BREEDING VS. INCOME-TAX OFFIC ER, FARMS PVT. LTD., 3-SHOPPING CENTRE, WARD 15(2), WEST END, NEW DELHI. NEW DELHI. (PAN: AAACR3036Q) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PN MEHTA, CA RESPONDENT BY: SMT. MAMTA KOCHAR , SR. DR DATE OF HEARING : 05.03.2012 DATE OF PRONOUNCEMENT : 16.03.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 04.11.2011 PASSED FOR ASSESSMENT YEAR 2008-09. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN DISALLOWING BUSINESS EXPENSES AMOUNTING TO RS.20,31 ,417. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY HAS FILED ITS RETURN OF INCOME ON 29.9.2008 DECLARING AN INCOME O F RS.6,30,940. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND A NOTICE UNDER SEC. 143(2) WAS DULY ISSUED AND SERVED UPON THE ASSESSEE . ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAS SHOWN 2 INCOME FROM SALES AT RS.25,414 WHEREAS THE OTHER IN COME HAS BEEN SHOWN AT RS.43,95,775. THIS INCOME WAS SHOWN FROM CAPITAL GA IN, INCOME FROM OTHER SOURCES, DIVIDEND INCOME AND INTEREST ON FIXED DEPO SITS. IT HAS RENTAL INCOME OF RS.17 LACS. ASSESSING OFFICER RECORDED A FINDING THAT ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY. IT HAS CLOSED DO WN ITS BUSINESS AND, THEREFORE, IT IS NOT ENTITLED FOR VARIOUS EXPENDITU RE. ON APPEAL, LEARNED FIRST APPELLATE AUTHORITY HAS PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THE LEARNED FIRST APPELLAT E AUTHORITY READ AS UNDER: PERUSAL OF THE INCOME AND EXPENDITURE STATEMENT OF THE APPELLANT SHOWS THAT THE APPELLANT HAS DEBITED THE FOLLOWING EXPENSES TO ITS P & L A/C. PURCHASE-FEED, FLOWERS, PLANTS AND PLOTS RS.51, 895 PAYMENT TO AND PROVISION FOR EMPLOYEES RS.9,09,4 90 POWER AND FUEL RS. 45,231 SELLING, ADMINISTRATIVE AND OTHER EXPENSES RS.9, 92,781 DEPRECIATION RS.10,18,135 THE A.O. HAS ALLOWED EXPENSES ON PURCHASES OF FEED FLOWERS, PLANTS AND PORTS AMOUNTING TO RS.51,895. THE COMPAN Y WAS NOT ENGAGED IN ANY BUSINESS DURING THE YEAR. THE APPELL ANT DID NOT MAKE ANY PURCHASE DURING THE YEAR ON THE BASIS OF WHICH IT COULD BE CLAIMED THAT THE APPELLANT WAS ENGAGED IN ANY BUSINESS ACTI VITY DURING THE RELEVANT YEAR. THE APPELLANT COMPANY HAS ONLY SHOWN INCOME FROM RENT, FIXED DEPOSIT AND CAPITAL GAINS. IT IS ALSO N OT THE CASE OF THE 3 COMPANY THAT IT IS ENGAGED IN LIQUIDATING ITS ASSET S OR COLLECTING ITS OUTSTANDING DUES. THUS THERE ARE NO GROUND TO HOLD THAT THE APPELLANT COMPANY IS ENGAGED IN ANY BUSINESS ACTIVITY DURING THE YEAR. EXPENDITURE CAN ONLY BE ALLOWED IF IT IS INCURRED F OR THE PURPOSE OF EARNING ANY INCOME OR FOR THE PURPOSE OF RUNNING A BUSINESS. THE CASE OF THE APPELLANT DOES NOT FALL WITHIN ANY SUCH CATE GORY. THE OTHER EXPENSES CLAIMED BY THE APPELLANT DO NOT HAVE ANY L INK WITH THE NATURE OF INCOME EARNED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. THE SAME CAN, THEREFORE, NOT BE ALLO WED. HOWEVER, KEEPING IN VIEW THE OFFICE EXIGENCIES AND THE CORPO RATE REQUIREMENT ESSENTIAL TO KEPT HE CORPORATE OFFICE RUNNING AN AD HOC EXPENDITURE OF RS.1,00,000 IS ALLOWED TO THE APPELLANT. THUS OUT OF THE TOTAL DISALLOWANCE OF RS.21,31,417 MADE BY THE A.O. AN AM OUNT OF RS.1,00,000 IS ALLOWED AND REST IS UPHELD. 3. WHILE IMPUGNING THE ORDER OF THE LEARNED CIT(APP EALS), LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TOWARDS THE DETAILS OF EXPENDITURE AND WRITTEN SUBMISSIONS FILED BEFORE TH E LEARNED CIT(APPEALS). HE POINTED OUT THAT THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.18,96,917. PROFIT ON SALE OF INVESTMENT AT RS.21,05,342 AND RE NTAL INCOME. THE ASSESSEE HAD SHOWN EXPENSES ON THE SALARY OF ACCOUNTANT, DRI VER, PEON, WATCHMAN, GENERAL SUPERVISOR, SPARE WATCHMAN FOR LEAVE, WATCH MAN AT MULLAHERE LAND, GARDNER AND CASUAL LABORERS. THESE ARE THE ESSENTIA L EXPENSES WHICH OUGHT TO HAVE BEEN ALLOWED BY THE ASSESSING OFFICER. 4 4. ON THE OTHER HAND, LEARNED DR RELIED UPON THE OR DER OF THE LEARNED CIT(APPEALS). SHE POINTED OUT THAT ASSESSEE HAS CLO SED DOWN ITS BUSINESS, THEREFORE, IT IS NOT ENTITLED FOR ANY BUSINESS EXPE NSES. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. IT IS NOT DISPUTED BY THE ASSESSE E THAT IN THIS YEAR IT IS NOT CARRIED OUT ANY BUSINESS ACTIVITY. IT IS NOT PLEADE D BEFORE THE REVENUE AUTHORITIES THAT THIS CLOSER OF THE BUSINESS IS JUS T A TEMPORARY PHASE. THE CASE OF THE ASSESSEE IS THAT IN ORDER TO MAINTAIN C ORPORATE STATUS AND IN ORDER TO MAINTAIN ASSETS OWNED BY THE ASSESSEE, IT IS REQ UIRED TO SPEND EXPENSES WHICH OUGHT TO HAVE BEEN ALLOWED. THE ASSESSEE FURT HER PLEADED THAT IT HAS SHOWN INCOME FROM INVESTMENT ETC. AND THEREFORE, EX PENSES SHOULD HAVE BEEN ALLOWED TO THE ASSESSEE. WE FIND THAT LEARNED FIRST APPELLATE AUTHORITY HAS MADE AN ANALYSIS OF ALL THESE ISSUES AND ALLOWE D A SUM OF RS.1 LAC ON AD HOC BASIS FOR KEEPING THE CORPORATE STATUS OF THE A SSESSEE INTACT. AS FAR AS THE OTHER INCOMES ARE CONCERNED, IF THERE ARE ANY DIREC T EXPENSES THEN ASSESSEE OUGHT TO HAVE CLAIMED UNDER SECTION 57(III) OF THE ACT. IT CANNOT CLAIM THE EXPENSES AS A BUSINESS EXPENDITURE. THE EXPENSES WE RE NOT INCURRED FOR RUNNING THE BUSINESS, THEREFORE, THEY CANNOT BE ALL OWED TO THE ASSESSEE. 5 LEARNED CIT(APPEALS) HAS RIGHTLY DECIDED THE ISSUE AND WE DO NOT SEE ANY REASON TO INTERFERE IN HER ORDER. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 16.03.201 2 SD/- SD/- ( T.S. KAPOOR ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16/03/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR