RITU CHAUDHRY D/O SURENDRA PAL CHAUDHRY, MUMBAI V. ITO 11(1)(3), MUMBAI

ITA 1261/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2731 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 19-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: A K GHOSH
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SAKTIJIT DEY(JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 126 1 /MUM/201 3 ASSESSMENT YEAR: 200 9 - 10 RITU CHAUDHRY D/O SURENDRA PAL VS. ITO 11(1)(3) CHAUDHRY C - 13, OBEROI SKY, GARDEN, AAYAKAR BHAVAN 3 RD CROSS ROAD,LOKHANDWALA COMPLEX, MUMBAI 400020 ANDHERI (W), MUMBAI - 4000 53 PAN NO. AAAPC5097R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. A. K. GHOSH REVENUE BY : SHRI. SATYA PAL KUMAR DATE OF HEARING : 22 /08/2016 DATE OF PRONOUNCEMENT : 23/ 0 9 /2016 ORDER PER N.K. PRADHAN, A.M THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) - 3 MUMBAI AND ARISES OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). 2. THERE HAS BEE N A DELAY OF 20 DAYS IN FILING THE APPEAL BY THE ASSESSEE. WE HAVE GONE THROUGH THE AFFIDAVIT FILED BY THE ASSESSEE AND FIND THAT SHE HAD GENUINE DIFFICULTIES IN FILING THE APPEAL IN TIME. THEREFORE, WE CONDONE THE DELAY OF 20 DAYS IN FILING THE APPEAL. 3 . THE FIRST GROUND RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF 1/3 OF CLOTHING EXPENSES OF RS.4,55,860/ - CLAIMED BY THE ASSESSEE. IT IS STATED THAT THE AO HAS DISALLOWED RS.1,51,953/ - DESPITE PRODUCTION OF BILLS BEFORE HIM. ITA NO. 1261 /MUM/2013 2 3.1 THE LD. DR SUPPOR TED THE ORDER PASSED BY THE LD. CIT(A) WHEREIN IT HAS BEEN OBSERVED THAT THE RE - USE OF CLOTHING AND PERSONAL ELEMENT CANNOT BE RULED OUT AND THEREFORE, THE DISALLOWANCE OF RS.1,51,953/ - HAS BEEN SUSTAINED. 3.2 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT A SIMILAR ISSUE AROSE BEFORE THE ITAT D BENCH MUMBAI IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2005 - 06 (ITA NO.2911/MUM/2009). THE TRIBUNAL REFERRED TO THE DECISI ON IN THE CASE OF STATE OF MADRAS V S. G. J. COELHO 53 ITR 186 (SC) AND HELD THE FOLLOWING: THE HONBLE SUPREME COURT HAS CLEARLY OBSERVED THAT PERSONAL EXPENSES INCLUDED EXPENSES ON THE PERSON OF THE ASSESSEE OR TO SATISFY HIS PERSONAL NEEDS AS SUCH CLO THES, FOOD, ETC. THUS THE EXPENSES ON MEDICAL IS ON PERSONAL NATURE AND THE EXPENSES ON CLOTHES WOULD CLEARLY FALL UNDER THE CATEGORY OF PERSONAL EXPENSES. IN THESE CIRCUMSTANCES, WE FIND NOTHING WRONG IN THE ORDER OF LD. CIT(A) AND, ACCORDINGLY, CONFIRM T HE SAME. 3.3. AS THE FACTS ARE SIMILAR FOR THE IMPUGN ED ASSESSMENT YEAR, THE DISALLOWANCE OF RS.1,51,953/ - UPHELD BY THE LD. CIT(A) IS SUSTAINED. 4. THE SECOND GROUND OF APPEAL RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE OF 40% OF CAR EXPENSES OF R S.1,47,980/ - MADE BY THE AO AND UPHELD BY THE LD. CIT(A) WHICH COMES TO RS.59,192/ - . 4.1 THE LD. C OUNSEL OF THE ASSESSEE SUBMITTED THAT SUPPORTING INVOICES FOR ALL THE EXPENDITURE HAVE BEEN PROVIDED TO THE AO AND IN MOST OF THE CASES EITHER THE VEHICLE NO. OR VEHICLE MAKE HAS BEEN MENTIONED ON THE BILL. 4.2 THE LD. DR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) UPHOLDING THE DISALLOWANCE OF RS.59,192/ - MADE BY THE AO ON THE REASON THAT THE ASSESSEE HAS FAILED TO PROVIDE THE DETAILS OF EXPENDITURE RELATING TO EACH VEHICLE. 4.3 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON REC ORD, IT IS FOUND THAT THE DISALLOWANCE OF RS.59,192/ - MADE BY THE AO IS PURELY ON AD HOC BASIS WITHOUT ANY SUPPORTING MATERIAL. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) ON THE ABOVE ADDITION IS SET ASIDE AND THE AO IS DIRECTED TO DELETE THE ADDITI ON OF RS.59,192/ - . ITA NO. 1261 /MUM/2013 3 5. THE THIRD GROUND RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF 50% OF ELECTRICITY EXPENSES OF RS.20,111/ - CLAIMED BY THE ASSESSEE. 5.1 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE VIDE LETTER DATED 23 .12. 2011 HAS EXPLAINED THAT THERE WERE TWO PREMISES C - 12, AND C - 13 AND THEY WERE BOTH ON DIFFERENT FLOOR OF THE SAME BUILDING. WHILE THE ASSESSEE WA S USING C - 12 PRE - DOMINANTLY FOR RESIDENCE, C - 13 HAS BEEN EXCLUSIVELY USED FOR THE OFFICE PURPOSE WHERE STAFF OF OVER SEVEN PEOPLE USED TO SEAT AND OPERATE S . I T WAS SUBMITTED THAT THE BILL OF BOTH THE PREMISES WERE SUBMITTED BEFORE THE AO AND THAT BILL OF C - 12 TOTAL TO RS.2,900/ - WHEREAS BILL OF C - 13 ACCOUNT FOR THE BALANCE AND IN SPITE OF THESE DETAILS BEING AVAILABLE, 50% OF THE EXPENSES HAVE BEEN DISALLOWED BY THE AO. 5.2 THE LD. DR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) UPHOLDING THE DISALLOWANCE OF 50% OF THE ELECTRICITY EXPENSES OF RS.20,111/ - ON THE REASON THAT THE RESIDENTIAL FLAT IS BEING USED BY THE ASSESS EE FOR THE PURPOSE FOR RESIDENCE AS WELL AS PROFESSIONAL ACTIVITIES. 5.3 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE AD HOC DISALLOWANCE OF 50% OF THE ELECTRICITY EXPENSES MADE BY THE AO AND UPHELD BY T HE LD. CIT(A) IS NOT BASED ON ANY MATERIAL EVIDENCE. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) ON THE ABOVE ADDITION IS SET ASIDE AND THE AO IS DIRECTED TO ALLOW THE ELECTRICITY EXPENSES OF RS.20,111/ - CLAIMED BY THE ASSESSEE. 6. THE FOURTH GROUND RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF 50% LAND LINE TELEPHONE EXPENSES AND 20% OF THE MOBILE TELEPHONE EXPENSES CLAIMED BY THE ASSESSEE. 6.1 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE TOTAL EXPENSES CLAIMED IS RS. 22,767/ - WHICH WORK S OUT TO ABOUT RS.950/ - PER MONTH PER PHONE. REMOVING THE SERVICE TAX ELEMENT OF 10.3% OUT OF THIS, THE US AGE BILL WORKS OUT TO RS.860/ - PER MONTH OUT OF WHICH RS.250/ - IS FIXED CHARGES, HENCE ACTUAL USAGE CHARGES IS ABOUT RS.610/ - PER M ONTH. IT IS STATED THAT THE ASSESSEE HAS SEVEN STAFF MEMBERS EMPLOYED WITH HER WHO HAVE TO DO THE ENTIRE COORDINATION WITH ALL EXTERNAL PARTIES. THE NUMBER OF CALLS DOES COMMENSURATE WITH THE SIZE OF OPERATION AND IN VIEW OF THIS THE DISALLOWANCE MADE BE D ELETED. ITA NO. 1261 /MUM/2013 4 6.2 THE LD. DR SU PPORTED THAT THE DISALLOWANCE MADE BY THE AO AND UPHELD BY THE LD. CIT(A) ON THE REASON THAT THE PERSONAL ELEMENT IN RESPECT OF USAGE OF LAND LINE A ND MOBILE TELEPHONE CANNOT BE RULED OUT 6.3 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE DISALLOWANCE MADE BY THE AO IS AN AD HOC BASIS WITHOUT ANY MATERIAL SUPPORT. IT IS ALSO FOUND THAT THE NUMBER OF CALLS DOES COMMENSURATE BROADLY WITH THE SIZE OF OPERATION OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) ON THE ABOVE TWO DISALLOWANCES ARE SET ASIDE AND THE AO IS DIRECTED TO ALLOW THE SAME. 7. THE FIFTH GROUND OF APPEAL RAISED BY THE ASSESSEE IS AGAINST THE INTEREST CHARGED BY THE AO U/S 234B AND 234C OF THE ACT. THE AO IS DIRECTED TO CHARGE INTEREST U/S 234B AND 234C AFTER GIVING APPEAL EFFECT AND ALSO AS PER THE PROVISIONS OF THE ACT. 8. IN THE RESULT, THE APPEAL ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COU RT 23 /0 9 /2016 SD/ - SD/ - (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 23 /0 9 /2016 A KV (ON TOUR) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI