Asst. Commissioner of Income Tax, Circle-1, Kurnool V. K N V Rajesekhar, Kurnool

ITA 1348/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7044 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 25-07-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 25-06-2018
• Court: TRIBUNAL

Judgement Text

ITA NOS 1348 AND CO 1 OF 2019 KNV RAJASEKHAR KURNOO L. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1348/HYD/2018 (ASSESSMENT YEAR: 2012-13) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 KURNOOL VS SHRI K.N.V. RAJASEKHAR KURNOOL PAN: AEDPK3140G (APPELLANT) (RESPONDENT) C.O. NO.01/HYD/2019 (ARISING OUT OF ITA NO.1348/HYD/2018 (ASSESSMENT YEAR: 2012-13) SRI K.N.V.RAJASEKHAR KURNOOL PAN: AEDPK3140G VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 KURNOOL (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M.H. NAIK, DR FOR ASSESSEE : SHRI G. SESHACHALAM O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS APPEAL IS FILED BY THE REVENUE, WHILE THE CROS S OBJECTION IS FILED BY THE ASSESSEE. BOTH ARE AGAINS T THE ORDER OF THE CIT (A) KURNOOL, DATED 10.04.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL IS RUNNING A HOSTEL IN THE NAME AND STYL E OF DATE OF HEARING: 25.07.2019 DATE OF PRONOUNCEMENT: 31.07.2019 ITA NOS 1348 AND CO 1 OF 2019 KNV RAJASEKHAR KURNOO L. PAGE 2 OF 5 MONTESSORI HOSTEL. HE FILED HIS E RETURN OF INC OME FOR THE A.Y 2012-13 ON 30.09.2012 ADMITTING A TOTAL INCOME OF RS.71,22,578/- AS INCOME FROM HOUSE PROPERTY AND ALSO FROM BUSINESS. DURING THE ASSESSMENT PROCEEDINGS U/S 1 43(3) OF THE ACT, PURSUANT TO SELECTION OF SCRUTINY UNDER CASS, THE AO CALLED FOR BOOKS OF ACCOUNT FOR VERIFICATION. THE AO RECOR DED THAT THE INFORMATION WAS FURNISHED BY THE ASSESSEE. THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.42,90,0 96/- IN RESPECT OF BUILDING BUT SINCE THE ASSET WAS NOT PUT TO USE, HE DISALLOWED THE CLAIM OF DEPRECIATION OF RS.42,90,09 6/-. THEREAFTER, HE OBSERVED THAT AN AMOUNT OF RS.12,02,806 WAS EXCE SS DEPRECIATION DEBITED TO THE P&L A/C, TOWARDS ITEMS OTHER THAN THE BUILDING AND HE DISALLOWED SUCH EXCESS CLAIM. FURTH ER, HE ALSO OBSERVED THAT THE ASSESSEE WAS ALSO NOT ABLE TO PRO DUCE CERTAIN BILLS BUT PREPARED SELF-MADE VOUCHERS FOR THE EXPEN DITURE TOWARDS GAS, GROCERIES, SOAP AND OTHER CONSUMABLE PRODUCTS, TAVERA CAR MAINTENANCE ETC., THE AO THEREFORE, DISALLOWED 10% OF SUCH EXPENDITURE AND ACCORDINGLY BROUGHT IT TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) STATING THAT ALL THE RELEVANT INFORMATION H AS BEEN FILED BEFORE THE AO BUT HE HAS NOT CONSIDERED THE SAME. A S REGARDS DEPRECIATION ON BUILDING, IT WAS SUBMITTED THAT THE BUILDING WAS ALREADY PUT TO USE IN VARIOUS YEARS AND A COMPARATI VE STATEMENT REGARDING THE STRENGTH OF THE HOSTEL STUDENTS, PLIN TH AREA OF THE BUILDING WHICH WAS PUT TO USE IN THE VARIOUS YEARS IN THE PAST AND YEAR-WISE MUNICIPAL TAXES PAID BASED ON THE PLINTH AREA WAS ALSO ENCLOSED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE S CASE WAS SUBJECT TO SCRUTINY BY VARIOUS AOS IN VARIOUS A.YS AND ITA NOS 1348 AND CO 1 OF 2019 KNV RAJASEKHAR KURNOO L. PAGE 3 OF 5 DEPRECIATION ON BUILDING AND ALL OTHER ITEMS WAS AL SO ALLOWED. WITH REGARD TO THE ORIGINAL BILLS/VOUCHERS, IT WAS SUBMITTED THAT ALL THE BILLS WERE PRODUCED BEFORE THE AO. AFTER CO NSIDERING THE CONTENTION OF THE ASSESSEE, THE CIT (A) OBSERVED TH AT THE EXPENDITURE OF RS.3,54,00,965/- ON THE CONSTRUCTION OF THE BUILDING WAS INCURRED BEFORE 30.09.2011 AND THAT A SUM OF RS.1,50,00,000/- WAS INCURRED BEFORE 31.03.2012 AND THAT ALL THE EXPENDITURE IS OUT OF THE BANK A/C (PUNJAB NATIONAL BANK). HE ALSO OBSERVED THAT THE ASSESSEE HAS PROVIDED THE FA CILITIES TO THE STUDENTS AND THEREFORE IT WAS ACCEPTABLE THAT ALL T HE BUILDINGS WERE PUT TO USE DURING THE RELEVANT PREVIOUS YEAR, PARTICULARLY IN VIEW OF THE FACT THAT THE PANCHAYAT TAXES WERE PAID COMMENSURATE WITH THE PLINTH AREA (INCLUDING THE NE WLY CONSTRUCTED AREA) DULY LEVIED BY THE OFFICIALS OF T HE PANCHAYAT BOARD. HE ALSO OBSERVED THAT THERE IS ALSO AN INCRE ASE IN THE ELECTRICITY CHARGES INCURRED. AS REGARDS THE DEPRE CIATION ON OTHER ITEMS, HE OBSERVED THAT THEY WERE DULY ACCEPTED AND ALLOWED IN THE EARLIER YEARS. AS REGARDS THE VOUCHERS ALSO, HE ACCEPTED THE ASSESSEES CONTENTION THAT ALL THE VOUCHERS WERE FI LED BEFORE THE AO BUT THE AO HAS FAILED TO NOTICE THE SAME AND MIS TOOK THAT THE ORIGINAL VOUCHERS WERE NOT FILED. THEREFORE, HE GRA NTED RELIEF TO THE ASSESSEE. AGAINST THE RELIEF GRANTED BY THE CIT (A) , THE REVENUE IS IN APPEAL BEFORE US, WHILE THE ASSESSEE HAS FILED T HE CROSS OBJECTION BEFORE US SUPPORTING THE ORDERS OF THE CI T (A). 4. THE LEARNED COUNSEL FOR THE ASSESSEE PRODUCED TH E COPIES OF THE ORIGINAL VOUCHERS BEFORE US AND SUBMI TTED THAT ALL THESE WERE FILED BEFORE THE AO. WE HAVE GONE THROUG H THE SAME AND FOUND THAT THEY ARE ALL ORIGINAL VOUCHERS. AS R EGARDS ITA NOS 1348 AND CO 1 OF 2019 KNV RAJASEKHAR KURNOO L. PAGE 4 OF 5 DEPRECIATION ON THE BUILDING, THE CIT (A) HAS BROUG HT OUT THAT THE ASSESSEE HAS PAID PANCHAYAT TAXES COMMENSURATE WITH THE PLINTH AREA AND WHICH INCLUDED THE NEWLY CONSTRUCTED AREA ALSO AND ALSO THAT THERE IS AN INCREASE IN THE ELECTRICITY CHARGE S EVIDENCING THAT THE NEWLY CONSTRUCTED AREA ALSO WAS PUT TO USE. THE REVENUE HAS NOT BEEN ABLE TO REBUT THESE FINDINGS OF THE CIT (A ) WITH ANY EVIDENCE TO THE CONTRARY. SIMILARLY, WITH REGARD TO THE DEPRECIATION ON ITEMS OTHER THAN THE BUILDINGS, THE AO HAS NOT G IVEN ANY REASON FOR DISALLOWANCE OF SUCH CLAIM OF DEPRECIATI ON AND WITHOUT PROPER REASONING, IT IS NOT UNDERSTANDABLE AS TO HO W HE HAS HELD THAT THE ASSESSEE IS ELIGIBLE FOR CERTAIN CLAIM OF DEPRECIATION AND WHETHER THE DIFFERENCE IS ON ACCOUNT OF RATE OF DEP RECIATION OR ALLOWABILITY OF THE EXPENDITURE IS NOT KNOWN. SINCE THE AO HAS NOT GIVEN ANY BASIS FOR DISALLOWANCE OF PART OF THE DEP RECIATION ON ITEMS OTHER THAN BUILDING AND THE CIT (A) HAS GIVEN A FINDING THAT THE AO HAS ADOPTED A DIFFERENT RATE OF DEPRECIATION FOR THE ASSETS FROM THE RATE WHICH WAS DULY ACCEPTED AND ALLOWED I N THE EARLIER YEARS, WE DO NOT SEE ANY REASON TO INTERFERE WITH T HE ORDER OF THE CIT (A). 5. IN THE RESULT, BOTH THE REVENUES APPEAL AND THE C.O FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST JULY, 2019. VINODAN/SPS ITA NOS 1348 AND CO 1 OF 2019 KNV RAJASEKHAR KURNOO L. PAGE 5 OF 5 COPY TO: 1 ASSTT. CIT, CIRCLE 1, 2 ND FLOOR, AAYAKAR BHAVAN, NR PET, OPP: CHILDRENS PARK, KURNOOL 518001 2 SHRI K.V.N.RAJASEKHAR, PROP. MONTESSORI HOSTELS, 46/1/L-4, CAMP KURNOOL 3 CIT (A)-KURNOOL 4 PR. CIT - KURNOOL 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER