ACIT, UDAIPUR V. M/s. Padmini Builders Pvt. Ltd., UDAIPUR

ITA 147/JODH/2013

• Counselvise Citation: 14723314 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 147 / JU/ 20 1 3 ASSESSMENT YEAR: 200 8 - 0 9 THE A. C.I.T VS. M/S PADMINI BUILDERS PVT. LTD CIRCLE 2 , UDAIPUR 47, PANCHWATI, UDAIPUR PAN NO. AAACO 6932 G (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI AMIT KOTHARI DEPARTMENT B Y : SHRI JAI SINGH , DR DATE OF H EARING : 27 . 0 8 .201 4 DATE OF PRONOUNCEMENT : 15 . 0 9 . 201 4 ORDER PER HARI OM MARATHA , J .M. TH IS APPEAL BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE CIT (A) , UDAIPUR DATED 06 . 1 2 .20 1 2 PERTAINING TO A.Y 20 0 8 - 0 9 . 2 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN TH E PRESENT CIRCUMSTANCES OF THE CASE, THE ID CIT(A) HAS ERRED IN: - 1) DELETING DISALLOWANCE OF RS. 2,40,000/ - OUT OF SALES PROMOTION EXPENSES MADE BY THE AO IGNORING THE FACT THAT THE ASSESSEE HAS NOT ESTABLISHED SUCH EXPENSES INCURRED FOR THE PURPOSE OF BUSI NESS. 2) DELETING DISALLOWANCES OF RS. 1,79,892/ - MADE BY THE AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES IGNORING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVED THAT THESE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. 3) DIRECTING TO CON SIDER RENTAL INCOME OF RS. 48,42,859/ - FOR COMPUTING NOTIONAL CARRY FORWARD LOSSES AND DEPRECIATION FOR THE PURPOSE OF DEDUCTION U/S 80IB OF THE I.T. ACT. (A) IGNORING THE FACT THAT LEASE RENTAL INCOME IS PURELY RENTAL INCOME FOR GIVING PREMISES ON RENT AND ALL THE EQUIPMENTS ARE INSTALLED BY LESSEE & NOT BY THE LESSER. (B) IGNORING THE SPECIFIC PROVISIONS U/S 80IB(13) R.W.S 80IA(5) OF THE I.T. ACT, WHEREIN IT HAS BEEN SPECIFICALLY PROVIDED THAT PROFIT AND GAIN OF ELIGIBLE BUSINESS HAS TO BE COMPUTED AS IF SUCH ELIGIBLE BUSI N ESS WAS THE ONLY SOURCE OF INCOME AND THEREBY LOSSES OF PRECEDING YEARS OF ONLY HOTEL BUSINESS HAS BEEN RIGHTLY CONSIDERED BY THE AO BY EXCLUDING THE RENTAL INCOME. 3 (C) DIRECTING NOT TO CONSIDER EVEN OTHER INCOME OF RS. 3,49,821/ - OUT OF RS. 10 ,54,408/ - FOR COMPUTING 'PROFIT AND GAIN' DERIVED FROM ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S 80IB OF THE I.T. ACT. 2.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE FACTS OF GROUND NO. 1 AND 2 [CONNECTED GROUNDS] ARE THAT THE ASSESSEE COMPANY RUNS A HOTEL IN THE NAME AND STYLE OF HOTEL INDIA INTERNATIONAL. THE ASSESSEE HAS DISCLOSED INCOME FROM THIS HOTEL AS WELL AS RENTAL INCOME AND INCOME FROM OTHER SOURCES. THE ASSESSEE HAS SHOWN SALE S PROMOTION EXPENSES OF RS. 2,44,076/ - . OUT OF THIS TOTAL EXPENDITURE , A SUM OF RS. 2,40,000/ - IS INCURRED FOR PAYMENT MADE TO FATEH PRAKASH HOTEL TO HOST A LUNCH OF 100 PERSONS FOR ORGANIZING A MEETING WITH TRAVEL AGENTS AND TOUR OPERATORS, AS PER THE MU TUALLY TAKEN DECISION AMONGST THE MEMBERS. THE A.O HAS FOUND THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO ESTABLISH THAT THIS EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ACCORDINGLY, THE A.O HAS ADDED THIS AMOUNT OF RS. 2,40,000/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE. LIKEWISE, PERUSAL OF THE FOREIGN TRAVEL EXPENSES ACCOUNT REVEALED EXPENDITURE OF RS. 1,79,892/ - ON 4 ACCOUNT OF TOUR TO CHINA AND DUBAI. THE ASSESSEE EXPLAINED THAT THIS TOUR WAS IN CONNECTION WITH ATT RACTING TOURISTS. SINCE THIS CLAIM WAS NOT PROVED, THE A.O HAS DISALLOWED AND HAS ADDED IT TO ASSESSEES INCOME OF THE YEAR. 2.2 HOWEVER, IN FIRST APPEAL, THE ASSESSEE COMPANY WAS SUCCESSFUL IN GETTING BOTH THE ABOVE ADDITIONS DELETED. NOW THE REVENUE H AS CHALLENGED THIS DELETION. 2.3 AFTER HEARING BOTH THE SIDES, WE HAVE FOUND THAT THE ASSESSEE HAD PRODUCED A COPY OF THE BILL ISSUED BY THE FATEH PRAKASH HOTEL TO ESTABLISH THAT A LUNCH FOR 100 PERSONS WAS HOSTED. THE PAYMENT TO THIS HOTEL WAS MADE THRO UGH ACCOUNT PAYEE CHEQUE. THE A.O HAS NOT CONDUCTED ANY ENQUIRY FROM FATEH PRAKASH HOTEL. ONLY NON - PRODUCTION OF PHOTOGRAPHS OF THE LUNCHEON WOULD NOT DEFEAT THIS CLAIM OF THE ASSESSEE. RATHER, FROM THESE EVIDENCE S , THE EXPENDITURE HAVING BEEN WHOLLY AN D EXCLUSIVELY MADE FOR THE BUSINESS PURPOSES STANDS EXPLAINED FOR WANT OF ANY CONTRARY EVIDENCE BEING IN THE POSITION OF THE A.O AND BROUGHT ON RECORD. ACCORDINGLY, WE CONFIRM THE IMPUGNED DELETION. 5 2.4 LIKEWISE, THE ASSESSEE PRODUCED THE MINUTES OF THE B OARDS MEETING IN WHICH THE TOUR OF THE DIRECTOR WAS APPROVED FOR BUSINESS BENEFITS. THEREFORE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 1,79,892/ - AS WELL WHICH HAS BEEN INCURRED UNDER THE HEAD TOUR TO CHINA AND DUBAI. WE CONFIRM TH E IMPUGNED DELETION. ACCORDINGLY, GROUND NOS. 1 AND 2 OF REVENUES APPEAL ARE DISMISSED. 3. THE FACTS OF GROUND NO. 3 ARE THAT THE LD. CIT(A) HAS DIRECTED THE A.O TO CONSIDER THE RENTAL INCOME OF RS. 48,42,859/ - FOR COMPUTING NOTIONAL CARRY FORWARD LOSSE S AND DEPRECIATION FOR THE PURPOSE OF THE DEDUCTION U/S 80IB OF THE ACT. THE ASSESSEE HAS GIVEN ITS PREMISES ON LEASE AND HAS EARNED RENTAL INCOME. AS PER THE A.O, IN VIEW OF SECTION 80IB(13) R.W.S 80IA(5) OF THE ACT THIS RENTAL INCOME CANNOT BE TREATED AS ELIGIBLE FOR THIS DEDUCTION. HOWEVER, THE LD. CIT(A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE. 3.1 BEFORE US BOTH THE PARTIES HAVE REITERATED THEIR EARLIER ARGUMENTS. THE LD. A.R BROUGHT TO OUR NOTICE, AT THE VERY OUTSET OF OPENING OF THE ARGUMENTS ON THIS ISSUE THAT IT STANDS COVERED IN THE FAVOUR OF THE ASSESSEE BY THE JUDGMENT 6 OF THIS VERY BENCH RENDERED IN THE CASE OF CIT VS. NAHAR COLOUR & COATINGS LTD IN ITA NO. 288/JU/2014 A.Y. 2010 - 11 DATED 12.8.2014, A COPY OF WHICH HAS BEEN PLACED ON RECORD. TO THAT EXTENT, THE LD. D.R COULD NOT DISAGREE WITH THE LD. A.R, HOWEVER, HE HAS HEAVILY RELIED ON HIS GROUNDS OF APPEAL AS WELL AS THE ORDER OF THE A.O. 3.2 WE HAVE FOUND THAT THIS ISSUE, VERILY STANDS COVERED BY THE ABOVE ORDER OF THE JODHPUR BENCH DATE D 12.8.2014 . WE HAVE DECIDED SIMILAR ISSUE IN THE CASE OF M/S NAHAR COLOR AND COATINGS LTD [SUPRA] IN THE FAVOUR OF THE ASSESSEE. THEREFORE, BY RESPECTFULLY FOLLOWING THE ORDER, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS GROUND NO. 3 OF REVENUES APPEAL. 4. IN THE RESU LT, THE APPEAL OF THE REVENUE IN ITA NO. 147 /JU/201 3 FOR A.Y. 2008 - 09 STANDS DISMISSED. ORDER PRON OUNCED IN THE COURT ON 15 TH SEPTEMBER , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL M EM B ER DATED : 15 TH SEPTEMBER , 201 4 7 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR