DCIT - 19(3), MUMBAI V. Smt. MONISHA RAVI JAISINGH, MUMBAI

ITA 1472/MUM/2007

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9526 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 15-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MOHIT JAIN
• Keywords: Depreciation; Notional interest
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 1161/MUM/2007(A.Y. 2003-04) MONISHA R. JAISING, CHAND TERRACES, 20/21 B, ST. ANDREWS ROAD, BANDRA(W), MUMBAI - 400 05-. PAN : ADRPJ 4593R (APPELLANT) VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE 19(3), MUMBAI. (RESPONDENT) ITA NO.1472/MUM2007(A.Y. 2003-04) ADDL. COMMISSIONER OF INCOME TAX, RANGE 19(3), MUMBAI. (APPELLANT) VS. MONISHA R. JAISING, CHAND TERRACES, 20/21 B, ST. ANDREWS ROAD, BANDRA(W), MUMBAI - 400 05-. PAN : ADRPJ 4593R (RESPONDENT) ASSESSEE BY : SHRI YOGESH THAR REVENUE BY : SHRI G.MOHIT JAIN DATE OF HEARING : 26/11/2012 DATE OF PRONOUNCEMENT : 30 /11/2012 ORDER PER I.P.BANSAL, J.M THESE ARE CROSS APPEALS DIRECTED AGAINST ORDER PA SSED BY LD. CIT(A)-XIX, MUMBAI DATED 30/11/2006 FOR ASSESSMENT YEAR 2003-04 . THE GROUNDS OF APPEAL RAISED BY ASSESSEE AS WELL AS REVENUE ARE RE PRODUCED BELOW: ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 2 ASSESSEES GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONBLE COMMISSIONER OF INCOME-TAX (APPEALS)- XIX, HEREINAF TER REFERRED TO AS CIT(A), ERRED IN HOLDING THAT THE LICENSE FEES IN RESPECT O F COMPOSITE LETTING ACTIVITY CARRIED ON BY THE APPELLANT ARE CHARGEABLE TO TAX U NDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT INCOME FROM BUSINESS. 2 HE FURTHER ERRED IN RELYING UPON HIS ORDER NO. CI T(A)XIXIIT-136/05-06 DATED 10.08.05 FOR ASSESSMENT YEAR 2002-03 IN WHICH HE HA S MADE THE FOLLOWING INCORRECT STATEMENTS- A. IT IS CLEAR THAT PROVIDING OF THESE FACILITIES I SERVICES IS ONLY INCIDENTAL AND RELATIVELY INSIGNIFICANT TO THE USE OF TENEMENT S. B ... .LOOKING INTO THE LOCALITY WHERE THE PROPERTY IS SITUATED, PREVAILING RENT RATE, RENT RECEIVED AND AMENITIES GIVEN ALONGWITH THE HOU SE, IT IS QUITE OBVIOUS THAT THE INCOME BEING RECEIVED BY THE ASSESSEE FROM THE TENA NT IS ON ACCOUNT OF THE USE OF THE HOUSE. C CONSIDERATION RECEIVED BY THE ASSESSEE FOR USE OF AMENITIES, IF ANY AT ALL, IS ONLY A SMALL PORTION OF THE TOTAL LEASE RENT RECEIV ED. D THESE ITEMS HAVE NOT BEEN LET OUT AS SUCH. 3 HE FURTHER ERRED IN COMING TO A CONCLUSION ON THE BASIS OF CONTENTIONS WHICH WERE REJECTED BY THE SUPREME COURT IN THE CASE OF S ULTAN BROS V CIT (51 ITR 353). 4 THE APPELLANT PRAYS THAT THE LICENSE FEES IN RESP ECT OF COMPOSITE LETTING ACTIVITY CARRIED ON BY HER BE CHARGED TO TAX UNDER THE HEAD INCOME FROM BUSINESS. GROUND II: WITHOUT PREJUDICE TO GROUND I 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE RELEVANT LICENSE FEES ARE NOT CHAR GEABLE TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. 2 THE APPELLANT PRAYS THAT THE RELEVANT LICENSE FEE S BE CHARGED TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. GROUND ILL: WITHOUT PREJUDICE TO GROUNDS I AND II I ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT SINCE THE INCOME IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY NO DEPRECIATION IS ALLOWABLE IN RES PECT OF ASSETS OWNED BY THE APPELLANT AND USED FOR THE PURPOSE OF COMPOSITE LET TING ACTIVITY CARRIED ON BY HER. 2 THE APPELLANT PRAYS THAT THE DEPRECIATION ON BUIL DINGS, FURNITURE AND FITTINGS, EQUIPMENT AND MACHINERY BE ALLOWED TO HER. GROUND IV: NON-DEDUCTION OF INTEREST ON FUNDS BORRO WED FOR CONSTRUCTION ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 3 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE APPELLANT HAD NOT FURNISHED EVIDEN CE REGARDING UTILIZATION OF BORROWED FUNDS FOR THE PURPOSES OF CONSTRUCTION OF HOUSE PROPERTY AND THEREFORE HOLDING THAT THE APPELLANT IS NOT ENTITLED TO DEDUC TION OF INTEREST, OF RS 13,77,737, AS A DEDUCTION WHILE COMPUTING INCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 2. THE APPELLANT PRAYS THAT THE SUM OF RS 13,77,737 /- BEING INTEREST ON FUNDS BORROWED FOR THE PURPOSES OF CONSTRUCTION OF THE HO USE PROPERTIES WHICH HAVE BEEN LET OUT BE ALLOWED AS A DEDUCTION WHILE COMPUT ING HER INCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. GROUND V: DISALLOWANCE OF 10% OF CAR EXPENSES AND T ELEPHONE EXPENSES AS BEING PERSONAL IN NATURE 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT 10% OF CAR EXPENSES AMOUNTING TO RS 22,990 AND 10% OF MOTOR CAR EXPENSES AMOUNTING TO RS 1,019 AS BEING PERSONA L IN NATURE AND THEREFORE NOT ALLOWABLE AS DEDUCTION. 2. THE APPELLANT PRAYS THAT THE SUM OF RS 22,990 OU T OF CAR EXPENSES AND RS 1,019 OUT OF TELEPHONE EXPENSES BE HELD TO HAVE BEE N INCURRED FOR THE PURPOSES OF THE BUSINESS OF THE APPELLANT AND BE ALLOWED AS A D EDUCTION WHILE COMPUTING THE INCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FRO M BUSINESS. GROUND VI: LEVY OF INTEREST UNDER SECTION 234B & 2 34C : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO CHARGE INTEREST ACCORDING TO LAW INSTEAD OF DIRECTING HIM NOT TO LEVY. 2 THE APPELLANT DENIES HER LIABILITY TO PAY INTERES T AND PRAYS THAT THE ASSESSING OFFICER BE DIRECTED NOT TO LEVY INTEREST UNDER SECT ION 234B AND SECTION 234C OF THE ACT. GROUND VII: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN HOLDING THAT NO APPEAL LIES AGAINST INITIATION OF P ENALTY PROCEEDINGS. GROUND VIII: THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER AND/OR AMEND THE ABOVE GROUNDS AT THE TIME OF HEARING. ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 4 REVENUES GROUNDS OF APPEAL:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RELYING UPON THE DECISION OF THE HONB LE BOMBAY HIGH COURT IN THE CASE OF J.K. INVESTOR (BOMBAY) LTD (2001) 248 ITR 7 23 AND DELETING THE NOTIONAL INTEREST ON INTEREST FREE DEPOSITS AND ADVANCE RENT RECEIVED BY THE ASSESSEE TO THE ALV OF THE PROPERTY, IGNORING THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF BHAGWAN DASS JAM UQI (1981) 128 ITR 315 ON SIMILAR ISSUE RELIED UPON BY THE ASSESSING OFFICER. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL FILED BY THE ASSESSEE STATING THAT THE ASSESSING OFFICER HAS PROCEEDED TO INCLUDE NOTIONAL INTEREST U/S 231(1)(B) OF THE INCOME TAX ACT, 1961 WHEREAS THE FACT IS THAT THE ASSESSING OF FICER HAD (COMPUTED THE ALV U/S 23(1)(A) OF THE INCOME TAX ACT. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF 10% OUT OF TRAVEL ING EXPENSES STATING THE EXPENSES ARE NOT EXCESSIVE, IGNORING THE FINDING OF THE ASSESSING OFFICER. THAT PERSONAL ELEMENT IS INVOLVED IN THE EXPENSES. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW D EDUCTION U/S 8OHHC, IGNORING THE FINDING OF THE ASSESSING OFFICER THAT THE ASSES SEE FAILED TO EXPLAIN SATISFACTORILY REASON FOR NOT FILING AUDIT REPORT A LONG WITH THE RETURN AND REJECTING THE CLAIM BY RELYING ON BOMBAY HIGH COURT DECISION IN THE CASE OF SHIVANAND ELECTRONICS (201 ITR 63). (5) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT ( A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED 2. SO FAR AS IT RELATE TO GROUND NO.1 TO 3 OF THE A SSESSEES APPEAL, THE ISSUES IS STATED TO BE COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN RESPECT OF IMMEDIATE PREC EDING ASSESSMENT YEAR 2002-03, COPY OF THE SAME WAS FILED BEFORE US, WHI CH IS ORDER DATED 23/7/2008 IN ITA NO.7511/MUM/2005. THE ISSUE WAS D ISPOSED BY THE TRIBUNAL WITH THE FOLLOWING OBSERVATION: 2. ASSESSEE HAS RAISED FOUR GROUNDS. GROUND NO.1 PE RTAINS TO TREATMENT OF THE INCOME ARISING OUT OF LETTING ACTIVITY CARRIED ON BY THE ASSESSEE CHARGED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AGAINST ASSES SEES CLAIM OF INCOME FROM BUSINESS. THE ASSESSEE RECEIVED RENTAL INCOME AND O FFERED THE SAME AS INCOME ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 5 FROM BUSINESS AND FURTHER CLAIMED DEPRECIATION AND OTHER EXPENSES. THE ASSESSING OFFICER ANALYSED THE NATURE OF RECEIPT AN D BROUGHT TO TAX UNDER THE HEAD HOUSE PROPERTY INCOME. THE LEARNED CIT(A) EX AMINED THE ISSUE IN DETAIL, ANALYSED THE FACTS AND CASE LAWS AND UPHELD THE ACT ION OF THE ASSESSING OFFICER IN ASSESSING THE RENT RECEIVED FROM PROPERTIES UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. 3. THE LEARNED A.R. FAIRLY CONCEDED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF SHAMBHU INVESTMENT P. LTD. VS. CIT 263 ITR 143 (SC). CONSEQ UENTLY THIS GROUND OF THE ASSESSEE IS REJECTED. 3. AFTER HEARING BOTH THE PARTIES, RESPECTFULLY FOL LOWING THE AFOREMENTIONED DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CAS E FOR IMMEDIATE PRECEDING ASSESSMENT YEAR, WE DECIDE THESE GROUNDS AGAINST TH E ASSESSEE AND THESE GROUNDS ARE DISMISSED. 4. APROPOS GROUND NO.4 & 5, LD. A.R DID NOT PRESS T HESE GROUNDS, HENCE, THEY ARE DISMISSED BEING NOT PRESSED. 5. SO FAR AS IT RELATES TO GROUND NO.6, IT WAS SUBM ITTED BY LD. A.R THAT THIS IS CONSEQUENTIAL IN NATURE AS NO ARGUMENT REG ARDING EXCESSIVENESS OF THE INTEREST OR NON-LEVABILITY OF INTEREST UNDER SECTIO N 234B & 23C WAS SUBMITTED, THEREFORE, THIS GROUND IS ALSO DISMISSED. 6. SO FAR AS IT RELATES TO GROUND NO.7, IT WAS SUBM ITTED BY LD. A.R THAT THE SAME IS PREMATURE, HENCE, GROUND NO.7 IS ALSO DISMI SSED BEING PREMATURE. 7. COMING TO DEPARTMENTAL APPEAL THE DEPARTMENT HA S FILED REVISED GROUND OF APPEAL, WHICH HAVE BEEN REPRODUCED ABOVE. GROUND NO.1 & 2 IS REGARDING ADDITION OF NOTIONAL INTEREST AND THIS G ROUND IS STATED TO BE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y 2004-05 VIDE ORDER DATED 28/3/2012 IN ITA NO.36 62/MUM/2011, COPY OF THE SAME WAS PLACED ON OUR RECORD AND ALSO GIVEN TO LD. D.R. RELEVANT OBSERVATIONS OF THE TRIBUNAL WHILE DELETING THE ADD ITION ARE AS UNDER: ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 6 5.4 HERE IN THIS CASE, THE FACTS ARE THAT THE APPE LLANT HAS SHOWN THE ACTUAL RENT RECEIVED WHICH WAS FAR MORE THAN THE MU NICIPAL RATABLE VALUE, WHICH HAS NOT BEEN DISPUTED EITHER BY THE ASSESSING OFFICER OR BY THE CIT(APPEALS). AFTER PERUSING THE DECISION OF THE I TAT MUMBAI BENCH IN THE CASE OF DCIT VS. RECLAMATION REALTY INDIA PVT. (SUPRA), IT IS SEEN THAT THE BENCH AFTER CONSIDERING THE CATENA OF CASE LAWS AND AFTER ANALYZING THE PROVISIONS OF SECTION 23(1)(A) AND 23(1)(B) AND ALSO THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF J.K. INVESTORS (SUPRA) AND ANOTHER JUDGMENT IN THE CASE OF M.V. SONAWALA VS. CIT REPORTED IN 177 ITR 246 HAVE COME TO THE CONCLUSION THAT THE JUDGMENT OF T HIRD MEMBER DECISION IN THE CASE OF ITO VS. BAKER TECHNICAL SERVICES (P) LTD. (SUPRA) CANNOT BE APPLIED BEING CONTRARY TO THE DECISION OF HON'BLE BOMBAY HIGH COURT AND THE SAME CANNOT BE FOLLOWED. THE RELEVAN T FINDING OF THE HON'BLE ITAT ARE BEING REPRODUCED HERE UNDER :- 23. AS FAR AS DECISIONS RELIED UPON BY THE LEARN ED D.R. IN THE CASE OF BAKER TECHNICAL SERVICES (P) LTD. (SUPRA), WE FIND THAT THE SAME IS BASED ON THE DECISION OF THE ITAT MUMBAI BE NCH IN THE CASE OF ITO VS. MAKRUPA CHEMICALS (P) LTD. 108 ITD 95 (M UMBAI). IN THE CASE OF MAKRUPA CHEMICALS, IN PARA-14 OF THE DECISI ON IT HAS BEEN CLEARLY HELD THAT RATEABLE VALUE, IF CORRECTLY DETE RMINED UNDER THE MUNICIPAL LAWS CAN BE TAKEN AS ALV U/S.23(1)(A) OF THE ACT AND IN THIS REGARD THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF SHEILA KAUSHISH(SUPRA) HAS BEEN FOLLOWED. IT HAS F URTHER BEEN OBSERVED THAT THE RATEABLE VALUE IS NOT BINDING ON THE AO, IF THE AO CAN SHOW THAT RATEABLE VALUE UNDER THE MUNICIPAL LA W DOES NOT REPRESENT THE CORRECT FAIR RENT. IN COMING TO THE ABOVE CONCLUSION, THE BENCH HAS FOLLOWED THE DECISION OF THE PATNA HIGH C OURT IN THE CASE OF KASHI PRASAD KATARVKA VS. CIT 101 ITR 810 (PATNA ). WE FIND THAT THE BOMBAY HIGH COURT WHICH IS THE JURISDICTIONAL H IGH COURT HAS HELD THAT THE RATEABLE VALUE UNDER THE MUNICIPAL LA W HAS TO BE ADOPTED AS ANNUAL VALUE U/S.23(1)(A) OF THE ACT AND THEREFORE THE DECISION IN THE CASE F MAKRUPA CHEMICALS (SUPRA) TO THE CONTRARY CANNOT BE FOLLOWED. FURTHER IN PARA-13 OF ITS DECI SION IN THE CASE OF MAKRUPA CHEMICALS, THE TRIBUNAL HAS VERY CATEGORICA LLY HELD THAT IF RATABLE VALUE IS LESS THAN THE STANDARD RENT (WHERE THE PROPERTY IS SUBJECT TO RENT CONTROL LAWS) THEN ONLY STANDARD RE NT HAS TO BE TAKEN. IN COMING TO THE ABOVE CONCLUSION THE TRIBUNAL HAS FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F DEWAN DAULAT RAI KAPOOR (SUPRA). THUS THE DECISION IN THE CASE OF BAKER TECHNICAL SERVICES (P) LTD. (SUPRA) BEING CONTRARY TO THE DEC ISION OF THE HONBLE BOMBAY HIGH COURT IN OUR VIEW CANNOT BE FOLLOWED. 24. THE DECISION RELIED UPON BY THE LEARNED D.R. IN THE CASE OF FIZZ DRINKS LTD.(SUPRA), ARE DISTINGUISHABLE ON FAC TS. THE FACTS IN THAT CASE WERE THAT THE AGREED RENT WAS RE.1/- PER MONTH AND INTEREST FREE SECURITY DEPOSIT OF RS.1,62,36,000/- WAS TAKEN BY THE OWNER. IT WAS THIS FACTOR WHICH WEIGHED IN THE MIND OF THE TR IBUNAL AS IS EVIDENT FROM THE OBSERVATIONS IN PARA-8 OF ITS ORDE R WHERE THEY HAVE ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 7 HELD THAT ANY FAIR JUDICIAL ADMINISTRATION WOULD NO T ALLOW SUCH THINGS TO HAPPEN. THE DECISION IN THE CASE OF TIVOLI INVE STMENT & TRADING CO. (P) LTD. (SUPRA) IS AGAIN DISTINGUISHABLE BECAU SE IT WAS A CASE WHERE THERE WAS NO RENT AND ONLY A HUGE INTEREST FR EE SECURITY DEPOSIT WAS TAKEN BY THE OWNER. 25. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT THE ANNUAL VALUE (ALSO REFERRED TO AS MUNICIPAL VALUATION/ RATEABLE VALUE) ADOPTED BY THE MUNICIPAL AUTHORITIES IN RESPECT OF THE PROPERT Y AT RS.27,50,835 SHOULD BE THE DETERMINING FACTOR FOR APPLYING THE P ROVISIONS OF SEC.23(1)(A) OF THE ACT. SINCE THE RENT RECEIVED B Y THE ASSESSEE WAS MORE THAN THE SUM FOR WHICH THE PROPERTY MIGHT REAS ONABLY BE EXPECTED TO LET FROM YEAR TO YEAR, THE ACTUAL RENT RECEIVED SHOULD BE THE ANNUAL VALUE OF THE PROPERTY U/S.23(1)(B) OF TH E ACT. NOTIONAL INTEREST ON INTEREST FREE SECURITY DEPOSIT/RENT REC EIVED IN ADVANCE SHOULD NOT BE ADDED TO THE SAME IN VIEW OF THE DECI SION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF J.K.INVEST ORS (BOMBAY) LTD. (SUPRA). WE HOLD ACCORDINGLY. THE APPEAL OF T HE REVENUE IS DISMISSED. 5.5 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH, WE CONFIRM THE ORDER OF THE CIT(APPEALS) DELETING THE NOTIONAL INT EREST OF `.24,30,000/- AS HAS BEEN ADDED IN THE ANNUAL LETTING VALUE BY THE A SSESSING OFFICER. 8. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, AS IT IS NOT DISPUTED BY THE REVENUE THAT ACTUAL RENT RECEIVED BY THE ASSESSEE IS FAR MORE THAN MUNICIPAL RATABLE VALUE, WE DISMISS GROUND NO .1 & 2 FILED BY THE REVENUE. 9. NOW COMING TO GROUND NO.3 OF REVENUES APPEAL, T HE AO NOTED THAT ASSESSEE HAD SHOWN TRAVELING EXPENSES TO THE TUNE O F RS.9,45,977/-. FOR THE REASON THAT USER OF THESE EXPENDITURE FOR PERSONAL PURPOSES CANNOT BE RULED OUT, THEREFORE, 10% OF THE TOTAL SUM I.E. A SUM OF RS.94,598/- WAS DISALLOWED. LD. CIT(A) DELETED THE DISALLOWANCE MADE BY AO BY A CCEPTING THE CONTENTION OF THE ASSESSEE THAT NO PERSONAL ELEMENT IS INVOLVED IN TRAVELING EXPENSES. THE ASSESSEE IS MAINTAINING DETAILS OF EXPENSES INCURRE D. THE DISALLOWANCE IS MADE ON THE SURMISES OF PERSONAL ELEMENT AND CONSID ERING THE TURNOVER OF THE ASSESSEE AND ALSO THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE THE ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 8 AMOUNT EXPENDED BY THE ASSESSEE ON TRAVELING IS NOT EXCESSIVE. IT IS AGAINST THESE FINDINGS OF LD. CIT(A) THE REVENUE HAS RAIS ED GROUND NO.3. 10. WE HAVE HEARD BOTH PARTIES ON THIS ISSUES AND I N THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD BY THE REVENUE AGAINST THE FINDINGS OF LD. CIT(A), WE DECLINE TO INTERFERE AND THIS GROUND OF THE REVE NUE IS DISMISSED. 11. NOW COMING TO GROUND NO.4 OF REVENUES APPEAL, THE ISSUE IS THAT ASSESSEE DID NOT CLAIM DEDUCTION UNDER SECTION 80 H HC IN THE RETURN OF INCOME. LATER ON VIDE LETTER DATED 8/12/2005 THE C LAIM WAS MADE BY FILING AUDIT REPORT UNDER SECTION 80 HHC. THE AO DID NOT ALLOW THE CLAIM OF THE ASSESSEE ON THE GROUND THAT AUDIT REPORT WAS REQUI RED TO BE FILED ALONG WITH THE RETURN OF INCOME. THE CLAIM OF THE ASSESSEE HA S BEEN ACCEPTED BY LD. CIT(A) ON THE BASIS OF LEGAL POSITION THAT SUBMISSI ON OF THE AUDIT REPORT ALONG WITH RETURN IS DIRECTORY IN NATURE AND NOT MANDATO RY. AS THE ASSESSEE HAS FULFILLED ALL OTHER CONDITIONS FOR CLAIMING DEDUCTI ON, THE DEDUCTION CANNOT BE DENIED TO THE ASSESSEE. 12. LD. D.R RELIED UPON THE ORDER OF AO, AS AGAINST THAT LD. AR RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. SHIVAND ELECTRONICS (201 ITR 63), COPY WAS FILED BEFORE US AND ALSO COPY WAS GIVEN TO LD. D.R, WHERE IN RESPECT OF DEDUCTION UNDER SECTI ON 80J(6) IT WAS HELD THAT THE REQUIREMENT OF FILING THE REPORT ALONG WITH R ETURN IS DIRECTORY AND IF THE ASSESSEE SUBMITS SUCH REPORT EVEN AFTER FILING THE RETURN BUT BEFORE COMPLETION OF THE ASSESSMENT, THE ITO MAY ACCEPT THE SAME IF H E HAS SPECIFIED THAT THERE WAS SUFFICIENT CAUSE FOR NON-FILING OF THE SAME AL ONG WITH RETURN. 13. IN VIEW OF THE SITUATION, AFTER HEARING BOTH TH E PARTIES, CONSIDERING THE FACT THAT AUDIT REPORT WAS FILED BY THE ASSESEE BE FORE COMPLETION OF THE ASSESSMENT, WE DECLINE TO INTERFERE IN THE IMPUGNED RELIED GRANTED BY THE LD. CIT(A) TO THE ASSESSEE. THIS GROUND OF THE REVENUE IS DISMISSED. ITA NO. 1161&1472/MUM/2007(A.Y. 2003-04) 9 14. NO OTHER GROUND WAS EITHER ARGUED BY THE REVENU E OR BY THE ASSESSEE. 15. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL BY THE ASSESSEE AS WELL AS BY THE REVENUE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF NOV. 2012 SD/- SD/- (SANJAY ARORA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH NOV. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R B BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.