JAIHIND EXPORTS P. LTD, MUMBAI V. DCIT CIR 9(2), MUMBAI

ITA 1519/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79011 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 26-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIYA
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Business income; Additional evidence

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL I, BENC H MUMBAI .. , . . , !' # BEFORE SHRI H.L.KARWA, PRESIDENT & SHRI B.R.BASKARA N, AM ./ ITA NO.1519/MUM/2011 ( $ $ $ $ / ASSESSMENT YEAR :2007-08) JAIHIND EXPORTS PVT. LTD., 11, VEENA BEENA, GURU NANAK ROAD, BANDRA (W), MUBAI- 400 050 VS. DCIT, CIRCLE 9(2), MUMBAI % !' ./ &' ./ PAN/GIR NO. : AAACJ 9894 L ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) +, - -- - . . . . ! !! ! /ASSESSEE BY : MR.M. SUBRAMANIAN & - -- - . . . . ! !! ! /REVENUE BY : MR. DEEPAK SUTARIYA - ,/' / DATE OF HEARING : 26 TH MAY, 2014 01$ - ,/' / DATE OF PRONOUNCEMENT : 28 TH MAY, 2014 #!2 #!2 #!2 #!2 / O R D E R PER B.R.BASKARAN (A.M.) : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 13-12-2010 PASSED BY LD CIT(A)-20, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2007-08. 2 . THE ASSESSEE HAS FILED THIS APPEAL IN RESPECT OF THE FOLLOWING ISSUES: I) DISALLOWANCE MADE U/S.14A R.W.RULE 8D RS.28,89 2/-; AND II) DISALLOWANCE OF REPAIRS INCURRED ON A FLAT RS. 13,78,485/-. 3 . AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE A SSESSEE DID NOT PRESS THE GROUND RELATING TO THE DISALLOWANCE U/S.1 4 R.W.RULE 8D. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS NOT PR ESSED. ITA NO.1519 /11 2 4. THE FACTS RELATING TO THE REMAINING ISSUE ARE STAT ED IN BRIEF:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A O NOTICED THAT THE REPAIRS EXPENSES CLAIMED BY THE ASSESSEE DURING THE YEAR WERE HIGHER THAT THAT WAS CLAIMED IN THE IMMEDIATELY PRE CEDING YEAR. ON MAKING FURTHER ENQUIRY, IT WAS NOTICED THAT THE ASS ESSEE HAS INCURRED A SUM OF RS.13,78,485/- AS REPAIRS UNDER THE HEAD SW ATI REPAIRS. THE AO SOUGHT EXPLANATION FROM THE ASSESSEE IN THIS REGARD . THE ASSESSEE SUBMITTED THAT IT HAD PURCHASED A FLAT IN THE YEAR 1999 AND IT WAS LET OUT THEREAFTER. THE RENT PAID BY THE TENANTS WAS DECLAR ED IN ITS RETURN OF INCOME IN THE EARLIER YEARS. IT WAS FURTHER SUBMITT ED THAT THE FLAT WAS VACATED BY THE TENANT SUBSEQUENTLY AND AT THAT POIN T OF TIME, IT WAS ASCERTAINED THAT THE FLAT NEEDED REPAIRS TO MAKE IT USABLE. ACCORDINGLY, IN ORDER TO PRESERVE THE EXISTING ASSET, IT WAS SUBMIT TED THAT THE ASSESSEE INCURRED EXPENSES ON REPAIRS AND MAINTENANCE. ACCOR DINGLY, IT WAS SUBMITTED THAT IT WAS A CURRENT REPAIR ALLOWABLE AS DEDUCTION. 5 . THE AO DID NOT ACCEPT THE EXPLANATIONS FURNIS HED BY THE ASSESSEE. HE NOTICED THAT THE ASSESSEE HAD DECLARED THE RENT RECEIVED FROM THE FLAT HAS BEEN DECLARED BY THE ASSESSEE UNDER THE HEAD I NCOME FROM HOUSE PROPERTY AND HENCE THE DEDUCTION ALLOWABLE FOR REP AIRS UNDER THE PROVISIONS OF THE I.T. ACT AGAINST HOUSE PROPERTY INCOME HAS ALREADY BEEN ALLOWED IN THE RESPECTIVE YEARS. HENCE THE AS SESSEE CANNOT CLAIM THE REPAIR EXPENSES UNDER THE HEAD HOUSE PROPERTY. THE A.O FURTHER NOTICED THAT THE ASSESSEE HAS ALSO FAILED TO SHOW T HE NEXUS BETWEEN THE EXPENDITURE AND THE BUSINESS ACTIVITY CARRIED ON BY IT. ACCORDINGLY, THE ITA NO.1519 /11 3 AO TOOK THE VIEW THAT THE ABOVE SAID EXPENDITURE CA NNOT BE CLAIMED AGAINST BUSINESS INCOME ALSO. ACCORDINGLY, THE AO DISALLOWED THE ENTIRE AMOUNT OF RS.13,78,485/- CLAIMED AS REPAIR EXPENSES INCURRED ON SWATI FLAT. 6 . IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) CONFIRMED THE ABOVE SAID DISALLOWANCE AND, HENCE, THE ASSESSEE HA S FILED THIS APPEAL BEFORE US. 7. WE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. BEFORE US, THE ASSESSEE HAS FILED A COPY OF RESOLUTION PASSED IN T HE MEETING OF THE BOARD OF DIRECTORS HELD ON 4-4-2006, WHICH HAS BEEN FILED AS ADDITIONAL EVIDENCE. LEARNED COUNSEL FOR THE ASSESSEE ALSO FUR NISHED A COPY OF WRITTEN SUBMISSION CLAIMED TO HAVE BEEN FILED BEFOR E LEARNED CIT(A). ADVERTING TO OUR ATTENTION TO THE ABOVE SAID DOCUME NTS, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE SAID SWAT I FLAT, AFTER CARRYING OUT NECESSARY REPAIR WORKS, WAS ALLOTTED TO A WHOLE -TIME DIRECTOR IN TERMS OF THE RESOLUTION OF BOARD OF DIRECTORS REFERRED AB OVE. HE FURTHER SUBMITTED THAT THE PERQUISITE VALUE THEREOF WAS ALS O BEING ADDED IN HANDS OF THE WHOLE TIME DIRECTOR AS PER PROVISIONS OF I.T . ACT. ACCORDINGLY, HE SUBMITTED THAT THE BUSINESS CONNECTION OF THE FLAT IS ESTABLISHED, SINCE IT WAS ALLOTTED TO A WHOLE TIME DIRECTOR. HE FURTHER SUBMITTED THAT THESE FACTS, THOUGH NOT FURNISHED BEFORE THE AO, YET THEY WERE FURNISHED BEFORE THE LD CIT(A). HE SUBMITTED THAT THE LD CIT(A) DID NOT APPRECIATE THESE SUBMISSIONS AND HENCE DID NOT CONSIDER THEM FOR DEC IDING THIS ISSUE. ITA NO.1519 /11 4 ACCORDINGLY HE SUBMITTED THAT THE CONSIDERATION OF ABOVE SAID FACTS IS VERY MUCH IMPORTANT IN ADJUDICATING THE ISSUE URGED BY T HE ASSESSEE. 8. THE LEARNED DR, HOWEVER, SUBMITTED THAT THE A SSESSEE IS MAKING FRESH SUBMISSIONS AND THEY WERE NOT MADE BEFORE THE AO. ACCORDINGLY, HE SUBMITTED THAT THESE ASPECTS, BEING FACTUAL IN N ATURE, REQUIRE EXAMINATION AT THE END OF THE AO. 9. WE FIND FORCE IN THE SUBMISSIONS MADE BY THE L EARNED DR. DURING THE COURSE OF HEARING, THE LD A.R WAS ASKED TO FURN ISH COPIES OF THE ASSESSMENT ORDERS OF THE EARLIER ASSESSMENT YEARS S O THAT IT COULD BE ASCERTAINED AS TO THE HEAD UNDER WHICH THE INCOME R EALIZED FROM THE IMPUGNED FLAT WAS DECLARED BY THE ASSESSEE. HOWEVE R, THE LD A.R EXPRESSED HIS INABILITY TO IMMEDIATELY FURNISH THE SAME. FURTHER THE CLAIM OF THE ASSESSEE THAT THE TENANT HAS VACATED THE FLA T IN OCTOBER, 2005 AND LATER IT WAS ALLOTTED TO A WHOLE TIME DIRECTOR WAS NOT EXAMINED BY THE TAX AUTHORITIES BELOW. ACCORDING TO THE ASSESSEE, THE USER OF THE FLAT BY A WHOLE TIME DIRECTOR ESTABLISHES THE NEXUS BETWEEN T HE EXPENDITURE AND THE BUSINESS. WE NOTICE THAT THESE FACTUAL ASPECTS WERE NOT EXAMINED BY THE TAX AUTHORITIES BELOW. BEFORE US ALSO, THE ASS ESSEE HAS FILED A COPY OF BOARD RESOLUTION PASSED IN THIS REGARD AS ADDITION EVIDENCE TO SUBSTANTIATE ITS CLAIM. HENCE, AS SUBMITTED BY LD D.R, ALL THESE ASPECTS REQUIRE EXAMINATION AT THE END OF THE AO. ACCORDIN GLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTO RE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE ISSUE AFR ESH BY CONSIDERING ALL ITA NO.1519 /11 5 THE SUBMISSIONS MADE BY THE ASSESSEE AND TAKE A APP ROPRIATE DECISION IN ACCORDANCE WITH LAW. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. + ,3 +, - 4- 56!7 ! 2 8, - &, 9: ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH MAY, 2014. #!2 - 01$ ' ! ; <# 3 28 TH MAY,2014 1 - = SD/- SD/- ( . . ) (H.L. KARWA) ( . . ) (B.R.BASKARAN ) / PRESIDENT !' # !' # !' # !' # / ACCOUNTANT MEMBER MUMBAI ; <# DATED 28/05/2014 ). . /PKM , . / PS #!2 #!2 #!2 #!2 - -- - ),> ),> ),> ),> ?!>$, ?!>$, ?!>$, ?!>$, / COPY OF THE ORDER FORWARDED TO : #!2 #!2 #!2 #!2 / BY ORDER, 5 55 5 / 9 9 9 9 & & & & ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. @ ( ) / THE CIT(A), MUMBAI. 4. @ / CIT 5. >A= ), , , / DR, ITAT, MUMBAI 6. =B C / GUARD FILE. *>, ), //TRUE COPY//