BOMBAY STOCK EXCHANGE LTD.(NOW KNOWN AS BSE LIMITED), MUMBAI V. DCIT- RG 2(1), MUMBAI

ITA 1594/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8773 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 12-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-03-2015
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Business income; Opportunity of being heard; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.1594/M/2015 (AY 2007 - 2008) BOMBAY STOCK EXCHANGE LTD., (NOW KNOWN AS BSE LIMITED) PHIROZE JEEJEEBHOY TOWERS, 25 TH FLOOR, DALAL STREET, FORT, MUMBAI 400 001. / VS. DCIT, RANGE 2(1), R.NO.551, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 020. ./ PAN : AAACCB6672L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJESH SHAH & ROHAN SHAH / RESPONDENT BY : SHRI M.C. OMI NINGSHEN, DR / DATE OF HEARING : 12.01.2017 / DATE OF PRONOUNCEMENT : 18 .01.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 17.3.2015 IS AGAINST THE ORDER OF THE CIT (A) - 4, MUMBAI DATED 22.12.2014 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL, ASSESSEE RAISED THE SOLITARY GROUND AND THE SAME READS AS UNDER: - THE LD CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE ENTIRE EXPENDITURE OF BUILDING, REPAIRS AND MAINTENANCE AMOUNTING TO RS. 1,93,99,502/ - WHILE CALCULATING THE INCOME FROM HOUSE PROPERTY. THE LD CIT (A) FAILED TO APPRECIATE THAT OUT OF TOTAL EXPENDITURE OF RS. 1,93,99,502/ - INCURRED BY THE APPELLANT UNDER THE HEAD BUILDING REPAIRS & MAINTENANCE ONLY RS. 1,03,69,733/ - W E RE INCURRED IN RELATION TO THE HOUSE PROPERTY AND BALANCE AMOUNT OF RS. 90,29,769/ - WAS FOR BUSINESS ACTIVITY. THE BUSINESS EXPENSE AMOUNTING TO RS. 90,29,769/ - SHOULD HAVE BEEN ALLOWED AS A DEDUCTION AND ACCORDINGLY THE AO MAY BE DIRECTED TO RESTRICT THE DISALLOWANCE TO RS. 1,03,69,733/ - AND NOT RS. 1,93,99,502/ - . 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUND AND MENTIONED THAT THE ONLY ISSUE TO BE ADJUDICATED BY THE TRIBUNAL RELATES TO THE ADDITION OF RS. 90,29,767/ - , WHICH IS THE PART OF GROSS AMOUNT OF RS. 1,93,99,502/ - . BR INGING OUR ATTENTION TO THE FACTS OF THE CASE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE EARNED RENTAL INCOME AND THE SAME WAS SHOWN AS BUSINESS INCOME. T HE SAM E IS IN TUNE WITH THE OBJECTS OF THE COM P A N Y . 2 ASSESSING OFFICER COMPLETED THE ASSESSMENT AND PASSED ORDER U/S 143(3) R.W.S 263 OF THE ACT, WHEREIN THE ASSESSED INCOME WAS DETERMINED AT RS.41,00, 22,065/ - . IN THE ASSESSMENT, AO TAXED THE S A I D RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ALLOWED THE STANDARD DEDUCTION @ 30% OF THE RENTAL INCOME. FURTHER, AO A L S O DISALLOWED A SU M OF RS. 1,93,99,502/ - ON ACCOUNT OF BUILDING REPAIRS AND MAINTENANCE. IN THE PROCESS, AO IGNORED THE FACT THAT THE DISALLOWABLE EXPENDITURE RELATABLE TO THE BUILDING REPAIRS AND MAINTENANCE IS NOT T H E E N T I R E S U M O F RS. 1,93,99,502/ - . A O S H O U L D H A V E R E S T R I C T E D T H E D I S A L L O W A N C E T O ONLY RS. 1,03,69,733/ - . THE BALA NCE AMOUNT OF RS. 90,29,769/ - IS COMPLETELY UNRELATED TO THE BUILDING REPAIRS AND MAINTENANCE . T HEY ACTUALLY RELATE TO THE AMC CHARGES, MAINTENANCE CHARGES, SECURITY EXPENSES, WATER CHARGES ETC. T H E S E E X P E N S E S A R E U N C O N N E C T E D T O T H E H E A D O F I N C O M E O F P R O P E R T Y I N C O M E . THE PARTICULARS OF PAGE 43 OF THE PAPER BOOK, AS ANNEXED SCHEDULE - M OF THE P & L ACCOUNT, ARE RELEVANT IN THIS REGARD. 3. ON GOING THROUGH THE ABOVE FACTS AND THE RELEVANT MATERIAL PLACED BEFORE US, WE ARE OF THE OPINION P R I M A F A C I E THAT THE SAID EXPENDITURE CANNOT BE LINKED TO THE PROPERTY INCOME . HOWEVER, WE DO NOT WA NT TO DE CIDE THE ISSUE JUST BASED ON THE NAME OF THE HEAD OF EXPENDITURE GIVEN ON PAGE 43 OF THE PAPER BOOK. IN OUR CONSIDERED OPINION, THE MATTER SHOULD BE REMANDED TO THE FILE OF THE AO FOR EXAMINING AND FIXING UP THE RELATIONSHIP BETWEEN THE EXPENDITUR E AND DISALLOWABILITY OF THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FOR THIS LIMITED PURPOSE, WE DIRECT THE AO TO DECIDE THE ISSUE AFRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. IN C ASE, AO COME TO THE CONCLUSION THAT THE SAID EXPENSES AMOUNTING TO RS. 90,29,769/ - IS OUTSIDE THE PURVIEW OF THE HEAD OF INCOME RELATING TO THE INCOME FROM HOUSE PROPERTY, IN OUR OPINION, THERE IS NO NEED FOR DISALLOWING THE SAID AMOUNT. WE ORDER ACCORDI NGLY. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OP EN COURT ON 1 8 T H JANUARY, 2017. S D / - S D / - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER 3 MUMBAI ; 18.01.2017 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI