REKHA S. PUNJABI, MUMBAI V. ACIT 19(1), MUMBAI

ITA 1595/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0620 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CIRCUMSTANCES OF CASE
• Keywords: Business income; Opportunity of being heard; Additional evidence
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO. 1595 / M/ 20 1 5 ( / ASSESSMENT YEAR: 20 010 - 11 ) SHRI CHAND PUNJABI & LATE SMT. REKHA S. PUNJABI 102, KESAR KRIPA 14 TH ROAD, KHAR - WEST MUMBAI - 400052 / VS. ACIT - 19(1) MUMBAI. ./ ./ PAN/GIR NO. : AAEPP 0363 P ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 16 . 11 .201 7 / DATE OF PRONOUNCEMENT : . 09. 0 2 .2018 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 10 .0 2 .201 5 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 34 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 10 - 11 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW: GROUND NO. 1: LETTING OU T TERRACE - 'OTHER SOURCES' OR HOUSE PROPERTY INCOME ASSESSEE BY: SMT. MRUGANSHI JOSHI DEPARTMENT BY: SHRI PURUSHOTTAM KUMAR (SR.AR ) ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 2 1. THE LEANED C1T(A) ERRED IN CONFIRMING THE ACTION OF THE AO OF TREATING THE INCOME ARISING FROM GRANTING LICENSE FOR THE I NSTALLATION OF TOWERS ON THE TERRACE, TO CELLULAR COMPANIES VIZ. LOOP AND VODAFONE AGGREGATING TO RS. 8,05,3197 - , UNDER (HE HEAD 'INCOME FROM OTHER SOURCES' AS AGAINST 'INCOME FROM HOUSE PROPERTY'. 2. THE LEARNED CIT(A) FAILED TO TAKE INTO CONSIDERATION THAT THE APPELLANT IS AND CONTINUES TO BE 'OWNER' OF THE PROPERTY, TILL THE SAME IS CONVEYED TO THE SOCIETY. UNTIL SUCH CONVEYANCE TAKES PLACE THE APPELLANT IS ENTITLED TO ENJOY ANY BENEFITS, ADVANTAGES, INCOME ARISING FROM THE PROPERTY. 3. WITHOUT PREJUD ICE, THE LEARNED CIT(A) ERRED IN NOT TREA TING THE INCOME OF RS. 8,05,310/ - UNDER THE HEAD ' PROF ITS/GAINS ARISING FROM BUSINESS INCOME' AS THE INCOME IS INCIDENTAL TO THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT. GROUND NO. 2? DISALLOWANCE OF LEGAL FEES (A ) DISALLOWANCE OF RS. 1,38,0457 - 1. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE DEDUCTION OF RS. 1,38,0457 - O UT OF RS, 3,09,050/ - , BEING LEGAL FEES PAID TO M/S. WADIA GHANDY AND CO., ALTHOUGH THE SUBMISSIONS WERE DULY SUPPORTED WITH THE BILLS {BILL NO. 2033 + 11023), 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE BILLS WERE IN THE NATURE OF ADDITIONAL EVIDENCE AND THEREFORE CANNOT BE ADJUDICATED UPON, ALTHOUGH THE SAME WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS, VIDE LETTER DATED 08 - 08 - 2012 AND 25 - 03 - 2013, WHICH PROVES THAT ALL BILLS WERE DULY SUBMITTED BEFORE AC. (B) DISALLOWANCE OF RS.2,00,000/ - 1. THE LEARNED C1T(A), FAILED TO TAKE INTO CONSIDERATION THAT OUT OF THE TOTAL AMOUNT PAYABLE TO M/S. WADIA GHANDY & CO. OF RS. 3,08,050/ - , A SUM OF RS, 2. 25.57Q/ - PERTAINS 10 BILL NO. 11023 DATED 09/11/2009, OUT OF WHICH THE APPELLANT HAS PAID A SUM OF RS. 2,00,000/ - , THEREFORE IT IS NOT A SEPARATE BILL IN THE NAME OF RAJWADI CHAWL AS HAS BEEN STATED BY THE CIT(A), 2. THE LEARNED CIT(A) FAILED TO TAKE INTO CONSIDERATION THAT THE DISALLOWANCE OF RS. 2,00,000/ - (PAID TO WADIA GANDHY IN RELATION TO THE RAJWADI CHAWL AMOUNTS TO DOUBLE ADDITION IN RESPECT OF THE SAME TRANSACTION. ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 3 3 . THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED HER RETURN OF INCOME ON 26 .0 8 .20 10 DECLARING TOTAL INCOME TO THE TUNE OF RS.83,65,229 /. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 . THE CASE WAS SELECTED FOR SCRUTINY , THEREFORE, NOTIC E U/S 143(2) OF THE ACT DATED 23 .0 9 .20 11 WAS ISSUED AND SERVE D UPON THE ASSESSEE ON 26.09.2011 . SUBSEQUENTLY, NOTICE U/S 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED ON 30.12.2011 WHICH WAS ALSO SERVED UPON THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL BUILDINGS. THE ASSESSEE WAS DERIVING INCOME FROM BUSINESS, HOUSE PROPERTY AND INCOME FROM OTHER SOURCES BY WAY OF INTEREST. THE ASSESSEE HAS SHOWN THE INCOME FROM HOUSE PROPERTY OF RS.5,63,723/ - AFTER CLAIMING THE DEDUCTION U/S 24 OF THE ACT. IT WAS NOTICED THAT THE ASSE SSEE HAS EARNED THE SAID INCOME FROM THE TWO TOWERS OF THE MOBILE COMPANIES NAMELY VODAFONE AND LOOP. NOTICE WAS GIVEN AND AFTER HEARING THE REPRESENTATIVE OF THE ASSESSEE , THE SAID INCOME WAS TREATED AS INCOME FROM OTHER SOURCES. THE ASSESSEE ALSO CLAIMED THE LEGAL AND PROFESSIONAL FEE TO THE TUNE OF RS. 9,14,501/ - . THE CLAIM OF THE ASSESSEE WAS IN CONNECTION WITH AN AMOUNT OF RS.51,500/ - WITH THE M/S. B. S. BAROT WHICH WAS NOT FOUND JUSTIFIABLE , THEREFORE, THE SAME DISALLOWED AND WAS ADDED TO THE INCOME O F THE ASSESSEE. THE ASSESSEE ALSO PAID THE LEGAL FEE TO THE TUNE OF RS. 3,09,050/ - TO M/S. WADIA GHANDI &CO. AND THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.1,38,045/ - WAS DISALLOWED BEING NOT FOUND JUSTIFIABLE AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE ALSO ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 4 PAID THE LEGAL FEE TO THE TUNE OF RS.2,00,000/ - TO M/S. RAJWADI CHAWL WHICH WAS ALSO NOT FOUND JUSTIFIABLE, THEREFORE, THE SAME WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL DISALLOWANCE ON ACCOUNT OF LEGAL FEE WAS TO THE TUNE OF RS.8,89,545/ - WHICH WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE UNC ERTAIN CLAIM OF THE INTEREST WAS ALSO DISALLOWED . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.1,73,90,630/ - . THE ASSESSEE WAS NOT SATISFIED, THEREFORE, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE CLAIM OF THE ASSESSEE BUT THE ASSESSEE WAS NOT SATISFIED ON THE ISSUES WHICH HE HAS TAKEN ABOVE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1: - 4 . UNDER TH IS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE ACTION OF THE AO IN WHICH THE AO TREATED THE INCOME A RISING FROM GRANTING LICENSE FOR THE INSTA LLATION OF TOWERS ON THE TERRACE TO CELLULAR COMPANIES I.E LOOP AND VODAFONE AGGREGATING TO RS.8,05 ,319/ - UNDER THE HEAD OF INCOME FROM OTHER SOURCES AS AGAINST THE INCOME FROM HOUSE PROPERTY . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS FILED AN APPLICATION FOR ADDITIONAL EVIDENCE IN WHICH THE ASSESSEE WAN TED TO PRODUCE THE COPY OF VARIOUS AGREEMENT OF TENANCY WHICH IS NECESSARY TO ADJUDICATE THE MATTER OF CONTROVERSY HENCE ADDITIONAL EVIDENCE IS LIABLE TO BE ADMI T T ED /ALLOWED IN THE INTEREST OF JUSTICE. HOWEVER, ON THE OTHER ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 5 HAND, THE LD. REPRESENTATIVE O F THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. ON APPRAISAL OF THE FINDING OF THE ASSESSING OFFICER AND CIT(A), WE NOTICED THAT THE SAID AGREEMENTS WERE NOT PRODUC ED BEFORE THEM. THESE AGREEMENTS SPEAKS ABOUT THE OWNERSHIP/ STATUS OF THE TERRACE . IT IS NECESSARY TO ADJUDICATE THE MATTER OF CONTROVERSY, THEREFORE, IN THE SAID CIRCUMSTANCES, WE ADMIT/ALLOW THE ADDITIONAL EVIDENCE AND SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND REMAND THE ISSUE BEFORE THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH BY CONSIDERING THE ADDITIONAL EVIDENCE AS WELL AS BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 2 : - 5 . ISSUE NO.2 IS IN CONNECTION WITH THE DISALLOWANCE OF LEGAL FEE TO THE TUNE OF RS.3,09,050/ - PAID TO M/S. WADIA GHANDY AND CO. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS PRODUCED THE NECESSARY EVIDENCE BEFORE THE AO AS WELL AS BEFORE THE CIT (A) BY PRODUCING THE BILL NO.2033 + 11023 BUT THESE BILLS WERE NOT CONSIDERED BY THE AUTHORITY WHILE PASSING THE ORDER , THEREFORE, THESE BILLS ARE LIABLE TO BE CONSIDERED IN ACCORDANCE WITH LAW . HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEP ARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS CIT(A), WE NOTICED THAT THESE BILLS WERE NOT ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 6 CONSIDERED BY THE AUTHORITY BELOW. BOTH THE ORDERS ARE NON - SPEAKING REGARDING THIS PIECE OF EVIDENCE . THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND REMAND THE ISSUE BEFORE THE AO TO ADJUDICATE THE MATTER OF CONTROVERSY AFRESH BY CONSIDERING THESE BILLS AND BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LA W. ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 3: - 6 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWANCE IN CONNECTION WITH THE PAYMENT OF RS.2,00,000/ - AS LEGAL FEES TO M/S. WADIA GHANDY AND CO. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS PAID THE SAID AMOUNT BY VIRTUE OF BILL NO 11023 DATED 09.11.2009, T HEREFORE, THE DISALLOWANCE OF AN AMOUNT OF RS.2,00,000/ - IS NOT JUSTIFIABLE. ON APPRAIS AL OF THE ORDER OF THE AO, WE NOTICED THAT AN AMOUNT OF RS.3,09,050/ - WAS PAYABLE TO M/S. WADIA GHANDY AND CO. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WAS UNDER THE OBLIGATION TO MAKE THE PAYMENT TO THE TUNE OF RS.2,25,570/ - B Y VIRTUE OF BILL N O. 11023 DATED 09.11.2009 . T HE ASSESSEE PAID AN AMOUNT OF RS.2,00,000/ - UNDER THIS BILL. THE COPY OF BILL IS ON THE FILE WHICH LIES AT PAGE NO. 55 TO 57 OF THE PAPER BOOK BUT THIS FACT IS TO BE VERIFIED AT THE LEVEL OF ASSESSING OFFICER AND ACCORDINGLY THE MATTER OF CONTROVERSY IS REQUIRED TO BE ADJUDICATED. IN BRIEF , IT IS REQUIRED TO BE SEEN WHETHER THE SAID AMOUNT TO THE TUNE OF ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 7 RS.2,00,000/ - WAS PAID TO M/S.WADIA GHANDY AND CO OR NOT. T HEREFORE, TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND REMAND THIS ISSUE ALSO BEFORE THE AO TO VERIFY THE CLA IM OF THE ASSESSEE IN VIEW OF THE BILL NO.11023 DATED 09.112009 IN ACCORDANCE WITH LAW B Y GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 09. 02 . 2018 SD/ - SD/ - ( R.C. SHARMA ) ( AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 09. 0 2 . 201 8 V IJAY ITA. NO.1595 /M/201 5 A.Y. 2010 - 11 8 / 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. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI