W.Rajesh, CHENNAI V. Addl. CIT, CHENNAI

ITA 1603/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68854 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DAS GUPTA IRS
• Assessee Lawyers: B S PU RSHOTHAM
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 1603(MDS)/2013 ASSESSMENT YEAR : 2007-08 SHRI W. RAJESH, NO.2, KALYANI PONNAPPA AVENUE, KOTHARI NAGAR ANNEX, RAMAPURAM, CHENNAI - 600 089. PAN : AAJPR 2084 E V. THE ADDITIONAL COMMISSIONER OF INCOME TAX, MEDIA CIRCLE II, CHENNAI - 600 034. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.S. PU RSHOTHAM, CA RESPONDENT BY : SHRI S. DAS GUPT A, IRS, JCIT DATE OF HEARING : 27 TH NOVEMBER, 2013 DATE OF PRONOUNCEMENT : 27 TH NOVEMBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V I AT CHENNAI, DATED 25.4.2013 AND ARISES OUT OF THE ASSESSMENT CO MPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2 I.T.A. NO. 1603/MDS/13 2. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER DISALLOWED VARIOUS CLAIMS MADE BY THE ASSES SEE. THE ASSESSING OFFICER ALSO DISALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF DEPRECIATION IN THE CASE OF JSR REAL EST ATES AND JSR CONSTRUCTION. DONATION MADE TO CHIEF MINISTER RELI EF FUND WAS ALSO DISALLOWED. THE ASSESSING OFFICER ALSO DISALL OWED THE EXPENSES RELATING TO ASSESSEES HOTEL BUSINESS, WHI CH AMOUNTED TO ` 12,49,905/-. 3. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT ASSESSEES CLAIM FOR DEPRECIATION AS WEL L AS DONATION TO CHIEF MINISTER RELIEF FUND ARE FOUND TO BE SUPPORTE D BY VOUCHERS AND BANK STATEMENTS PRODUCED. HE, ACCORDINGLY, SET ASIDE THOSE DISALLOWANCES AND DIRECTED THE ASSESSING OFFICER TO EXAMINE THOSE CLAIMS IN THE LIGHT OF EVIDENCES PRODUCED BY THE AS SESSEE. IN RESPECT OF DISALLOWANCE OF EXPENDITURE RELATING TO BUSINESS OF HOTEL AMOUNTING TO ` 12,49,905/-, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD AS FOLLOWS:- 5. COMING TO THE DISALLOWANCE OF EXPENSES OF HOTEL BUSINESS, IT IS ADMITTED BY THE ASSESSEE HIMSELF IN HIS WRITTEN SUBMISSIONS BEFORE THE AO THAT THE ASSESSEE BORROWS IN THE NAME OF HOTEL BUSINESS AND THE FUNDS ARE UTILIZED FOR 3 I.T.A. NO. 1603/MDS/13 REAL ESTATE BUSINESS. IN SUCH A SCENARIO, IT CANNOT BE ACCEPTED THAT THE EXPENDITURE ARE INCURRED ON THE HOTEL BUSINESS. HENCE, THE DISALLOWANCE IS SUSTAINED. 4. IT IS AGAINST THE ABOVE, THE ASSESSEE HAS COME I N APPEAL BEFORE THE TRIBUNAL. THE RELEVANT GROUNDS ARE AS F OLLOWS:- 1.2 THE CIT(A) ERRED IN BUYING THE ARGUMENT THAT THE APPELLANT HAS NOT ESTABLISHED THAT THE EXPENSES CLAIMED ARE INCURRED FOR THE HOTEL BUSINESS. 1.3 THE CIT(A) FAILED TO APPRECIATE THAT IN ADDITION TO HOTEL BUSINESS THE APPELLANT IS ALSO ENGAGED IN REAL ESTATE AND CONSTRUCTION BUSINESS, THE INCOME WHEREFROM HAS ALSO BEEN ADMITTED BY THE APPELLANT. 1.4 THE CIT(A) HAVING ACCEPTED THE FACT THAT THE FUNDS BORROWED BY THE APPELLANT FOR HOTEL BUSINESS HAVE BEEN UTILIZED IN REAL ESTATE BUSINESS SHOULD HAVE ALLOWED THE CLAIM OF EXPENSES AS HELD OUT WHOLLY FOR THE PURPOSE OF BUSINESS. 1.5 THE CIT(A) OUGHT TO HAVE FOLLOWED THE DECISION RENDERED BY HONOURABLE SUPREME COURT IN THE CASE OF VEECUMSEES VS CIT REPORTED IN 220 ITR 185 (SC) WHEREIN IT WAS HELD THAT INTEREST PAID FOR BORROWING OF CINEMA THEATRE IS ALLOWABLE U/S 36(1)(III) EVEN THOUGH THE THEATRE IS SOLD SINCE THE ASSESSEE IS CARRYING ON JEWELLERY BUSINESS. 5. WE HEARD BOTH SIDES IN DETAIL. 4 I.T.A. NO. 1603/MDS/13 6. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) ON THE ISSUE IS VERY SPEAKING. THE ASSESSEE HIMSELF H AS STATED BEFORE THE ASSESSING OFFICER THAT THE FUNDS BORROWED IN TH E NAME OF HOTEL BUSINESS IS IN FACT UTILIZED FOR THE REAL ESTATE BU SINESS CARRIED ON BY HIM. THEREFORE, AS RIGHTLY HELD BY THE COMMISSIONE R OF INCOME TAX (APPEALS), THE CORRESPONDING EXPENDITURE CANNOT BE ATTRIBUTED TO THE HOTEL BUSINESS. THEREFORE, THE DISALLOWANCE HA S BEEN RIGHTLY CONFIRMED. 7. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED AS DEVOID OF MERIT. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 27 TH OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 27 TH NOVEMBER, 2013. KRI. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT-IV, CH ENNAI 4. CIT(A)-VI, CHENNAI 5. DR 6. GF.