Shri Tarun Kothari, Ahmedabad V. The Income tax Officer,Ward-3(3), Ahmedabad

ITA 1645/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9959 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K JHA SRDR
• Assessee Lawyers: VIVEK N CHAVDA
• Keywords: Business expenditure; Search and seizure; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1645/AHD/2010 ASSESSMENT YEAR:2006-07 DATE OF HEARING:6.9.10 DRAFTED: 6.9.1 0 TARUN KOTHARI C/O. TARUN ELECTRICAL INDUSTRIES, 103, DERSHAK, OPP. PUNJABI HALL, NAVRANGPURA, AHMEDABAD-380 009 PAN NO.ACHPK4457E V/S . INCOME TAX OFFICER, WARD-3(3), AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI VIVEK N CHAVDA, AR RESPONDENT BY:- SHRI S.K. JHA, SR-DR O R D E R THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE OR DER OF COMMISSIONER OF INCOME-TAX (A)-GANDHINAGAR IN APPEAL NO. CIT(A)GNR/ 49/2009-10 DATED 26- 02-2010. THE ASSESSMENT WAS FRAMED BY ITO WARD-3(3) , AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 16-12-2008 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF FOLLOWING EXPENSE S:- RS.73,033/- DISALLOWANCE OF BUSINESS EXPENSES CLA IMED. RS. 9,080/- FINANCE CHARGES PAID FOR THE CAR LOA N. ITA NO.1645/AHD/2010 A.Y.2006-07 TARUN KOTHARI V. ITO WD-3(4), ABD PAGE 2 3. HAVING HEARD THE RIVAL CONTENTIONS AND GOING THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT ASSESSEE HAD CLAIMED BOTH THESE ABOVE REFERRED EXPENSES AS A CHARGE AGAINST HIS SALARY IN COME DERIVED FROM A PARTNERSHIP FIRM M/S. TARUN ELECTRICAL, ON THE GROU ND THAT SUCH SALARY INCOME IS IN THE NATURE OF INCOME FROM BUSINESS AND PROFE SSION. THE ASSESSING OFFICER ON THE OTHER HAND DID NOT ALLOW THIS CLAIM ON THE GROUND THAT THERE IS NO DIRECT NEXUS BETWEEN SUCH EXPENSES AND THE INCOME A GAINST WHICH THESE EXPENSES HAVE BEEN CLAIMED, BECAUSE IN COMPUTING IT S INCOME, THE CONCERNED FIRM HAS ALREADY ACCOUNTED FOR ALL SUCH E XPENSES WHICH WERE NECESSARY TO EARN THAT INCOME. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO EXACTLY ON SIMILAR FACTS CO NFIRMED THE ADDITION BY GIVING FOLLOWING FINDINGS IN PARA-2.3 OF HIS APPELLATE ORDER:- 2.3 THE MATTER HAS BEEN CONSIDERED BUT I AM AFRAID I CANNOT AGREE WITH THE ASSESSEE. NO DOUBT, THE SALARY INCOME FROM THE PARTNERSHIP FIRM HAS THE CHARACTER OF BUSINESS SINCE, NONETHELESS, A S RIGHTLY POINTED OUT BY THE ASSESSING OFFICER, THE ASSESSEE WILL HAVE TO PROVE THAT THESE EXPENSES WERE INCURRED TO EARN THE REMUNERATION WHI CH IN FACT WERE RECEIVED FROM THE FIRM. ALL THE EXPENSES PERTAINING TO THE FIRM STAND ALLOWED IN THE CASE OF THE FIRM AND IT IS FOR THE A PPELLANT TO SHOW THE USE OF SUCH FINANCIAL AND COMMERCIAL ASSET WHOSE CLAIM HAS BEEN MADE, AS HAVING BEEN USED TO EARN THE SALARY. THOUGH PUT IN DIFFERENT WORDS, ASSESSING OFFICER HAS CORRECTLY STATED THAT THE SAL ARY IS THE COMPENSATION OF WORK DONE FOR THE FIRM. THERE CAN N OT BE FURTHER ACTIVITY TO EARN THAT SALARY. THE ONLY SUBSTANTIVE ARGUMENT ADVANCED IN THE WRITTEN SUBMISSIONS IS WITH RESPECT TO THE USE OF C AR AND ASSOCIATED EXPENSES. IF THE FIRM DOES NOT HAVE A CAR IN ITS BA LANCE SHEET, IT HARDLY IS A GROUND TO ARGUE THAT THE APPELLANTS CAR MUST HAVE USED FOR THE BUSINESS PURPOSE OF THE FIRM, AS HAS BEEN DONE BY H IM. 4. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT EVEN NOW BEF ORE ME THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE THAT THE EXPENSES INCURRED ARE FOR THE PURPOSE OF BUSINESS OF THE FIRM AND THE COMMERCIAL ASSETS WERE UTILIZED FOR THE PURPOSE OF BUSINESS. IN THE ABSENCE OF THE SAME, I AM UNABL E TO AGREE WITH THE ITA NO.1645/AHD/2010 A.Y.2006-07 TARUN KOTHARI V. ITO WD-3(4), ABD PAGE 3 CONTENTION OF LD. COUNSEL FOR THE ASSESSEE. ACCORDI NGLY, I CONFIRM THE CONCURRENT FINDINGS OF THE LOWER AUTHORITIES AND TH IS ISSUE OF ASSESSEES APPEAL IS DISMISSED. 5. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06/09/2010 SD/- (MAHAVIR SINGH) (JUDICIAL MEMBER) AHMEDABAD, DATED : 06/09/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-GNR 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD