ACIT, CHENNAI V. M/s. Mangal Tirth Estates Ltd., CHENNAI

ITA 1653/CHNY/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58054 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 22-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMAT
• Assessee Lawyers: M VISWANATHAN
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1653/MDS/2009 (ASSESSMENT YEAR : 2005-06) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-IV(1), 4 TH FLOOR, AAYAKAR BHAVAN, CHENNAI-600 034. VS. M/S. MANGAL TIRTH ESTATES LTD., SPENCER PLAZA, 769 ANNA SALAI, CHENNAI-600 002. PAN:AAACM4614R (APPELLANT) (RESPONDENT) APPELLANT BY : DR. YOGESH KAMAT, JCIT RESPONDENT BY : MR. M.VI SWANATHAN, C.A. DATE OF HEARING : 22 ND MARCH, 2012 DATE OF PRONOUNCEMENT : 22 ND MARCH, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENU E IMPUGNING ORDER DATED 5.3.2009 PASSED BY THE CIT(A) RELEVANT TO THE ASSESSMENT YEAR 2005-06. THE PRESEN T APPEAL INVOLVES A VERY SHORT POINT OF DISALLOWANCE BY THE ASSESSING OFFICER TO THE TUNE OF ` 8,28,781/- UNDER THE HEAD REPAIRS & MAINTENANCE TO THE ASSESSEE. ITA NO.1653/MDS /2009 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A DE VELOPER OF REAL ESTATE. THE ASSESSEE COMPANY SUBMITTED INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2005-06 ON 31.10.200 5 DECLARING TOTAL INCOME OF ` 2,36,96,677/-. NOTICE UNDER SECTION 143(2) WAS SERVED ON THE ASSESSEE ON 31.10.2006 AND THE ASSESSMENT WAS COMPLETED ON 20.12.2007 AFTER ADDING BACK THE FOLLOWING ITEMS:- I) ADVANCE AMENITY CHARGES ` 42,21,404 II) CAR PARKING DEPOSIT RECEIVED FOR CAR PARKING FACILITY ` 2,00,000 III)REPAIR & MAINTENANCE ` 8,43,000 THE ASSESSEE HAD ENTERED INTO A RENTAL AGREEMENT IN RESPECT OF ONE OF THE SHOPS CONSTRUCTED BY IT WITH M/S. MEG AMART ENTERPRISES P. LTD. THE AGREEMENT WAS DATED 1.4.200 4. TIME WAS GIVEN TO THE TENANT TO OCCUPY THE PREMISES UPTO 1.9.2004, AFTER CARRYING OUT NECESSARY INTERIOR WOR K, FIXTURES, FITTINGS ETC. THE RENTAL PAYMENT WAS TO START FROM 1.9.2004 ONWARDS. HOWEVER, BEFORE TENANCY ACTUALLY STARTED, FIRE TOOK PLACE IN THE PREMISES ON 8 TH JULY, 2004 DAMAGING SUBSTANTIAL PART OF THE BUILDING INCLUDING THE SHOP RENTED OUT TO M/S. ITA NO.1653/MDS /2009 3 MEGAMART ENTERPRISES PVT.LTD. THE ASSESSEE PAID AN AMOUNT OF ` 8,28,781/- TOWARDS THE DAMAGE CAUSED BY THE FIRE T O TENANT. THE ASSESSEE THEREAFTER CLAIMED THE SAID AM OUNT AS EXPENDITURE AS REPAIRS & MAINTENANCE. THE ASSESSIN G OFFICER HELD THAT SHOP FORMS PART OF A HOUSE PROPERTY OF TH E ASSESSEE COMPANY AND THE RENTAL RECEIPTS FROM THE SAME WERE TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AS SUC H, STATUTORY DEDUCTION OF 30% OF THE ANNUAL LETTING VA LUE WAS PERMISSIBLE TOWARDS REPAIRS AND MAINTENANCE AND NOT ACTUAL DAMAGE AS CLAIMED BY THE ASSESSE ALLEGED TO HAVE BE EN PAID/REIMBURSED TO THE TENANT. 3. AGAINST THE ASSESSMENT ORDER DATED 20.12.2007, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) IMPU GNING THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE CI T(A) AFTER GOING THROUGH THE FACTS OF THE CASE AND DOCUMENTS ON RECORD, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE B Y DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCO UNT OF AMENITY CHARGES AND REPAIRS & MAINTENANCE. ITA NO.1653/MDS /2009 4 4. AGGRIEVED BY THE ORDER PASSED BY THE CIT(A) THE REVENUE HAS COME IN APPEAL ON THE GROUND THAT THE C IT(A) HAS ERRED IN HOLDING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO THE TUNE OF ` 8,28,781/- UNDER THE HEAD REPAIRS & MAINTENANCE WAS NOT CORRECT. 5. THE LEARNED D.R. SUBMITTED THAT THE ASSESSING OF FICER HAD RIGHTLY MADE ADDITION OF ` 8,28,781/- AS THE AMOUNT CLAIMED BY THE ASSESSEE ALLEGED TO HAVE BEEN PAID T O THE TENANT (M/S.MEGAMART ENTERPRISES P.LTD.) AS REIMBU RSEMENT ON ACCOUNT OF DAMAGES CAUSED BY FIRE IS NOT ADMISSI BLE. THE ASSESSEE CANNOT CLAIM DOUBLE BENEFIT BY CLAIMING ST ATUTORY DEDUCTION TO THE EXTENT OF 30% ON REPAIRS & MAINTEN ANCE OF THE HOUSE PROPERTY AS WELL AS EXPENSES TOWARDS DAMA GE CAUSED BY FIRE TO THE TENANT. 6. ON THE OTHER HAND, THE LEARNED A.R. SUBMITTED TH AT THE AMOUNT OF ` 8,28,781/- WAS PAID BY THE ASSESSEE COMPANY TO HIS TENANT ON ACCOUNT OF LOSS SUFFERED BY THE TENAN T IN THE FIRE WHICH BROKE IN THE PREMISES OF THE ASSESSE. THE TEN ANT WAS IN THE PROCESS OF FIXING WOODEN PANELS AND FIXTURES IN THE ITA NO.1653/MDS /2009 5 TENANTED PREMISES WHEN THE FIRE BROKE OUT IN THE PR EMISES & THE TENANT SUFFERED LOSS. THE ASSESSEE REIMBURSED T HE AMOUNT AS A GOODWILL GESTURE TO THE TENANT. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE ORDERS OF THE LOWER AUTHORITIES. AS PER THE CON TENTION OF THE LEARNED A.R., THE AMOUNT OF ` 8,28,781/- HAS BEEN REIMBURSED BY THE ASSESSEE COMPANY TO M/S. MEGAMART ENTERPRISES P.LTD., THE TENANT IN THE PREMISES OF T HE ASSESSE. A PERUSAL OF THE LEASE DEED SHOWS THAT THERE IS NO CLAUSE WHEREIN THE ASSESSEE IS LIABLE TO PAY FOR ANY DAMAG ES CAUSED ON ACCOUNT OF UNFORESEEN EVENTS / FIRE TO TH E TENANT. THUS THERE WAS NO STATUTORY OR ANY CONTRACTUAL LIAB ILITY ON THE PART OF THE ASSESSEE TO REIMBURSE THE AFORESAID AMO UNT FOR THE LOSS CAUSED TO THE TENANT ON ACCOUNT OF FIRE WH ICH TOOK PLACE IN THE PREMISES OF THE ASSESSEE COMPANY. IT I S AN ADMITTED CASE OF THE ASSESSEE THAT ALTHOUGH THE AGR EEMENT WAS EXECUTED FROM 1.4.2004 TENANCY WOULD HAVE BEEN EFFECTIVE FROM 1.9.2004. ONCE THE TENANCY WAS TO ST ART FROM THE DATE SUBSEQUENT TO THE DATE OF OCCURRENCE OF FI RE, THERE WAS NO REASON FOR THE ASSESSEE TO COMPENSATE THE TE NANT FOR ITA NO.1653/MDS /2009 6 ANY LOSS CAUSED TO THE FIXTURES, FITTINGS ETC. OF T HE TENANT IN THE PREMISES OF THE ASSESSEE. BE THAT AS IT MAY, THE CL AIM OF THE ASSESSEE TO THE TUNE OF ` 8,27,781/- TOWARDS REIMBURSEMENT OF LOSS SUFFERED BY THE TENANT IS NOT PER SE ADMIS SIBLE. THE SAID PAYMENT WAS NOT MADE BY THE ASSESSEE OUT OF AN Y STATUTORY OR CONTRACTUAL LIABILITY OR AS PER ANY AG REEMENT BETWEEN THE OWNER AND THE TENANT. THE LEARNED A.R. DREW OUR ATTENTION TO ONE LETTER DATED 27 TH DECEMBER, 2004 ADDRESSED TO THE ASSESSEE BY THE MANAGING DIRECTOR OF M/S. MEGAMART ENTERPRISES PVT. LTD., IT WAS MENTIONED I N THE LETTER THAT M/S. MEGAMART ENTERPRISES P.LTD. HAS INCURRED AN EXPENDITURE OF ` 8,28,781/- FOR REPAIRS OF THE STORE TO RESTORE IT BACK IN ORIGINAL CONDITION AND FURTHER REQUESTI NG THE ASSESSEE TO REIMBURSE THE SAID AMOUNT. HOWEVER, DES PITE SPECIFIC QUERY FROM THE BENCH WITH REGARD TO THE DE TAILS AND NATURE OF THE EXPENDITURE, THE LEARNED A.R. FAILED TO PLACE ON RECORD ANY DOCUMENT GIVING DETAILS/NATURE OF EXPE NDITURE. THE DOCUMENT REFERRED TO BY THE LEARNED A.R. IS NOT OF ANY HELP OR SUPPORT THE SUBMISSIONS MADE BY HIM. THE LE ARNED A.R. HAS MISERABLY FAILED TO SHOW FROM ANY DOCUMENT ON THE ITA NO.1653/MDS /2009 7 RECORD THAT THE AMOUNT WAS PAID BY THE ASSESSEE COM PANY TO THE TENANT OUT OF ANY CONTRACTUAL LIABILITY. 8. IN VIEW OF ABOVE, WE SET ASIDE THE ORDER OF THE CIT(A) WITH REGARD TO THE DELETION OF REPAIRS & MAINTENANC E TO THE TUNE OF ` 8,28,781/- AND RESTORE THE ORDER OF THE ASSESSING OFFICER TO THAT EXTENT. 9. THE APPEAL OF THE REVENUE IS ALLOWED ACCORDINGL Y. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 22 ND MARCH, 2012. SD/- SD/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 22 ND MARCH, 2012. SOMU COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.