D.B. VASWANI, MUMBAI V. ITO 12(3)(4), MUMBAI

ITA 168/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49187 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 09-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M R KUBAL
• Keywords: Business income; Business expenditure; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI V. DURGA RA O, J.M. ITA NOS. 167 & 168/MUM/2009 ASSESSMENT YEARS: 2004-05 & 2005-06 D.B. VASWANI, APPELLANT 121, MAKER CHAMBER VI NARIMAN POINT, MUMBAI 400 021 AAEPV1833E VS. INCOME TAX OFFICER 12(3)(4), RESPONDENT 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 APPELLANT BY : MR. VIMAL PUNAMIYA RESPONDENT BY : MR. M.R. KUBAL . ORDER PER V. DURGA RAO, J.M.: BOTH THESE APPEALS PERTAIN SAME ASSESSEE AND THE S AME ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) FOR ASSES SMENT YEARS 2004-05 & 2005-06. SINCE IDENTICAL ISSUES ARE INVOLVED, THE SE APPEALS WERE HEAD TOGETHER AND, THEREFORE, A COMMON ORDER IS PAS SED FOR THE SAKE OF CONVENIENCE. 2. GROUND NO. 1 IS COMMON IN BOTH THE APPEALS PERTA INING TO DISALLOWANCE OF EXPENSES CLAIMED AGAINST DADA MANZI L PROPERTY INCOME. 3. THE FACTS IN AY 2004-05 ARE REFERRED TO DISPOSE OF THESE APPEALS. THE ASSESSEE HAD CLAIMED EXPENSES, NAMELY, BANK CHA RGES, BMC PROPERTY TAXES, ELECTRICITY EXPENSES, LICENSE FEE, LIFT REPAIRS & MAINTENANCE, REPAIRS & MAINTENANCE EXPENSES, TELEPH ONE EXPENSES, ITA NOS. 167 & 168/M/09 D.B. VASWANI. 2 WATER CHARGES, CONVEYANCE EXPENSES, SALARIES PAID, AND LEGAL & PROFESSIONAL FEES, TOTALING TO RS. 9,00,717/-. OUT OF THESE EXPENSES, THE AO HAD ALLOWED ONLY RS. 4,22,042/- BEING PROPER TY TAXES AND THE BALANCE AMOUNT HAD BEEN DISALLOWED ON THE GROUND TH AT THESE DO NOT FALL IN THE PURVIEW OF DEDUCTIONS FROM INCOME FROM HOUSE PROPERTY. ON APPEAL, BEFORE THE CIT(A) THE ASESSSEE SUBMITTED THAT THE SAID EXPENSES WERE ELIGIBLE FOR DEDUCTION WHILE COMPUTIN G THE INCOME FROM HOUSE PROPERTY. HE FURTHER SUBMITTED THAT CIT(A) HA D ALLOWED THE SAID TYPE DEDUCTIONS IN AY 2001-02 AND 2002-03. AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD THAT T HE APPELLATE ORDERS RELIED UPON BY THE ASSESSEE DO NOT GIVE ANY SPECIFI C FINDING AS TO THE ALLOWABILITY OF THOSE EXPENSES THAT ARE CLAIMED IN THE INSTANT YEAR. HE FURTHER HELD THAT THE ASSESSEE HAD ALSO NOT SUBMITT ED COPIES OF TENANCY AGREEMENT TO PROVE THAT THE EXPENSES, SALAR Y PAID ETC. AND THAT THE RENT CHARGED IS ALSO FOR SUCH EXPENSES. HE ALSO HELD THAT THE ASSESSEE HAD ALSO NOT FILED ANY MATERIALS TO JUSTIF Y THAT THE EXPENSES LIKE CONVEYANCE, TELEPHONE ETC. WERE FOR THE PURPOS E OF EARNING THE HOUSE PROPERTY. IN VIEW OF THE ABOVE, THE CIT(A) CO NFIRMED THE DISALLOWANCE MADE BY THE AO. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORDS AS WELL AS GONE THROUGH THE ORD ERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE ASSESSEE B EFORE THE CIT(A) IS THAT IN AY 2001-02 AND 2002-03 SUCH EXPENSES WERE A LLOWED BY THE THEN CIT(A). THE CIT(A() HELD THAT THE APPELLATE O RDERS RELIED UPON BY THE ASSESSEE DO NOT GIVE ANY SPECIFIC FINDING AS TO THE ALLOWABILITY OF THOSE EXPENSES THAT ARE CLAIMED IN THE INSTANT YEAR . HE HAS ALSO HELD THAT THE ASSESSEE HAS NOT FAILED ANY MATERIAL EVIDE NCE TO JUSTIFY THE VARIOUS CLAIMS. AFTER CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT TO MEET ENDS OF JUSTICE, WE REMIT THE MAT TER BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE AFRESH ON MERIT AND IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF HEARING TO BOTH THE ITA NOS. 167 & 168/M/09 D.B. VASWANI. 3 SIDES. THE ASESSSEE IS DIRECTED TO SUBMIT THE MATER IAL EVIDENCE BEFORE THE CIT(A) IN SUPPORT OF HIS CLAIM. ACCORDINGLY, TH E GROUND RAISED IN BOTH THE YEARS UNDER CONSIDERATION ARE TREATED AS A LLOWED FOR STATISTICAL PURPOSES. 5. THE ASSESSEE RAISED ANOTHER GROUND IN AY 2005-06 WHICH IS PERTAINING TO INTEREST CLAIM OF RS. 3,03,077 ON OVE RDRAFT. 6. THE AO HAD OBSERVED THAT THE ASSESSEE HAD CLAIME D INTEREST OF RS. 3,03,077/- PAID ON OVERDRAFT TAKEN FROM THE HDF C BANK. WHEN THE AO CONFRONTED WITH THE ASSESSEE, THE ASSESSEE E XPLAINED THAT THE OVERDRAFT WAS TAKEN FROM THE HDFC BANK TO APPLY FOR PUBLIC ISSUE OF SHARES IN A COMPANY AND SUBMITTED THAT IT IS FOR TH E PURPOSE OF BUSINESS. HOWEVER, THE AO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, DISALLOWED THE INTEREST CLAIM OF THE ASSE SSEE ON THE GROUND THAT SINCE INCOME FROM SHARES ARE NOT INCLUDED IN T HE HEAD OF THE BUSINESS INCOME AND THE INCOME UNDER THE HEAD CA PITAL GAINS HAS BEEN CLAIMED EXEMPT U/S 10(38) OF THE ACT. ON APPEA L, THE CIT(A) CONFIRMED THE ORDER OF THE AO. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE OVERDRAFT AMOUNT TAKEN FROM HDFC BANK USED FOR THE PURPOSE OF BUSINESS AND INTEREST PAID THEREON HAS T O BE ALLOWED AS BUSINESS EXPENDITURE. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE HEARD THE BOTH THE SIDES AND PERUSED THE RECORD. WE FIND THAT THE FACTS AVAILABLE ON RECORD ARE NOT SUF FICIENT TO DECIDE THE ISSUE, THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECT ION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AND AFTER PROVI DING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIR ECT THE ASSESSEE TO PRODUCE ALL THE RELEVANT MATERIAL IN SUPPORT HIS CL AIM. ITA NOS. 167 & 168/M/09 D.B. VASWANI. 4 9. IN THE RESULT, BOTH THE APPEALS ARE TREATED AS A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JUNE, 2011. SD/- SD/- (PRAMOD KUMAR) (V. DURG A RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 22 ND JUNE, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.