LEGAL REPRESENTATIVE OF LATE INDERJIT SHARMA, MUMBAI V. ITO 5 (2)(1), MUMBAI

ITA 1869/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71484 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Assessee Lawyers: A H DALAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI , ! '# $## #% , & ! ' BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 1869 / / 2012 A.YS. 2006-07 ITA NO. : 1869/MUM/2012 (ASSESSMENT YEAR: 2006-07) LEGAL REPRESENTATIVE OF LATE INDERJIT SHARMA, BLOCK NO. 3, ROUND FLOOR, SOHNI MANSION, AUGUST KRANTI MARG, GOWALI TANK MUMBAI -400 020 .: PAN: AAFPS 1011 C VS ITO 5(2)(1), AAYAKAR BHAVAN, M.K. MARG, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.H. DALAL RESPONDENT BY : SHRI O.P. SINGH /DATE OF HEARING : 03-10-2013 !' / DATE OF PRONOUNCEMENT : 09-10-2013 + O R D E R $## #% , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE LEGAL HEIR OF THE ASSESS EE, MR. INDERJIT SHARMA, AGAINST THE ORDER OF CIT(A) 9, MUMBAI, DATE D 23.01.2012, WHEREIN, THE FOLLOWING GROUND HAS BEEN RAISED: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN TAXING THE AMOUNT OF RS. 8,29,608/-. THE APPELLANT HAD TRANSFE RRED THE WORK-IN- PROGRESS ON 1/4/2005 WITH THE CONDITION THAT ALL FU TURE COST RELATED TO THE PROJECT WILL BE BORNE BY INDERLOK HOTELS PVT LT D. ACCORDINGLY THE APPELLANT HAD RECOVERED FROM INDERLOK HOTELS PVT LT D. RS. 8,29,608/- FOR THE FINANCIAL YEAR 2005-06 FOR FURTHER EXPENSES INC URRED ON THE PROJECT, WHICH WAS CREDITED TO THE ACCOUNT OF INDERLOK HOTEL S PVT LTD. AND APPELLANT HAD NOT CLAIMED ANY AMOUNT BY WAY OF DEDU CTION FROM EXPENSES OF RS. 8,29,608/-. L/R OF LATE INDERJIT SHARMA ITA 1869/M/2012 2 2. THE SOLITARY ISSUE PERTAINS TO THE TREATMENT OF RECEIPT OF RS. 8,29,608/-, I.E. WHETHER IT IS REIMBURSEMENT OF EXP ENSES BY THE COMPANY, M/S INDERLOK HOTELS PVT LTD OR IT HAS SOME OTHER CH ARACTER. 3. THE FACT IS THAT THE ASSESSEE IS A BUILDER AND D EVELOPER OF PROPERTIES IN THE MUMBAI CITY RANGE. THE ASSESSEE WAS DEVELOPING LOKMANYA CHAWLS INTO LOKMANYA NAGAR CO-OP. SOCIETY. IN 2005-06, THE ASSE SSEE TRANSFERRED THE PROJECT TO A FAMILY OWNED COMPANY KNOWN AS INDERLOK HOTELS PVT LTD. AT A TOTAL CONSIDERATION, COMPUTED AT BOOK VALUE AT RS. 1,76,21,893.28. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED RS. 8,29,608/- FROM THE SAID COMPANY, THE EXPENSES THAT HAD BEEN INCURRED BY THE ASSESSEE ON BEHALF OF THE COMPANY, WHICH, THE ASSESSEE HAD CLAIMED TO BE REIMBURSEMENT OF EXPENSES. 4. IN THE PROCEEDINGS BEFORE THE AO, THE ASSESSEE S UBMITTED THE FACTS. THE AO, COMPUTED AN ESTIMATED PROFIT ON COST AT 5% OF THE TRANSFER COST OF RS. 1,76,21,893/-, WHICH CAME AT RS. 8,81,095/- AND ADDED THE SUM. 5. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE F ACTS AND PLEADED THAT THERE WAS NO JUSTIFICATION TO ADD RS. 8,81,095/- AN D THE FACT OF RS. 8,29,609/- REMAINED UNATTENDED. THE CIT(A), WHILE O BSERVING THAT NO DETAILS WERE FILED BY THE ASSESSEE, REDUCED THE SUM OF RS. 8,29,609/- BEING THE SUM CLAIMED TO BE REIMBURSEMENT FROM THE ADDITION MADE AND CONFIRMED THE BALANCE OF RS. 51,487/-. 6. THE ASSESSEE, BEING AGGRIEVED, IS NOW BEFORE THE ITAT. 7. BEFORE US, THE AR SUBMITTED AND REITERATED THAT THERE WAS NO JUSTIFICATION FOR ADDITION OF RS. 8,81,095/- AND AL SO THAT THE CIT(A) OUGHT TO HAVE GIVEN RELIEF AND DELETED THE AMOUNT OF RS. 8,2 9,608/-, WHICH WAS PURELY REIMBURSEMENT OF EXPENSES INCURRED BY THE ASSESSEE. 8. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHO RITIES. 9. WE HAVE HEARD AND PERUSED THE MATERIAL ON RECORD . THE CIT(A) HAS CATEGORICALLY OBSERVED THAT THE ASSESSEE HAS NOT PL ACED ANY MATERIAL TO PROVE THAT THE ASSESSEE HAD ACTUALLY INCURRED THE EXPENSE S OF RS. 8,29,608/- IN L/R OF LATE INDERJIT SHARMA ITA 1869/M/2012 3 FINANCIAL YEAR 2005-06 ON BEHALF OF THE FAMILY OWNE D PRIVATE LIMITED COMPANY AND WHAT ARE THE EXPENSES THAT HAVE BEEN INCURRED B Y THE ASSESSEE. 10. THIS FACT CANNOT BE IGNORED. IN THESE CIRCUMSTA NCES, WE ARE OF THE OPINION THAT THE ISSUE NEEDS DE NOVO ADJUDICATION BY THE AO. 11. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A ) ON THE ISSUE AND DIRECT THE AO TO EXAMINE THE CORRECTNESS OF CLAIM OF THE A SSESSEE WITH REGARD TO THE FACT THAT RS. 8,29,608/- WERE THE EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF THE FAMILY CONCERN AND WHICH HAS BEEN REC EIVED BY HIM ONLY AS A REIMBURSEMENT AND WHICH DOES NOT INVOLVE ANY PROFIT ELEMENT, WHICH WOULD BE CONTRA THE CONCLUSION DRAWN BY THE AO IN THE ASS ESSMENT ORDER, WHERE HE ESTIMATED THE INCOME FROM PROJECT @ 5%. 12. THE GROUND IS THEREFORE, ALLOWED FOR STATISTICA L PURPOSES. 13. THE APPEAL IS THUS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER, 2013. SD/- SD/- ( ) ( $## #% ) ! ! (RAJENDRA SINGH) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 9 TH OCTOBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 9 MUMBAI / THE CIT (A)-9, MUMBAI. 4) & & ' 5, MUMBAI / THE CIT 5, MUMBAI, 5) )*+ , & , & , , -. / THE D.R. I BENCH, MUMBAI. 6) +/ 0 COPY TO GUARD FILE. L/R OF LATE INDERJIT SHARMA ITA 1869/M/2012 4 &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & , , -. DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS