PRASHANT TAK, Jaipur V. ACIT, Jaipur

ITA 188/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99580 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH
• Keywords: Business expenditure; Onus to prove
• Section: 143(3); 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 188/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 PRASHANT TAK, 53, LAXMAN MARG, GANDHI PATH, VAISHALI NAGAR, JAIPUR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ACFPT 9612 A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA SINGH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 14/10/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 14/12/2015 VKNS'K @ ORDER PER: T.R. MEENA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 10/12/2013 PASSED BY THE LEARNED CIT(A)-I, JAIPUR, FOR A.Y. 2009-10. THE RESPECTIVE GROUNDS OF APPEAL RAISED BY THE APPELLAN T ARE AS UNDER:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 5,13,060/- ON ACCOUNT OF DISALLOWANCE MADE OF EXPENS ES INCURRED AS APPLICATION FEE FOR ALLOTMENT OF LIQUOR SHOP ARBITRARILY WITHOUT CONSIDERING THE SUBMISSIONS MADE AND EVIDENCES ADDUCED BEFORE HIM. HENCE THE DISALLOWANCE SO SUSTAINED DESERVES TO BE ALLOWED. ITA 188/JP/2014_ PRASHANT TAK VS ACIT 2 1.1 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE EXPENSES WAS INCURRED FOR OBTAINING THE LIQUOR BUSIN ESS AND PAID TO GOVERNMENT DEPARTMENT IN RESPECT OF WHI CH INCOME WOULD ARISE IN FURTHER YEARS TO COME AND FURT HER IS NON REFUNDABLE, THUS EXPENSES INCURRED ON APPLICATI ON FEES IS ALLOWABLE AS BUSINESS EXPENDITURE. HENCE THE DISALLOWANCE SO SUSTAINED DESERVES TO BE ALLOWED. 2. THE ASSESSEE IS INVOLVED IN THE BUSINESS OF PURCH ASE, SALE AND INVESTMENT OF SHARES AND DEBENTURES. THE ASSESSEE FI LED HIS RETURN ON 30/09/2009 DECLARING INCOME AT RS. 10,90,450/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, (IN SHORT THE ACT) . THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DEBITED FEES FOR APPLICATION FOR GETTING DESI MADIRA CONTRACT AND PAID FEES OF RS. 5 ,13,060/-. IT WAS SUBMITTED BY THE ASSESSEE THAT LIQUOR BUSINESS IS T HE PARENTAL BUSINESS OF ASSESSEE. THE LD ASSESSING OFFICER HELD THAT THE ASS ESSEE HAD NOT GIVEN SPECIFIC REASONS FOR CLAIMING THESE EXPENSES. IT IS NOT A BUSINESS OF THE ASSESSEE. AS PER SECTION 37 OF THE ACT, THE EXPENSE S CAN BE ALLOWED, WHICH WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. THEREFORE, THE EXPENSES CLAIMED ON DESI MADIRA RETAIL SHOP ARE NOT ALLOWABLE AND SAME WERE ADDED BACK IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CO NFIRMED THE ADDITION BY OBSERVING AS UNDER:- ITA 188/JP/2014_ PRASHANT TAK VS ACIT 3 4.1 SO FAR AS THE DESI MARIDA SHOP APPLICATION FEE AMOU NTING TO RS. 5,13,060/- IS CONCERNED, IT IS SEEN THAT THI S ADDITION HAS BEEN MADE BY THE A.O. AS THIS EXPENDIT URE WAS NOT RELATED TO THE BUSINESS OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT WAS CARRYING ON BUSINESS OF SHARE BROKERING IN THE NAME OF M/S MAVERICK SHARES BROKERS PVT. LTD.. THE EXPENDITURE INCURRED BY THE APPELLANT AS APPLICATION FEES WAS FOR OBTAINING COUN TRY LIQUOR BUSINESS. THIS EXPENDITURE, THEREFORE, HAS NO T BEEN INCURRED IN CONNECTION WITH AN EXISTING BUSINES S. THE BUSINESS OF SHARE BROKERING IS ENTIRELY DIFFEREN T THAN WHAT IS BEING SOUGHT TO BE ACQUIRED BY THE APPELLANT . AS HELD BY THE HONBLE MP HIGH COURT IN THE CASE OF PE RFECT POTTERY (166 ITR 196), IN ORDER TO SUSTAIN A CLAIM OF DEDUCTION BY WAY OF BUSINESS EXPENDITURE, THE EXPENDITURE MUST HAVE BEEN INCURRED FOR THE PURPOSE S OF BUSINESS WHICH WAS IN EXISTENCE. SINCE THERE WAS NO SUCH BUSINESS IN THE YEAR UNDER CONSIDERATION, THIS EXPENDITURE INCURRED BY THE APPELLANT CANNOT BE ALL OWED. THE DISALLOWANCE MADE ON THIS ACCOUNT IS, THEREFORE, CONFIRMED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT DURING THE YEAR UNDER CONSIDERAT ION, BESIDES SHARE TRADING BUSINESS, THE ASSESSEE APPLIED FOR RETAIL L IQUOR SHOP, WHICH IS ALSO A PARENTAL BUSINESS. SINCE THE SAID BUSINESS IS DONE UNDER THE CLOSE ITA 188/JP/2014_ PRASHANT TAK VS ACIT 4 SUPERVISION AND GOVERNMENT REGULATIONS, THEREFORE, AS PER GOVERNMENT POLICY DURING THE PREVIOUS YEAR RELEVANT TO A.Y. UN DER APPEAL, THE ASSESSEE HAD SUBMITTED TOTAL 102 APPLICATIONS FOR ALLOTMENT OF RETAIL LIQUOR SHOP AND FOR EACH APPLICATION FEES FOR RS. 5,030/-, THUS TOT AL AMOUNT OF RS. 5,13,060/- WAS DEPOSITED BY THE ASSESSEE AS NON-REFU NDABLE FEES. FURTHER AS PER REQUIREMENT OF THE STATE EXCISE DEPARTMENT, EARNEST MONEY OF RS. 2,19,81,800/- WAS ALSO DEPOSITED BY THE ASSESSEE DUR ING THE YEAR UNDER CONSIDERATION THROUGH DEMAND DRAFT. THE SAID AMOUNT OF FEES FOR ALLOTMENT OF LIQUOR SHOP WAS NON-REFUNDABLE FEES AND HAD BEEN FORFEITED WHEREAS THE ASSESSEE WAS NOT SUCCEEDED FOR LOTTERY SYSTEM OF ALLOTMENT OF SHOP. THE ASSESSEE COULD NOT SUCCEED IN PROCURING OF ALLOT MENT OF LIQUOR SHOPS LICENSE, THEREFORE, ONLY EARNEST MONEY WAS REFUNDED TO THE ASSESSEE. ACCORDINGLY, THE ASSESSEE HAD CLAIMED APPLICATION F EES FORFEITED AT RS. 5,13,060/- U/S 37 OF THE ACT AS A REVENUE EXPENDITU RE. HE HAS FURTHER DRAWN OUR ATTENTION ON SECTION 37 OF THE ACT AND ARG UED THAT THE ASSESSEE INCURRED THESE EXPENSES FOR BUSINESS PURPOSES AND A LLOWABLE U/S 37 OF THE ACT. HE FURTHER RELIED ON THE DECISION IN THE CASE OF INDIAN MOLASSES CO. P. LTD. VS CIT 37 ITR 66 (SC) WHEREIN IT HAS BEEN HELD T HAT IF THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PUR POSES, WHICH IS ALLOWABLE U/S 37 OF THE ACT. HE FURTHER RELIED ON TH E DECISION IN THE CASE OF ITA 188/JP/2014_ PRASHANT TAK VS ACIT 5 EMPIRE JUTE CO. LTD. VS. CIT 124 ITR 1 (SC) WHEREIN NATURE OF EXPENSES HAS BEEN CONSIDERED BY THE HON'BLE SUPREME COURT. I N THE CASE OF S.A. BUILDERS VS. CIT 158 TAXMAN 74 (SC) WHEREIN IT HAS BE EN HELD THAT IF THE EXPENDITURE INCURRED ON GROUND OF COMMERCIAL EXPEDI ENCY, WHICH ALLOWABLE U/S 37 OF THE ACT. LD AR HAS FURTHER RELIED ON THE FOLLOWING CASE LAWS:- (I) (2011) 10 TAXMANN.COM 18 (DELHI ITAT). (II) BHARTI AIRTEL LTD. VS ACIT 48 DTR 416 (ITAT MUM BAI BENCH). (III) CIT VS. MADRAS AUTO SERVICE (P) LTD. 233 ITR 4 68 (SC) THEREFORE, HE PRAYED TO DELETE THE ADDITION. 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND GONE THROU GH THE CASE LAWS CITED BY THE ASSESSEE. THE ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF SHARES, INVESTMENT OF SHARE AND DEBENTURES. THE ASSE SSEE PAID RS. 5,13,060/- AS APPLICATION FEES FOR OBTAINING DESI M ADIRA RETAIL SHOP DURING THE YEAR UNDER CONSIDERATION BUT THE ASSESSEE COULD NOT BE SUCCEEDED IN GETTING THE RETAIL SHOP LICENSE. THE LIQUOR BUSINESS HAS NOT STARTED DURING THE YEAR UNDER CONSIDERATION IN ABSENCE OF LICENSE. THE ASSESSEE CLAIMED ITA 188/JP/2014_ PRASHANT TAK VS ACIT 6 THESE EXPENSES AGAINST THE INCOME OF SHARE BROKERIN G DURING THE YEAR UNDER CONSIDERATION. AS PER SECTION 37 OF THE ACT, ANY EXPENSE CAN BE CLAIMED BY THE ASSESSEE IN THE P&L ACCOUNT ONLY INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSE ES BUSINESS WAS NOT RUNNING OF DESI MADIRA RETAIL SHOP DURING THE YEAR, WHICH IS NOT RELATED TO THE MAIN BUSINESS OF THE ASSESSEE AT ALL. THE ASSESS EE HAD NOT DISCHARGED BURDEN OF PROOF LIES WITH HIM. THE CASE LAWS REFERRED BY THE ASSESSEE ARE NOT SQUARELY APPLICABLE AS IN CASE LAWS CITED BY THE ASSESSEE WERE IN THE SAME BUSINESS DURING THE YEAR UNDER CONSIDERATION. THEREFORE, WE CONFIRM THE ORDER OF THE LD CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 14 TH DECEMBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI PRASHANT TAK, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT ITA 188/JP/2014_ PRASHANT TAK VS ACIT 7 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 188/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR