MAHINDRA LIFESPACE DEVELOPERS LTD, MUMBAI V. ACIT CIR 6(3), MUMBAI

ITA 1899/MUM/2009

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6045 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard; Additional evidence; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 1899 /M/ 20 09 ASSESSMENT YEAR : 2005 - 0 6 MAHINDRA LIFESPACE DEVELOPERS LTD. 5 TH FLOOR, MAHINDRA TOWERS, ROAD NO.13, WORLI, MUMBAI - 400018. VS. ACIT CIRCLE6(3), ROOM NO.522, AAYAKAR BHAVAN, M.K ROAD, MUMBAI. ./ ./ PAN/GIR NO. : ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 03 . 0 4 .2018 DATE OF PRONOUNCEMENT : 02.07 . 201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 24 . 12 .20 08 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - VI , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 05 - 06 . IN FACT, THE APPEAL HAS ALREADY BEEN HEARD AND DECIDED BY VIRTUE OF ORDER DATED 19.10.2016 BUT THE ISSUES NO. 7 & 8 IN ITA. NO.1899/M/2009 WERE NOT ADJUDICATED, THEREFORE, THE ASSESSEE FILED THE MISCELLANEOUS APPLICATION BEARING NO .155/M/2017 AND BY CONSIDERING THE MISCELLANEOUS APPLICATION, THE BENCH RECALLED THE ORDER TO THE EXTENT ASSESSEE BY: SHRI PRASAD BAPAT DEPARTMENT BY: SHRI H. N. SINGH (DR) ITA. NO. 1899 / M/20 09 A.Y. 2005 - 06 2 OF ADJUDICATION OF THE ISSUES NO. 7 & 8 BY VIRTUE OF ORDER DATED 22.09.2017 IN THE SAID MISCELLANEOUS APPLICATION. 2 . IN BRIEF, THE FACTS HAVE ALREADY BEEN DESCRIBED WHILE DECIDING THE PRESENT APPEAL BY VIRTUE OF ORDER DATED 19.10.2016 , THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. THE FOLLOWING ISSUES WHICH ARE AT THE NOS. OF 7 & 8 ARE REQUIRED TO BE ADJUDICATED. 7. ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE LD. CIT(A), ERRED IN CONFIRMING DISALLOWANCE OF RS.34,04,138/ - AS PER THE PROVISION OF SECTION 40A(2)(A)&(B). 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING DISALLOW ANCE OF CLUB MEMBERSHIP EXPENSES OF RS.1,50,000/ - AS CAPITAL EXPENDITURE. ISSUE NO . 7 : - 3 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLEN GED THE CONFIRMATION OF DISALLOWANCE OF RS.34,04,138/ - AS PER THE PROVISION OF SECTION 40A(2)(A) & (B) OF THE ACT. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE PURCHASED THE 22 ACRES OF LAND IN CONSIDERATION OF RS.8.80 CRORES. THE ASSESSEE SUBMITTED THE DET AILS OF STAMP DUTY PAID IN RESPECT OF 21.15 ACRES. THE AO MISUNDERSTOOD THAT THE CONSIDERATION PAID FOR RS.21.15 ACRES AS THE CONS IDERATION WAS PAID FOR 22 ACRES, THEREFORE, THE ASSESSING OFFICER DISALLOWED THE EXCESS CONSIDERATION U/S 40 A(2)(B) OF THE ACT . THE ACTION OF THE AO WAS UPHELD BY THE CIT (A). T HE CONTENTION OF THE LD. REPRESENTATIVE OF THE ASSESSEE IS ITA. NO. 1899 / M/20 09 A.Y. 2005 - 06 3 THAT THE DOCUMENTS WERE NO T FURNISHED BEFORE THE AO AND BEFORE THE CIT(A) . THE ASSESSEE WANTED TO FURNISH THE LEASE - DEED DATED 31.03.2006 FOR 2 1.15 ACRE AND LEASE - DEED DATED 18.06.2008 FOR 0.85 ACRE WHICH LIES AT PAGE NO. 1 TO 33 OF THE PAPER BOOK. THE ASSESSEE WANTED TO PRODUCE THESE DOCUMENTS BEFORE THE AO AS ADDITIONAL EVIDENCE. SINCE THE EVIDENCE SEEMS TO BE RELEVANT TO ADJUDICATE THE MATTER OF CONTROVERSY, THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE IS REQUIRED TO BE EXAMINED AND VERIFIED AT THE END OF THE ASSESSING OFFICER IN THE INTEREST OF JUSTICE , THEREFORE, WE ADMIT THE ADDITIONAL EVIDENCE ON RECORD AND SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESTORED THE MATTER BEFORE THE AO TO CONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE EVIDENCE ADDUCED BY THE ASSESSEE . B EFORE PASSING THE ORDER , IT IS INCUMBENT UPON THE AO TO PROVIDE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDA NCE WITH LAW. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. I SSUE NO 8 : - 4 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWANCE OF CLUB MEMBER SH IP EXPENSES TO THE TUNE OF RS.1 , 5 0 , 000/ - . THE AO DISALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING THAT THE EXPENDITURE WAS PERSONAL IN NATURE AND ALSO CAPITAL IN NATURE . T HE CIT(A) CONFIRMED THE SAME. THE ASSESSEE PAID THE EXPENSES TOWARDS FACILITY OF THE CLUB TO THE TUNE OF RS.25,457/ - WHICH ITA. NO. 1899 / M/20 09 A.Y. 2005 - 06 4 WAS NOT D ISPUTED BY ASSESSING OFFICER. THE ASSESSEE PAID TO THE TUNE OF RS.15,00,000/ - FOR 10 YEARS AND AMORTIZED THE CLAI M TO THE EXTENT OF 1/10 TH IN YEAR I.E. AN AMOUNT OF RS.1,50,000/ - . IT IS TO BE SEEN WHETHER THE CLUB FACILITIES HAVE BEEN USED FOR BUSINESS PUR POSE OR NOT. HOWEVER, AT THE TIME OF ARGUMENT, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN CASE OF UNITED GLASS MFG. CO. LTD . (CIVIL APPEAL NO.6449/2012) AND THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF BAYER CROP S CIENCE (ITA. 7978/M/2010) . THE PAYMENT TO THE CLUB IS NOT IN DISPUTE AND SO FAR AS THE CLAIM TO THE EXTENT OF 1,50,000/ - IN THE YEAR UNDER CONSIDERATION IS ALSO NOT IN DISPUTE BUT IT IS REQUIRED TO BE SEEN WHETHER THE SAID AMOUNT WAS PAID FOR BUSINESS PURPOSE OR NOT. THE LAW RELIED BY THE ASSESSEE ALSO SPEAKS ABOUT THE ALLOWANCE OF THE C LAIM WHEN THE ASSESSEE BOOK THE CLUB FACILITY FOR BUSINESS PURPOSE, THEREFORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT IT IS REQUIRED TO BE EXAM INED BY THE AO THAT FACILITY WAS BEING USED BY BUSINESS PURPOSE OR NOT. THEREFORE, THE FINDING OF THE CIT(A) IS HEREBY ORDERED TO BE SET ASIDE AND THE ISSUE IS HEREBY RESTORED TO THE AO TO EXAMINE THE MATTER AFRESH IN VIEW OF THE SAID ABOVE OBSERVATION IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA. NO. 1899 / M/20 09 A.Y. 2005 - 06 5 IN RESULT, APPEAL THE ISSUE NOS. 6 & 7 ARE HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE . 5 . THIS ORDER SHALL ALSO WILL BE PART AND PARCEL OF THE ORDER PASSED BY THE ITAT IN ITA. NO.1899/M/2009 FOR THE A.Y. 2005 - 06 DATED 19.10.2016. ACCORDINGLY, THE APPEAL IS HEREBY DISPOSED OF. 6 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 02.07 . 2018 . SD/ - SD/ - ( RAJENDRA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 02.07 . 2018 . VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI