U.V. Business Centre P Ltd., New Delhi V. ITO, New Delhi

ITA 205/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58915 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C B SINGH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `H : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.205/DEL./2012 (ASSESSMENT YEAR : 2008-09) U.V. BUSINESS CENTRE, VS. ITO, WARD 18(2) 257, CYCLE MKT., JHANDEWALAN EXTN., NEW DELHI. NEW DELHI. (PAN/GIR NO.AAACU1431E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KVSR KRISHNA, CA REVENUE BY : SHRI C.B. SINGH, SR.DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A)- XXI, NEW DELHI DATED 02.09.2011, RELEVANT TO ASSESS MENT YEAR 2008-09, WHEREBY SUSTENANCE OF DISALLOWANCE OF RS.5,91,483/- OUT OF EXPENSES CLAIMED IN PROFIT & LOSS A/C HAS BEEN CHALLENGED. 2. THE FACTS INDICATE THAT THE ASSESSEE COMPANY DER IVES ITS INCOME FROM RENTED PROPERTY AND IS ALSO STATED TO BE ENGAGED IN OTHER ACTIVITIES LIKE LAND DEVELOPERS AND CONTRACT BUSINESS. DURING THE YEAR UNDER CONSIDERA TION, IT HAD CLAIMED VARIOUS EXPENSES UNDER DIFFERENT HEADS ON TOTAL OF 17 ITEMS, AMOUNTI NG TO RS.6,63,041/-. THE ASSESSING OFFICER HAS ALLOWED ONLY RS.71,556/- AND HAS DISALL OWED RS.5,91,485/- WHICH RESULTED IN AN ADDITION OF THE SAME AMOUNT AND ASSESSEE IN APPE AL HAS CHALLENGED SUCH DISALLOWANCE/ADDITION. I.T.A. NO.205/DEL./2012 (A.Y. : 2008-09) 2 3. BEFORE FIRST APPELLATE AUTHORITY, IT WAS SUBMITT ED THAT ASSESSEE HAS RENTAL INCOME OF RS.18,55,267/- (ON ACCOUNT OF RENT RECEIVED AND ACCRUED), SERVICE CHARGES OF RS.2,86,224/-, INTEREST ON INCOME TAX REFUND OF RS. 37,800/- AND INTEREST ON FIXED DEPOSIT OF RS.13,368 AND AGAINST SUCH INCOME ASSESSEE CLAIM ED EXPENDITURE OF RS.6,63,041/- IN THE PROFIT & LOSS A/C WITH RESPECT TO 17 ITEMS AND ASSESSING OFFICER WHILE ALLOWING 25% OF SERVICE CHARGES AMOUNTING TO RS.71,556/-, HAS TR EATED BALANCE OF SERVICE CHARGES AS INCOME FROM OTHER SOURCES AND MADE TOTAL ADDITION IN THE AMOUNT OF RS.5,91,487/- BY HOLDING THAT NO BUSINESS HAS BEEN CARRIED OUT BY TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT IN THIS CASE NO DOUBT FOR THIS AND EARLIER YEAR, THERE WAS NO BUSINESS INCOME, BUT THESE EXPENSES ARE ALLO WABLE AS THERE WERE NECESSARILY TO BE INCURRED BY THE ASSESSEE, BUT PLEA OF THE ASSESSEE WAS NOT ACCEPTED AND CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER TO SUSTAIN THE IMPUGNE D DISALLOWANCE/ADDITION. 4. STILL AGGRIEVED, THE ASSESSEE HAS COME UP IN FUR THER APPEAL AND IT WAS SUBMITTED THAT NO DOUBT FOR IMMEDIATELY PRECEDING YEAR AND FO R THE YEAR UNDER CONSIDERATION, NO BUSINESS ACTIVITIES WAS CARRIED OUT BECAUSE THERE W AS TEMPORARY LULL IN THE LINE OF BUSINESS OF THE ASSESSEE, BUT SINCE THESE EXPENSES HAVE BEEN INCURRED BECAUSE ASSESSEE HAS TO MAINTAIN PROPER INFRASTRUCTURE AND PERSONNEL FOR MA NAGEMENT PURPOSES IN THE LINE OF BUSINESS OF PROMOTERS AND DEVELOPERS OF LAND AND IF CONSTRUCTION HAS BEEN PUT ON HOLD, BECAUSE OF THE MARKET CONDITION, THE CLAIM OF THE A SSESSEE ABOUT EXPENSES COULD NOT BE DENIED. IT WAS THUS PLEADED FOR DELETION OF THE IM PUGNED ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASE LAWS: I.T.A. NO.205/DEL./2012 (A.Y. : 2008-09) 3 1. SASSOON J. DAVID AND CO. PVT. LTD. VS. CIT (1979 ), 118 I.T.R. 261(SC) 2. CIT, VS. BHAGWATI REROLLING MILLS (1995), 211 I. T.R. 227 (RAJ.) 3. CIT VS. ANITA JAIN (2009), 182 TAXMAN 193(DEL.). 4. DCIT VS. FORTUNE GARMENTS LTD. (2011), 7 I.T.R. 243(DEL.) 5. LD.DR WHILE RELYING UPON THE BASIS AND REASONING AS GIVEN BY THE CIT(A) HAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER AS A SSESSEE HAS NOT DONE ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION, AND ALSO FOR E ARLIER YEAR, SO, ASSESSEE DID NOT HAVE ANY BUSINESS INCOME, MAINLY ASSESSEE HAS EARNED REN TAL INCOME AND SERVICE CHARGES. THEREFORE, THE EXPENSES AS CLAIMED BY THE ASSESSEE COULD NOT BE ALLOWED AND WITH RESPECT TO SERVICE CHARGES, ASSESSING OFFICER HAS HIMSELF A LLOWED 25% OF SUCH EXPENSES AND ASSESSEE HAS NOT BEEN ABLE TO MAKE OUT A CASE FOR F URTHER ALLOWANCE. IT WAS THUS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER. 6. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD, AND CASE LAWS CITED ABOVE AND FIND THAT THE BASIS AND REASONING TO ARRIVE AT THE CONCLUSION AS DRAWN BY CIT(A) IN ORDER TO UPHOLD THE ACTION OF THE ASSESSI NG OFFICER ARE SOUND AND CONVINCING. ASSESSEE HAS FAILED TO ESTABLISH THAT IT HAS CONDUC TED ANY BUSINESS ACTIVITIES DURING THE YEAR UNDER CONSIDERATION OR THE EXPENDITURE INCURRE D HAS ANY RELATION WITH THE INCOME EARNED AND MOREOVER FOR TWO YEARS, NO BUSINESS WAS CARRIED ON AS ADMITTED BY THE ASSESSEE . THE THEORY OF TEMPORARY LULL AS CANVASS ED BY THE ASSESSEE HAS ALSO NOT BEEN SUBSTANTIATED AND IT IS ALSO NOT THE CASE OF THE AS SESSEE THAT ALLOWANCE OF 25% ALLOWED AGAINST SERVICE CHARGES IS UNREASONABLE OR INADEQUA TE. SINCE, RECEIPT OF SERVICE CHARGES IS NOT A BUSINESS INCOME OF THE ASSESSEE, IT HAS CO RRECTLY BEEN HELD AS INCOME FROM OTHER SOURCES AND REASONABLE DEDUCTION OF 25% HAS ALREADY BEEN ALLOWED. THEREFORE, WE DO I.T.A. NO.205/DEL./2012 (A.Y. : 2008-09) 4 NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE IN THE ORDER PASSED BY THE CIT(A) WHICH IS CONFIRMED AND APPEAL OF THE ASSESSEE BEING DEVOID O F ANY MERITS, IS DISMISSED. 6. AS SUCH, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23/03/2012. SD/- SD/- (K.G. BANSAL) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : MARCH 23, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXI, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT