KISH REALTY P. LTD, MUMBAI V. DCIT 9(2), MUMBAI

ITA 2229/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9852 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: YAGNESH DESAI; HEMANT BAHEDIA LD ARS
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

ITA NO 2229/MUM/2013 KISH REALTY PRIVATE LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 2229/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) KISH REALTY P RIVATE LIMITED B-1/1 MAYUR MA KRUPA CHSL SHIMPOLI ROAD BORIVALI(W) MUMBAI 400 092 / VS. DEPUTY COMMISSIONER OF INCOME TAX 9(2) ROOM NO.218, 2 ND FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI -400 020 ./ ./PAN/GIR NO. AACCK-5830-B ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : YAGNESH DESAI & HEMANT BAHEDIA, LD. ARS REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 24/08/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 ITA NO 2229/MUM/2013 KISH REALTY PRIVATE LIMITED ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF LD. COMMISSIONER OF IN COME TAX (APPEALS)-20 [CIT(A)], MUMBAI DATED 13/12/2012 QUA CONFIRMATION OF CERTAIN ADDITIONS. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ASSESSED U/S 143(3) FOR IMPUGNED AY ON 22/12/2011 AT RS.36,74,270/- AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.30,14,934/- E-FILED BY THE ASSESSEE ON 29/09/2009. THE LD. AO NOTED THAT THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS ACTIVITY DURING THE YEAR. THE ASSESSEE HAS SUFFERED ADDITION OF RS.1,75,323/- U/S 41(1) AND ANOTHER ADDITION OF RS. 2,67,288/- UNDER THE HEAD HOUSE PROPERTY AND BOTH THESE ADDITIONS ARE THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE OUTSTANDING LIABILITY OF RS.1,75,323/- REFLECTED BY ASSESSEE AG AINST A CONCERN NAMELY COZY FURNITEK PVT. LTD. WAS OUTSTANDING SINCE A LONG PERIOD OF TIME AND HENCE THE SAME, IN THE OPINION OF LD. AO, CALLED FO R ADDITION U/S 41(1). THE ASSESSEE CONTENDED THAT THE LIABILITY HAD NOT C EASED TO EXIST AND THE SAME WAS PAYABLE ON DEMAND. HOWEVER, NOT CONVIN CED, THE LD. AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 41 (1). 2.3 THE SECOND ADDITION PERTAINED TO ADDITION OF RS .2,67,288/- UNDER THE HEAD HOUSE PROPERTY TO ACCOUNT FOR DISCREPANCY IN RENT REFLECTED BY ITA NO 2229/MUM/2013 KISH REALTY PRIVATE LIMITED ASSESSMENT YEAR 2009-10 3 THE ASSESSEE VIS--VIS CONTRACTUAL RENT AS PER THE RENT AGREEMENT. IT WAS NOTED THAT THE ASSESSEE REFLECTED RENT OF RS.73 ,76,712/- FROM TWO ENTITIES NAMELY COLOUR ROOF INDIA LTD. & KLT AUTOMOTIVE AND TUBULAR PRODUCTS LTD .. HOWEVER, THE SAME AS PER RENTAL AGREEMENT WAS RS.76,44,000/-. RESULTANTLY, THE DIFFERENTIAL AMOUN T OF RS.2,67,288/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 13/12/2 012 WHERE THE ADDITION U/S 41(1) WAS CONFIRMED BY PLACING RELIANC E ON THE DECISION OF APEX COURT RENDERED IN CIT VS SUGAULI SUGAR WORKS PVT. LTD. [1999 236 ITR 518] . REGARDING ADDITION OF RS.2,67,288/- ON ACCOUNT OF DIFFERENTIAL RENT, THE ASSESSEE CONTENDED THAT THERE WAS DISPUTE AS TO SERVICES RENDERED BY THE ASSESSEE AND THEREFORE, THE IMPUGNE D AMOUNT WAS DEDUCTED BY THE RESPECTIVE PARTIES AND HENCE, NOT O FFERED TO TAX. HOWEVER, NOT CONVINCED, LD.CIT(A) CONFIRMED THE SAM E ON THE PREMISES THAT NO VERIFIABLE EVIDENCES COULD BE FURNISHED BY THE ASSESSEE TO SUPPORT THESE CONTENTIONS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. REPRESENTATIVE FOR ASSESSEE [AR] WHILE D RAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER BOOK , EXPLAINED THAT THE ASSESSEE PURCHASED FURNITURE FROM THE SAID CREDITOR S WHICH WAS CAPITALIZED IN THE BOOKS OF ACCOUNTS AND DEPRECIATI ON WAS CLAIMED AGAINST THE SAME. HOWEVER, THE AMOUNT OUTSTANDING D ID NOT CEASE TO EXIST BUT PAYABLE ON DEMAND. PER QUERY FROM THE BEN CH THAT WHETHER THE OUTSTANDING AMOUNT WAS PAID SUBSEQUENTLY AT ANY POI NT OF TIME, LD. AR FAIRLY CONCEDED THAT THE SAME WERE NEVER PAID AT AN Y TIME IN SUBSEQUENT ITA NO 2229/MUM/2013 KISH REALTY PRIVATE LIMITED ASSESSMENT YEAR 2009-10 4 YEARS. THE LD. AR, IN THE ALTERNATIVE, PLEADED THAT SINCE THE FURNITURE HAS BEEN CAPITALIZED IN THE BOOKS, THE OUTSTANDING PAYM ENT BE REDUCED FROM FURNITURE & FIXTURES WHICH WOULD RESULT INTO LOWER DEPRECIATION CLAIM F OR THE ASSESSEE. WE FIND THE SAME TO BE FAIR AND REASO NABLE AND DIRECT THE LD. AO TO REDUCE THE OUTSTANDING AMOUNT FROM THE FURNITURE & FIXTURES ACCOUNT AND REDUCE PROPORTIONATE DEPRECIATION AGAINST THE SAME. THIS GROUND OF ASSESSEES APPEAL STANDS ALLOWED FOR STAT ISTICAL PURPOSES. 5. REGARDING ADDITIONS AGAINST DIFFERENTIAL RENT, THE LD. AR REITERATED THE CONTENTIONS AS RAISED BEFORE LOWER AUTHORITIES AND PLACED RELIANCE ON SECTION 25A WHEREAS LD. DR CONTENDED THAT THE ASSES SEE WAS OBLIGED TO OFFER RENTAL INCOME AS PER THE AGREEMENT SINCE N O DOCUMENTARY EVIDENCES WERE FURNISHED BY HIM TO SUPPORT THE CONT ENTION THAT THE DIFFERENTIAL RENT WAS UNDER DISPUTE. 6. HEARD THE RIVAL CONTENTIONS. WE FIND THAT AS PER PROVISIONS OF SECTION 23(1)(B), THE ASSESSEE WAS OBLIGED TO OFFER THE ACTUAL RENT RECEIVED OR RECEIVABLE . THE LD. AR HAS CONTENDED THAT THE DIFFERENTIAL RENT HAS BEEN DISPUTED AND NOT PAID BY THE RESPECTI VE TENANTS AND HENCE, NOT RECEIVABLE. IN SUPPORT, THE LEDGER COPIE S OF THE TENANTS HAVE BEEN SUBMITTED BEFORE US. WE FIND STRENGTH IN THE A RGUMENTS OF LD. AR SUBJECT TO VERIFICATION OF THIS FACT. THEREFORE, WH ILE AGREEING IN PRINCIPLE THAT THE ASSESSEE WAS OBLIGED TO OFFER THE ACTUAL R ENT RECEIVED OR RECEIVABLE, THE MATTER IS RESTORE BACK TO THE FILE OF LD. AO TO VERIFY THIS CONTENTION OF THE ASSESSEE, WHO, IN TURN, IS DIRECT ED TO PROVIDE DOCUMENTARY EVIDENCES LIKE CONFIRMATION FROM THE TE NANTS ETC. TO SUBSTANTIATE THE SAME. THIS GROUND OF ASSESSEES AP PEAL ALSO STANDS ALLOWED FOR STATISTICAL PURPOSES. ITA NO 2229/MUM/2013 KISH REALTY PRIVATE LIMITED ASSESSMENT YEAR 2009-10 5 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. #&. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI