M/s SNC Power Corporation Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-12(3), Bangalore

ITA 2328/BANG/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7318 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-08-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 06-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KANNAN NARAYANAN JT BENGALURU
• Assessee Lawyers: S V RAVISHANKAR
• Section: 13; 22; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER IT A NO S . 2327 TO 2329/BANG/2018 ASSESSMENT YEAR S : 2010 - 11 TO 2012 - 13 M/S. SNC POWER CORPORATION PVT. LTD., (PRESENTLY KNOWN AS SHANKARNARAYANA CONSTRUCTIONS PVT. LTD.), SNC HOUSE, 4 TH FLOOR, NO.7, RESIDENCY ROAD, [OLD NO.9, RAJARAM MOHAN ROY ROAD] BENGALURU 560 025. PAN: AAJCS 7901C VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12(3), BENGALURU. AP PELLANT RESPONDENT APPELLANT BY : S HRI S.V. RAV ISHANKAR, ADVOCATE RESPONDENT BY : SHRI KANNAN NARAYANAN, JT. CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 17 . 0 8 .202 1 DATE OF PRONOUNCEMENT : 17 .0 8 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE THREE APPEALS ARE BY THE ASSESSEE DIRECTED AGAINST DIFFERENT ORDERS, ALL DATED 21.03.2018 OF THE CIT(APPEALS), B ENGALURU-6, BENGALURU FOR THE ASSESSMENT YEARS 2010-11 TO 2012-13. 2. THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON , THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 3. THE FIRST COMMON GROUND FOR CONSIDERATION IS WIT H REGARD TO DISALLOWANCE OF LEASE RENTAL EXPENSES BY OBSERVING THAT IT IS EXCESSIVE AND ITA NOS.2327 TO 2329/BANG/2018 PAGE 2 OF 5 UNREASONABLE. THE LEASE RENTAL EXPENSES CLAIMED BY THE ASSESSEE AND ALLOWED BY THE AO ARE AS FOLLOWS:- ASST. YEAR CLAIMED BY AS SESSEE ALLOWED BY THE AO 2 010 - 11 6,00,000 3,40,919 2011 - 12 6,00,000 3,73,120 2012 - 13 6,60,000 4,10,433 4. AGAINST THE ABOVE, THE ASSESSEE WENT IN APPEAL B EFORE THE CIT(APPEALS), WHO CONFIRMED THE ORDER OF THE AO. A GAINST THIS, THE ASSESSEE IS IN APPEALS BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.65/BANG/2013 FOR THE AY 2007-08 AND THE TRIBUNAL VIDE ORDER DATED 20.02.2020 HELD AS UNDER:- 6. AS PER GROUND NO. 6, THE GRIEVANCE OF THE ASS ESSEE IS ABOUT CONFIRMING OF THE DISALLOWANCE OF RS. 468,600 /- MADE BY THE AO TOWARDS THE LEASE RENT. IN THIS REGARD, IN P ARA (E) OF THE SYNOPSYS, IT IS SUBMITTED THAT THE ASESSEE HAS ALRE ADY DISALLOWED LEASE RENT OF RS. 6 LACS IN THE COMPUTATION OF INCO ME AVAILABLE ON PAGE 54 OF THE PAPER BOOK AND HENCE, DISALLOWANC E OF LEASE RENT BY THE AO AMOUNTS TO DOUBLE DISALLOWANCE AND T HEREFORE, IT SHOULD BE DELETED. WE FIND THAT AS PER THE COMPUTAT ION AVAILABLE ON PAGE 54 OF THE PAPER BOOK, AN ADDITION OF RS. 6 LACS IS MADE ON ACCOUNT OF LEASE RENT BUT THE SAME IS CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM HOUSE PROPERTY AND THE AO DISALLOWED RS. 6 LACS SO CLAIMED BY THE ASSESSEE AN D THERE IS NO SEPARATE DISALLOWANCE OF RS. 480,000/-. THE CONTENT ION THAT THERE IS DOUBLE DISALLOWANCE IS NOT CORRECT BECAUSE DEDUC TION IS VERY MUCH CLAIMED IN THE COMPUTATION AVAILABLE ON PAGE 5 4 OF THE PAPER BOOK AND IT IS DISALLOWED BY THE AO BY OBSERV ING THAT FOR COMPUTING INCOME UNDER THE HEAD HOUSE PROPERTY, DED UCTION ON ACCOUNT OF GROUND RENT IS NOT ALLOWABLE. WE FIND NO INFIRMITY IN THE ORDER OF CIT (A) ON THIS ISSUE. ACCORDINGLY, GR OUND NO. 6 IS ALSO REJECTED. ITA NOS.2327 TO 2329/BANG/2018 PAGE 3 OF 5 6. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TR IBUNAL, WE ARE INCLINED TO DISMISS THE GROUND OF THE ASSESSEE ON S IMILAR LINES. 7. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE T OWARDS AMORTIZATION OF LEASE EXPENSES. THE APPELLANT HAS TAKEN UP A PR OPERTY ON LEASE FOR 28 YEARS AND CONSTRUCTED A BUILDING THEREON OUT OF WHI CH 14,300/- SQ.FT. IS BEING USED FOR PURPOSES OF BUSINESS AND CONSEQUENTL Y THE PROPORTIONATE EXPENSES REQUIRE TO BE ALLOWED AS REVENUE. THE TOTA L EXPENDITURE INCURRED ON CONSTRUCTION IS RS.4,24,17,518/-AND PROPORTIONAT E COST OF CONSTRUCTION OF BUSINESS PREMISE IS RS.1,38,17,089/- [ (RS.4,24,17, 518/- / 43,900 SQ. FT) * 14,300 SQ. FT]. THE SAME IS CLAIMED AS REVENUE EXPE NDITURE FOLLOWING THE RATIO OF THE HONBLE MADRAS HIGH COURT DECISION IN THE CASE OF M/S. TVS LEAN LOGISTICS LTD., VS. CIT REPORTED IN 293 ITR 432 (MAD). IT IS FURTHER SUBMITTED THAT THE HON'BLE APEX COURT IN THE CASE O F CIT VS. M/S. TAMILNADU POLICE HOUSING CORPORATION, REPORTED IN 3 13 ITR [STATUTE] 28 , HAS ALSO DISMISSED THE DEPARTMENT'S SPECIAL LEAVE P ETITION. IT IS FURTHER SUBMITTED THAT THE APPELLANT HAS AMORTIZED THE COST OF BUILDING ATTRIBUTABLE TO THE LET-OUT PORTION AND CLAIMED AS REDUCTION FRO M THE RENTAL RECEIPTS AND RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF SHANKARNARAYANA INDUSTRIES AND PLANTATIONS PVT. LTD. IN ITA NO.860/ BANG/93, 783/BANG/94 & 661/BANG/95 DATED 22.08.1997. THUS IT IS SUBMITTED THAT THE AMOUNT OF RS. 1,38,17,089/- REQUIRES TO BE ALLOWABLE AS REVENUE E XPENDITURE. SIMILAR ARE THE FACTS FOR THE OTHER ASSESSMENT YEARS, WITH ONLY CHANGE IN THE FIGURES. 8. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE T HE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.65/BANG/2013 FOR THE AY 2007-08 AND THE TRIBUNAL VIDE ORDER DATED 20.02.2020 HELD AS UNDER: - 7. AS PER GROUND NO. 7, THE GRIEVANCE OF THE ASS ESSEE IS ABOUT CONFIRMING OF THE DISALLOWANCE OF RS. 10,21,444/- M ADE BY THE AO TOWARDS THE ASSESSEES CLAIM FOR AMORTIZATION OF THE COST OF THE LETOUT PROPERTY. IN THIS REGARD, IN PARA (B) OF THE SYNOPSYS, IT IS SUBMITTED RELIANCE IS PLACED ON THE TRIBUNAL ORD ER RENDERED IN ITA NOS.2327 TO 2329/BANG/2018 PAGE 4 OF 5 THE CASE OF SHANKARNARYANA INDUSTRIES AND PLANTATIO NS PVT. LTD. IN ITA NO. 860/BANG/1995 DATED 22.08.1997. COPY OF THI S TRIBUNAL ORDER IS ALSO SUBMITTED. IN THIS TRIBUNAL ORDER, TH E TRIBUNAL HAS NOTED ABOUT ANOTHER TRIBUNAL ORDER WHICH IS AGAINST THE ASSESSEE BUT THE TRIBUNAL FOLLOWED THAT TRIBUNAL ORDER WHICH IS IN FAVOUR OF THE ASSESSEE BUT IT IS NOT CLEAR AS TO WHAT IS THE EXACT BASIS OF THOSE TRIBUNAL ORDERS WHICH ARE IN FAVOUR OF THE AS SESSEE BY HOLDING THAT THERE IS DIVERSION OF A PORTION OF INC OME AT SOURCE. IN THE TRIBUNAL ORDER WHICH IS AGAINST THE ASSESSEE HA VING BEEN RENDERED IN THE CASE OF L. S. ENTERPRISES IN ITA NO . 940/BANG/1989 DATED 21.02.1995, THE ISSUE WAS DECID ED AGAINST THE ASSESSEE ON THIS BASIS THAT NO SUCH DEDUCTION I S ALLOWABLE U/S 23 AND 24 OF I. T. ACT. SINCE, A VALID BASIS IS GIV EN BY THE TRIBUNAL FOR DECIDING THE ISSUE AGAINST THE ASSESSEE AND THE RE IS NO VALID BASIS IN THE TRIBUNAL ORDER IN WHICH, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND SINCE, NO DEDUCTION IS IN FACT ALLOWABLE U/S 23 & 24 OF THE I T ACT ABOUT COST OF BUILDING LET OUT EVEN IF CONSTRUCTED ON LEASE HOLD LAND AND FOR COMPUTING AN NUAL RENT U/S 22 & 23, WHAT IS RELEVANT IS THE AMOUNT OF RENT REC EIVED OR RECEIVABLE AND THERE IS NO SCOPE OF ANY DEDUCTION O N ACCOUNT OF DIVERSION OF A PORTION OF INCOME AT SOURCE, WE HOLD THAT THIS CLAIM OF THE ASSESSEE IS NOT ALLOWABLE. ACCORDINGLY, GROU ND NO. 7 IS ALSO REJECTED. 9. IN VIEW OF THE AFORESAID ORDER OF THE TRIBUNAL, WE DISMISS THIS GROUND OF APPEAL BY THE ASSESSEE. 10. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMI SSED. PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF AUGUST, 2021. SD/- SD/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 17 TH AUGUST, 2021. / DESAI S MURTHY / ITA NOS.2327 TO 2329/BANG/2018 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.