Parakh Kothi Limited, Kolkata V. ITO, Ward - 9(3), Kolkata , Kolkata

ITA 2340/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1294 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 17-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: IMLIMERN JAMIR
• Keywords: Wrong claim; Bad and doubtful debts; Provision of bad debts

Judgement Text

ITA NO.2340/KOL/2017 PARAKH KOTHI LIMITED A.Y.2013- 14 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] ITA NO.2340/KOL/2017 ASSESSMENT YEAR : 2013-14 PARAKH KOTHI LIMITED -VERSUS- I.T.O., WARD -9 (3) KOLKATA KOLKATA (PAN: AABCP 6867 A) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI ANIL KOCHAR, ADVOCATE FOR THE RESPONDENT: SHRI IMLIMERN JAMIR, ADDL. CIT DATE OF HEARING : 07.03.2018. DATE OF PRONOUNCEMENT : 21.03.2018. ORDER PER J.SUDHAKAR REDDY, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-(A)-3, KOLKATA RELATING TO A.Y. 2013-14. 2. THE ASSESSEE IS A COMPANY. IT FILED ITS RETURN O F INCOME ON 25.09.2013 DECLARING TOTAL INCOME OF RS.10,06,090/-. THE CENTR AL PROCESSING CENTRE (CPC) PROCESSED THE RETURN U/S 143(1) OF THE ACT ON 22.04 .2014 AFTER MAKING AN ADJUSTMENT OF RS.4,73,140/-. THE ASSESSEE CARRIED THE MATTER I N APPEAL. THE LD.CIT(A) BROUGHT OUT THE FACTS RELATING TO THE ADJUSTMENT AT PAGE 2 TO 4 OF HIS ORDER WHICH IS EXTRACTED FOR READY REFERENCE :- THE ONLY ISSUE IN THE CASE IS THE CLAIM OF THE ASS ESSEE FOR ADJUSTMENT OF LOSS OF RS.4, ,73,140/- , SHOWN BY THEM UNDER THE HEAD 'OTH ER SOURCES', AGAINST THE HOUSE PROPERTY INCOME RETURNED BY THEM OF RS.14,79,230/-. IT IS THE CONTENTION OF THE APPELLANT THAT SET OFF OF THE LOSS AS CLAIMED UNDER THE HEAD 'OTHER SOURCES' HAS WRONGLY BEEN DENIED. ACCORDINGLY, IT WAS SUBMITTED THAT THE LOSS OF THE CURRENT YEAR UNDER THE HEAD 'OTHER SOURCES' OF R.4,73,140/- SHOULD BE ALLOWED TO BE SET OFF AGAINST THE HOUSE PROPERTY INCOME. THE BASIC FACTS OF THE CASE ARE THAT THE ASS ESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.10,06,090/- ON 25.09.2 013. THE CASE WAS PROCESSED BY THE CPC AND THE INTIMATION WAS ISSUED ON 22.04.2 014 WHEREIN THE LOSS ITA NO.2340/KOL/2017 PARAKH KOTHI LIMITED A.Y.2013- 14 2 CLAIMED BY THE ASSESSE UNDER THE HEAD 'OTHER SOURCE S' OF RS.4,73,140/-WAS NOT ALLOWED TO BE SET OFF AGAINST THE INCOME UNDER THE HEAD 'HOUSE PROPERTY'. THE APPELLANT IS THE OWNER OF THE BUILDING NAMED PARAKH KOTHI FROM WHICH RENTAL INCOME IS DERIVED. T HERE ARE NUMBER OF TENANTS IN THE BUILDING. APART F ROM THE RENT, THE ASSESSEE DERIVED SERVICE CHARGES FROM THE TENANTS. THE ANNUAL LETABLE VALUE HAS BEEN SHOWN BY THE APPELLANT AFTER REDUCIN G SERVICE CHARGES FROM THE RENT RECEIVED FROM THE TENANTS. IN THIS CASE, THE N ET ANNUAL VALUE, AFTER DEDUCTING SERVICE AND MISCELLANEOUS CHARGES FROM THE RENT, HA S BEEN DECLARED BY THE ASSESSEE AT RS.3778341/-. FURTHER, THE APPELLANT HA S CLAIMED ELECTRICITY EXPENSES OF RS.6,05,789/- AS A DEDUCTIBLE EXPENSE UNDER THE HEAD 'OTHER SOURCES'. IN THIS REGARD, IT IS OBSERVED THAT DEDUCTIONS UNDER THE HE AD 'HOUSE PROPERTY' HAS BEEN ENUMERATED UNDER SECTION 24. THESE DEDUCTIONS ARE S PECIFIED AND EXHAUSTIVE. NO FURTHER DEDUCTION, APART FROM THE ONES SPECIFIED U/ S.24, ARE ALLOWABLE TO THE APPELLANT WHILE COMPUTING THE INCOME UNDER THE HEAD 'HOUSE PROPERTY'. IN THIS CONTEXT, IT WAS OBSERVED THAT IN THE RETURN OF INCO ME THE ASSESEE HAS ALREADY CLAIMED DEDUCTION U/S.24(A), BEING THE STATUTORY DE DUCTION, FOR REPAIR AND MAINTENANCE CHARGES. THEREFORE, IT WAS NOTICED THAT THE ASSESSEE IS CLAIMING EXPENSES RELATED TO EARNING OF HOUSE PROPERTY INCOM E AGAINST THE INTEREST INCOME SHOWN UNDER THE HEAD 'OTHER SOURCES'. DEDUCTION FOR INCOME UNDER THE HEAD 'OTHER SOURCES' HAS BEEN SPECIFIED UNDER SECTION 57 . THE CONDITION FOR CLAIMING ANY DEDUCTION U/S.57 IS THAT THE EXPENSE SHOULD BE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME. O N PERUSAL OF SCHEDULE 12 OF THE ACCOUNTS OF THE APPELLANT, THE DETAILS OF RECEI PTS DECLARED UNDER THE HEAD 'OTHER SOURCES' ARE AS FOLLOWS:- INTEREST RECEIVED ON FIXED DEPOSITS - RS.L,08,100 .77 INTEREST ON IT REFUND - RS. 9,948.00 INTEREST ON SECURITY DEPOSIT WITH CESC - RS. 14,60 0.60 RS.L,32,649.37 FROM THE ABOVE, IT IS OBSERVED THAT THE ASSES SEE HAS SHOWN INTEREST INCOME OF RS.L,32,649/-. THE INTEREST INCOME HAS BEEN EARNED MAINLY FROM FIXED DEPOSITS FROM THE BANKS. NO EXPENSES HAVE BEEN INCURRED FOR EARNING THE INTEREST INCOME. THE ELECTRICITY EXPENSE IS FOR THE HOUSE PROPERTY I NCOME AND HAS NO RELATION OR NEXUS FOR THE PURPOSE OF EARNING INTEREST INCOME. T HEREFORE, IT WAS FELT THAT THE ELECTRICITY EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD 'OTHER SOURCES' OF RS.6,05,789/- HAD NOT BEEN EXPENDED WHOLLY AND EXCL USIVELY FOR EARNING INTEREST INCOME AND THEREFORE, THE SAME WAS NOT ALLOWABLE AS A DEDUCTIBLE EXPENSE U/S.57 . 3. HE GAVE A NOTICE TO THE ASSESSEE FOR ENHANCEMENT OF INCOME AND THEREAFTER ENHANCED THE INCOME TO RS.16,11,880/-. HE ALSO REC ORDED SATISFACTION U/S 271(1)(C) OF THE ACT AND ISSUED NOTICE FOR LEVYING PENALTY. AGGR IEVED THE ASSESSEE IS IN APPEAL. ITA NO.2340/KOL/2017 PARAKH KOTHI LIMITED A.Y.2013- 14 3 4. THE LD. COUNSEL FOR THE ASSESSEE SHRI ANIL KOCHA R SUBMITTED THAT THE CPC COULD NOT HAVE MADE AN ADJUSTMENT OF THIS NATURE WH ILE PROCESSING THE RETURN U/S 143(1)(A) OF THE ACT AS THIS IS A DEBATABLE ISSUE. HE SUBMITTED THAT THE ADJUSTMENT IS NOT A PRIMA FACIE ADJUSTMENT AND HENCE THE LD. CIT( A) SHOULD HAVE DELETED THE SAME. THE LD. CIT(A) INSTEAD OF HOLDING THAT THE ADJUSTME NT MADE BY CPC WHILE PROCESSING THE INTIMATION U/S 143(1) OF THE ACT IS BAD IN LAW, ENHANCED THE ASSESSMENT. HE SUBMITTED THAT WHAT THE CPC COULD NOT DO U/S 143(1) OF THE ACT, THE LD. CIT(A) COULD NOT HAVE DONE WHILE ADJUDICATING AN APPEAL AGAINST THE SAME. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, VEHEMENTLY CONTENDED THAT THE CLAIM IN QUESTION IS PRIMA FACIE INADMISSI BLE. HE POINTED OUT THAT THE ASSESSEE HAD CLAIMED ELECTRICITY CHARGES AS EXPENDITURE DEDU CTIBLE FROM INTEREST ON DEPOSITS. SUCH BLATANTLY WRONG CLAIM WAS RIGHTLY DISALLOWED A S A PRIMA FACIE ADJUSTMENT BY CPC. HE RELIED ON THE ORDER OF THE LD. CIT(A) AND S UPPORTED THE SAME. 6. AFTER HEARING THE RIVAL CONTENTIONS, PERUSING TH E PAPERS ON RECORD AND ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED, I HOLD AS FOLLOWS :- THE ASSESSEE IN ITS COMPUTATION OF INCOME HAS CLAIM ED ELECTRICITY CHARGES U/S 57(III) OF THE ACT AS EXPENDITURE INCURRED FOR EARN ING INTEREST ON SECURITY DEPOSIT. ADMITTEDLY THE ELECTRICITY CHARGES WERE INCURRED ON HOUSE PROPERTY ON WHICH THE ASSESSEE HAD EARNED RENTAL INCOME. THUS THIS IS A BLATANTLY WRONG CLAIM. I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE FIRST APPELLATE A UTHORITY, WHERE HE HAS UPHELD THE INTIMATION PROCESSED BY CPC. AS REGARDS THE ENHAN CEMENT OF THE INCOME, THE LD. CIT(A) HAS FOLLOWED A PROCEDURE LAID DOWN IN LAW BY ISSUING NOTICE TO THE ASSESSEE. HENCE I HAVE NO HESITATION IN UPHOLDING THE SAME AS FACTUALLY THE ASSESSEE COULD NOT CONTROVERT THESE FINDINGS. 6.1. THE LD COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS YOGEN D.SANGHVI FOR THE PROPOSITION THAT WHILE COMPUTING INCOME FROM HOUSE PROPERTY THE COMMON AR EA MAINTENANCE CHARGES AND ITA NO.2340/KOL/2017 PARAKH KOTHI LIMITED A.Y.2013- 14 4 NON-OCCUPANCY CHARGES PAID BY THE ASSESSEE TO THE S OCIETY HAD TO BE CONSIDERED. WE FIND THAT SUCH CHARGES WERE DIRECTED TO BE TAKEN IN TO CONSIDERATION WHILE COMPUTING THE ANNUAL LETTING VALUE U/S 22 OF THE ACT. THE DEC ISION DOES NOT APPLY TO THE FACTS OF THE CASE BECAUSE, IT LAYS DOWN THE PROCEDURE OF DET ERMINING THE ANNUAL LETTING VALUE OF A PROPERTY. WE ALSO FIND THAT THE DECISION OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF BAJAJ AUTO FINANCE LTD. VS CIT, PUNE 2018 ( 2) TMI 1716 ORDER DATED 23.02.2018 DOES NOT APPLY TO THE FACTS OF THE CASE, AS IT WAS NOT A CASE OF A BLATANTLY WRONG CLAIM MADE . THE PROVISION OF BAD DEBTS WAS M ADE AND THE AMENDED LAW WAS APPLIED WHILE PROCESSING THE RETURN. THIS WAS HELD AS BAD IN LAW. IN THIS CASE THE ISSUE IS NOT DEBATABLE. FOR ALL THE ABOVE REASONS I UPHOL D THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISM ISSED. O RDER PRONOUNCED IN THE COURT ON 21.03.2018. SD/- [ J.SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 21.03.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.PARAKH KOTHI LIMITED, C/O S.L.KOCHAR, ADVOCATE, 5 ASHUTOSH CHOWDHURY AVENUE, KOLKATA-700019. 2. I.T.O., WARD-9 (3), KOLKATA. 3. C.I.T.(A)- 3, KOLKATA 4. C.I.T-3, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES ITA NO.2340/KOL/2017 PARAKH KOTHI LIMITED A.Y.2013- 14 5