Sri. Venkateshwara Developers, V. AddlC.I.T,

ITA 237/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8699 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: P DINESH
• Keywords: Depreciation; Additional evidence; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.237(BNG)/2013 (ASSESSMENT YEAR : 2011-12) M/S SRI VENKATESHWARA DEVELOPERS, NO.51, LE PARC RICHMONDE, RICHMOND ROAD, BANGALORE PAN NO.AAFFS1671N APPELLANT VS THE COMMISSIONER OF INCOME-TAX(A), BANGALORE RESPONDENT ASSESSEE BY : SHRI P.DINESH, ADVOCATE REVENUE BY : DR.P.K.SRIHARI, ADDL.CIT DATE OF HEARING : 30-11-201 5 DATE OF PRONOUNCEMENT : 13-01-2016 O R D E R PER SHRI INTURI RAMA RAO, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), BANGALORE DAT ED 30-0-2013 FOR THE ASSESSMENT YEAR : 2009-10. 2. THE ASSESEE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL; 1. THE LD.CIT, BANGALORE HAS ERRED IN CONFIRMING T HE DISALLOWANCES AND ADDITIONS TO THE ADMITTED INCOME BY THE ASSESSING AUTHORITY BY NOT DELETING SUCH DISALLOWAN CES AND ADDITIONS IN TOTAL. 2 ITA NO.237 (B)/2013 2. WITHOUT PREJUDICE TO THE CIT(A) BANGALORE OUGHT NOT TO HAVE SUSTAINED HE DISALLOWANCE OF RS.8,29,642/- BEI NG INTEREST EXPENSES PAID TO THE CITI BANGALORE ON BOR ROWINGS. 3. THE CIT(A) BANGALORE OUGHT TO HAVE ALLOWED THE E XPENSES OF RS.25,40,000/- WHICH WAS CONSIDERED WRONGLY AS C APITAL EXPENDITURE BY THE ASSESSING AUTHORITY AND ALLOWING ONLY THE DEPRECIATION ON SUCH EXPENSES. 4. THE CIT(A) BANGALORE OUGHT TO HAVE CONSIDERED TH E DETAILS SUBMITTED ALONGWITH DOCUMENTS AS ADDITIONAL EVIDENC E UNDER RULE 46A(1) OF THE IT RULES. 5.THE CIT(A) BANGALORE OUGHT TO HAVE RELIED UPON TH E REMAND REPORT OF THE ASSESSING AUTHORITY WHICH IS AGAINST THE ASSESSEE, EQUITY AND JUSTICE. 6. THE CIT(A) BANGALORE OUGHT TO HAVE CONSIDERED TH E FACT THAT THE ADDITIONS TO THE TOTAL INCOME SAID TO HAVE BEEN AGREED BY THE REPRESENTATIVE BEFORE THE ASSESSING A UTHORITY WAS NOT AUTHORIZED BY THE APPELLANT. 7.WITHOUT PREJUDICE TO THE CIT(A) BANGALORE OUGHT T O HAVE APPRECIATED EVIDENCES AND DOCUMENTS FURNISHED IN SU PPORT OF THE GROUNDS OF APPEAL. 8. ON THE FACTS, THE ADDITIONS TO THE ADMITTED INCO ME AS SUSTAINED Y THE CIT(A) BANGALORE ARE EXCESSIVE, ARB ITRARY AND UNREASONABLE WHICH OUGHT TO BE REDUCED IN TOTAL . 3 ITA NO.237 (B)/2013 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM DERIVES INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. IT FILED ITS RET URN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 DECLARING TOTAL INCOME OF R S.8,88,72,350/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT W AS COMPLETED U/S 143(3) OF THE IT ACT, 1961 VIDE ORDER DATED 16-11-2011 AT A TOTAL INCOME OF RS.9,19,87,990/-. WHILE DOING SO, THE AO DISALLOWED A SUM OF RS.8.29,642/- BEING THE INTEREST PAID ON THE AMOUNTS BORROWED FRO M CLOSE RELATIVES, WHILE COMPUTING THE INCOME FROM HOUSE PROPERTY. FURTHER, DISALLOWED A SUM OF RS.25,40,000/- WHILE COMPUTING THE INCOME FROM OTHE R SOURCES ON THE GROUND THAT RS.16,90,000/- WAS SPENT TOWARDS PROVID ING COVERING FOR THE DRIVEWAY AND RS.8,50,000/- WAS SPENT TOWARDS PURCHA SE OF STORAGE UNITS AND FABRIC PANELS. THE AO HELD THESE TWO EXPENDITURES TO BE CAPITAL EXPENDITURE AND AFTER ALLOWING THE DEPRECIATION AT THE RATE OF 10% THEREON MADE NET ADDITION OF RS.22,86,000/-. 4. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER DISMISSED THE APPEAL. HENCE, THE AS SESSEE IS IN APPEAL BEFORE US. 4 ITA NO.237 (B)/2013 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INTEREST OF RS.8,29,642/- WAS NOT PAID TO THE SPECIFIED PERSONS , BUT PAID TO THE CITY BANK ON OVER DRAFT ACCOUNT AND THE DETAILS OF WHICH ARE FILED BEFORE THE LD.CIT(A) BY WAY OF ADDITIONAL EVIDENCE BY MAKING A N APPLICATION U/S 246A(1) OF THE IT ACT, 1961. THE LD. COUNSEL FOR THE ASSESS EE FURTHER SUBMITTED THAT HE EXPENSES OF RS.25,40,000/- WAS INCURRED ONLY IN THE NATURE OF REPAIRS AND MAINTENANCE AND THEY ARE NOT CAPITAL EXPENDITURE AN D SUBMITTED THE DETAILS OF EXPENDITURE. THE CIT(A) WITHOUT EXAMINING THE D ETAILS SIMPLY CONFIRMED THE ADDITION ON THE GROUND THAT DURING THE COURSE O F ASSESSMENT PROCEEDINGS. THE LEARNED AR OF THE ASSESSEE HAD CONCEDED FOR THE ADDITIONS IN RESPECT OF EXPENDITURE DISALLOWED HOLDING THAT IT IS CAPITAL E XPENDITURE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE IMPUGNED ADDITIONS WERE CONFIRMED BY T HE LEARNED CIT(A) SOLELY ON THE GROUND THAT THE LEARNED AR OF THE ASSESSEE A GREED FOR SUCH ADDITIONS. IT IS WELL SETTLED PRINCIPLES OF LAW THAT NO ADDITI ON CAN BE MADE SOLELY BASED ON THE CONCESSION MADE BY THE COUNSEL FOR THE ASSES SEE WITHOUT BRINGING ANY CORROBORATIVE MATERIAL ON RECORD IN SUPPORT OF THE ADDITIONS. FURTHER, WE FIND FROM THE RECORD AT THE STAGE OF PROCEEDINGS BEFORE THE LD.CIT(A) THAT THE 5 ITA NO.237 (B)/2013 ASSESSEE HAD FILED ADDITIONAL EVIDENCE IN SUPPORT O F THE CONTENTION THAT THE INTEREST WAS PAID NOT TO THE RELATED PARTIES, BUT T O CITI BANK AND ALSO THE EXPENDITURE OF RS.25,40,000/- WAS NOT INCURRED ON C APITAL ITEMS, BUT IT IS ONLY IN THE NATURE OF REPAIRS AND MAINTENANCE. THE LD. CIT(A) WITHOUT EXAMINING THE ADDITIONAL EVIDENCE MERELY CONFIRMED THE ADDITIONS. THUS, IN OUR CONSIDERED OPINION, THE INTEREST OF JUSTICE WOU LD BE MET, IF THE MATTER IS RESTORED TO THE FILE OF THE LD.CIT(A) FOR FRESH ADJ UDICATION IN THE LIGHT OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE HI M DURING THE COURSE OF HEARING OF THE APPEAL, AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE AS WELL AS TO THE AO. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH JANUARY, 2016. S D / - (VIJAYPAL RAO) SD/ - (INTURI RAMARAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE D A T E D : 13-01-2016 6 ITA NO.237 (B)/2013 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR,ITAT, BANGALORE