DCIT 8(1), MUMBAI V. BEECHINS CREATIONS P. LTD, MUMBAI

ITA 2430/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8533 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAV

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.2430/M/2010 ASSESSMENT YEAR 2005-06 THE ACIT 8(1), R.NO.210, 2 ND FLOOR, M/S. BEECHINS CREATIONS PVT. LTD. AAYAKAR BHAVAN UNIT NO.2 ANDHERI INDL. ESTATE M.K.ROAD, MUMBAI 400 020. OFF VEERA DESAI ROAD, A NDHERI (E) MUMBAI 400 058. PAN : AAACB2280Q APPELLANT RESPONDENT REVENUE BY : SHRI R.S.SRIVASTAV ASSESSEE BY : NONE O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.1.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ONLY DISPUTE RAISED BY THE REVENUE IS REGARDING ADDITION MADE ON ACCOUNT OF DI SALLOWANCE OF EXPENSES WHICH HAS BEEN DELETED BY THE CIT(A). 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF COTTON KNIT TED GARMENTS HAD CLOSED DOWN ITS BUSINESS. HE THEREFORE DISALLOWED THE CLAI M OF EXPENSES AS MENTIONED BELOW: 2 I) WAGES AND SALARIES TO STAFF RS.8,08,075/- II) STAFF WELFARE RS. 53,633/- III) RENT RS.13,34,326/- IV) RATES AND TAXES RS. 54,788/- V) REPAIRS RS. 1,070/- VI) AUDIT FEES RS. 7,500/- VII) INSURANCE RS. 6,78,878/- VIII) CONVEYANCE RS. 1,780/- IX) MISC. EXPENSES RS. 67,025/- X) TRAVELING EXPENSES RS. 31,250/- 3. IN APPEAL THE ASSESSEE SUBMITTED THAT EVEN IF NO BUSINESS WAS CARRIED OUT THE ASSESSEE HAD TO PAY FOR ITS WORKERS, FOR RE PAIRS AND MAINTENANCE OF PLANT AND FACTORY, FOR INSURANCE OF PLANT AND OTHER ASSETS, AUDIT FEES ETC. THE ASSESSEE HAD CLAIMED ONLY THE EXPENSES WHICH WERE N ECESSARY TO PROTECT ITS PLANT AND MACHINERY AND OTHER BUSINESS ASSETS WHICH WERE ALLOWABLE. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE HIGH COURT OF MUMBAI IN CASE OF HINDUSTAN CHEMICAL WORKS LTD. VS CIT (124 ITR 561) IN WHICH THE HONBLE HIGH COURT HAD HELD AS UNDER : THE ASSESSEE STOPPED HIS BUSINESS OF MANUFACTURING OF CHEMICALS DUE TO ACUTE FINANCIAL STRINGENCY. THE EXPENDITURE INCURRE D THEREAFTER ON OFFICE SALARIES, MACHINERIES DISMANTLING CHARGES, RENT, RA TES, TAXES AND INSURANCE, POSTAGE, TELEGRAM, TELEPHONE AND OTHER N ECESSARY EXPENSES WERE HELD REFERABLE TO THE ASSESSEES HOLDING ON TO THE BUSINESS ASSETS AND AS SUCH ALLOWABLE DEDUCTION. 3 4. CIT(A) THEREFORE FOLLOWING THE JUDGMENT OF HONB LE HIGH COURT OF MUMBAI (SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL. 5. BEFORE US NO ONE APPEARED ON BEHALF OF THE ASSE SSEE TO REPRESENT THE CASE THOUGH THE NOTICE OF HEARING HAD BEEN GIVEN WE LL IN TIME. WE THEREFORE PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERI AL AVAILABLE ON RECORD AND AFTER HEARING THE LEARNED DR WHO ONLY PLACED RELIAN CE ON THE ORDER OF AO. 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF CERTAIN EXPENS ES AS MENTIONED EARLIER WHEN THE BUSINESS OF THE ASSESSEE HAD CLOSED. CIT(A) HAS ALLOWED THE CLAIM FOLLOWING THE JUDGMENT OF HONBLE HIGH COURT OF MUMBAI IN CAS E OF HINDUSTAN CHEMICALS WORKS LTD. VS CIT (124 ITR 561) IN WHICH THE HONBL E HIGH COURT HAVE HELD THAT THE EXPENSES INCURRED AFTER STOPPAGE OF BUSIN ESS ON OFFICE SALRIES, MACHINERIES DISMANTLING CHARGES, RENT, RATES, TAXES AND INSURANCE, POSTAGE, TELEGRAM, TELEPHONE AND OTHER NECESSARY EXPENSES WH ICH ARE REFERABLE TO THE ASSESSEES HOLDING OF THE BUSINESS ASSETS ARE ALLOW ABLE. IN THIS CASE THE ASSESSEE HAS CLAIMED SIMILAR EXPENSES GENUINENESS O F WHICH HAS NOT BEEN DOUBTED. WE THEREFORE SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN ALLOWING THE CLAIM AND THE SAME IS THEREFORE UPHELD. 4 6. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . 5. THE DECISION WAS PRONOUNCED IN THE OPEN COURT 09 .02.2011. SD/- SD/- ( D.K. AGARWAL ) (RAJEN DRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 09.02.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR I BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK