M/s Siddharth Properties, Pune V. Dy. CIT, Pune

ITA 2471/PUN/2012

• Counselvise Citation: 247124514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Assessee Lawyers: NILESH KHANDELWAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2471/PN/2012 (ASSESSMENT YEAR : 2009-10) M/S SIDDHARTH PROPERTIES, C/O SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001. PAN : AAZFS3607C . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE- 3, PUNE. . RESPONDENT ASSESSEE BY : MR. NILESH KHANDELWAL DEPARTMENT BY : MR. P. L. PATHADE DATE OF HEARING : 23-04-2014 DATE OF PRONOUNCEMENT : 30-04-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE D ATED 30.08.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.12.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THE GROUNDS OF APPEAL ASSESSEE HAS CHALLENGED THE ADDITIONS OF RS.42,85,867/-, RS.3,36,958/- AND RS.2,20,704/- SUS TAINED BY THE CIT(A) ON ACCOUNT OF INTEREST EXPENDITURE, FOREIGN EDUCATION EXPENSE INCURRED ON PARTNER AND EXPENSES INCURRED ON REPAIR OF PMC SCHOOL RESPE CTIVELY. AT THE TIME OF HEARING, THE GROUND OF APPEAL RELATING TO THE ADDIT ION ON ACCOUNT OF INTEREST EXPENDITURE OF RS.42,85,867/- HAS NOT BEEN PRESSED AS ACCORDING TO THE LEARNED REPRESENTATIVE FOR THE ASSESSEE THE NECESSA RY RELIEF HAS ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER FOLLOWING THE DECISION OF THE PUNE ITA NO.2471/PN/2012 A.Y. 2009-10 BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2008- 09. ACCORDINGLY, THE SAID GROUND OF APPEAL IS REND ERED INFRUCTUOUS. 3. WITH RESPECT TO THE DISALLOWANCE OF RS.3,36,958/ - OUT OF FOREIGN EDUCATION EXPENSE INCURRED ON PARTNER THE SUBMISSIO N PUT-FORTH BY THE ASSESSEE IS THAT IT IS AN AD-HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE SAME HAS BEEN ERRONEOUSLY UPHELD BY THE CIT (A). THE LEARNED COUNSEL POINTED OUT THAT ASSESSEE HAD CLAIMED EXPEN DITURE ON ACCOUNT OF FOREIGN TRAVEL OF RS.6,38,887/- WHICH RELATED TO ED UCATION EXPENSES ON AN EDUCATIONAL COURSE UNDERTAKEN BY ONE OF THE PARTNER S IN UK. THE SAID COURSE WAS UNDERTAKEN BY THE PARTNER IN THE FIELD OF CONST RUCTION MANAGEMENT AND IT WAS RELATED TO THE NATURE OF BUSINESS UNDERTAKEN BY THE ASSESSEE, NAMELY, BUILDERS AND DEVELOPERS. ASSESSEE FURTHER EXPLAINE D THAT OUT OF THE TOTAL EXPENDITURE OF 10500 FOR THIS COURSE, THE PARTNER S OF THE FIRM DECIDED TO INCUR 7500 AND THE SUM OF RS.6,38,887/- WAS CLAIMED AS EXPENDITURE ON THIS COUNT. THE ASSESSING OFFICER HAS DISALLOWED 50% OF THE EXPENDITURE ON AD-HOC BASIS, WHICH ACCORDING TO ASSESSEE IS NOT TE NABLE. THE LEARNED COUNSEL FURTHER EXPLAINED THAT THE EXPENSES HAVE BE EN INCURRED ON THE EDUCATION OF THE PARTNER, WHO HAS CONTINUED AS A PA RTNER IN THE FIRM AND THEREFORE IT WAS FOR THE BENEFIT OF THE ASSESSEE FI RM THAT SUCH EXPENDITURE WAS INCURRED. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS RELIED UPON THE ORDERS OF THE A UTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REVENUE. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, ONE OF THE PARTNERS OF THE ASSESSEE FIRM UNDERTOOK A CO URSE AT KINGSTON UNIVERSITY, UK AND IN TERMS OF THE DETAILS AVAILABLE FROM THE A SSESSMENT ORDER THE SAID PARTNER PURSUED THE COURSE OF M.SC. IN CONSTRUCTIO N MANAGEMENT. THE ITA NO.2471/PN/2012 A.Y. 2009-10 ASSESSEE POINTED OUT THAT SUCH COURSE WAS INTENDED TO SUPPLEMENT THE DEGREE IN ARCHITECTURE WHICH WAS AVAILABLE WITH THE SAID PARTNER; AND, IN-TURN HIS NEW EDUCATIONAL QUALIFICATIONS WOULD HELP IN UN DERTAKING MORE EFFECTIVELY THE BUSINESS OF THE ASSESSEE FIRM OF BUILDERS AND D EVELOPERS. THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE FIRM WAS TO THE TUNE OF RS.6,73,916/-. THE ASSESSING OFFICER DISALLOWED 50% AS ACCORDING T O HIM ASSESSEE WAS NOT ABLE TO PROVE THAT THE EXPENDITURE WAS MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. THE CIT(A) HAS ALSO SUSTAINE D THE SAME. WE ARE UNABLE TO APPRECIATE THE JUSTIFICATION ADVANCED BY THE ASSESSING OFFICER TO MAKE THE IMPUGNED DISALLOWANCE. ON ONE HAND, THE A SSESSING OFFICER IS NOT SATISFIED THAT THE EXPENDITURE IS INCURRED WHOLLY A ND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS WHILE AT THE SAME TIME HE SEEK S TO ALLOW 50% OF THE SAID EXPENDITURE. BE THAT AS IT MAY, IT ONLY REFLECTS T HAT IN SO FAR AS THE NEXUS OF SUCH EXPENDITURE WITH THE BUSINESS OF THE ASSESSEE FIRM IS CONCERNED, THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. O NCE THE SAME IS ACCEPTED, WE FIND NO REASONS TO JUSTIFY ANY AD-HOC DISALLOWANCE. THEREFORE, HAVING REGARD TO THE FACTS OF THE PRESENT CASE WE A RE UNABLE TO SUSTAIN THE PARTIAL DISALLOWANCE OF RS.3,36,958/- MADE BY THE A SSESSING OFFICER. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET-ASIDE A ND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE IMPUGNED ADDITION OF RS.3,36 ,958/-. THUS, ASSESSEE SUCCEEDS ON THIS GROUND. 6. THE SECOND ISSUE RELATES TO A DISALLOWANCE OF RS .2,20,704/- ON ACCOUNT OF EXPENDITURE INCURRED ON REPAIRS OF PMC SCHOOL. IN THIS REGARD, THE FACTS ARE THAT ASSESSEE UNDERTOOK REPAIRS OF PMC SCHOOL AND I NCURRED EXPENDITURE OF RS.2,70,704/- BUT AFTER COMPLETION OF THE WORK, IT DID NOT RECEIVE ANY PAYMENTS. BECAUSE ASSESSEE DID NOT REALIZE ANY PAY MENTS THE ASSESSING OFFICER HAS DISALLOWED THE IMPUGNED EXPENDITURE, WH ICH HAS SINCE BEEN UPHELD BY THE CIT(A). ITA NO.2471/PN/2012 A.Y. 2009-10 7. WE ARE UNABLE TO UPHOLD THE AFORESAID DISALLOWAN CE BECAUSE THERE IS NO DISPUTE THAT THE AFORESAID EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE IN THE COURSE OF CARRYING ON HIS BUSINESS OF BUILDE RS AND DEVELOPERS. MERELY BECAUSE, FOR CERTAIN REASONS THE ASSESSEE HAS NOT R ECEIVED ANY PAYMENTS WOULD NOT DISTRACT FROM THE FACTS THAT THE SAID EXP ENDITURE IS INCURRED IN THE COURSE OF CARRYING ON REGULAR BUSINESS AND DESERVES TO BE ALLOWED. WE HOLD SO. THUS, THE ORDER OF THE CIT(A) IS SET-ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE AFORESAID ADDITION. ACCORDI NGLY, ASSESSEE SUCCEEDS IN THIS GROUND ALSO. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 30 TH APRIL, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE