M/s Bar Chem, New Delhi V. ACIT, New Delhi

ITA 2515/DEL/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3473 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 05-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJOG KAPOOR
• Keywords: Depreciation; Principle of natural justice
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI !' !' !' !' $ $$ $ $ $$ $' ' ' ' &' & &' & &' & &' & ( ( ( ( BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER & SH.O.P.KANT, ACCOUNTANT MEMBER ' ' ' '$ $$ $ / ITA NO.2515/DEL/2016 )) )) )) )) / ASSESSMENT YEAR: 2012-13 BAR CHEM, C-533, DEFENCE COLONY, NEW DELHI. PAN-AAGFB6071Q. .......... *+ /APPELLANT VS THE ACIT, CIRCLE-54(1), NEW DELHI. . ,-*+ / RESPONDENT *+.& / APPELLANT BY : NONE ,-*+.& / RESPONDENT BY : SH. SANJOG KAPOOR, SR.DR .' / DATE OF HEARING: 25.11.2019 /0.' / DATE OF PRONOUNCEMENT: 29.11.2019 & & & & / ORDER PER SUSHMA CHOWLA, JM: THE APPEAL FILED BY ASSESSEE IS AGA INST ORDER OF CIT(A)-18, NEW DELHI DATED 08.03.2016 RELATING TO A SSESSMENT YEAR 2012-13 PASSED UNDER SECTION 143(3) OF THE INCOME-T AX ACT, 1961 (IN SHORT ACT). 2 ITA NO.2515/DEL/2016 ASSESSMENT Y EAR: 2012-13 2. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE. WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSESSEE AS THE ISSUE INVOLVED IS SMALL. THE LD.DR FOR THE REVENUE HAS PUT FORWARD HIS CONTENTIONS. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE ORDERS OF THE AUTHORITIES BELOW IN HOLDING THAT INCOME EARNED BY THE ASSESSEE FROM RENDERING OF VARIOUS BUSINESS AUXILIARY SERVICES AN D HOUSE KEEPING SERVICES ARE TAXABLE AS INCOME FROM OTHER SOURCES I NSTEAD OF INCOME FROM BUSINESS & PROFESSION. FURTHER, THE ASSESSEE IS AL SO AGGRIEVED BY THE ORDER OF THE CIT(A) IN SUSTAINING THE DISALLOWANCE OF 30% OUT OF VARIOUS EXPENSES. 4. BRIEFLY IN THE FACTS RELATING TO THE ISSUE, THE ASSESSEE FIRM HAD DECLARED INCOME FROM HOUSE PROPERTY. THE ASSESSEE IN ADDITION HAD RECEIVED MAINTENANCE CHARGES AND HAD DECLARED BUSIN ESS LOSS OF RS.15,57,635/-. THE ASSESSING OFFICER ASKED THE AS SESSEE TO EXPLAIN WHY THE INCOME FROM MAINTENANCE CHARGES SHOULD NOT BE T REATED AS INCOME FROM OTHER SOURCES. FURTHER, THE ASSESSEE WAS ALSO ASKED TO JUSTIFY THE NATURE OF EXPENSES CLAIMED IN THE PROFIT & LOSS A/C AGAINST THE MAINTENANCE CHARGES RECEIVED. THE CASE OF THE ASSE SSEE BEFORE THE ASSESSING OFFICER WAS THAT THE EXPENSES HAVE DIRECT NEXUS WITH THE BUSINESS OPERATIONS CARRIED ON BY THE ASSESSEE AND MERITS TO BE ALLOWED. THE ASSESSING OFFICER OBSERVED THAT THE LD.AR HIMSE LF HAS SUBMITTED THAT THE INCOME FROM BUSINESS WHICH IS IN RESPECT O F SERVICES RENDERED TO 3 ITA NO.2515/DEL/2016 ASSESSMENT Y EAR: 2012-13 THE OCCUPANTS OF THE PROPERTY IF IT IS TO BE TAKEN AS INCOME FROM OTHER SOURCES HAS NO MATERIAL EFFECT ON COMPUTING THE NET INCOME. THE ASSESSING OFFICER THUS, TREATED THE INCOME FROM MAI NTENANCE AS INCOME FROM OTHER SOURCES. IN PARA 2.1 AT PAGE 3 OF THE A SSESSMENT ORDER, THE ASSESSING OFFICER HAS TABULATED THE EXPENDITURE TOT ALING TO RS.11,84,857/- CLAIMED BY THE ASSESSEE AS ATTRIBUTA BLE TO THE SAID INCOME OWNED BY THE ASSESSEE. THE ASSESSING OFFICE R WAS OF THE VIEW THAT SINCE THE ASSESSEE IS PROVIDING SERVICES TO TH E OCCUPANTS OF HIS BUILDING ONLY HENCE, THE EXPENSES CLAIMED WERE NOT RELATABLE TO THE INCOME FROM SERVICES AND CONSEQUENTLY, EXPENSES TOT ALING TO RS.11,84,857/- WERE DISALLOWED IN THE HANDS OF THE ASSESSEE. FURTHER, THE ASSESSEE HAD ALSO CLAIMED THE EXPENSES ON ACCOU NT OF CERTAIN ITEMS TOTALING TO RS.18,53,012/- AND SAME WERE DISALLOWED IN THE HANDS OF THE ASSESSEE AS SAME COULD NOT BE ATTRIBUTED TO EARNING OF INCOME FROM OTHER SOURCES. FURTHER, OUT OF THE BALANCE EXPENSES TOTA LING TO RS.7,77,560/-, 50% OF THE EXPENSES WERE DISALLOWED AS NOT DIRECTLY RELATED TO EARNING INCOME FROM OTHER SOURCES. 5. IN APPEAL, THE CIT(A) UPHELD THE ORDER OF THE AS SESSING OFFICER IN ASSESSING THE INCOME UNDER THE HEAD INCOME FROM OTH ER SOURCES. THEN, HE REFERRED TO THE PROVISIONS OF SECTION 57(1) OF T HE ACT AND POINTED OUT THAT THE DEPRECIATION WHICH WAS CLAIMED BY THE ASSE SSEE WAS ON GENERATORS ONLY AND THE SAME IS TO BE ALLOWED IN TH E HANDS OF THE ASSESSEE. IN RESPECT OF THE BALANCE EXPENDITURE TOT ALING TO 4 ITA NO.2515/DEL/2016 ASSESSMENT Y EAR: 2012-13 RS.18,53,012/- AND RS.7,77,560/-, THE CIT(A) RESTRI CTED THE DISALLOWANCE TO 30% OF THE EXPENDITURE BEING NOT ATTRIBUTABLE TO THE INCOME FROM OTHER SOURCES. THE ASSESSEE IS IN APPEAL AGAINST T HE ABOVE SAID FINDING OF THE CIT(A). 6. THE FIRST ISSUE WHICH NEEDS TO BE ADJUDICATED IS HEAD OF INCOME UNDER WHICH THE RECEIPTS ARE TO BE ASSESSED. WE UP HOLD THE ORDER OF AUTHORITIES BELOW IN ASSESSING THE SAME AS INCOME F ROM OTHER SOURCES, ESPECIALLY BECAUSE ASSESSEE HAS ACCEPTED ALTERNATE CONTENTION BEFORE AUTHORITIES BELOW. 7. ON PERUSAL OF THE RECORD AND AFTER HEARING THE L D.DR FOR THE REVENUE, WE ARE OF THE VIEW THAT AS FAR AS THE DISA LLOWANCE REFERRED TO BY THE CIT(A) OF RS.7,77,560/- IS CONCERNED, THE PERUS AL OF PARA 2.1.4 REFLECTS THAT ONLY 50% OF THE EXPENDITURE WAS DISAL LOWED IN THE HANDS OF THE ASSESSEE I.E. TOTALING TO RS.3,88,780/-. HENC E, THE DIRECTIONS OF THE CIT(A) IN DISALLOWING 30% OUT OF RS.7,77,560/- CANN OT STAND. 8. NOW, COMING TO THE CLAIM OF THE ASSESSEE OF ALLO WING EXPENDITURE TOTALING TO RS.18,53,012/- AND RS.3,88,780/- , WE A RE OF THE VIEW THAT ENDS OF NATURAL JUSTICE WOULD BE MET BY RESTRICTING THE DISALLOWANCE OF 10% OF THE TOTAL EXPENDITURE. ACCORDINGLY, WE DIRE CT THE ASSESSING OFFICER TO RESTRICT THE SAME TO 10% OF THE EXPENDIT URE OF RS.18,53,012/- AND RS.3,88,780/-. 5 ITA NO.2515/DEL/2016 ASSESSMENT Y EAR: 2012-13 9. THUS, GROUND OF APPEAL NO.1 WHICH IS GENERAL IN NATURE, DOES NOT REQUIRE ADJUDICATION, HENCE THE SAME IS DISMISSED. GROUND OF APPEAL NO.2 RAISED ON THE HEAD UNDER WHICH THE INCOME TO B E ASSESSED IN THE HANDS OF THE ASSESSEE IS ALSO DISMISSED AND GROUND OF APPEAL NO.3 ON THE ALLOWANCE OF EXPENSES IS PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF NOVEMBER, 2019. SD/- SD/- (O.P.KANT) (SUSHMA CHOW LA) &' &' &' &' /ACCOUNTANT MEMBER /JUDICIAL MEMBER / ' DATED : 29 TH NOVEMBER, 2019 . * AMIT KUMAR * &.,23&24 COPY OF THE ORDER IS FORWARDED TO : 1. *+ / THE APPELLANT 2. ,-*+ / THE RESPONDENT 3. 5 6 7 / THE CIT(A) 4. 8 5 / THE PR. CIT 5. 6. 29:, / DR, ITAT, DELHI :);4 GUARD FILE. & & & & / BY ORDER , -2, // TRUE COPY // => ? , ASSISTANT REGISTRAR, ITAT, DELHI