M/s. B. U. Bhandari Constructions, Pune V. Assistant Commissioner of Income-tax, Circle - 2, Pune

ITA 2608/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1586 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 13-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Assessee Lawyers: V L JAIN
• Keywords: Business income; Depreciation; Business expenditure; Rule of consistency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 2608 /PUN/201 7 / ASSESSMENT YEAR : 20 14 - 15 M/S. B . U. BHANDARI CONSTRUCTIONS, A - 3, ABHIMANSHREE SOCIETY, PASHAN ROAD, PASHAN, PUNE 411008 PAN : AACFB1467A ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2, PUNE / RESPONDENT ASSESSEE BY : SHRI V.L. JAIN REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 05 - 07 - 2019 / DATE OF PRONOUNCEMENT : 03 - 0 9 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3, PUNE DATED 31 - 10 - 2017 FOR THE ASSESSMENT YEAR 20 14 - 15 . 2 ITA NO .2608/PUN/2017, A.Y. 2014 - 15 2. SHRI V.L. JAIN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT HE IS NOT PRESSED GROUND NO. 1 OF THE APPEAL. 2.1 IN RESPECT OF GROUND NO. 2 OF THE APPEAL, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS EARNED INCOME FROM GIVING FURNITURE ON HIRE. THE ASSESSEE DISCLOSED THE SAME AS BUSINESS INCOME. IN ASSESSMENT PROCEEDINGS THE ASSESSI NG OFFICER HELD THE INCOME EARNED BY ASSESSEE FROM FURNITURE HIRING CHARGES AS I NCOME FROM H OUSE P ROPERTY . IN FIRST APPELLATE PROCEEDINGS THE COMMISSIONER OF INCOME TAX (APPEALS) DISAGREE WITH THE ASSESSING OFFICER IN HOLDING INCOME FROM FURNITURE HIR IN G CHARGES AS I NCOME FROM H OUSE P ROPERTY. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) WENT ON A DIFFERENT TANGENT AND HELD THE SAID INCOME AS I NCOME FROM O THER S OURCES . THE ASSESSEE IN THE PREVIOUS ASSESSMENT YEARS AND IN SUBSEQUENT ASSESSMENT YEARS HAS BEEN DECLARING INCOME FROM FURNITURE HIRE CHARGES UNDER THE HEAD B USINESS I NCOME . THE DEPARTMENT HAS ACCEPTED THE SAME. THE LD. AR FURTHER CONTENDED THAT THE ASSESSEE HAS ENTERED INTO A SEPARATE A GREEMENT FOR GIVING FURNITURE AND FIXTURES ON HIRE . THE FURNITURE AND FIXTURES ARE REFLECTED IN THE BALANCE SHEET AS BUSINESS ASSETS. 2.2 IN RESPECT OF GROUND NO. 3, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE VIZ. DEPRECIATI ON, ELECTRICITY EXPENSES, INTEREST ON UNSECURED LOANS, OFFICE EXPENSES, PROFESSIONAL FEES, ETC. AS BUSINESS EXPENDITURE. HOWEVER, THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THERE IS NO BUSINESS INCOME, HENCE, THERE IS NO QUESTION OF ALLOWING BUSINESS EXPENDITURE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS UPHELD THE FINDINGS OF ASSESSING OFFICER IN MECHANICAL MANNER MANNER. 3 ITA NO .2608/PUN/2017, A.Y. 2014 - 15 3. ON THE OTHER HAND SHRI SANJEEV GHEI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDE R AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN GROUND NO. 1 OF THE APPEAL HAS ASSAILED THE FINDINGS OF COMMIS SIONER OF INCOME TAX (APPEALS) IN CONFIRMING INCOME FROM PARKING HIRE CHARGES UNDER THE HEAD I NCOME FROM H OUSE P ROPERTY . THE LD. AR OF THE ASSESSEE STATED AT THE BAR TH AT HE IS NOT PRESSING GROUND NO. 1 OF THE APPEAL . THUS, IN VIEW OF THE STATEMENT MAD E BY LD. AR OF THE ASSESSEE, THE GROUND NO. 1 OF THE APPEAL IS DISMISSED AS NOT PRESSED. 5. IN GROUND NO. 2 OF THE APPEAL , THE ASSESSEE HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING INCOME EARNED FROM GIVING FURNITURE ON H IRE UNDER THE HEAD I NCOME FROM O THER S OURCES . THE ASSESSEE HAS CLAIMED INCOME FROM GIVING FURNITURE ON HIRE UNDER THE HEAD B USINESS I NCOME . THE LD. AR OF ASSESSEE POINTED THAT IN THE EARLIER AND IN SUBSEQUENT ASSESSMENT YEARS THE ASSESSEE HAS BEEN DECLARING SUCH INCOME AS B USINESS I NCOME AND THE SAME WAS ACCEPTED BY THE DEPARTMENT. THE CONTENTIONS OF THE LD. AR OF ASSESSEE HAVE NOT BEEN REBUTTED BY THE DEPARTMENT. THE LD. AR TO FURTHER SUBSTANTIATE HIS CONTENTIONS HAS DRAWN OUR ATTENTION TO THE BALANCE SHEET AS ON 31 - 03 - 2016 AT PAGE 33 OF THE PAPER BOOK TO SHOW THAT THE FURNITURE HAS BEEN SEPARATELY SHOWN IN THE SCHEDULE OF FIXED ASSETS. FURTHER, OUR ATTENTION HAS BEEN DRAWN TO THE FURNITURE AND FIXTURES HIRE AGREEMENT AT PAGES 15 TO 21 OF THE PAPER BOOK. A PERUSAL OF DOCUMENTS ON RECORD CLEARLY INDICATE THAT FURNITURE HAS BEEN SHOWN AS BUSINESS ASSET OF THE ASSESSEE AND A 4 ITA NO .2608/PUN/2017, A.Y. 2014 - 15 SEPARATE AGRE EMENT HAS BEEN EXECUTED FOR GIVING FURNITURE ON HIRE. TAKING INTO CONSIDERATION ENTIRETY OF FACTS AND PRINCIPLE OF CONSISTENCY, WE FIND MERIT IN THE SUBMISSIONS OF ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE ERRED IN HOLDING INCOME FROM HIRIN G OF FURNITURE AS I NCOME FROM O THER S OURCES . FURNITURE AND FIXTURES ARE BUSINESS ASSETS OF THE ASSESSEE, HENCE, INCOME GENERATED FROM GIVING FURNITURE ON HIRE IS BUSINESS INCOME OF THE ASSESSEE. THE GROUND NO. 2 OF THE APPEAL IS ALLOWED, ACCORDINGLY. 6. IN GROUND NO. 3 OF THE APPEAL, THE ASSESSEE HAS ASSAILED DISALLOWANCE OF BUSINESS EXPENDITURE AGGREGATING TO RS.70,45,232/ - . THE ASSESSEE HAS CLAIMED FOLLOWING EXPENDITURE AS BUSINESS EXPENSES. S. NO. EXPENSES AMOUNT (RS.) 1 ELECTRICITY EXPENSES 38,000 2 DEPRECIATION 3,29,475 3 INTEREST ON UNSECURED LOAN 46,65,960 4 OFFICE EXPENSES 42,000 5 PROFESSIONAL FEES 52,910 6 REPAIRS AND MAINTENANCE OF MACHINERY 1,73,910 7 REPAIRS AND MAINTENANCE FURNITURE 57,293 8 PRINT AND STATIONERY 452 9 SUPERVISION CHARGES 51,500 10 INTEREST ON PARTNERS CAPITAL 16,32,542 11 BANK CHARGES 1,190 TOTAL 70,45,232 7. THE AUTHORITIES BELOW HAVE DISALLOWED BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE ON THE PREMISE THAT THE ASSESSEE IS NOT CARRYING ANY BUSINESS ACTIVITIES HENCE, THERE CAN BE NO BUSINESS EXPENDITURE. WHILE ADJUDICATING GROUND NO. 2 OF THE APPEAL HERE - IN - ABOVE, WE HAVE HELD THAT 5 ITA NO .2608/PUN/2017, A.Y. 2014 - 15 INCOME FROM HIRING OF FURNITURE IS B USINESS I NCOME OF ASSESSEE. THUS, THE OBSERVATION OF LOWER AUTHORITIES T HAT THE ASSESSEE IS NOT CARRYING ANY BUSINESS ACTIVITY IS CONTRARY TO THE FACTS. IN PRINCIPLE, WE HOLD THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IN RUNNING OF BUSINESS IS ALLOWABLE. THE REVENUE HAS NOT RAISED ANY DOUBT OVER THE QUANTIFICATION OF EXPEN DITURE WHILE DISALLOWING THE SAME. WE FIND MERIT S IN THE CONTENTIONS OF THE ASSESSEE. ACCORDINGLY, GROUND NO. 3 OF THE APPEAL IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 03 RD DAY OF SEPTE MBER, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 03 RD SEPTEMBER, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 2, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE