Ms. Deepa Mehra, New Delhi V. ITO, New Delhi

ITA 2625/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91532 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 01-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P D TAN EJA
• Keywords: Capital asset; Depreciation; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2: NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER I.T.A .NO. 2625/DEL/2014 (ASSESSMENT YEAR- 2008-09) DEEPA MEHRA, 32-E/F, ASHOKA AVENUE, SAINIK FARMS, NEW DELHI. AAIPM8889R VS ITO, WARD 33(4), NEW DELHI. APPELLANT BY SH. SANJAY SOOD, CA RESPONDENT BY SH. P.D. TANEJA, SR. DR DATE OF HEARING 01/07/2015 DATE OF PRONOUNCEMENT 30/07/2015 O R D E R THE ASSESSEE HAS QUESTIONED THE FIRST APPELLATE OR DER ON THE FOLLOWING GROUNDS: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(APPEALS)-XXI, NEW DELHI, HAS ERRED IN CONFIRMIN G THE ADDITION MADE BY AO, ON ACCOUNT OF EXPENDITURE INCURRED ON F OREIGN TRAVELLING ON AD HOC BASIS AGGREGATING TO RS. 1,35, 087/-; 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XXI, NEW DELHI, HAS ERRED IN CONFIRMING THE ADDITION MAD E BY AO, ON ACCOUNT OF EXPENDITURE INCURRED ON CAR DEPRECIATION ON AD HOC BASIS OF AN AMOUNT OF RS. 12,810/-; 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XXI, NEW DELHI, HAS ERRED IN CONFIRMING THE ADDITION MAD E BY AO, ON ACCOUNT OF EXPENDITURE INCURRED ON CAR RUNNING ON A D HOC BASIS OF AN AMOUNT TO RS. 9,715/-; 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XXI, NEW DELHI, HAS ERRED IN CONFIRMING THE ADDITION MAD E BY AO ON ACCOUNT OF SHORT TERM CAPITAL GAIN OF AN AMOUNT TO RS. 3,20,000/-; 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-XXI, NEW DELHI, HAS ERRED IN CALCULATION OF TAX DUE, INA SMUCH AS THE RATE OF TAX APPLICABLE TO WOMEN WERE NOT APPLIED BY THE AO. ITA NO. 2625/D/2014 DEEPA MEHRA 2 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S DEEPIKA CREATIONS AND IS IN THE BUSINESS OF JEWELLERY. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO NOTED THAT ON THE SALES OF RS. 1,66,30,311/-, THE ASSESSEE HAD DECLAR ED NET PROFIT OF RS. 6,82,336/- AND AFTER CLAIMING DEDUCTION U/S 40(A)(IA) HAD SHOWN THE NET RETURN OF RS. 64,810/- ONLY. THE ASSESSEE HAD ALSO CLAIMED FOREIGN TRAVELLING EXPENS ES AT RS. 12,41,396/- WHICH INCLUDED AIR FARE EXPENSES OF RS. 5,65,959/- AND OTHER EXPEN SES OF RS. 6,75,437/-. THE AO MADE A DISALLOWANCE @ 20% ON ACCOUNT OF PERSONAL USE TOW ARDS THE CLAIMED EXPENSES. THE OTHER CLAIMED EXPENSES WERE ON ACCOUNT OF DEPRECIAT ION ON CAR AND CAR RUNNING EXPENSES. BESIDES, ADDITION OF RS. 3,20,000/- ON A CCOUNT OF SHORT TERM CAPITAL GAIN HAS ALSO BEEN MADE. THE LD. CIT(A) HAS UPHELD THE DISA LLOWANCES, WHICH HAVE BEEN QUESTIONED BEFORE THE TRIBUNAL. 3. IN SUPPORT OF THE GROUNDS RELATING TO THE EXPENS ES CLAIMED ON ACCOUNT OF FOREIGN TRAVELLING, DEPRECIATION ON CAR AND CAR RUNNING EXP ENSES, THE LD. AR SUBMITTED THAT THE DISALLOWANCES MADE ARE PURELY ON AD HOC BASIS, HENC E, THE SAME MAY BE DELETED. 4. THE LD. SR. DR, SH. P.D. TANEJA ON THE OTHER HAN D, TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE EXPENSES CLAIMED WERE NOT SUPPORTED WITH EVIDENCES. HENCE, THE AO WAS HAVING NO OPTION BUT TO MAKE A REASONABLE DISALLOWANCE. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, I FIND THAT THE AO HAS MADE DISALLOWANCES @ 20% OF THE CLAIMED EXPENSES IN ABSENCE OF EVIDENCES IN SUPPORT AND ON ACCOUNT OF POSSIBILITY OF PERSONAL USER OF T HOSE FACILITIES MEANT FOR BUSINESS. SINCE THE ASSESSEE HAS NOT BEEN ABLE TO IMPROVE ITS CASE WITH THE SUPPORTING EVIDENCE, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD AS UNDER THE FACTS AND CIRCUMSTANCES THE AO HAS MADE R EASONABLE DISALLOWANCES. THE RELATED GROUND NOS. 1, 2 & 3 ARE THUS, REJECTED. 6. APROPOS GROUND NO. 4, THE RELEVANT FACTS ARE THA T THE ASSESSEE HAS PURCHASED THE FLAT FOR RS. 30 LAKHS AND STAMP DUTY OF RS. 1,80,000/- WAS PAID AS PER THE SALE DEED DATED 08/08/2005. THE SAID FLAT WAS SOLD FOR RS. 35 LAKH S ON 27/11/2007. THE ASSESSEE ITA NO. 2625/D/2014 DEEPA MEHRA 3 CLAIMED TO HAVE INCURRED EXPENDITURE OF RS. 5 LAKHS FOR FURNITURE AND FITTINGS WHICH WAS SOLD ALONG WITH THE FLAT FOR RS. 1,25,000/- AND AS SUCH SHE CLAIMED LOSS OF RS. 3,75,000/-. THUS, THE ASSESSEE COMPUTED THE SHORT TERM CAPITAL GAIN TAKING THE COST OF THE PROPERTY AT RS. 36,80,000/- (RS. 30,00,000 + RS. 1,80,000 + RS . 5,00,000) AND TAKING THE SALE CONSIDERATION OF RS. 36,25,000/- (RS. 35,00,000 + RS. 1,25,000) CLAIMED THE SHORT TERM CAPITAL LOSS OF RS. 55,000/- (RS. 36,80,000 RS. 3 6,25,000). THE AO, HOWEVER, HAS RECOMPUTED THE SHORT TERM CAPITAL GAIN ON THE BASIS OF ACTUAL PURCHASE AND SALE OF THE FLAT AND HAS NOT CONSIDERED THE PURCHASE AND SALE OF THE FURNITURE AND FITTINGS ON THE BASIS THAT THE SAME ARE NOT PART OF THE CAPITAL ASSET AND ACCORDINGLY, HE HAS MADE THE ADDITION OF RS. 3,20,000/-. THE LD. CIT(A) HAS UPHELD THE S AME WHILE DISCUSSING THE DEFINITION OF CAPITAL ASSET PROVIDED U/S 2(14)(II) OF THE ACT. 7. IN SUPPORT OF THE GROUND THE LD. AR SUBMITTED TH AT FURNITURE AND FITTINGS WERE INSTALLED IN THE FLAT AND WHEN THE FLAT WAS PURCHAS ED THOSE WERE PART OF THE FLAT AS PER THE SALE DEEDS. HE REFERRED PAGE NO. 2 OF THE PAPER BO OK I.E. COMPUTATION OF SHORT TERM CAPITAL GAIN, PAGE NO. 11 OF THE SALE DEED DATED 27 /11/2007 AND PAGE NO. 27 OF THE SALE DEED DATED 08/08/2005 SHOWING THAT FIXTURES AND FIT TINGS WERE PARTS OF THE FLAT PURCHASED AND SOLD. HE ALSO REFERRED PAGE 23 AND 38 OF THE P APER BOOK WHICH ARE COPIES OF RECEIPTS TOWARDS THE FURNITURE AND FITTINGS INSTALLED IN THE FLAT. IN THE RECEIPT MADE AVAILABLE AT PAGE NO. 38 RS. 5 LAKHS SHOWN TO HAVE BEEN PAID, VI DE CHEQUE DATED 01/09/2005 TOWARDS FURNITURE, FIXTURE AND FITTINGS INSTALLED IN THE FL AT AND IN THE RECEIPT MADE AVAILABLE AT PAGE NO. 23 THE PAYMENT OF RS. 1,25,000/- SHOWN TO HAVE BEEN RECEIVED, VIDE CHEQUE DATED 12/12/2007 TOWARDS FURNITURE AND FITTINGS INS TALLED IN THE FLAT. 8. THE LD. DR, ON THE OTHER HAND, PLACED RELIANCE O N THE ORDERS OF THE AUTHORITIES BELOW. 9. CONSIDERING THE ABOVE SUBMISSION, I FIND THAT NO WHERE IN THE DOCUMENTS LIKE SALE DEEDS AND RECEIPTS HAS BEEN MENTIONED AS TO WHAT WE RE THOSE FURNITURE, FIXTURE AND FITTINGS INSTALLED IN THE FLAT TO ARRIVE AT A DEFIN ITE CONCLUSION AS TO WHETHER THESE WERE IN NATURE CAPITAL ASSETS. IN ABSENCE OF SUCH DETAIL, I AM OF THE VIEW THAT THE LD. AO HAS RIGHTLY DISALLOWED THE CLAIMED LOSS OF RS. 3,75,000 /- ON ACCOUNT OF FURNITURE AND FITTINGS ITA NO. 2625/D/2014 DEEPA MEHRA 4 WHILE COMPUTING THE SHORT TERM CAPITAL GAIN. THE S AME IS UPHELD. GROUND NO. 4 IS ACCORDINGLY REJECTED. 10. APROPOS GROUND NO. 5, THE LD. CIT(A) HAS ALREAD Y CONSIDERED THIS GROUND WHILE SETTING ASIDE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY AS TO WHETHER THE ASSESSEE IS ELIGIBLE FOR THE BENEFIT OF SPECIAL COM PUTATION OF TAX FOR WOMEN AND REDRESS THE GRIEVANCE OF THE ASSESSEE. THUS, THIS GROUND D OES NOT NEED ANY ADJUDICATION. THE SAME IS ACCORDINGLY REJECTED. 11. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30/07/ 2015 SD/- (I.C. SUDHIR) JUDICIAL MEMBER DATED: 30 /07/2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 2625/D/2014 DEEPA MEHRA 5 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 22.07.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 23.07. 2015, 30.7.15 3. DRAFT PLACED BEFORE THE SECOND MEMBER 30.07.2015 4. DRAFT APPROVED BY THE SECOND MEMBER 30.07.2015 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 30.07 .2015 6. DATE OF PRONOUNCEMENT OF ORDER 30.07.2015 7. DATE OF FILE SENT TO THE BENCH CLERK 31.07.2015 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER