APEX HOTEL ENTERPRISES P. LTD, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITA 2633/MUM/2013

• Counselvise Citation: 263319914 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO . 2633/M/2013 ASSESSMENT YEAR: 200 9 - 1 0 M / S. APEX HOTEL ENTERPRISES PVT. LTD., 301, THE ANGEL, 2 KRISHNA SANGHI PATH, GAMDEVI, MUMBAI 400 0 07 PAN: AAACA 4540Q VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL C IRCLE - 47 , MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAKESH JOSHI , A.R. REVENUE B Y : SHRI PAVAN KUMAR BEERLA , D.R. DATE OF HEARING : 2 1.01. 201 5 DATE OF PRONOUNCEMENT : 01.04. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] DATED 04.02.2013 . 2. THE SOLE ISSUE TAKEN IN THIS APPEAL IS RELATING TO THE DISALLOWANCE OF MUNICIPAL TAXES PAID OF RS.2 , 46 , 670/ - . 3. DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER (HER EINAFTER REFERRED TO AS THE AO) NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.7 , 53 , 582/ - ON ACCOUNT OF MUNICIPAL TAXES PAID. THE AO FURTHER NOTED THAT THE TAX LIABILITY OF THE ASSESSEE TOWARDS MUNICIPAL TAXES WAS RS.4 , 62 , 550/ - AND THE DIFFERENCE O F RS.2 , 46 , 670/ - WAS THE EXCESS AMOUNT PAID DUE TO NON PAYMENT OF THE DUE TAXES IN TIME. THE AO THEREFORE HELD THAT THE EXCESS PAYMENT OF ITA NO.2633/M/2013 M/S. APEX HOTEL ENTERPRISES PVT. LTD. 2 TAXES PAID BY THE ASSESSEE WAS TOWARDS THE PENALTY LEVIED BY THE MUNICIPAL AUTHORITY AND HENCE THE SAME WAS NOT ALLOWA BLE AS EXPENDITURE. 4. THE LD. CIT(A) ALSO UPHELD THE DISALLOWANCE MADE BY THE AO. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS. WE FIND THAT AS PER THE EXPLANATION TO SEC TION 37(1) OF INCOME TAX ACT, ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION IS ALLOWED IN RESPE CT OF SUCH EXPENDITURE. IN THE CASE IN HAND, THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE ON THE DUE MUNICIPAL TAXES IS NEITHER CAN BE SAID TO BE AN EXPENDITURE INCURRED FOR ANY PURPOSE WHICH IS AN OFFENCE NOR THE SAME IS PROHIBITED BY LAW. UNDER SU CH CIRCUMSTANCES, THE EXPLANATION TO SECTION 37(1) OF THE INCOME TAX ACT IS NOT ATTRACTED. IT IS NOT DISPUTED THAT THE ASSESSEE HAD PAID THE AMOUNT IN QUESTION WHICH IS IN THE SHAPE OF MUNICIPAL TAXES AND INTEREST THERE UPON, WHICH, IN OUR VIEW, WOULD FAL L WITHIN THE PURVIEW OF ALLOWABLE EXPENDITURE. 6. IN VIEW OF OUR ABOVE OBSERVATIONS, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE IMPUGNED DISALLOWANCE IS ORDERED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 01.04.2015 . * KISHORE , SR. P.S. ITA NO.2633/M/2013 M/S. APEX HOTEL ENTERPRISES PVT. LTD. 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.