M/S. BIJIS HOTESL (INDIA) PVT. LTD, MUMBAI V. THE ITO 9(1)(3), MUMBAI

ITA 2817/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48773 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 24-04-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: A L SHARMA
• Keywords: Depreciation; Reasonable cause; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND T.R.SOOD(A.M ) ITA NO.2817/MUM/2008 (ASSESSMENT YEAR : 2004-05) BIJIS HOTEL (INDIA) PVT.LTD. 353-A,VASU SMRUTI, 13 TH ROAD, KHAR (W), MUMBAI-400052 PAN: AAACB1793J INCOME TAX OFFICER 9(1)(3), 3 RD FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020. APPELLANT V/S RESPONDENT APPELLANT BY : SHRI A.L. SHARMA RESPONDENT BY : SMT. ASHIMA G UPTA. O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.02.2008 PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX (A) FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING HOTEL AT LONAVALA, FILED RETURN DECLARI NG NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDING S VARIOUS DETAILS SUCH AS DETAILS IN RESPECT OF RECE IPTS, VARIOUS EXPENSES DEBITED TO THE P AND L ACCOUNT, DETAILS O F ADDITIONS TO FIXED ASSETS ETC. WERE CALLED FOR. I N RESPONSE, THE ASSESSEE FILED THE SAME. THE AO AFTER CARRYIN G OUT THE ITA NO.2817/MUM/2008 (ASSESSMENT YEAR : 2004-05) 2 TEST CHECK DISALLOWED THE PROVISIONS MADE FOR CER TAIN EXPENSES AGGREGATING TO RS.28,50,719/-, OUT OF MISCELLANEOUS EXPENSES RS.86,390/-, OUT OF DIRECT E XPENSES OF RS.2,00,000/-, OUT OF SELLING AND DISTRIBUTION E XPENSES RS.2,00,000/- AND DONATION RS.5,200/- AGGREGATING TO RS.33,42,309/-. APART FROM THIS, THE AO IN THE ABSE NCE OF ANY STATEMENT OF DEPRECIATION DID NOT ALLOW THE DEPRECI ATION CLAIMED BY THE ASSESSEE AND IN THE ABSENCE OF ANY A NNEXURE CLAIMING SET OFF OF BUSINESS LOSS OF RS.11,01,969/ -, DISALLOWED THE SAME AND THEREBY COMPLETED THE ASSES SMENT AT AN INCOME OF RS.42,36,130/- VIDE ORDER DATED 29. 12.2006 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961(THE ACT). ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (A) WHILE DIRECTING THE AO TO ALLOW SALES-TAX PAYMENT OF RS.11,69,550/- AFTER VERIFICATION THAT THE PAYMENT HAS BEEN MADE DURING THE YEAR I.E. BEFORE FILING OF THE RETU RN U/S 139(1) OF THE ACT AND TO ALLOW THE APPELLANTS CLAIM OF SE T OFF OF BUSINESS LOSS OF EARLIER YEAR AFTER VERIFICATION FR OM THE ASSESSMENT RECORD, CONFIRMED ALL OTHER DISALLOWANCE S ON THE GROUND THAT THERE IS NO SATISFACTORY EXPLANATION AN D DOCUMENTARY EVIDENCE IN SUPPORT OF THE EXPENSES CLA IMED BY THE ASSESSEE AND ACCORDINGLY PARTLY ALLOWED THE APP EAL. ITA NO.2817/MUM/2008 (ASSESSMENT YEAR : 2004-05) 3 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN GROUNDS NO.1 TO 1.06 AS UN DER : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN:- 1.01 CONFIRMING ADDITION OF PROVISION OF RS.28,50,719/-; 1.02 CONFIRMING MISCELLANEOUS EXPENSES OF RS.8,63,900/- 1.03 CONFIRMING ADDITION OF DIRECT EXPENSES OF RS.2,00,000/- 1.04 CONFIRMING ADDITION OF SELLING AND DISTRIBUTIO N EXPENSES OF RS.2,00,000/-; 1.05 CONFIRMING DISALLOWANCE OF DEPRECIATION OF RS.17,42,453/- 1.06 NOT ALLOWING CARRIED FORWARD BUSINESS LOSS OF RS.11,01,969/- 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE WITH REGARD TO GROUND NO.1.01 TO 1.04 SUB MITS IN WRITING THAT CHANGE IN THE MANAGEMENT, WE COULD NOT FURNISH DETAILS SO NOT PRESSED. SD. THE LEARNED COUNSEL FOR THE ASSESSEE WITH REGARD TO GROUND NO.1.06 SUBM ITS THAT SINCE THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS DIRECTED THE AO TO CONSIDER THE SAME SUBJECT TO VE RIFICATION OF THE ASSESSMENT RECORD, THEREFORE, HE IS NOT PRES SING THE SAID GROUND ALSO WHICH WAS NOT OBJECTED BY THE LEAR NED DR. ITA NO.2817/MUM/2008 (ASSESSMENT YEAR : 2004-05) 4 5. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORTI NG MATERIAL PLACED ON RECORD BY THE LEARNED COUNSEL FO R THE ASSESSEE, THE AFORESAID GROUNDS TAKEN BY THE ASSESS EE ARE THEREFORE REJECTED BEING NOT PRESSED. 6. WITH REGARD TO THE SUSTENANCE OF DISALLOWANCE O F DEPRECIATION OF RS.17,42,453/-, THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITS THAT DUE TO OVERSIGHT DEPRECIATIO N SCHEDULE WAS NOT ENCLOSED ALONGWITH THE COMPUTATIO N. HOWEVER, DEPRECIATION SCHEDULE AS PER THE COMPANI ES ACT, WAS FILED ALONG WITH THE BALANCE-SHEET. HE FURTH ER SUBMITS THAT DURING THE PROCEEDINGS BEFORE THE LEARNED COMM ISSIONER OF INCOME TAX (A), THE ASSESSEES CHARTERED ACCOUNT ANT WAS NOT WELL, THEREFORE, HE COULD NOT PRODUCE THE REQUIRED DETAILS. IN THESE CIRCUMSTANCES, THE LEARNED COUNS EL FOR THE ASSESSEE SUBMITS THAT HE MAY BE ALLOWED TO FILE THE DETAILS AND THE SAME MAY BE ADMITTED WHICH WAS NOT SERIOUSL Y OBJECTED TO BY THE LEARNED DR.. 7. AFTER HEARING RIVAL PARTIES AND PERUSING THE MAT ERIAL AVAILABLE ON RECORD AND IN THE ABSENCE OF ANY CON TRARY MATERIAL PLACED ON RECORD BY THE LEARNED DR, WE FIN D THAT IN PARAGRAPH 3 OF THE ASSESSMENT ORDER THE AO OBSERVE D THAT DETAILS OF ADDITIONS TO FIXED ASSETS ETC. HAVE BE EN FILED AND IN ANY CASE THERE WAS REASONABLE CAUSE WITH THE ASSESSEE, THEREFORE, WE ADMIT THE SAME. ON PERUSAL OF THE DETAILS OF ITA NO.2817/MUM/2008 (ASSESSMENT YEAR : 2004-05) 5 THE DEPRECIATION, WE FIND THAT THE ASSESSEE HAS CLA IMED DEPRECIATION ON PLANT AND MACHINERY, FURNITURE AND FIXTURES, COMPUTER AND MOTOR CAR ON THE OPENING WDV AS PER T HE RATES PRESCRIBED UNDER THE RULES. IT IS NOBODYS CASE THAT THE ASSESSEE HAS MADE ANY ADDITION IN THE ASSETS. IT IS ALSO NOT IN DISPUTE THAT THE ASSETS WERE NOT USED BY THE ASSESSEE FOR BUSINESS PURPOSE. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO DEPRECIAT ION ON THE WDV AS PER INCOME TAX RULES. THE AO IS DIRECTED TO ALLOW THE SAME AS PER RULES. THE GROUND TAKEN BY THE ASSE SSEE IS THEREFORE ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH MAY ,2011. SD SD (T.R.SOOD) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 TH MAY 2011 SRL:5511 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. LEARNED CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI