RARE ROSE PREMSIES P. LTD, MUMBAI V. ITO 7(2)(1), MUMBAI

ITA 2842/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2248 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SATHYA MOORTHY
• Assessee Lawyers: RASESH V PAREKH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NOS.2842, 2845 & 2846/MUM/2015 ( / ASSESSMENT YEARS:2005-06,2009-10 & 2011-12 M/S. RARE ROSE PREMISES PVT. LTD., PENINSULA CHAMBERS, 5 TH FLOR, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI-400 013 / VS. THE ITO - 7(2)(1), MUMBAI ./ ./ PAN/GIR NO. AABCR 7389F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI RASESH V PAREKH / RESPONDENT BY: SHRI N. SATHYA MOORTHY / DATE OF HEARING : 21.07.2016 ! / DATE OF PRONOUNCEMENT : 27.07.2016 / O R D E R PER C.N. PRASAD, JM: THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-14, MUMBAI DATED 25.3.2015 PERTAINING T O ASSESSMENT YEARS 2005-06, 2009-10 & 2011-12. ITA NOS. 2842, 2845 & 2846/M/2015 2 2. THE ONLY COMMON GROUND IN ALL THESE APPEALS IS T HAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF ORDI NARY EXPENSES INCURRED FOR FUNNING AND MAINTENANCE OF THE COMPANY . 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE IN APPEALS HAS BEEN DECIDED BY THE TRIBUNAL F OR ASSESSMENT YEAR 2008-09 IN ITA NO. 420/M/2012 DATED 10.5.2013, THE SAME MAY BE FOLLOWED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO SERIO US OBJECTION. 5. WE HAVE PERUSED THE ORDER OF THE CO-ORDINATE BEN CH FOR ASSESSMENT YEAR 2008-09 AND FIND THAT THE CO-ORDINA TE BENCH DECIDED THIS ISSUE OBSERVING AS UNDER: 5. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2, TH E LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE E XPENSES IN QUESTION WERE INCURRED BY THE ASSESSEE TO COMPLY WITH THE ST ATUTORY REQUIREMENTS AS THE ASSESSEE IS A PRIVATE LIMITED C OMPANY. HE HAS CONTENDED THAT THE EXPENSES SO INCURRED WERE VERY M INIMAL TO RUN ANY CORPORATE BODY AND AS THE SAME WERE INCURRED FOR TH E PURPOSE OF BUSINESS, THEY ARE ALLOWABLE AS DEDUCTION UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. WE FIND MERIT IN THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IN VIEW OF THE FACT TH AT THE BUSINESS OF THE ASSESSEE COMPANY IS THAT OF LETTING OUT PROPERTIES OWNED BY IT AND THE SAME WAS VERY MUCH CARRIED ON IN THE YEAR UNDER CON SIDERATION. NO DOUBT, THE INCOME FROM LETTING OUT IS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS PER THE SPECIFIC PR OVISIONS CONTAINED IN THE INCOME TAX ACT, BUT THE FACT REMAINS THAT TH E ASSESSEE WAS ENGAGED IN THE BUSINESS DURING THE YEAR UNDER CONSI DERATION IN ITS CAPACITY AS PRIVATE LIMITED COMPANY AND THE EXPENSE S INCURRED TO MAINTAIN ITS STATUS AS A COMPANY AND TO COMPLY WITH THE STATUTORY REQUIREMENTS WERE WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF THE SAID BUSINESS. WE ARE THEREFORE OF THE VIEW THAT THE EXP ENSES INCURRED BY THE ASSESSEE TO MAINTAIN AND RUN THE CORPORATE BODY ARE ALLOWABLE AS DEDUCTION UNDER THE HEAD PROFITS AND GAINS OF BUSI NESS OR PROFESSION AS CLAIMED BY THE ASSESSEE. IN THAT VIEW OF THE MAT TER, WE DELETE THE DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) AND ALLOW GROUND NO. 2 OF THE ASSESSEES APPEAL. ITA NOS. 2842, 2845 & 2846/M/2015 3 RESPECTFULLY FOLLOWING THE SAID ORDER WE HOLD THAT THE ORDINARY EXPENSES INCURRED BY THE ASSESSEE TO MAINTAIN AND R UN THE ASSESSEE COMPANY ARE ALLOWABLE AS DEDUCTION UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AS CLAIMED BY THE ASSESSEE. WE ALLOW THE GROUND OF THE ASSESSEE ON THIS ISSUE. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 27 TH JULY, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI