CELINA JAITLY, MUMBAI V. ACIT 11(1), MUMBAI

ITA 2999/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59875 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T C SUBRAMANIAN
• Assessee Lawyers: YAGNESH DESAI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI RAJENDRA SINGH, A.M. AND SHRI V.D. RAO , J.M. ITA NO. : 2999/MUM/2011 ASSESSMENT YEAR : 2006-07 MS. CELINA JAILTLY A-1501, BIANCA APARTMENTS OFF YARI ROAD, VERSOVA, ANDHERI (W) MUMBAI-400 061. PAN NO: AFOPJ 3213 M ASSTT. COMMISSIONER OF INCOME TAX -11(1) AAYAKAR BHAVAN MUMBAI. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI YAGNESH DESAI RESPONDENT BY : SHRI T.C. SUBRAMANIAN DATE OF HEARING : 14.3.2012 DATE OF PRONOUNCEMENT : 14.3.2012 O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 10.2.2012 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISPUTE RAISED IS REGARDING DISALLOWANCE OF DEPRECIATION AND INTEREST EXPENDITURE. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WHO IS A FILM ACTOR, HAD ACQUIRED A FLAT AT BIANCA, VERSOVA. THE FLAT HAD BEEN ACQUIRED FROM BORROWED FUNDS. THE ASSESSEE CLAIMED THAT SHE WAS A PROFE SSIONAL ITA NO. 2999/M./11 A.Y.06-07 2 ACTRESS AND, THEREFORE PART OF THE FLAT HAD BEEN USED F OR OFFICE PURPOSES. ACCORDINGLY SHE HAD CLAIMED DEDUCTION ON ACCOUN T OF DEPRECIATION AND INTEREST @ 40% ALLOCATED TOWARDS OFFICE USE. THE AO HOWEVER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE THAT SHE WAS RUNNING AN OFFICE FROM RESIDENCE AND DISALLOWED THE CLAIM MADE. IN APPEAL THE ASSESSEE SUBMITTED THAT SHE WAS AN ACTRESS AND WAS HAVING RE GULAR CONFERENCES, MEETINGS WITH CLIENTS, PRODUCTION HOUSES, COMP ANIES FOR ACTING AND ADVERTISEMENT CONTRACTS WHICH MOST OF THE TIME WAS DONE AT HER RESIDENCE AND FOR WHICH SHE HAD TO ENGAGE PROF ESSIONALS. SHE HAD ALSO ENGAGED EMPLOYEES TO WHOM SALARY HAD BEEN PAI D AT RS.1,74,700/-, ELECTRICITY EXPENSES HAD BEEN INCURRED AT RS.42,419/-, BOOKS AND PERIODICALS AT RS.68,207/-, TELEPHONE AND MO BILE EXPENSES AT RS.2,06,493/-. IT WAS ACCORDINGLY URGED THAT THE CLA IM SHOULD BE ALLOWED. CIT(A) NOTED THAT THE AO HAD ALREADY ALLO WED EXPENSES ON SALARY, ELECTRICITY, TELEPHONE ETC. RELATING TO THE RESI DENCE AND THEREFORE IT HAD BEEN ACCEPTED BY THE AO THAT THE ASSE SSEE WAS HAVING AN OFFICE AT THE RESIDENCE AND, THEREFORE, THE ONLY DISPUTE WAS REGARDING THE EXTENT OF USER OF THE RESIDENTIAL FLAT FOR THE PURPOSE OF OFFICE. THE CIT(A) FURTHER OBSERVED THAT SHE HERSELF SU BMITTED THAT SHE WAS AGREEABLE TO AN ALLOCATION @ 25% TOWARDS OFFICE SPACE. CIT(A) HOWEVER HELD THAT SPACE OF 120 SQ.FT. WAS ADEQU ATE FOR RUNNING AN OFFICE. HE, THEREFORE, DIRECTED THE AO TO MAKE ALL OCATION OF ITA NO. 2999/M./11 A.Y.06-07 3 DEPRECIATION AND INTEREST EXPENSES ON THAT BASIS TAKING I NTO ACCOUNT THE TOTAL AREA OF THE FLAT. AGGRIEVED BY THE SAID D ECISION ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTED THAT T HE SPACE OF 120 SQ.FT. ALLOCATED BY CIT(A) FOR OFFICE WAS NOT ADEQ UATE AS ASSESSEE WAS HAVING TWO EMPLOYEES AND SHE HAD TO HOLD REGULAR CONFERENCES/MEETINGS. IT WAS ACCORDINGLY REQUESTED THAT P ROPER AREA MAY BE ALLOCATED TOWARDS OFFICE USE OF THE FLAT WHICH HA D SIZE OF 1600 SQ.FT.. THE LD. DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF CIT(A). 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ESTIMATE D DISALLOWANCE OF DEPRECIATION AND INTEREST EXPENDITURE IN RELATION TO THE RESIDENTIAL FLAT OWNED BY THE ASSESSEE A PART OF WHICH IS CLAIMED TO H AVE BEEN USED FOR THE PURPOSE OF OFFICE. THE ASSESSEE IS A FILM ACTO R. IT HAS BEEN CLAIMED THAT SHE WAS HAVING REGULAR CONFERENCE/MEET INGS WITH CLIENTS, PRODUCTION HOUSES AND COMPANIES FOR ACTING AND AD VERTISEMENT CONTRACTS WHICH MOST OF THE TIME WERE DONE AT HER PLACE O F RESIDENCE. IT HAS ACCORDINGLY BEEN REQUESTED THAT ALLOCATION OF 12 0 SQ.FT. OF OFFICE SPACE MADE BY CIT(A) WAS NOT APPROPRIATE. THERE IS NO DISPUTE THAT THE FLAT HAD BEEN ACQUIRED FROM BORROWED FUNDS ON WHI CH INTEREST WAS ITA NO. 2999/M./11 A.Y.06-07 4 PAYABLE. THERE IS ALSO NO DISPUTE THAT FLAT HAD BEEN U SED FOR OFFICE PURPOSES AS THE AO HIMSELF HAS ALLOWED EXPENSES ON ELECTRICI TY, SALARY ETC. THE DISPUTE IS ONLY REGARDING ESTIMATION OF AREA A LLOCATED TOWARDS OFFICE PURPOSES. THE FLAT IS STATED TO BE HAVING AN ARE A OF 1600 SQ.F.T. CIT(A) HAS ALLOCATED ONLY 120 SQ.FT. FOR OFFICE PURPOSES. IN OUR VIEW CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO T AKING INTO ACCOUNT THE FACT THAT THE ASSESSEE HAS ALSO ENGAGED CERT AIN EMPLOYEES AND HAD TO HOLD MEETING/CONFERENCES, 20% OF THE AREA OF THE FLAT MAY BE REASONABLY ALLOCATED TOWARDS OFFICE PUR POSES. WE ACCORDINGLY DIRECT THE AO TO ALLOW DEPRECIATION AND INT EREST EXPENSES ON THAT BASIS. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 14.3.2012. SD/- SD/- (V.D. RAO) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 14.3.2012. JV. ITA NO. 2999/M./11 A.Y.06-07 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.