The ITO, Ward-9(4), Ahmedabad V. Shri Ashwin Kantilal RAval, Ahmedabad

ITA 314/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80328 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: ANIL R SHAH
• Keywords: Business income; Depreciation; Additional evidence

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.314/AHD/2013 WITH CO NO.83/AHD/2013 [ASSTT.YEAR : 2009-2010] ITO, WARD-9(4) AHMEDABAD. /VS. SHRI ASHWIN KANTILAL RAVAL B/H. SAMARTHESHWAR MAHADEV OPP: LAW GARDEN, ELLISBRIDGE AHMEDABAD 380 006. PAN : AAJPR 8752 R ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI M.K. SINGH, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI ANIL R. SHAH 5 1 &(*/ DATE OF HEARING : 6 TH AUGUST, 2014 678 1 &(*/ DATE OF PRONOUNCEMENT : 05/09/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE REVENUE AND CO BY THE ASESSEE FOR THE ASSTT.YEAR 2009-2010 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A). THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER: ITA NO.314/AHD/2013 (REVENUES APPEAL) 2. THE GROUND NO.1 OF THE APPEAL OF THE REVENUE IS AS UNDER: ITA NO.314/AHD/2013 WITH CO -2- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING HE DISALLOWANCE OF RS.56,04,681/- MADE ON ACCOUNT OF I NTEREST EXPENSES. 3. THE LEARNED DR HAS REFERRED TO RELEVANT PORTIONS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTED THAT THE AO HAS PASSED A WELL REASONED SPEAKING ORDER ON THIS I SSUE, AND THEREFORE, IT SHOULD BE CONFIRMED. HE SUBMITTED THAT THE ASSESSE E HAS NOT FURNISHED ANY EVIDENCE OF NEXUS BETWEEN THE EXPENSES INCURRED AND THE CORRESPONDING INCOME EARNED, AND THAT THERE WAS NO NEXUS BETWEEN LOAN TAKEN AND INTEREST PAYMENT ON LOAN AND PURCHASE OF LAND. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS ELA BORATELY DISCUSSED THE ISSUE. HE HAS RECORDED THAT THE ASSESSEE WAS I NVOLVED IN THE BUSINESS OF SUB-LETTING OF PROPERTIES, AND DURING THE RELE VANT YEAR, IT HAD TAKEN 45 PROPERTIES ON RENT AND PAID RS.49.20 LAKHS, AND WHI LE ON SUBLETTING HE RECEIVED RS.56.24 LAKHS RESULTING INTO NET SURPLUS OF RENT SHOWN AS BUSINESS INCOME OF RS.7.04 LAKHS. ASSESSEE HAS UTI LIZED RS.47.60 LAKHS FOR PURCHASE OF PROPERTIES FROM WHICH INCOME OF RS. 14.95 LAKHS WAS EARNED AS RENT AND SHOWN UNDER THE HEAD INCOME FRO M HOUSE PROPERTY. THE BALANCE AMOUNT OF RS.114.34 LAKHS WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN UTILIZED FOR BUSINESS OF CONSTRUCTION. T HE CIT(A) HAS FURTHER RECORDED THAT THIS FUND FLOW HAS SUBSTANCE TO SHOW CLEAR NEXUS OF UTILIZATION OF BORROWED FUND FOR EARNING INCOME IN THE FORM OF INTEREST, RENT INCOME AND BUSINESS INCOME OF CONSTRUCTION, AN D HAS PAID TDS ON THE INTEREST PAYMENT WHEREVER APPLICABLE. THERE BEING NO MATERIAL BEFORE US TO CONTROVERT THESE FINDINGS OF THE CIT(A), WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, ITA NO.314/AHD/2013 WITH CO -3- AND ACCORDINGLY, WE HOLD THAT IT COULD NOT BE PROVE D BY THE REVENUE THAT THE ASSESSEES EXPENDITURE WERE BOGUS OR NOT INCURR ED FOR BUSINESS CONSTRUCTION, AND ACCORDINGLY, GROUND NO.1 OF THE R EVENUE IS DISMISSED. 5. THE GROUND NO.2 OF THE REVENUE IS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DIFFERENCE IN VALUATION OF CLOSING WORK IN PROGRESS AMOUNTING TO RS.73,48,000/- 6. THE LEARNED DR REFERRED TO RELEVANT PORTIONS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE SUBMITTE D THAT THE ASSESSEE HAS MADE WRONG CALCULATION OF WORK-IN-PROGRESS DURING T HE RELEVANT PERIOD. HE SUBMITTED THAT THE STRUCTURAL ENGINEER, SHRI J.P . SHAHS CERTIFICATE WAS NOT HAVING ANY CREDIBILITY FOR THE REASONS RECORDED BY THE AO IN HIS ASSESSMENT ORDER. THE LEARNED COUNSEL FOR THE ASSE SSEE HAS RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE CIT(A) HAS PASSED A WELL REASONED SPEAKING ORDER ON THIS ISSUE. THE CIT(A) HAS RECORDED THAT THE AO HAS NOT REJECTED BOOKS OF ACCOUNTS OF THE ASSESSEE AND HAS MADE ADDI TION TO CLOSING STOCK BASED ON THE STATEMENT OF SHRI J.P. SHAH AND INQUIR Y FROM INSPECTOR WITHOUT CONFRONTING TO THE ASSESSEE. WE ARE UNABLE TO APPRECIATE THE STAND OF THE AO THAT STRUCTURAL ENGINEER, SHRI J.P. SHAH, BEING 77 YEARS OF AGE, AND SUFFERING FROM BLOOD PRESSURE, SUGAR AND OTHER DISEASES, HIS CERTIFICATE COULD NOT BE RELIED UPON. THE CIT(A) HAS FURTHER R ECORDED THAT THE AOS EXERCISE OF SUCH ESTIMATION WILL NOT RESULT INTO AN Y SUBSTANTIAL REVENUE GAINING EXERCISE BECAUSE THE ASSESSE AFTER FOLLOWIN G PROPER METHOD AND ACCOUNTING STANDARD ALREADY REFLECTED PROFIT IN RES PECTIVE YEAR AND PAID TAXES THEREON. IN REPLY TO A SPECIFIC QUERY FROM T HE BENCH, THE LEARNED ITA NO.314/AHD/2013 WITH CO -4- COUNSEL FOR THE ASSESSEE SUBMITTED THAT PROJECT HAS ALREADY COMPLETED AND ITS FINAL PROFIT & LOSS HAS ALREADY BEEN DECLARED A ND TAXED AS SUCH BY THE DEPARTMENT. WE FIND THAT THERE IS NO MATERIAL BEFO RE US TO REJECT THE VALUATION OF WORK-IN-PROGRESS WHICH WAS ALSO SUPPOR TED BY CERTIFICATE OF STRUCTURAL ENGINEER, SHRI J.P. SHAH. IN THESE FACT S OF THE CASE, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) IN D IRECTING THE AO TO ACCEPT THE VALUATION OF CLOSING WORK-IN-PROGRESS AS CERTIF IED BY THE STRUCTURAL ENGINEER IN HIS CERTIFICATE, AND IN DELETING THE AD DITION, AND ACCORDINGLY, THE GROUND NO.2 OF THE REVENUE IS DISMISSED. CO NO.83/AHD/2013 (ASSESSEES CO) 8. THE GROUND NO.1 AND 2 OF THE CO ARE AS UNDER: 1. THE LD.CIT(A) HAS RIGHTLY DELETED DISALLOWANCE OF RS.56,04,681 MADE ON ACCOUNT OF INTEREST AND OTHER VARIOUS EXPENSES AND THE ORDER OF THE CIT(A) IS REQUIRED TO BE SUSTAINED AND APPEAL FILED BY THE ITO, WARD-9(4) IS REQUIRES TO B E DISMISSED. 2. THE LD.CIT(A) HAS RIGHTLY DELETED ADDITION OF RS .73,48,000 MADE TO THE VALUATION OF CLOSING WORK IN PROGRESS B Y TAKING TIN CONSIDERATION EVIDENCES FACTS OF THE CASE, PROVISIO NS OF LAW AND BY A PASSING A SPEAKING ORDER AND THEREFORE, THE ORDER O F THE CIT(A) IS REQUIRED TO BE SUSTAINED AND APPEAL FILED BY THE IT O, WARD-9(4) IS REQUIRES TO BE DISMISSED. 9. WE HAVE HEARD PARTIES. THESE GROUNDS OF THE CO ARE MERELY SUPPORTING THE ORDER OF THE CIT(A), AND THEREFORE, ARE NOT ADJUDICATED UPON, AND ARE DISMISSED. 10. THE GROUND NO.3 OF THE CO IS AS UNDER: 3. THE LD.CIT(A) HAS ERRED IN CONFIRMING DEPRECIAT ION @15% INSTEAD OF 50% CLAIMED ON NEW COMMERCIAL VEHICLES P URCHASED DURING THE YEAR. IT IS SUBMITTED THAT ON THE FACTS AND CIRCUMSTANCES, ITA NO.314/AHD/2013 WITH CO -5- CIRCULARS AND JUDICIAL PRONOUNCEMENTS, THE CIT(A) O UGHT TO HAVE ALLOWED DEPRECIATION @50% ON NEW COMMERCIAL VEHICLE S PURCHASE DURING THE YEAR AND AS CLAIMED BY YOUR RES PONDENT. 11. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED CERTAIN DOCUMENTS FOR ADMISSION THEREOF AS ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL. WE HAVE HEARD PARTIES ON THE ISSUE OF ADMISSION OF ADDITION AL EVIDENCE. WE FIND THAT THERE IS NO JUSTIFICATION FOR ADMISSION OF ADD ITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE. REGARDING MERITS OF THE ISSUE, WE FIND THAT THE CIT(A) HAS PASSED SPEAKING ORDER ON THIS ISSUE, AND HIS FINDING COULD NOT BE CONTROVERTED ON BEHALF OF THE ASSESSEE. ACCORDI NGLY, THE GROUND NO.3 OF THE CO IS DISMISSED. 12. IN THE RESULT, BOTH APPEAL OF THE REVENUE AND T HE CO OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD