FACT PLACEMENT BOMBAY P. LTD, MUMBAI V. ITO 5(1)(4), MUMBAI

ITA 3148/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7889 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 02-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 13-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: ARVIND DALAL
• Keywords: Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F, MUMBAI BEFORE SHRI R V EASWAR, SENIOR VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER I T A NO: 3148/MUM/2009 (ASSESSMENT YEAR: 2005-06) FACT PLACEMENT BOMBAY PVT. LTD., MUMBAI APPELLA NT (PAN: AAACF0947L) VS INCOME TAX OFFICER 5(1)(4), MUMBAI RESPONDENT APPELLANT BY: SHRI ARVIND DALAL RESPONDENT BY: SHRI VIRENDRA OJHA O R D E R R V EASWAR, SENIOR VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSM ENT YEAR 2005-06 AND ARISES OUT OF THE ASSESSMENT ORDER FRAMED UNDER SEC TION 143(3) OF THE INCOME TAX ACT, 1961, ON 27.11.2007. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF PLACEMENT SERVICES. 3. THE MAIN ISSUE IN THIS CASE IS WHETHER THE INCOM E TAX AUTHORITIES WERE JUSTIFIED IN DISALLOWING THE EXPENSES OF RS.2,99,46 2/- DEBITED UNDER THE HEAD REPAIRS AND MAINTENANCE EXPENSES. THE AFORESAID EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THEY RE PRESENTED CAPITAL EXPENDITURE. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE, H OLDING THAT THE EXPENDITURE WAS INCURRED IN RESPECT OF ASSETS BELONGING TO THE DIRECTORS AND, THEREFORE, CANNOT BE ALLOWED AS A DEDUCTION. 4. WE HAVE EXAMINED THE FACTS IN THE LIGHT OF THE R IVAL CONTENTIONS. THE EXPENDITURE WAS INCURRED MOSTLY ON PURCHASE OF COMM ERCIAL PLYWOOD, LABOUR AND 2 POP WORK. BEFORE THE ASSESSING OFFICER THE ASSESSE E SUBMITTED THAT THE EXPENSES WERE FOR REPAIR OF FURNITURE AND FOR MAINT AINING THE SAME. BUT THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT THE BALANCE SHEET OF THE ASSESSEE DID NOT SHOW THE EXISTENCE OF ANY FURN ITURE. BEFORE THE CIT(A), THE ASSESSEE SEEMS TO HAVE STATED THAT THE FURNITURE WA S OWNED BY THE DIRECTORS. BUT THIS DID NOT FIND FAVOUR WITH THE CIT(A), WHO H ELD THAT EXPENDITURE CANNOT BE INCURRED ON ASSETS BELONGING TO OTHERS. IN OUR VIE W, THE CASE REQUIRES FRESH EXAMINATION IN THE HANDS OF THE ASSESSING OFFICER. IT IS TRUE THAT THE PLEA OF THE ASSESSEE THAT THE ASSETS BELONGED TO THE DIRECTORS WAS MADE FOR THE FIRST TIME BEFORE THE CIT(A), BUT FOR THAT REASON ALONE THE CL AIM CANNOT BE DISALLOWED PROVIDED THE ASSESSEE IS ABLE TO SUBSTANTIATE THE S AME WITH EVIDENCE. IT IS ALSO NOT CORRECT TO STATE THAT NO EXPENDITURE CAN BE INC URRED BY THE ASSESSEE ON ASSETS BELONGING TO OTHERS. AT THE SAME TIME THE A SSESSEE IS ALSO UNDER AN OBLIGATION TO ADDUCE EVIDENCE TO SHOW THE NATURE AN D ALLOWABILITY OF THE EXPENDITURE. IT IS, IN OUR OPINION, NECESSARY FOR THE ASSESSEE TO ADDUCE ALL THE FACTS RELATING TO THE EXPENDITURE BEFORE THE ASSESS ING OFFICER, SO AS TO ENABLE HIM TO TAKE AN APPROPRIATE DECISION, IN ACCORDANCE WITH LAW. WE, THEREFORE, REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AFTER ALLOWING DUE OPPORTUNITY TO THE ASSESSEE. THUS, GROUND NO. II I S ALLOWED ON THESE TERMS. 5. GROUND NO. III IS DIRECTED AGAINST THE ADHOC DIS ALLOWANCES OF CONVEYANCE EXPENSES, STAFF WELFARE EXPENSES AND TRAVELLING EXP ENSES IN THE AMOUNTS OF RS.15,000/-, RS.2,500/- AND RS.2,500/- RESPECTIVELY . 6. ON GOING THROUGH THE ORDERS OF THE DEPARTMENTAL AUTHORITIES, WE FIND THAT THE ASSESSEE ITSELF HAS ACCEPTED BEFORE THE ASSESSI NG OFFICER THAT SOME VOUCHERS WERE NOT FULLY SUPPORTED. THE QUANTUM OF DISALLOWANCE, HOWEVER, 3 APPEARS TO BE SOMEWHAT ON THE HIGHER SIDE. WE THER EFORE REDUCE THE DISALLOWANCE UNDER THE HEAD CONVEYANCE EXPENSES T O RS.5,000/- AND DELETE THE DISALLOWANCE UNDER THE HEAD STAFF WELFARE EXPE NSES AND TRAVELLING EXPENSES. THE GROUND IS THUS PARTLY ALLOWED. 7. GROUND NO. I IS DISMISSED AS NOT PRESSED. 8. GROUND NO. IV IS GENERAL AND REQUIRES NO DECISIO N. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 9 TH FEBRUARY 2010. SD/- SD/- (RAJENDRA SINGH) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI, DATED 9 TH FEBRUARY 2010 SALDANHA COPY TO: 1. FACT PLACEMENT BOMBAY PVT. LTD. 3/823, NAVJIVAN SOCIETY LAMINGTON ROAD, MUMBAI CENTRAL, MUMBAI 400 008 2. ITO 5(1)(4) 3. CIT-V 4. CIT(A)-V 5. DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI