G. Suresh, Trivandrum V. ACIT, Kollam

ITA 315/COCH/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58220 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 29-05-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Depreciation; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T. A. NOS. 315-318/COCH/2009 ASSESSMENT YEARS : 2002-03 TO 2005-06 G.SURESH, LAXMI, MOOLAYIL LANE, SASTHAMANGALAM, TRIVANDRUM VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOLLAM. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI T.M.SREEDHARAN, SR. ADV. REVENUE BY MS. S.VIJAYAPRABHA, JR. DR DATE OF HEARING 04/01/2012 DATE OF PRONOUNCEMENT 6/01/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: ALL THESE APPEALS ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A)-I, TRIVANDRUM AND THEY RELATE TO THE ASSESSMENT YEARS 2002-03 TO 2005-06. SINCE SOME OF THE ISSUES URGED IN THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAK E OF CONVENIENCE. 2. THE ASSESSEE IS A FILM ACTOR AND FILM PRODUC ER. THE ASSESSEE PREFERRED APPEALS BEFORE THE LD CIT(A) AGAINST THE ADDITIONS MADE BY THE ASSESSING OFFICER, BUT COULD NOT FIND FAVOUR. HENCE THE ASSESSEE IS IN APPEAL BEFOR E US. 3. THE FIRST ISSUE, WHICH IS COMMON IN ALL THE FOUR YEARS, PERTAIN TO DISALLOWANCE OF A PORTION OF CAR LOAN INTEREST, CAR INSURANCE AND TAX ES TOWARDS PERSONAL USE. IN THE I.T.A. NOS. 315 TO 318/COCH/2009 2 ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASS ESSEE HAS DISALLOWED 1/3 RD OF CAR EXPENSES AND CAR DEPRECIATION TOWARDS PERSONAL USE. HOWEVER, WHILE COMPUTING THE SAID DISALLOWANCE, THE ASSESSEE DID NOT TAKE INTO ACCOUN T THE EXPENSES INCURRED TOWARDS INTEREST ON CAR LOAN, CAR INSURANCE AND TAXES. ACC ORDINGLY, THE ASSESSING OFFICER DISALLOWED 1/3 RD OF THE SAID EXPENSES ALSO TOWARDS PERSONAL USE. T HE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD. CIT(A) WITH THE CO NTENTION THAT THE CAR LOAN INTEREST, INSURANCE AND TAXES ARE ALL FIXED EXPENSES AND HENC E, THERE IS NO NECESSITY TO DISALLOW A PART OF THE SAME TOWARDS PERSONAL USE. HOWEVER, TH E LD. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND ACCORDINGL Y, CONFIRMED THE ADDITION WITH THE FOLLOWING OBSERVATIONS:- 3. I HAVE CONSIDERED THIS. THE ASSESSING OFFICER HAD DISALLOWED THE SAID EXPENDITURE ON ACCOUNT OF THE SAME BEING PERSONAL IN NATURE AS THE CAR HAS BEEN USED FOR PERSONAL PURPOSES ALSO. IT IS FOR THIS R EASON THAT THE AMOUNT PAID AS INTEREST ON CAR LOAN, INSURANCE AND TAXES ETC. HAS TO BE APPORTIONED FOR BUSINESS AS WELL AS PERSONAL PURPOSES. ACCORDINGLY, THE ASSES SING OFFICER HAS MADE THE DISALLOWANCE OF THE CLAIM. THE CASE LAW REFERRED TO BY THE AUTHORIZED REPRESENTATIVE IS NOT RELEVANT HERE DUE TO THE DIF FERENCE IN THE FACTS STATED IN THE CASE REFERRED AND THE FACTS OF THE APPELLANT. IN V IEW OF THIS, I HOLD THAT THE ORDER OF THE ASSESSING OFFICER ON THIS POINT IS CORRECT AND THERE IS NO NEED TO MODIFY THE ORDER ON THIS POINT. THIS GROUND IS DISMISSED. 3.1 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE. WE NOTICE THAT THE ASSESSEE HIMSELF HAS DISALLOWED 1/3 RD OF CAR DEPRECIATION TOWARDS HIS PERSONAL USE. IN THESE CIRCUMSTANCES, WE ARE UNABLE TO AGREE WITH THE CONT ENTION OF THE ASSESSEE THAT NO DISALLOWANCE IS CALLED FOR OUT OF EXPENSES INCURRED TOWARDS INTEREST, INSURANCE AND TAXES. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD CIT(A) ON THIS ISSUE 4. THE NEXT ISSUE WHICH IS URGED IN ASSESSMENT YEAR 2003-04 AND 2004-05 RELATE TO AD-HOC DISALLOWANCE MADE BY THE AO ON ACCOUNT OF IN COMPLETE BILLS AND VOUCHERS. IN THE I.T.A. NOS. 315 TO 318/COCH/2009 3 ASSESSMENT YEAR 2003-04, A SUM OF ` 50,000/- WAS DISALLOWED AND IN THE ASSESSMENT YEAR 2004-05, A SUM OF ` 3,08,000/- WAS DISALLOWED. HOWEVER, WE NOTICE THAT THE ASSESSEE DID NOT AGITATE THE ADDITION OF ` 50,000/- MADE IN THE ASSESSMENT YEAR 2003-04 BEFORE THE LD. CIT(A) AND HENCE, WE DECLINE TO INTERFERE WITH THE GROUND RAISED IN THIS REGARD. 4.1 IN THE ASSESSMENT YEAR 2004-05, THE ASSESSING O FFICER HAS DISALLOWED A SUM OF ` 3,08,000/- OUT OF THE VARIOUS EXPENSES CLAIMED BY T HE ASSESSEE, SINCE THE CONCERNED BILLS AND VOUCHERS WERE FOUND TO BE INCOMPLETE AND ALSO C ONTAINED SELF-MADE VOUCHERS. BEFORE LD. CIT(A) THE ASSESSEE CONTENDED THAT THE ABOVE SAID DISALLOWANCE WAS ON HIGHER SIDE AS IT WORKED OUT TO 27.64%. HOWEVER, THE LD. CIT(A) WAS NOT CONVINCED OF THE EXPLANATIONS OF THE ASSESSEE. BEFORE US, THE ASSESS EE SUBMITTED THAT THE IMPUGNED DISALLOWANCE WAS VERY MUCH ON THE HIGHER SIDE AND P OINTED OUT THAT IN THE SUCCEEDING ASSESSMENT YEAR, THE ASSESSING OFFICER HAS DISALLOW ED ONLY A SUM OF ` 50,000/- ON THE VERY SAME FACTS. HAVING REGARD TO THE SUBMISSIONS MADE BY THE ASSESSEE , WE ARE OF THE VIEW THAT THE DISALLOWANCE TO BE MADE TOWARDS IMPRO PER MAINTENANCE OF BILLS AND VOUCHERS IN THE ASSESSMENT YEAR 2004-05, BE RESTRIC TED TO ` 1 LAKH AND IN OUR VIEW, IT WOULD MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGL Y. 5. THE NEXT ISSUE URGED IN ASSESSMENT YEAR 2003-04 TO 2005-06 PERTAIN TO ENHANCEMENT OF RENTAL INCOME FROM ` 6000 PER MONTH TO ` 6500 PER MONTH. THE ASSESSEE HAD BEEN DISCLOSING A RENT OF ` 6500/- PER MONTH UPTO THE ASSESSMENT YEAR 2002-03. HOWEVER, FROM THE ASSESSMENT YEAR 2003-04 ONWARDS, THE ASSESSEE DISCLOSED A SUM OF ` 6000/- PER MONTH AS RENT ON THE PLEA THAT HE IS ACT UALLY GETTING LOWER RENT. HOWEVER, THE ASSESSING OFFICER COMPUTED THE HOUSE PROPERTY INCOM E BY ADOPTING THE RENT AS ` 6500/- PER MONTH. THE ASSESSEE UNSUCCESSFULLY AGITATED T HE ENHANCEMENT OF RENT BEFORE LD. CIT(A) . 5.1 WE HEARD THE LD. COUNSEL IN THIS REGARD. THERE CANNOT BE ANY DOUBT THAT THE ANNUAL VALUE OF THE PROPERTY HAS TO BE DETERMINED IN ACCOR DANCE WITH THE PROVISIONS OF S. 23 OF THE ACT. ACCORDING TO THE SAID SECTION, THE ANNUAL VALUE SHALL BE DEEMED TO BE THE SUM FOR I.T.A. NOS. 315 TO 318/COCH/2009 4 WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR (FAIR MARKET VALUE OF RENT). HOWEVER, IF THE ACTUAL RENT RECEIV ED OR RECEIVABLE IS MORE THAN THE FAIR MARKET VALUE OF RENT, IT SHALL BE TAKEN AS THE ANN UAL VALUE OF THE PROPERTY. THUS, IF THE ACTUAL RENT RECEIVABLE IS LESSER THAN THE FAIR MARK ET VALUE OF RENT, THEN THE FAIR MARKET VALUE SHALL BE DEEMED AS THE ANNUAL VALUE OF THE PR OPERTY. IN THE INSTANT CASE, THE ASSESSEE HAS DECLARED THE ANNUAL VALUE OF THE PROP ERTY AT ` 6500/- PER MONTH IN THE ASSESSMENT YEAR 2002-03. HAVING ADOPTED THE SAME AS FAIR MARKET VALUE, IN OUR VIEW, THE ASSESSEE WOULD NOT BE ENTITLED TO REDUCE THE S AME FOR THE REASON THAT THE ACTUAL RENT RECEIVED IN THE SUBSEQUENT YEARS IS LESSER. IT IS ALSO TO BE NOTED THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE FAIR MARKET VALUE HAS ACTUALLY COME DOWN IN THE YEARS UNDER CONSIDERATION. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD. CIT(A) ON THIS ISSUE. 6. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND R ELATING TO THE CLAIM OF DEDUCTION FROM PROFESSIONAL FEE RECEIPTS AS PER THE ORDER DAT ED 26.2.2009 PASSED BY HONBLE KERALA HIGH COURT IN THE HANDS OF THE ASSESSEE. BEFORE U S, THE LD. AR FAIRLY CONCEDED THAT THE IMPUGNED RECEIPT WAS NOT AVAILABLE BEFORE THE TAX A UTHORITIES AT THE RELEVANT POINT OF TIME. SINCE THE IMPUGNED ISSUE IS A NEW ISSUE WHICH IS NO T EMANATING FROM THE ORDER OF THE LD. CIT(A) , WE DECLINE TO INTERFERE WITH THE SAME. TH E ASSESSEE MAY SEEK APPROPRIATE RELIEF BEFORE THE ASSESSING OFFICER IN ACCORDANCE WITH LA W. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2004-05 IS PARTLY ALLOWED AND OTHER APPEALS ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 6.1.2012. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 6TH JANUARY, 2012 I.T.A. NOS. 315 TO 318/COCH/2009 5 GJ COPY TO: 1. G.SURESH, LAXMI, MOOLAYIL LANE, SASTHAMANGALAM, TRIVANDRUM.. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM.. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .