Mugundhan Projects Private Limited, CHENNAI V. DCIT Corporate Circle 4(1), CHENNAI

ITA 3461/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4065 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VIJAYA PRABHA
• Assessee Lawyers: N ARJUN RAJ
• Keywords: Reopening of assessment; Depreciation; Difference of opinion

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , . , ( BEFORE SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ./ ITA NO.3461/CHNY/2019 )* * /ASSESSMENT YEAR: 2009-10 M/S.MUGUNDHAN PROJECTS P. LTD., NO.12/20, NEDUNCHEZHIN STREET, NEHRU NAGAR, VELACHERY, CHENNAI-600 042. [PAN: AAFCM 3266 N] VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR. N.ARJUN RAJ, CA ./- 0 /RESPONDENT BY : MRS.VIJAYA PRABHA, JCIT 0 /DATE OF HEARING : 26.02.2020 0 /DATE OF PRONOUNCEMENT : 26.02.2020 / O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI, IN ITA NO.60/17-18 DATED 16.10.2019 FOR THE AY 2009-10. 2. THE GROUND NO.1 RAISED BY THE ASSESSEE IS GENERA L IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. ITA NO.3461/CHNY/2019 :- 2 -: 3. THE GROUND NO.2 RAISED BY THE ASSESSEE IS CHALLE NGING THE VALIDITY OF REOPENING OF ASSESSMENT U/S.147 OF THE ACT. THIS G ROUND WAS STATED TO BE NOT PRESSED BY THE LD.AR AT THE TIME OF HEARING BEF ORE US. THE SAME IS RECKONED AS A STATEMENT MADE FROM THE BAR AND ACCOR DINGLY, THE GROUND NO.2 RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRE SSED. 4. THE GROUND NOS.3-6 RAISED BY THE ASSESSEE ARE ON LY CHALLENGING THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE DISALLOWA NCE MADE BY THE LD.AO U/S.40A(3) OF THE ACT TO THE EXTENT OF ` 53 LAKHS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE COMP ANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. WE FIND THAT THE AO OBSERVED THAT THE ASSESSEE HAS INCURRED EXPENDITURE IN CASH TO TH E EXTENT OF ` 53 LAKHS ON 05.04.2008 ( ` 35 LAKHS) AND ON 19.11.2008 ( ` 18 LAKHS). AS THIS SUM WAS PAID PURSUANT TO THE AGREEMENT OF GUARANTEE DAT ED 19.11.2008, THE LD.AO SOUGHT TO INVOKE THE PROVISIONS OF SEC.40A(3) OF THE ACT TO DISALLOW THE SAID SUM AS THE SAME WAS INCURRED OTHERWISE THA N BY WAY OF ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DEMAND DRAFT. THE AS SESSEE COMPANY RESPONDED BEFORE THE LD.AO THAT IT WAS NOT AWARE OF THE TRANSACTION RECORDED IN THE AGREEMENT. IT WAS ALSO PLEADED THA T THE SAID AGREEMENT WAS ENTERED BY THE FORMER DIRECTOR OF THE ASSESSEE COMPANY MR. R.SASI KUMAR WITHOUT THE KNOWLEDGE OF THE ASSESSEE COMPANY AND THAT THE SAID DIRECTOR HAD ALREADY LEFT COMPANY DURING 2010 ON AC COUNT OF CERTAIN DIFFERENCE OF OPINION AND DISPUTE. THIS FACT WAS A LSO MENTIONED AND ITA NO.3461/CHNY/2019 :- 3 -: CONFIRMED BY THE PRESENT DIRECTOR MR.R.THIRUVENGADA M WHILE FURNISHING THE STATEMENT ON OATH U/S.131(1) OF THE ACT BEFORE THE LD.AO ON 17.03.2014. THE LD.AO, HOWEVER, DID NOT AGREE TO T HE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THE SAID AGREEMENT OF GU ARANTEE WAS ENTERED IN THE NAME OF THE COMPANY AND THE SAME COULD NOT H AVE BEEN ENTERED WITHOUT THE CONSENT OF THE BOARD OF DIRECTORS. SI NCE, THE SAID PAYMENT OF ` 53 LAKHS WERE MADE IN CASH, THE LD.AO PROCEEDED TO DISALLOW THE SAME U/S.40A(3) OF THE ACT IN THE ASSESSMENT, WHICH WAS CONFIRMED BY THE LD.CIT(A) BEFORE US. THE LD.AR FURNISHED THE COPY O F RETURN OF INCOME, STATEMENT OF TOTAL INCOME AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.03.2009 RELEVANT TO THE AY 2009-10 OF THE ASSESS EE COMPANY. FROM THE PERUSAL OF THE P&L A/C, WE FIND THAT THE ASSESS EE HAD NOT CLAIMED ANY EXPENDITURE AS DEDUCTION TO THE TUNE OF ` 53 LAKHS, WHICH WAS DISALLOWED BY THE LD.AO. THE TOTAL EXPENDITURE DEBITED TO THE P&L A/C OF THE ASSESSEE IS ` 16,14,005/- COMPRISING OF ADMINISTRATIVE EXPENSES O F ` 9,51,095/- AND DEPRECIATION OF ` 6,62,910/-. THE BREAKUP OF THE ADMINISTRATIVE EXPENSES TO THE EXTENT OF ` 9,51,095/-, ARE AS UNDER: EMPLOYEE COST OF ` 2,25,600/- PARTICULARS 31.03.2009 BANK CHARGES 1572 RENT 540000 TELEPHONES 51531 AUDIT FEES 16545 ACCOUNTS OUTSOURCING FEES 16545 PRINTING & STATIONERY 6240 ELECTRICITY CHARGES 21041 INTEREST ON CAR LOAN 42130 LOAN PROCESSING FEES 12867 OFFICE EXPENSES 10124 SERVICE & MAINTENANCE 1000 VEHICLE MAINTENANCE 5000 WATER CHARGES 900 ITA NO.3461/CHNY/2019 :- 4 -: 6. HOWEVER, WE FIND THERE IS NO REASON RECORDED BY THE LOWER AUTHORITIES IN THIS REGARD IN THEIR RESPECTIVE ORDE RS. HENCE, IN THE INTEREST OF JUSTICE, WE DEEM IT FIT AND APPROPRIATE, TO REMI T BACK THIS ISSUE TO THE FILE OF THE LD.AO FOR ADJUDICATION IN ACCORDANCE WI TH LAW WITH A SPECIFIC DIRECTION TO EXAMINE THE FINANCIAL STATEMENT OF THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE LD.AO SHOULD DECIDE THE ISSUE OF DISALLOWANCE U/S.40A(3) OF THE ACT BY GIVING A CATE GORICAL FINDING AS TO WHETHER THE ASSESSEE HAS CLAIMED ANY DEDUCTION IN RESPECT OF PAYMENT OF ` 53 LAKHS. ACCORDINGLY, THE GROUNDS RAISED BY THE A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH DAY OF FEBRUARY, 2020, IN CHENNAI. SD/- SD/- ( ) (MAHAVIR SINGH) /VICE PRESIDENT ( . ) ( M. BALAGANESH ) ( /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: 26 TH FEBRUARY, 2020. TLN 0 .)7 87 /COPY TO: 1. - /APPELLANT 4. 9 /CIT 2. ./- /RESPONDENT 5. 7 .)) /DR 3. 9 ( ) /CIT(A) 6. * /GF