DCIT, New Delhi V. M/s KLG Systel Ltd., New Delhi

ITA 3724/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8595 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 19-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Business income

Judgement Text

I.T.A. NO.3724/DEL/2008 1 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH D BEFORE SHRI K G BANSAL, ACCOUTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 3724 /DEL/2008 (ASSESSMENT YEAR 2004-05 ) DCIT, CIRCLE 5(1), VS. M/S. KLG SYSTEL LTD., NEW DELHI FLAT NO.6 & 7, 6 TH FLOOR, NARAIN MANZIL, BARAKHAMBA ROAD, NEW DELHI. (APPELLANTS) (RESPONDENTS) APPELLANT BY: SHRI B K GUPTA, SR. DR RESPONDENT BY: NONE ORDER PER GEORGE MATHAN, JM: 1. THIS APPEAL BY THE REVENUE HAS BEEN PREFERRED AG AINST THE ORDER OF LD. CIT(A) VIII, NEW DELHI IN APPEAL NO.151/2006-07 DATED 10.10.2008 FOR THE ASSESSMENT YEAR 2004-05. IN THE REVENUES APPEAL, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF PROFESSIONAL CHARGES INCURRED BY TH E ASSESSEE IN REGARD TO THE RENTING OUT OF ITS PROPER TY. SHRI B K GUPTA, SR. DR REPRESENTED FOR THE REVENUE AND NONE REPRESENTED ON BEHALF OF THE ASSESSEE. I.T.A. NO.3724/DEL/2008 2 2. IT WAS SUBMITTED BY THE LD. D.R. THAT THE ASSESS EE IS A COMPANY, WHICH IS IN THE BUSINESS OF DEVELOPMENT OF SOFTWARE, WEB DESIGNING AND TRADING IN GOODS. THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.14,18,64 4/- IN CONNECTION WITH THE LEASING OUT OF THE BUILDING OF THE ASSESSEE AT POCKET 4, ELECTRONIC CITY, GURGAON. IT WAS THE SUBMISSION THAT AS THE EXPENDITURE HAD BEEN INCURRED IN CONNECTION WITH THE LETTING OUT OF THE BUILDING, THE SAME WAS NOT ALLOWABLE. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ALSO DISCLOSED THE RENTAL INCOME OF THE BUILDING UNDER THE HEAD INCOM E FROM HOUSE PROPERTY IN THE SUBSEQUENT ASSESSMENT YEARS THOUGH FOR THE RELEVANT ASSESSMENT YEAR IT HA D BEEN OFFERED AS INCOME FROM BUSINESS. 3. WE HAVE CONSIDERED THE SUBMISSION OF THE LD. D.R. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING AUTHORITY HAS ACCEPTED THE RENTAL INCOME RECEIVED BY THE ASSESSEE IN REGARD TO THE BUILDING LEASED OUT UNDER THE HEAD BUSINESS INCOME. ONCE THE INC OME HAS BEEN ASSESSED AS BUSINESS INCOME, OBVIOUSLY, TH E EXPENDITURE INCURRED IN CONNECTION WITH THE LETTING OUT OF THE SAID BUILDING CANNOT BE TREATED AS AN EXPEND ITURE, WHICH IS NOT ALLOWABLE. IT IS FURTHER NOTICED FROM PARA 4.3 AND 4.4 OF THE ORDER OF LD. CIT(A) THAT THE CIT (A) I.T.A. NO.3724/DEL/2008 3 HAS CONSIDERED THE FACT THAT THE INCOME FROM LEASIN G OUT HAS BEEN DISCLOSED BY THE ASSESSEE UNDER THE HEAD BUSINESS AND PROFESSION AND THE EXPENDITURE INCUR RED WAS INCIDENTAL TO THE LEASING OUT OF THE PREMISES. IT IS ALSO NOTICED THAT THE LD. CIT(A) HAS FOLLOWED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. REPORTED IN 124 ITR 01 FOR GRANTING THE RELIEF. AS IT IS NOTICED THAT THE FINDING OF LD. C IT(A) IS IN LINE WITH THE FACT AS ARE AVAILABLE ON RECORD, A ND ON THE BASIS OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD. REFERRED TO SUPRA AND FINDING OF LD. CIT(A) ON THIS ISSUE STAND CONFIRMED . IN THESE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 5. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 24 TH JULY 2009. (K. G. BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:24 TH JULY, 2009 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI