ACIT, New Delhi V. M/s. JNG Builders Pvt. Ltd., New Delhi

ITA 3873/DEL/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69157 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Business income; Business expenditure

Judgement Text

ITA NO. 3873/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3873 /DEL/201 1 A.Y. : 2008-09 ACIT, CIRCLE 4(1), NEW DELHI ROOM NO. 407, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S JNG BUILDERS PVT. LTD., B-8, JANGPURA, MATHURA ROAD, NEW DELHI (PAN: AAACJ 0598B) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. RAJ KUMAR, CA DEPARTMENT BY : SH. K.K. JAISWAL, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VII, N EW DELHI DATED 24.6.2011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE ISSUE RAISED IN THE APPEAL IS THAT LD. COM MISSIONER OF INCOME TAX (A) ERRED IN DELETING THE ADDITION OF RS . 14,74,375/-. 3. IN THIS CASE IT WAS OBSERVED BY THE ASSESSING O FFICER THAT ASSESSEE HAD SHOWN TWO KINDS OF RECEIPTS VIZ. RENTA L INCOME AND MISC. INCOME. ASSESSING OFFICER FURTHER OBSERVED T HAT ASSESSEE HAS SHOWN MISC. RECEIPT OF RS. 42,700/-. THE ASSESSEE COMPANY HAS CLAIMED EXPENSES AMOUNTING TO RS. 14,74,375/- AGAI NST THIS MISC. RECEIPT OF RS. 42,700 AND SETTING OFF OF THESE EXP ENSES AGAINST THE ITA NO. 3873/DEL/2011 2 MISC. INCOME HAS SHOWN A LOSS RS. 14,31,675/- UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. 3.1 ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF MISC. INCOME. HENCE, HE OBSERVED THAT IT WAS NO POSSIBLE TO DECIDE THE NATURE OF RECEIPT AND IN WHAT HEAD THE INCOME SHOULD BE CLASSIFIED. ASSESSING OFFICER FU RTHER OPINED THAT ASSESSEE WAS NOT CARRYING OUT THE BUSINESS OR PROFE SSION DURING THE YEAR. HENCE, THE ASSESSING OFFICER HELD THAT THE AMOUNT OF RS. 14,74,375/- WAS DISALLOWED AND ADDED BACK TO THE TO TAL INCOME OF THE ASSESSEE. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (A) NOTED THAT ASSESSING OFFICER HAS NOT BROUGHT ANYTH ING ON RECORD THAT ASSESSEE COMPANY CLOSED ITS BUSINESS. LD. COM MISSIONER OF INCOME TAX (A) OPINED THAT IF THE ASSESSEE DID NOT CARRY OUT BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATI ON, AT BEST THAT COULD BE CASE OF TEMPORARILY SUSPENSION OF ACTIVITI ES, BUT IN NO CASE, THE ASSESSING OFFICER COULD FORM AN OPINION THAT A SSESSEE HAS CLOSED ITS BUSINESS. LD. COMMISSIONER OF INCOME T AX (A) FURTHER NOTED THAT IT WAS THE CONTENTION OF THE ASSESSEE T HAT EXPENSES INCURRED BY THE ASSESSEE HAVE TO BE ALLOWED AS THE SAME WERE ESSENTIAL TO KEEP UP THE CORPORATE ENTITY. ASSESSE E FURTHER CONTENDED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) THAT IN THE ALTERNATE THE EXPENDITURE WAS ALSO TO BE ALLOWE D, AS PER THE PROVISIONS OF SECTION 57(III) OF THE ACT. LD. COMM ISSIONER OF INCOME TAX (A) ACCEPTED THE CONTENTION OF THE ASSESSEE THA T EXPENDITURE WAS INCURRED FOR MAINTAINING THE CORPORATE ENTITY. LD. COMMISSIONER OF INCOME TAX (A) FURTHER NOTED THAT ON PERUSAL OF THE ACCOUNTS FOR SUCCEEDING ASSESSMENT YEARS 2009-10 & 2010-11 ALSO REVEALED THAT ASSESSEE HAS DERIVED INCOME FROM BUSINESS ACT IVITY. HENCE, LD. ITA NO. 3873/DEL/2011 3 COMMISSIONER OF INCOME TAX (A) HELD THAT ADDITION O F RS. 14,74,375/- WAS LIABLE TO BE DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS NOT DONE ANY BUSINESS DURING THE YEAR. THE EXPENDITURE CL AIMED ARE NOT ALLOWABLE AS THEY DO NOT RELATE ANY BUSINESS. LD. DEPARTMENTAL REPRESENTATIVE FURTHER PLACED RELIANCE UPON THE ORD ER OF THE ASSESSING OFFICER. LD. COUNSEL OF THE ASSESSEE ON T HE OTHER HAND SUBMITTED THAT THERE WAS ONLY A TEMPORARY LULL IN T HE BUSINESS OF THE ASSESSEE. IN SUBSEQUENT YEARS, THE BUSINESS HAS PI CKED UP AND THE CLAIM OF BUSINESS EXPENDITURE IN THIS REGARD HAVE B EEN ALLOWED BY THE ASSESSING OFFICER. LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT IN THE PRECEDING ASSESSMENT YEAR, ASSESSING OF FICER HAS MADE SIMILAR DISALLOWANCES. HOWEVER, THE LD. COMMISSION ER OF INCOME TAX (A) HAD DELETED THE ADDITION. REVENUE HAS NOT A GITATED THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX (A) BEFORE THE ITAT. IN THESE CIRCUMSTANCES, LD. COUNSEL OF THE ASSESSEE PLEADED THAT LD. COMMISSIONER OF INCOME TAX (A)S ORDER BE UPHELD. 6.1 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. W E FIND THAT THE NATURE OF EXPENSES CLAIMED IN THIS REGARD RELAT ED TO ITEMS SUCH AS AUDIT FEES, SALARIES, PROFESSIONAL CHARGES, INSU RANCE, PRINTING AND STATIONERY, BANK CHARGES, HOUSE KEEPING EXPENSES, R EPAIR AND MAINTENANCE EXPENSES. THESE EXPENSES IN OUR CONSIDE RED OPINION, ARE NECESSARY TO MAINTAIN THE CORPORATE ENTITY. IT IS ALSO NOTED THAT IN THE PRECEDING YEAR SIMILAR DISALLOWANCE WAS DELE TED BY THE LD. COMMISSIONER OF INCOME TAX (A) AND THE REVENUE H AS ACCEPTED THE SAME. FURTHERMORE, IN SUBSEQUENT ASSESSMENT YEA RS, ASSESSEES BUSINESS HAS PICKED UP AND THE CLAIM OF BUSINESS E XPENDITURE IN ITA NO. 3873/DEL/2011 4 THOSE YEARS HAVE BEEN ALLOWED. THUS, WE ACCEPT THE CONTENTION OF THE ASSESSEE THAT THERE WAS A TEMPORARILY LULL IN THE BUSINESS OF THE ASSESSEE. THIS RESULTED IN ASSESSEE NOT EARNING ANY WORTHWHILE BUSINESS INCOME. IN THESE CIRCUMSTANCES, IN OUR CON SIDERED OPINION, ASSESSEES CONTENTION HAS CONSIDERABLE COGENCY. IN THIS REGARD, WE REFER TO THE DECISION OF ITAT, DELHI BENCH IN 38 TT J 564 IN THE CASE OF DALJIT EXPORTS (IND.) P. LTD. VS. ITO. IN THIS CA SE IT WAS HELD THAT ASSESSEE WAS A CORPORATE ENTITY AND DID NOT CARRY A NY BUSINESS DURING ASSESSMENT YEAR UNDER CONSIDERATION. IT WA S HELD THAT EXPENSES INCURRED BY THE ASSESSEE TO KEEP ITS CORPO RATE ENTITY ARE ALLOWABLE. IN THE BACKGROUND OF THE AFORESAID DISCU SSION AND PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. COMMISSIONER OF INCOME TAX (A). ACCORDINGLY, WE UPH OLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/8/2013. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 02/8/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 3873/DEL/2011 5