SAIGAL SEA TRADE, MUMBAI V. ADDL CIT 18(1), MUMBAI

ITA 3881/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0511 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Depreciation; Principle of natural justice
• Section: 143(3)

Judgement Text

1 ITA 3881/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.3881/MUM/2016 (ASSESSMENT YEAR:2011-12) M/S SAIGA SEA TRADE J.V. HOUSE, 2 ND FLOOR D.S. BABREKAR MARG MUMBAI-28 PAN :AAAFS6920K ADDL. CIT-18(1), MUMBAI APPELLANT BY SHRI MAHESH O RAJORA REVENUE BY SHRI M.C. OMI NINGSHEN DATE OF HEARING 09 -01-2018 DATE OF PRONOUNCEMENT -01-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)- 33, MUMBAI DATED 30-03-2016 FOR THE ASSESSMENT YEAR 2011-12. THE FOLLOWING ARE THE GROUNDS TAKEN BY THE ASSESSEE:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI [HEREINAFTER / REFERRED TO AS 'CIT(A)] ERRED IN C ONFIRMING THE DISALLOWANCE OF DEPRECIATION OF RS. 10,44,0327- AND SOCIETY CHARGES OF RS.3,78,8317- CLAIMED ON HOUSING ACCOMMODATION O N THE GROUND THAT THESE EXPENSES ARE NOT INCURRED WHOLLY AND EXC LUSIVELY FOR THE PURPOSE OF THE APPELLANT'S BUSINESS. 2. THE CIT(A) ERRED IN CONFIRMING THE ADHOC DISALLO WANCE OF RS.5,20,5837- MADE BY THE AO, BEING 5% OF VARIOUS E XPENSES DEBITED TO THE PROFIT & LOSS A/C AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. 2 ITA 3881/MUM/2016 2. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE S UNDER APPEAL STAND COVERED BY THE ORDER OF THE TRIBUNAL IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10. THE LD.DR AGREED TO T HE PROPOSITION. 3. WITH REGARD TO GROUND NO.1, WE FIND THAT THE E BE NCH OF THE TRIBUNAL IN ITA NO.224/MUM/2013 FOR THE ASSESSMENT YEAR 2009-10 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH TH E FOLLOWING OBSERVATIONS:- 7. BRIEFLY STATED THE FACTS ARE, THE ASSESSING OFFI CER IN COURSE OF ASSESSMENT PROCEEDINGS, WHILE EXAMINING ASSESSEES CLAIM OF DEPRECIATION NOTICED THAT DEPRECIATION OF ` 9,49,00 5 WAS IN RELATION TO PREMISE OTHER THAN OFFICE. HE ALSO FOUND THAT THE A SSESSEE HAD PAID SOCIETY CHARGES OF ` 1,62,567. HE FURTHER FOUND THA T THESE DEDUCTIONS CLAIMED WERE NOT ALLOWED IN THE EARLIER ASSESSMENT YEAR. HE, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE DEDUCTI ON CLAIMED SHOULD NOT BE DISALLOWED. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE BUT THE ASSESSING OFFICER REJECTING TH E CLAIM OF THE ASSESSEE, DISALLOWED THE DEDUCTION CLAIMED. 8. THE LEARNED COMMISSIONER (APPEALS) ALSO CONFIRME D THE DISALLOWANCE. 9. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, SIM ILAR ISSUE ALSO AROSE IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200809 AND THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER FOR CONSIDERING AFRESH. IN THIS CONTEXT, HE DREW OUR AT TENTION TO PARA22 OF THE ORDER PASSED BY THE TRIBUNAL AS REFERRED TO ABOVE. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO AGREED THAT THE MA TTER SHOULD BE RESTORED BACK TO THE ASSESSING OFFICER FOR DECIDING AFRESH IN TERMS OF DIRECTION OF THE TRIBUNAL IN ASSESSMENT YEAR 20080 9. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED, WHILE DECIDING SIMILAR ISSUE IN ASSESSEES OWN CASE IN ITA NO.7282/MUM./2011, DATED 17TH JUNE 2015, FOR ASSESSMENT YEAR 200809, THE TRIBUNAL HELD AS U NDER: 22. THE ISSUE IN GROUND OF APPEAL NO. 4 IS AGAINST THE DISALLOWANCE OF DEPRECIATION ON RESIDENTIAL PREMISE S OF RS.7,91,136/- THE CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT IT HAD PROVIDED THE SAID RESIDENTIAL PREMISES BUT ITS EMPLOYEES WHO WERE WORKING WITH THE ASSESSEE FOR TH E PAST SEVERAL YEARS. THE AO FURTHER, DENIED THE SAID CLAI M OF THE ASSESSEE AS NO EVIDENCE WAS PRODUCED BY THE ASSESSE E IN SUPPORT THEREOF. THE CIT(A) ALSO UPHELD THE ORDER O F CIT(A) FOR THE ABSENCE OF ANY EVIDENCE HAVING BEEN FILED BY THE AS SESSEE 3 ITA 3881/MUM/2016 MERELY BECAUSE DEPRECIATION WAS ALLOWED IN THE EARL IER YEARS, WAS DENIED TO THE ASSESSEE IN THE PRESENT YEAR IN THE A BSENCE OF ANY DETAILS. THE ASSESSEE IS IN APPEAL AGAINST THE SUCH DISALLOWANCE OF DEPRECIATION ON RESIDENTIAL BUILDING, WHICH IS C LAIMED TO BE BEING USED BY THE EMPLOYEES OF THE ASSESSEE. SIMILA R ISSUE OF CLAIM OF DEPRECIATION ON THE SAID ASSET AROSE IN AS SESSMENT YEAR 2001-02 WHEREIN THE PREMISES WERE ALLOTTED TO ONE O F THE EMPLOYEE OF THE ASSESSEE FIRM AND DEPRECIATION ON T HE SAID ASSET WAS ALLOWED BY THE AO VIDE ORDER PASSED UNDER SECTI ON 143(3) OF THE ACT, DATED 19.02.2004, THE SAID RESIDENTIAL FLA T IS AS PER ASSESSEE, STILL BEING USED BY THE EMPLOYEES AND THE PER QUEST ON ACCOUNT OF THE SAID RESIDENTIAL ACCOMMODATION IS AD DED IN THE HANDS OF THE EMPLOYEES. THE CLAIM OF THE ASSESSEE W AS DENIED BY THE AUTHORITIES BELOW IN THE ABSENCE OF THE PARTICU LARS OF THE PERSON HAVING NOT BEEN PROVIDED BY THE ASSESSEE. IN ALL FAIRNESS WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE LOOK ED INTO BY THE AO, IN ORDER TO VERIFY CLAIMS OF THE ASSESSEE. FOLL OWING THE PRINCIPLES OF NATURAL JUSTICE WE MAY IT FIT DEEM TO THE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO TO VERIFY THE NAME S OF THE EMPLOYEES TO WHOM THE PREMISES HAVE BEEN ALLOTTED A ND IN WHOSE HANDS THE PERK HAS BEEN OFFERED. REASONABLE OPPORTU NITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE. THE GROU ND OF APPEAL NO. 4 RAISED BY THE ASSESSEE IS THUS ALLOWED FOR ST ATISTICAL PURPOSES. 11. AS THERE IS NO MATERIAL DIFFERENCE IN FACTS, RE SPECTFULLY FOLLOWING THE AFORESAID VIEW OF THE TRIBUNAL, WE RESTORE THE MATT ER BACK TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTION. THIS GROU ND IS ALLOWED FOR STATISTICAL PURPOSES. 4. C ONSISTENT WITH THE VIEW ALREADY TAKEN BY THE TRIBUN AL, WE RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R WITH SIMILAR DIRECTION. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 5. WITH RESPECT TO THE SECOND GROUND, THIS GROUND ALSO STANDS DECIDED BY THE TRIBUNAL AGAINST ASSESSEE WITH THE F OLLOWING OBSERVATIONS:- 12. IN GROUND NO.3, ASSESSEE HAS CHALLENGED ADHOC DISALLOWANCE OF ` 1,04,564 BEING 5% OF VARIOUS EXPENSES AGGREGATING T O ` 20,91,282. 13. WHILE COMPLETING ASSESSMENT, THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE OF 5% ON VARIOUS EXPENDITURE CLAIMED B Y THE ASSESSEE FOR WANT OF SUPPORTING DETAILS AND VOUCHERS. THOUGH THE ASSESSEE CHALLENGED 4 ITA 3881/MUM/2016 THE DISALLOWANCE BEFORE THE LEARNED COMMISSIONER (A PPEALS), HE ALSO CONFIRMED THE DISALLOWANCE. 14. LEARNED COUNSEL FOR BOTH THE PARTIES AGREED THA T THE ISSUE IN DISPUTE IS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN ORDER PASSED FOR ASSESSMENT YEAR 200809. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE, IT IS NOTICED THAT WHILE DECIDIN G THE ISSUE OF ADHOC DISALLOWANCE OF 5% OUT OF VARIOUS EXPENSES, THE TRI BUNAL DID NOT INTERFERE IN THE MATTER AND UPHELD THE DISALLOWANCE. FOLLOWIN G THE ORDER OF THE TRIBUNAL, WE UPHOLD THE DISALLOWANCE BY DISMISSING THE GROUND RAISED BY THE ASSESSEE. CONSISTENT WITH THE EARLIER DECISION OF THE TRIBUNA L, WE DISMISS THE GROUND RAISED BY THE ASSESSE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 31 ST JANUARY, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI