ITO 18(3)(4), MUMBAI V. UNIVERSAL ESTATE DEVELOPER, MUMBAI

ITA 3968/MUM/2012

• Counselvise Citation: 396819914 RSA 2012
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N PADMANABHAN
• Assessee Lawyers: USHA DALAL
• Keywords: Business expenditure

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI , !' ## , !' $ BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.3968/M/2012 ( ' ( ' ( ' ( ' ( / ASSESSMENT YEAR: 2007-08) THE INCOME TAX OFFICER 18(3)(4), ROOM NO.206, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG PAREL, MUMABI 400 012 ' ' ' ' / VS. M/S. UNIVERSAL ESTATE DEVELOPER, 5/3, BHAGVAN SINGH COLONY, SENAPATI BAPAT. MARG, MAHIM, MUMBAI 400 016 PAN: AAAFU0680J ( )* / APPELLANT) ( +,)* / RESPONDENT) ASSESSEE BY : MS. USHA DALAL, A.R. REVENUE BY : SHRI N. PADMANABHAN, D.R. ' - ./ / DATE OF HEARING : 01.01.2015 01( - ./ / DATE OF PRONOUNCEMENT : 09.01.2015 !2 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 22.03.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND GIVING RELIEF OF RS.7,12,667/- ON ACCOUNT OF EXPENSES INCURRED TOWAR DS SHOP NO 5 & 9 WITHOUT APPRECIATING THE FACT THAT THESE EXPENSES A RE NOT AT ALL ITA NO.3968/M/2012 M/S. UNIVERSAL ESTATE DEVELOPER 2 CONNECTED WITH THE RECEIPTS DISCLOSED IN THE P & L ACCOUNT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AN D GIVING RELIEF OF RS.9,86,198/- RELATING TO CONSTRUCTION OF COMPOUND WALL WITHOUT APPRECIATING THE FACT THAT BUILDING WAS COMPLETED A ND HANDED OVER TO THE TENANTS IN THE F.Y. 2004-05 AND IT IS ONLY LOGICAL CONCLUSION THAT THE SAME WAS TOO COMPLETED BEFORE HANDING OVER TO THE SOCIET Y FOR WITHOUT COMPOUND WALL THE BUILDING COULD NOT HAVE BEEN HAND ED OVER. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND GI VING RELIEF OF RS.2,19,590/- ON ACCOUNT OF LABOUR AND TRANSPORTATION EXPENSES WITHO UT APPRECIATING THE FACT THAT THESE EXPENSES ARE NOT AT ALL CONNECTED WITH THE RECEIPTS DISCLOSED IN THE P & L ACCOUNT. 4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND GI VING RELIEF OF RS.3,53,000/- ON ACCOUNT OF LIFT EXPENSES WITHOUT APPRECIATING THE F ACTS THAT THESE EXPENSES ARE NOT AT ALL CONNECTED TO THE RECEIPTS DISCLOSED IN THE P & L AC COUNT AND ARE RELATED TO PROJECT COMPLETED EARLIER IN F.Y. 2004-05. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND GI VING RELIEF OF RS.1,32,238/- ON ACCOUNT OF INTEREST ON CAR LOAN WITHOUT APPRECIATIN G THE FACTS THAT PERSONAL ELEMENT IN THE SAME CANNOT BE DENIED. 3. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEALS THAT THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN ALLOWING T HE EXPENDITURE, AS DETAILED IN THE GROUNDS OF APPEAL, HOLDING THAT THE SAME RELATE D TO THE PROJECT IN QUESTION WHICH OTHERWISE WERE DISALLOWED BY THE ASSESSING OF FICER (HEREINAFTER REFERRED TO AS THE AO) HOLDING THAT THE SAID EXPENDITURE WAS NOT CONNECTED WITH THE RECEIPTS DISCLOSED IN THE P&L ACCOUNT AND THAT THE PROJECT IN QUESTION WAS COMPLETED IN THE PRECEDING FINANCIAL YEAR AND HENCE THE EXPENDITURE INCURRED ON ALREADY COMPLETED PROJECT WAS NOT ALLOWABLE FOR THE CURRENT ASSESSMENT YEAR. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. R EPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. WE FIND FROM THE IMPUGNED ORDER THAT SO FAR SO THE DISPUTE RELATING TO EXPEND ITURE INCURRED ON SHOP NO.5 TO 9 DISPUTED BY THE REVENUE VIDE GROUND NO.1 IS CONCE RNED, THE LD. CIT(A), ITA NO.3968/M/2012 M/S. UNIVERSAL ESTATE DEVELOPER 3 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HAS OBSERVED THAT THE EXPENDITURE INCURRED ON SHOP NO.5 TO 9 OF THE PROJE CT WAS BUSINESS EXPENDITURE INCURRED FOR IMPROVING THE STOCK IN TRADE. THE ASS ESSEE HAD OFFERED INCOME TO TAX IN THE NEXT YEAR WITHOUT CLAIMING THESE EXPENSE S. THE GENUINENESS OF EXPENDITURE WAS NOT DOUBTED BY THE AO. UNDER SUCH CIRCUMSTANCES, THE EXPENSES WERE ALLOWABLE EXPENDITURE FOR THE YEAR UN DER CONSIDERATION. WE AGREE WITH THE ABOVE FINDINGS OF THE LD. CIT(A). 5. SIMILARLY, SO FAR AS THE GROUND NO.2 TO 4 ARE CO NCERNED, THE LD. CIT(A) HAS GIVEN THE FINDINGS THAT THOUGH THE PROJECT WAS SUBSTANTIALLY COMPLETED DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YE AR 2006-07, HOWEVER, THE PROJECT WAS NOT FULLY COMPLETED. CERTAIN WORKS WER E CARRIED OUT DURING THE YEAR UNDER CONSIDERATION. THERE WAS INCOME FROM TH E PROJECT DURING THE YEAR UNDER CONSIDERATION AND ALSO IN THE PREVIOUS YEAR A S WELL IN THE SUCCEEDING FINANCIAL YEAR. THEREFORE IT COULD NOT BE SAID THA T THE PROJECT WAS ENTIRELY COMPLETE AND NO FURTHER EXPENDITURE WAS INCURRED. EVEN THE GENUINENESS OF THE EXPENDITURE INCURRED ON THE PROJECT HAD NOT BEE N DISPUTED. THE EXPENDITURE WAS DIRECTLY RELATED TO THE PROJECT AND THE SAME WA S ESSENTIALLY A BUSINESS EXPENDITURE. WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF THE LD. CIT(A) IN THIS RESPECT. 6. GROUND NO.5 OF THE APPEAL IS RELATING TO DISALLO WANCE OF RS.1,32,238/- ON ACCOUNT OF INTEREST ON CAR LOAN. THE AO DISALLO WED THE SAID INTEREST HOLDING THAT PERSONAL USE OF MOTOR CAR COULD NOT BE RULED O UT. THE LD. CIT(A) DELETED THE SAID DISALLOWANCE OBSERVING THAT IT WAS NOT DIS PUTED THAT THE ASSET WAS PURCHASED BY THE FIRM FOR BUSINESS PURPOSE. THERE WAS NO FINDING THAT MOTOR CAR HAD BEEN USED FOR PERSONAL PURPOSE. IT WAS NOT A CASE OF DISALLOWANCE OF EXPENDITURE ON RUNNING THE MOTOR VEHICLE WHERE THE ELEMENT OF PERSONAL USE CAN BE SUSPECTED. SINCE THERE WAS NO DISPUTE THAT THE ASSET WAS PURCHASED FOR ITA NO.3968/M/2012 M/S. UNIVERSAL ESTATE DEVELOPER 4 BUSINESS PURPOSE, UNDER SUCH CIRCUMSTANCES, THE LD. CIT(A) RIGHTLY DELETED THE INTEREST DISALLOWANCE. WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ALSO. 7. IN THE RESULT, THERE IS NO MERIT IN THE APPEAL O F THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.01. 2015. !2 - 01( 3 4!'5 09.01.2015 1 - # SD/- SD/- ( / RAJENDRA) ( ## / SANJAY GARG) !' / ACCOUNTANT MEMBER !' / JUDICIAL MEMBER /MUMBAI ; 4!' / DATED 09.01. 2015 * KISHORE !2 - +.; <;(. !2 - +.; <;(. !2 - +.; <;(. !2 - +.; <;(./ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. = ( ) / THE CIT(A)- 4. = / CIT 5. ;@# +.' , , / THE DR CONCERNED BENCH, 6. #A / GUARD FILE. !2' !2' !2' !2' / BY ORDER, ,;. +. //TRUE COPY// B BB B/ // /C C C C ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI