RAJESHWAR PRASAD DUBEY, MUMBAI V. ACIT 12(1), MUMBAI

ITA 4203/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8725 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: KISHORE K PDDAR
• Keywords: Period of limitation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI D.MANMOHAN,VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.4203/MUM/2011 ASSESSMENT YEAR-2007-08 SHRI RAJESHWAR PRASAD DUBEY, M/S. PANKAJ SHIPPING & TRANSPORT CO., 2, SETHI MANSION, 1 ST FLOOR, 12, KUMPTHA STREET, BALLARD ESTATE, MUMBAI-400 001 PAN-ACZPD 9533G VS. THE ACIT-12(1), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KISHORE K. PDDAR RESPONDENT BY: SHRI A.B. KOLI DATE OF HEARING :08.10.2012 DATE OF PRONOUNCEMENT: 12.10.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF LD. CIT(A)-23, MUMBAI DT. 15.2.2011 PERTAINING TO ASSES SMENT YEAR 2007-08. 2. THE APPEAL IS LATE BY 6 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE CAUSE IN THE DELAY FOR FILING OF APP EAL. AFTER CONSIDERING THE CONTENTS OF THE AFFIDAVIT, WE FIND THAT THE FILING FEE HAS BEEN PAID WITHIN THE PERIOD OF LIMITATION THOUGH APPEAL IN FORM NO. 36 W AS LATE BY 6 DAYS. CONSIDERING THE FACTS AND CIRCUMSTANCES AS ENUMERAT ED IN THE AFFIDAVIT, THE DELAY IS CONDONED. 3. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUND S OF APPEAL. GROUND NO. 1 RELATES TO THE RETAINING OF THE ADDITION TO T HE EXTENT OF 10% OF THE ITA NO. 4203/MUM/2011 2 REIMBURSABLE EXPENDITURE INCURRED IN CASH UNDER TH E HEAD FORK LIFT & CRANE HIRING CHARGES, LABOUR CHARGES AND MISCELLANEOUS EX PENSES AMOUNTING TO RS. 8,83,709/-. 4. THE FACTS GIVING RISE TO THIS GRIEVANCE SHOW THA T DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF REIMBURSABLE EXPENSES ALONGWITH BIFURCATION OF CASH EXPENSES WITH THAT OF THE PAYMENT MADE BY CHEQUE ALONG WITH SUPPORTING BI LLS/VOUCHERS TO SUBSTANTIATE ITS CLAIM. IN RESPONSE TO THE SAID QUE RY, THE ASSESSEE SUBMITTED A DETAILED STATEMENT. THE AO OBSERVED THAT EXPENS ES TO THE TUNE OF RS. 88,37,090/- ARE CASH PAYMENTS WHERE ADDITIONAL SUPP ORTING WERE NOT AVAILABLE WHICH ARE SUPPORTED BY SELF MADE VOUCHERS PREPARED BY THE ASSESSEES OWN EMPLOYEES. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS INCURRED EXPENSES UNDER THE HEAD COOLIE & CARTAGE A T RS. 12,50,000/- AND SUNDRY EXPENSES AT RS. 3,32,889/- TOTALING TO RS. 1 5,82,889/- WHICH EXPENSES ARE ALSO SUPPORTED BY INTERNAL VOUCHERS ONLY. THE A O WENT ON TO DISALLOW 20% OF THE TOTAL UNSUPPORTED CASH EXPENSES AT RS. 1,04,19,979/-. THE DISALLOWANCE WAS QUANTIFIED AT RS. 20,83,996/-. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). SO FAR AS DISALLOWANCE OUT OF CASH EXPENSES UNDER THE HEAD FO RKLIFT & CRANE , LABOUR CHARGES AND MISCELLANEOUS EXPENSES FOR REPACKING AM OUNTING TO RS. 88,37,090/-, THE LD. CIT(A) OBSERVED THAT IN THE IM MEDIATELY PRECEDING ASSESSMENT YEAR 2006-07, THE ADDITION HAS BEEN SUS TAINED AT 10% BY THE ITAT, MUMBAI. AS NO NEW FACTS WERE FOUND FOR THE YEAR UNDER CONSIDERATION, THE LD. CIT(A) DIRECTED TO RESTRICT THE DISALLOWANC E TO 10%. THE LD. CIT(A) ALSO DIRECTED TO RESTRICT THE DISALLOWANCE TO 10% O F EXPENSES INCURRED UNDER THE HEAD SUNDRY EXPENSES. 6. AGGRIEVED BY THIS FINDING, THE ASSESSEE IS BEFOR E US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE IMMEDIATELY PRECEDING YEAR AS THE QUANTUM DISALLOWANCE WAS MUCH LESS, THE ASSESSEE DI D NOT PREFER ANY APPEAL. ITA NO. 4203/MUM/2011 3 BUT THE SAME SHOULD NOT BE TAKEN AS A PRECEDENT FOR THE YEAR UNDER CONSIDERATION. THE LD. COUNSEL FURTHER SUBMITTED T HAT CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE, THE ASSESSEE HAS TO IN CUR CERTAIN EXPENSES IN CASH WHICH ARE REIMBURSABLE BY ITS CLIENTS. THEREF ORE, THE SAME SHOULD NOT BE TREATED AS UNSUPPORTED AND ACCORDINGLY NO DISALL OWANCE SHOULD BE MADE. THE LD. DR RELIED UPON THE FINDINGS OF THE LOWER AU THORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERU SED THE ORDERS OF THE LOWER AUTHORITIES. IT IS NOT IN DISPUTE THAT THE AS SESSEE HAS INCURRED CASH EXPENSES WHICH ARE SUPPORTED BY ONLY INTERNAL VOUCH ERS. CONSIDERING THE PAST HISTORY OF THE ASSESSEE, THE DISALLOWANCE OF 1 0% AS DIRECTED BY THE LD. CIT(A) WOULD TAKE CARE OF ALL THE DISCREPANCIES. T HEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF LD. CIT( A). GROUND NO. 1 IS ACCORDINGLY DISMISSED. 8. GROUND NO. 2 RELATES TO THE DISALLOWANCE OUT OF SUNDRY EXPENSES WHICH HAS BEEN RESTRICTED TO 10% AT RS. 33,169/-. THESE EXPENSES ARE ALSO NOT PROPERLY SUPPORTED AND ARE INCURRED IN CASH. HOWEV ER, SUCH DISALLOWANCES HAD BEEN MADE FOR THE FIRST TIME AS IT APPEARS FROM THE ORDERS OF THE LOWER AUTHORITIES. AS WE HAVE CONFIRMED THE DISALLOWANCE AS PER GROUND NO. 1 OF THE PRESENT APPEAL TO THE EXTENT OF 10% WHICH WILL COVER ALL THE DISCREPANCIES IN THIS GROUND, WE DO NOT FIND ANY REASON TO FURTHE R DISALLOW EXPENSES UNDER THE HEAD SUNDRY EXPENSES. ACCORDINGLY, FINDING OF THE LD. CIT(A) ARE REVERSED. THE ADDITION OF RS. 33,169/- IS DIRECTED TO BE DELETED. 9. GROUND NO. 3 RELATES TO THE DISALLOWANCE OF SOCI ETY MAINTENANCE CHARGES AT RS. 2,73,260/- UNDER THE HEAD INCOME FR OM HOUSE PROPERTY. 10. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE AO FOUND THAT THE ASSESSEE HAS SHOWN INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AT RS. 18,00,000/- AND CLAIMED A SUM OF RS. 2,73,26 0/- UNDER THE HEAD SOCIETY MAINTENANCE CHARGES. THE AO WAS OF THE OPI NION THAT ONLY MUNICIPAL ITA NO. 4203/MUM/2011 4 TAXES ARE DEDUCTED AS EXPENSES AND SINCE THE ASSESS EE COULD NOT BIFURCATE THE EXPENSES PAID TO THE SOCIETY, THEREFORE IN THE ABSENCE OF ANY PROOF, THE AO DISALLOWED THE TOTAL SUM OF RS. 2,73,260/-. 11. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND REITERATED HIS SUBMISSION THAT SOCIETY CHARGES INCL UDE MAINTENANCE CHARGES AND MUNICIPAL TAXES. THE LD. CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND WENT ON TO RELY ON VARIOUS DECISIONS A S DISCUSSED ON PAGE-4 OF THE ORDER AND CONFIRMED THE ADDITION MADE BY THE AO . 12. AGGRIEVED BY THIS FINDING, THE ASSESSEE IS BEFO RE US. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THAT WHAT IS TAXABLE U/ S. 23 OF THE ACT IS THE NET RENT RECEIVED WHICH MEANS THAT ALL THE EXPENSES INC IDENTAL FOR EARNING THE RENTAL INCOME ARE TO BE ALLOWED. THEREFORE, SOCIET Y MAINTENANCE CHARGES PAID BY THE ASSESSEE TO THE SOCIETY WHERE THE HOUSE PROPERTY IS SITUATED SHOULD BE ALLOWED AS EXPENSES. THE LD. COUNSEL FUR THER SUBMITTED THAT THE SOCIETY MAINTENANCE CHARGES ALSO INCLUDE MUNICIPAL TAXES WHICH ARE DEDUCTIBLE FROM THE INCOME UNDER THE HEAD INCOME FR OM HOUSE PROPERTY. 13. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE RELI ED UPON THE ORDERS OF LOWER AUTHORITIES. 14. WE HAVE CONSIDERED THE RIVAL CONTENTION AND PER USED THE ORDERS OF THE LOWER AUTHORITIES. DEDUCTIONS AVAILABLE FROM INCOM E UNDER THE HEAD INCOME FROM HOUSE PROPERTY ARE (A) TAXES LEVIED BY ANY LOC AL AUTHORITY (B) A SUM EQUAL TO 30% OF THE ANNUAL VALUE AND (C) WHERE THE PROPERTY HAS BEEN ACQUIRED/CONSTRUCTED/REPAIRED/RENEWED OR RECONSTRUC TED WITH BORROWED CAPITAL, THE AMOUNT OF INTEREST PAYABLE ON SUCH CAP ITAL. THUS THE CLAIM OF THE ASSESSEE THAT SOCIETY MAINTENANCE CHARGES ARE ALLOW ABLE DEDUCTIONS DO NOT HOLD ANY WATER. FURTHER, THE ASSESSEE COULD NOT BI FURCATE THE AMOUNT OF MUNICIPAL TAXES INCLUDED IN SOCIETY MAINTENANCE CHA RGES. THEREFORE, WE DO ITA NO. 4203/MUM/2011 5 NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) WHICH ARE CONFIRMED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF OCTOBER, 2012 SD/- SD/- (D.MANMOHAN) (N.K. BILLAIYA ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 12 TH OCTOBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI