SULKASHANA SECURITIES LTD, MUMBAI V. ITO 1(3)(2), MUMBAI

ITA 4290/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1213 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 21-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHENDR
• Assessee Lawyers: AARTI VISSANJIAR
• Keywords: Business income
• Section: 147

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -HBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./4290/MUM/2016 , /ASSESSMENT YEAR: 2012-13 SULAKSHANA SECURITIES LTD. 4TH FLOOR, MAFATLAL HOUSE H.T. PAREKH MARG, BACKBAY RECLAMATION MUMBAI-400 020. PAN:AABCS 1783 L VS. INCOME TAX OFFICER-1(3)(2) ROOM NO.541, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI M.C. OMI NINGSHEN-DR ASSESSEE BY: MS. AARTI VISSANJI-AR / DATE OF HEARING: 23.02.2017 / DATE OF PRONOUNCEMENT: 12.04.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 11.04.2016 OF CIT(A)-3, MUMBAI THE ASSESSEE HAD FILED THE PRESENT APPEAL. ASSESSEE-, COMPANY, DERIVING INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES FILED ITS ORIGINAL RETURN OF INCOME O N 25.09.2012 DECLARING TOTAL INCOME OF RS.6.30 LAKHS.INITIALLY RETURN WAS PROCESSED U/S. 1 43(1) OF THE ACT. LATER ON, THE ASSESSMENT WAS REOPENED AS PER THE PROVISIONS OF SECTION 147 O F THE ACT AND THE ASSESSING OFFICER (A.O) COMPLETED THE ASSESSMENT,U/S.143(3) R.W.S. 147, ON 23.03.2015 DETERMINING INCOME OF THE ASSESSEE AT RS.11.15 LAKHS. 2. FIRST GROUND OF APPEAL IS ABOUT DEDUCTION IN RESPEC T OF AIR CONDITIONING AND OTHER CHARGES. DURING THE ASSESSMENT PROCEEDINGS, THE AO CALLED UP ON THE ASSESSEE TO SUBMIT THE COPY OF BILL IN RESPECT OF EXPENDITURE INCURRED FOR AIR CON DITIONING AND OTHER CHARGES.AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE IN TH AT REGARD THE AO MADE A DISALLOWANCE OF RS.2.94 LAKHS. HE OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED BILLS /VOUCHERS FOR THE EXPENSES CLAIMED. 2.1. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM, IT WAS ARGUED THAT IT HAD SHIFTED ITS OFFICE, THAT PAPER RELATED WITH THE EXPENDITURE WERE NOT TRACEABLE, THAT IT W AS TRYING TO LOCATE THE SAME. AS THE ASSESSEE 4290/M/16(12-13) SULAKSHANA SECURITIES LTD . 2 HAD NOT FILED ANY EVIDENCE OF INCURRING OF EXPENDIT URE BEFORE THE FAA, SO, HE UPHELD THE ORDER OF THE AO. 2.2. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) STATED THAT IDENTICAL ISSUE WAS RESTORED BACK TO THE FILE OF TH E AO BY THE TRIBUNAL IN AY.S 2006-07 AND 2009-10 (IN ITA/7271/MUM/2011 DT.11.4.14 AND ITA/64 27/MUM/2013 DT.27.5.15) WE ARE REPRODUCING PARA NO.4-5 AT PAGE-3&4 OF THE ORDER FO R AY 2009-10 (SUPRA) AND IT READS AS UNDER:- 4. BEFORE US, AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE ISSUE FOR THE EARLIER ASSESSMENT YEAR 2006-07 HAD TRAVELLED UP TO THE LEVEL OF TRIBUNAL. WE HAVE PERUSED THE TRIBUNALS ORDER FOR THE ASSESSMENT YEAR I.E. A .Y. 2006-07 PASSED IN ITA NO.7271/M/2011 DATED 11.04.2014. WE FIND THAT THE TRIBUNAL, WHILE ADJUDICATING THE IDENTICAL ISSUE FOR A.Y. 2006-07, HAS RESTORED THE MATTER TO THE FILE OF THE AO OBSERVING AS UNDER: 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. INSOFAR AS THE ISSUE, WHETHER RECEIPT FROM AIR CONDITIONING AND OTHER CHARGES ARE TO BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' OR UNDER THE HEAD 'INCOME FROM H O U S E P R O P E R T Y ' I S C O N CE RN ED , T H E S A ME H A S B E EN SE T T L ED B Y T H E TRIBUNAL IN FAV OUR OF THE ASSESSEE IN ASSESSEE'S OWN CASE, BY HOLDING THAT SUCH RECEIPTS ARE TO BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES', WHICH HAS BEE N ACCEPTED BY THE LEARNED COMMISSIONER (APPEALS) ALSO. HOWEVER, THE LEARNED COMMISSIONER ( APPEALS), WITHOUT ANALYSING THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO MAFATLAL CENTRE BUILDING, HAS SIMPLY DIRECTED THE ASSESSING OFFICER TO ALLOW ELECTRICITY CHARGES ONLY. SUCH A DIRECTION IS WHOLLY MISCONCEIVED AS ALL THE NECESSARY EXPENDITURES WHIC H ARE ATTRIBUTABLE TO THE EARNING OF THE RECEIPTS WHICH ARE SHOWN UNDER THE HEAD 'INCOME FRO M OTHER SOURCES' HAS TO BE CONSIDERED UNDER SECTION 57(III). THE TRIBUNAL ALSO GAVE SIMIL AR DIRECTIONS TO THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE AFTER EXAMINING THE SAME UND ER SECTION 57. IN THIS YEAR ALSO, CONSISTENT WITH THE STAND TAKEN BY THE TRIBUNAL, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE BACK THE ISSUE T O THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO CONSIDER THE EXPENSES AS SHOWN BY THE ASSESSEE AND TO SEE IT S DEDUCTIBILITY UNDER SECTION 57 OF THE ACT. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. SINCE THE FACTS ARE IDENTICAL AND THE LD. CIT(A ) IN THE IMPUGNED ORDER HAD ALSO FOLLOWED THE DECISION OF HIS PREDECESSOR RELEVANT TO A.Y. 20 06-07, HENCE IN VIEW OF THE FACT THAT THE ISSUE HAS BEEN CONSIDERED AND RESTORED BY THE TRIBU NAL TO THE FILE OF THE AO FOR A.Y. 2006-07, WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO IN TERMS OF THE DIRECTION GIVEN BY THE TR IBUNAL ON IDENTICAL FACTS IN EARLIER ASSESSMENT YEAR 2006-07 AND DIRECT THE AO TO DECIDE IT ACCORDINGLY. RESPECTFULLY FOLLOWING THE SAME,ISSUE IS RESTORED B ACK TO THE FILE OF AO FOR FRESH ADJUDICATION WHO WILL DECIDE THE ISSUE AFTER AFFORDING A REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. 3. GROUND OF APPEAL NO.2 IS ABOUT DEDUCTION OF EXPENDI TURE INCURRED TOWARDS FEE, LEGAL AND PROFESSIONAL FEE FOR MAINTAINING CORPORATE STATUS A MOUNTING TO RS.1.91 LAKHS. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESS EE HAD SHOWN EXPENSES OF RS.1,40,450/- AND RS.50,628/- UNDER THE HEADS AUDIT FEE AND PROFE SSIONAL FEE RESPECTIVELY. HE DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID EXPENDITURE SHOULD NOT BE DISALLOWED. 4290/M/16(12-13) SULAKSHANA SECURITIES LTD . 3 3.1. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE T HE AO HELD THAT THE MAIN ACTIVITY /SOURCE OF INCOME OF THE ASSESSEE WAS INCOME FROM H OUSE PROPERTY AND INCOME FROM OTHER SOURCES, THAT IT HAD BEEN ALLOWED DEDUCTION IN RESP ECT OF HOUSE PROPERTY AS PER THE PROVISIONS OF THE ACT, THAT THE EXPENDITURE CLAIMED BY IT TOWA RDS AUDIT AND LEGAL CHARGES COULD NOT BE ALLOWED, AS THE ASSESSEE DID NOT HAVE BUSINESS INCO ME FOR THE YEAR UNDER CONSIDERATION. DURING THE APPELLATE PROCEEDINGS THE FAA UPHELD THE ORDER OF THE AO HOLDING THAT THE ASSESSEE HAD NOT SHOWN ANY BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION. 3.2. DURING THE COURSE OF HEARING BEFORE US THE AUTHORIS ED REPRESENTATIVE (AR) ARGUED THAT EXPENDITURE WAS INCURRED FOR MAINTAINING CORPORATE STATUS AND SAME HAD TO BE ALLOWED U/S.57 OF THE ACT. HE REFERRED TO THE CASES OF RAMPUR TIMB ER AND TURNERY CO. LTD. (129ITR58); PREIMUS INVESTMENTS AND FINANCE LTD. (ITA 4879/MUM/ 2012, AY 06-07 DT.13.5.15); GANGA PROPERTIES LTD.(199ITR094) AND BANARAS ELECTRIC LIG HT AND POWER CO.LTD(204ITR804); NAKODAR BUS SERVICE (P.)LTD.(179ITR506). THE DEPART MENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE BEFORE US. IN THE CASE OF RAMPUR TIMBER AND TURNERY CO. LTD. (SUPRA), THE HON'BLE HIGH COURT OF ALLAHABAD HAD DEALT WITH THE PROVISIONS OF SECTION 57(III) O F THE ACT.IN THAT MATTER THE COMPANY HAD DISCONTINUED ITS BUSINESS AND HAD CLAIMED CERTAIN E XPENDITURES UNDER THE HEADS MISCELLANEOUS EXPENSES, SALARY, LEGAL EXPENSES FOR RETAINING THE STATUS OF COMPANY .THE HONBLE COURT HELD THAT SUCH EXPENDITURE HAD TO BE ALLOWED AS SAME WER E INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING/EARNING INCOME.RESPECTFULLY FOLLO WING THE ABOVE EXPENDITURE WAS INCURRED FOR RETAINING THE CORPORATE STATUS OF THE ASSESSEE, HENCE, SAME IS ALLOWABLE.REVERSING THE ORDER OF THE FAA WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE . AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS P ARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2017. , 2017 SD/- SD/- ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 12 .04 .2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 4290/M/16(12-13) SULAKSHANA SECURITIES LTD . 4 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.