M/S. GINNERS & PRESSERS LTD, MUMBAI V. THE ITO 1(1)(4), MUMBAI

ITA 4312/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7457 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 19-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI R.K. PAND A ,(AM) ITA NO.4312/MUM/2008 ASSESSMENT YEAR : 2004-05 GINNERS & PRESSERS LIMITED ORIENTAL HOUSE, 5 TH FLOOR, 7, J, TATA ROAD CHURCHGATE MUMBAI-400 020. ..( APPELLANT ) P.A. NO. (AAACG 1415 C) VS. INCOME TAX OFFICER-1((1)(4) AAYAKAR BHAVAN MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI NITESH JOSHI RESPONDENT BY : SHR I MOHD. USMAN O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 26/5/2008 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF INVESTMENT AND CONSULTANCY SER VICES. IT FILED RETURN DECLARING TOTAL INCOME OF RS.NIL. DURING THE COURSE OF ASSESSMENT PROCEEDING IN WAS INTERALIA OBSERVED BY AO THAT ASSESSEE PAID A SUM TOTAL OF RS.17,89,276 AS RENT, RS.3,98,353/- AS WATER ITA NO.4312/M/08 A.Y:04-05 2 CHARGES AND RS.3,24,951/- AS PROPERTY TAX AGGREGATING T O RS.25,12,580/- TO M/S. KILACHAND DEVCHAND & CO. PRIVATE LIMITED(KDCPL). HOWEVER, ON CONFIRMATION OF ACCOUNTS W ITH THE KDCPL IT WAS REVEALED THAT NO SUCH EXPENSES WERE PAID T O THEM BY THE ASSESSEE. ON BEING ASKED, THE ASSESSEE VIDE LETTER DT.2 1.9.06 EXPLAINED THAT THE ABOVE EXPENSES WERE CLAIMED ON ACCRUA L BASIS I.E. MERCANTILE ACCOUNTING PRINCIPLE. HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE IS MERELY TRYING TO INFLATE ITS EXPENSES SO AS T O DECREASE ITS TAXABLE INCOME AND ACCORDINGLY HE DISALLOWED THE EXP ENSES TOTALING TO RS.25,12,580/- AND ADDED TO THE INCOME OF THE ASSESSE E. THE AO AFTER MAKING SOME OTHER DISALLOWANCE COMPLETED THE ASSESSM ENT AT AN INCOME OF RS.32,05,092/- VIDE ORDER DATED 9.11.200 6 PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961(THE ACT). ON APP EAL, THE LD. CIT(A) FOLLOWING THE APPELLATE ORDER IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 WHEREIN IT HAS BEEN HELD THAT THE CLAIM AS UNASCERTAINED LIABILITY NOT ALLOWABLE AS EXPENDITURE, CONFIRMED THE DISALLOWANCE MADE BY AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF DISALLOWANCE OF RS.25,12,580/-. ITA NO.4312/M/08 A.Y:04-05 3 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE, AT THE OUTSET, SUBMITS THAT THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN G INNERS & PRESSERS VS. ITO AND VICE VERSA IN ITA NOS3981 AND 4193/MU M/07 FOR ASSESSMENT YEAR 2003-04 DATED 20.1.2010 WHEREIN THE TRI BUNAL ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE HAS DELETED THE DISALLOWANCE MADE BY THE AO. HE THEREFORE, SUBMITS THAT THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD. C IT(A) BE DELETED. 5. ON THE OTHER HAND, THE LD. DR, SUPPORTS THE ORDER OF THE AO AND CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 WHEREIN THE TRIBUNAL VIDE PARA -19 OF ITS ORDER DATED 20 TH JAN, 2010 HAS HELD AS UNDER : 19. AFTER HEARING THE RIVAL CONTENTIONS, WE ARE O F THE CONSIDERED OPINION THAT THE CLAIM IN QUESTION T OWARDS RENT, PROPERTY TAXES, WATER CHARGES HAVE TO BE ALLO WED IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT DENIED I TS LIABILITY FOR PAYING THE SAME. THE ASSESSEE HAD WR ITTEN TO THE LESSEE THAT IT WOULD PAY THE AMOUNTS IN QUESTIO N. KDCPL HAD ALSO REQUESTED THE ASSESSEE TO DEDUCT TA X AT ITA NO.4312/M/08 A.Y:04-05 4 SOURCE AT 2% PLUS SURCHARGE, INSTEAD OF 5%. THUS I T IS CLEAR FROM THE FACTS THAT THE LIABILITY IN QUESTION CANNOT BE TERMED AS A DISPUTED LIABILITY. NON-PAYMENT OF REN T ETC. TO THE LANDLORD DOES NOT MEAN THAT THE LIABILITY IS NOT ASCERTAINED NOR CAN IT BE SAID THAT THE LIABILITY H AS NOT CRYSTALLIZED. HENCE, THIS EXPENDITURE HAS TO BE ALL OWED. THUS WE AGREE WITH THE ARGUMENT OF THE LD. COUNSEL MR. PARDIWALLA AND ALLOW THIS GROUND OF THE ASSESSEE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE ORDER OF THE T RIBUNAL (SUPRA), AND KEEPING IN VIEW THAT THERE IS NO DISPUTE THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, WE ARE OF TH E VIEW THAT THE DISALLOWANCE OF RS.25,12,580/- MADE BY THE AO AND SUSTA INED BY THE LD. CIT(A) IS NOT SUSTAINABLE AND ACCORDINGLY THE SAME I S DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 7. IN THE RESULT ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4.3.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 4.3.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.4312/M/08 A.Y:04-05 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 4.2.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 5.2.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 4.3.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 5.3.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER