JAI DANANI, MUMBAI V. CIT(A)-34, MUMBAI

ITA 4333/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9389 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 24-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI LD
• Assessee Lawyers: AMEET PATELLD
• Keywords: Depreciation; Business expenditure
• Section: 143(3); 133(6); 201

Judgement Text

ITA NO.4333/MUM/2019 JAI DANANI ASSESSMENT YEAR: 2014-15 1 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.4333/MUM/2019 ( / ASSESSMENT YEAR: 2014-15) JAI DANANI 3, UNION PARK, PALI HILL ROAD BANDRA (W), MUMBAI 400052 / VS. ITO - 22(1)(4) 3 RD FLOOR , R.NO.308 PIRAMAL CHAMBER, LALBAUG MUMBAI -400 012. '# ./ ./PAN/GIR NO. AJFPD-8713-P ( ! #% /APPELLANT ) : ( &'#% / RESPONDENT ) ASSESSEE BY : SHRI AMEET PATEL-LD. AR REVENUE BY : SHRI SANJAY J. SETHI-LD. DR / DATE OF HEARING : 22/12/2020 / DATE OF PRONOUNCEMENT : 04/01/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2014-15 CONTESTS THE ORDER OF LEARNED COMMISSIONER OF INCOM E TAX (APPEALS)-34, MUMBAI [CIT(A)], APPEAL NO.CIT(A)-34/ITO.22(1)(4)/I T-10423/16-17 DATED 26/04/2019 WHICH HAS CONFIRMED INTEREST DISAL LOWANCE OF RS.15.92 LACS AS MADE BY LD.AO WHILE FRAMING ASSESSMENT U/S 143(3) ON ITA NO.4333/MUM/2019 JAI DANANI ASSESSMENT YEAR: 2014-15 2 22/12/2016. THE ASSESSEE IS STATED TO BE ENGAGED IN BUYING & SELLING OF PAINTINGS. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER- BOOK. OUR ADJUDICATION TO THE SUBJECT MATTER OF APP EAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE PURCHASED A COMMERCIAL PROPERTY SITUATED AT UNIT NO . 1603, LODHA SUPREMUS, DR. E.MOSES ROAD, WORLI NAKA, MUMBAI FROM M/S LODHA DEVELOPERS PRIVATE LIMITED. IT TRANSPIRED THAT THE PURCHASE CONSIDERATION OF RS.642.32 LACS WAS SOURCED OUT OF UNSECURED LOAN TAKEN BY THE ASSESSEE FROM HIS FATHER AS WELL AS MORTGAGE LOAN O BTAINED FROM M/S FULLERTON INDIA CREDIT CO. LTD. 3.2 UPON PERUSAL OF BALANCE SHEET, IT WAS OBSERVED THAT NO DEPRECIATION WAS CLAIMED ON THE SAID PREMISES BUT T HE ASSESSEE CLAIMED INTEREST OF RS.15.92 LACS TOWARDS PURCHASE OF THE P REMISES. ACCORDINGLY, THE ASSESSEE WAS DIRECTED TO SUBSTANTI ATE THE FACT THAT THE PROPERTY WAS ACTUALLY USED FOR BUSINESS PURPOSES. I N DEFENSE, THE ASSESSEE SUBMITTED COPY OF PART POSSESSION LETTER D ATED 02/09/2013 ALONG WITH COPY OF ELECTRICITY BILL DATED 31/12/201 3 SHOWING ELECTRICITY CONSUMPTION DURING THE MONTH OF OCTOBER, 2013. 3.3 HOWEVER, AFORESAID SUBMISSIONS WERE FOUND TO BE NON TENABLE IN THE LIGHT OF PART-POSSESSION LETTER DATED 02/09/201 3. THE BUILDER, IN RESPONSE TO NOTICE U/S 133(6) FILED THE COPY OF THE SAME LETTER BUT FAILED TO THROW ANY LIGHT ON THE FACT WHETHER THE BUSINESS WAS ACTUALLY COMMENCED BY THE ASSESSEE AT THE SAID PREMISES OR N OT. FURTHER THE POSSESSION LETTER WAS NOT COMPLETE POSSESSION BUT O NLY PRE-CONDITIONAL ITA NO.4333/MUM/2019 JAI DANANI ASSESSMENT YEAR: 2014-15 3 LETTER BEFORE POSSESSION OF THE PROPERTY. THE ELECT RICITY BILLS WERE ISSUED IN THE NAME OF ANOTHER ENTITY NAMELY M/S ODEAN THEATERS AND PROPERTIES PVT. LTD AND NOT IN THE NAME OF THE ASSESSEE WHICH LED LD. AO TO DISBELIEVE THE ASSESSEES SUBMISSIONS. IN THE SAID BACKGROUND, IT WAS HELD THAT INTEREST AS CLAIMED BY THE ASSESSEE W OULD NOT BE ALLOWABLE U/S 36(1)(III). THE POSSESSION OF THE PRO PERTY WAS NOT OBTAINED DURING THE YEAR AND THE SAME WAS NOT USED FOR BUSIN ESS PURPOSES. FINALLY, THE INTEREST SO CLAIMED WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE DISALLOWANCE, UPON CONFIRMATION BY LD. CIT(A), IS IN FURTHER CHALLENGE BEFORE US. 4. UPON CAREFUL CONSIDERATION OF DOCUMENTS ON RECOR D, WE FIND THAT THE ASSESSEE HAS BEEN OFFERED THE POSSESSION OF THE CITED PREMISES VIDE BUILDERS LETTER DATED 02/09/2013. IT IS CLEARLY ME NTIONED IN THE OPENING PARAGRAPH THAT THE UNIT WAS READY FOR OCCUPATION AN D THE ASSESSEE WAS INVITED TO INSPECT THE PREMISES BEFORE ACCEPTING TH E KEYS OF THE UNIT. THE POSSESSION FORMALITIES WERE TO BECOME INVALID IN CA SE THE PAY ORDER AND CHEQUES ISSUED TOWARDS THE OUTSTANDING AMOUNT OF TH E UNIT WERE DISHONORED FOR ANY REASONS. THE ASSESSEES BANK STA TEMENT WOULD SHOW THAT THE PART PAYMENTS MADE TO BUILDER WERE CLEARED FROM ASSESSEES BANK DURING THE MONTH OF AUGUST, 2013 ITSELF. PROCEEDING FURTHER, THE PREMISES COOPERATIVE SOCIET Y, VIDE LETTER DATED 09/07/2014, CONFIRMED THAT THE ASSESSEE WAS ADMITTE D AS THE MEMBER OF THE SOCIETY W.E.F. 25/04/2014. IT HAS ALSO CONFIRME D THAT THE POSSESSION OF THE PREMISES WAS TAKEN BY THE ASSESSEE DURING TH E MONTH OF SEPTEMBER, 2013 AND ASSESSEE HAD COMMENCED COMMERCI AL ACTIVITIES IMMEDIATELY. ITA NO.4333/MUM/2019 JAI DANANI ASSESSMENT YEAR: 2014-15 4 THE ELECTRICITY BILL, THOUGH NOT IN THE NAME OF THE ASSESSEE, SHOWS REGULAR ELECTRICITY CONSUMPTION SINCE OCTOBER, 2013 ONWARDS TILL MARCH, 2014. THE FACT THAT THE ELECTRICITY METER STOOD IN THE NAME OF ODEON THEATRES AND PROPERTIES PRIVATE LIMITED WOULD LOSE SIGNIFICANCE IN VIEW OF THE FACT THAT THE ASSESSEE WAS OFFERED THE POSSE SSION OF THE PREMISES IN SEPTEMBER, 2013 ITSELF WHICH FACT STOOD CONFIRME D BY THE PREMISES COOPERATIVE SOCIETY. FURTHER, IT IS UNDISPUTED FACT THAT THE ASSESSEE WAS PAYING THE ELECTRICITY CHARGES SINCE SEPTEMBER, 201 3. ANOTHER PERTINENT FACT TO BE NOTED IS THAT THE ASSE SSEE PURCHASED CERTAIN ALUMINUM PARTITION MATERIAL FROM M/S GANGAR ALUMINU M VIDE INVOICE DATED 23/10/2013 TO MAKE-READY THE DISPLAY UNIT AT THE SAID PREMISES WHICH WOULD SUPPORT THE FACT THAT THE PREMISES WAS PUT TO USE DURING THE YEAR. THE ADDITION IN FURNITURE & FIXTURE SO PURCHA SED HAS BEEN CAPITALIZED DURING THE YEAR AND DEPRECIATION HAS BE EN CLAIMED AGAINST THE SAME. THE SAME IS NOT UNDER DISPUTE. THE PREMIS ES SO PURCHASED HAVE ALSO BEEN REFLECTED AS FIXED ASSET IN THE BALA NCE SHEET, THOUGH NO DEPRECIATION HAS BEEN CLAIMED AGAINST THE SAME. BUT THE SAID FACT ALONE WOULD NOT DISENTITLE THE ASSESSEE TO CLAIM LEGITIMA TE BUSINESS EXPENDITURE. IN FACT THE ASSESSEE HAS RAISED TAX IN VOICE AGAINST ITS CUSTOMER ON ACCOUNT OF SALE OF PAINTINGS FROM THE S AID PREMISES ON 18/02/2014. IN VIEW OF THE FOREGOING, WE WOULD HOLD THAT THE AS SESSEE WAS ENTITLED TO CLAIM THE INTEREST EXPENDITURE U/S 36(1)(III). WE O RDER SO. THE LD. AO IS DIRECTED TO RECOMPUTED ASSESSEES INCOME IN TERMS O F OUR ABOVE ORDER. ITA NO.4333/MUM/2019 JAI DANANI ASSESSMENT YEAR: 2014-15 5 5. THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON 04 TH JANUARY, 2021. SD/- SD/- (AMARJIT SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04/01/2021 S R.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ! #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. - ( ! ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./ &0 , ! 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.