PRASAD AGENTS P. LTD, MUMBAI V. ACIT 3(2)(2), MUMBAI

ITA 4344/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7426 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 02-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMA
• Assessee Lawyers: DIVYA JOKHAKAR
• Keywords: Depreciation; Question of law
• Section: 143(3); 115JB; 143(1); 37

Judgement Text

P A G E | 1 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4344/MUM/2018 (ASSESSMENT YEAR: 2014 - 15 ) PRASAD AGENTS PRIVATE LIMITED 46, JOLLY MAKER CHAMBER, II, 225, NARIMAN POINT, MUMBAI 400021 VS. ACIT - 3(2)(2) MUMBAI PAN AAACP3530D (APPELLANT) (RESPONDENT) APPELLANT BY: MS. DIVYA JOKHAKAR , A.R RESPONDENT BY: SHRI KUMAR PADMAPANI BOHRA , D.R DATE OF HEARING: 03.10 . 2019 DA TE OF PRONOUNCEMENT: 2 3 .10.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - 8, MUMBAI, DATED 23.04.2018 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT, 1961 ( FOR SHORT ACT), DATED 28.07.2016 FOR A.Y. 2014 - 15 . THE ASSESSEE ASSAILING THE IMPUGNED ORDER HAS RAISED BEFORE US T HE FOLLOWING GROUNDS OF APPEAL: THE LEARNED COMMISSIONER OF INCOME TAX (CIT) ERRED IN CONFIRMING THE DISALLOWANCES MADE BY THE DEPUTY COMMISSIONER OF INCOME TAX AS UNDER: (I) DISALL OWANCE OF DEPRECIATION OF RS.9, 17,274 ON LONAWALA PROPERTY TREATING IT AS NON BUSINESS ASSET. (II) CHARGE OF NOTIONAL RENT OF RS. 10,43,065 OF LONAWALA HOUSE EVEN THOUGH IT IS BUSINESS ASSET. (III) DISALLOWING RS. 22,57,073 CLAIMED AS REPAIRS TO LONAWALA PROP ERTY WHICH IS A BUSINESS ASSET. P A G E | 2 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) (IV) DISALLOWING RS. 1,67,860 ON NEW DELHI CWGV (COMMON WEALTH GAMES VILLAGE) PROPERTY AS REPAIRS TO PROPERTY. IN BRIEF THE CIT HAS ERRED IN THE FOLLOWING FOR WHICH THIS APPEAL IS MADE TO YOUR HONOR. AMOUNT DISALLOWANCE (I) 9,17,274 DISALLOWANCE OF DEPRECIATION ON LONAWALA PROPERTY. (II) 10,43,065 CHARGING NOTIONAL RENT ON LONAWALA PROPERTY. (III) 22,57,073 DISALLOWANCE REPAIRS ON LONAWALA PROPERTY. (IV) 1,67,860 DISALLOWANCE REPAIRS ON DELHI PROPERTY THE ASSESSEE URGE THAT THE DISALLOWANCE ON THE ABOVE BE DELETED. THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT TO EACH OTHER AND THE ASSESSEE HAS A RIGHT TO ADD, ALTER AND AMEND ANY OF THE ABOVE GROUNDS OF APPEAL . 2. ALSO, THE ASSESSEE HA S RAISED THE FOLLOWING ADDITIONAL GROUND OF APPEAL BEFORE US: 1. THE LEARNED CIT (APPEALS) ERRED IN LAW AND IN FACTS IN IGNORING THE FACT THAT THE PROVISIONS OF SECTION 115JB OF THE INCOME TAX ACT 1961, CONTAIN A CODE BY ITSELF AND THEREFORE THE SAID PR OVISIONS ARE NOT TO BE INTERFERED SO LIGHTLY. FURTHER, J ADDITIONS TO TAXABLE INCOME OF RS. 9,17,274/ - BEING DISALLOWANCE OF DEPRECIATION ON THE PROPERTY AND DISALLOWANCE ON REPAIRS AMOUNTING TO RS.24,24,433/ - , COULD HAVE BEEN ALSO MADE TO INCOME U/S 115JB OF THE INCOME TAX ACT, 1961 BY IGNORING THE PROVISIONS OF SECTION 1I5JB OF THE INCOME TAX ACT, 1961. 3 . BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS A NBFC MAINLY ENGAGED IN INVES TING IN SHARES/SECURITIES, MUTUAL FUNDS AND ALSO TRADING IN SHARES/SECURI TIES HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2014 - 15 ON 26.09.2014, DECLARING ITS TOTAL INCOME AT RS.65,18,400/ - . R ETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 4. ON A PERUSAL OF THE PROFIT AND LOSS ACCOUNT IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD INTER ALIA CLAIMED THE FOLLOWING EXPENSES: SR. NO. PARTICULARS AMOUNT 1. DEPRECIATION ON FLAT AMBY VALLEY SITUATED AT LONAWALA RS. 9,17,274/ - . 2. REPAIRS AND MAINTENANCE EXPENDITURE IN RESPECT OF FLAT AMBY VALLEY SITUATED AT LONAWALA RS.22,57,073/ - . 3. REPAIRS AND MAINTENANCE EXPENDITURE OF PROPERTY SITUATED AT CWGV, NEW DELHI RS. 1,67,860/ - OBSERVING, THAT THE ASSESSEE COMPANY WAS HAVING ITS REGISTERED OFFICE AT NARIMAN POINT, MUMBAI, THE A.O CALLED UPON IT TO EXPLAIN AS TO HOW THE F LAT AT AMBY VALLEY , LONAWALA WAS BEING USED FOR THE PURPOSE OF ITS BUSINESS. APART THERE FROM, THE ASSESSEE WAS ALSO CALLED UPON P A G E | 3 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) TO PUT FORTH AN E XPLANATION AS TO HOW THE PROPERTY SITUATED AT C OMMON WEALTH GAMES VILLAGE (FOR SHORT CWGV ) , NEW DELHI WAS BEING USED FOR THE PURPOSE OF ITS BUSINESS. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE AFORESAID PROPE RTIES WERE BEING USED FOR THE PURPOSE OF HOLDING BOARD MEETINGS. HOWEVER, THE A.O WAS NOT INSPIRED BY THE REPLY FILED BY THE ASSESSEE. IT WAS OBSERVED BY THE A.O , THAT THE ASSESSEE WHICH WAS HAVING ITS REGISTERED OFFICE AT NARIMAN POINT, MUMBAI, AND WAS ENGAGED IN THE BUSINESS OF SHARE TRADING AND MAKING OF INVESTMENT S IN SHARES/SECURITIES, MUTUAL FUNDS ETC., COULD NOT HAVE USED THE ABOVEMENTIONED PROPERTIES FOR THE PURPOSE OF ITS BUSINESS. IN THE BACKDROP OF HIS CONVICTION THAT THE AFORESAID PROPERTIES W ERE NOT BEING USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES, THE A.O DISALLOWED THE CORRESPONDING EXPENSES CLAIMED BY THE ASSESSEE IN RESPECT OF THE SAME VIZ. (I). DEPRECIATION CLAIMED IN RESPECT OF FLAT AT AMBY VALLEY, LONAVALA : RS.9,17,274/ - ; (II) . THE REPAIRS AND MAINTENANCE EXPENSES CLAIMED IN RESPECT OF FLAT AT AMBY VALLEY, L ONAVALA : RS. 22,57,073/ - ; AND (III). THE REPAIRS AND MAINTENANCE EXPENSES CLAIMED IN RESPECT OF THE APARTMENT AT CWGV, NEW DELHI OF RS.1,67,860/ - . APART THERE FROM, THE A.O WORK ED OUT THE ANNUAL LETTABLE VALUE (FOR SHORT ALV) UNDER SEC.22 OF THE FLAT AT AMBY VALLEY, LONAWALA AT RS.14,90,092/ - I.E @ 8% OF RS.1,86,26,152/ - (VALUE OF THE PROPERTY AS PER THE DEPRECATION SCHEDULE) AND BROUGHT THE SAME TO TAX UNDER THE HEAD HOUSE PROPERTY . ON THE BASIS OF HIS AFORESAID DELIBERATIONS, THE A.O WORKED OUT THE INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS AT RS.1,09,03,170/ - . FURTHER, THE A.O MODIFIED THE BOOK PROFIT UNDER SEC.115JB BY ADDING THE AFORESAID DISALLOWANCE OF DEPRE CIATION AND DISALLOWANCE OF THE REPAIRS AND MAINTENANCE EXPENSES , AND WORKED OUT THE SAME AT RS.2,40,77,285/ - . 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTIONS ADVANCED BY THE ASSESSEE UPHELD THE ADDITIONS/DISALLOWANCE S MADE BY THE A.O AND DISMISSED THE APPEAL. 6. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE MAY HEREIN OBSER VE THAT AS PER THE REGISTRY THE ASSESSES APPEAL INVOLVE S A DELAY OF 1 DAY. AS IS DISCERNIBLE FROM THE RECORDS, AS THE LAST DATE ON WHICH THE APPEAL WAS TO BE FILED BY THE ASSESSEE I.E 01/07/2018 WAS A PUBLIC HOLIDAY, THEREFORE, IT WAS FILED ON THE VERY N EXT DATE ON 02.07.2018. IN OUR CONSIDERED VIEW, AS PER SEC. 9 OF THE GENERAL CLAUSE ACT, 1897 R.W SEC. 4 OF THE LIMITATION ACT, 1963, THE APPEAL FILED BY THE ASSESSEE UNDER P A G E | 4 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) THE AFORESAID CIRCUMSTANCES I.E ON 02/07/2018, IS TO BE TAKEN AS HAVING BEEN FILED WITHIN THE STIPULATED TIME PERIOD. ACCORDINGLY, AS THERE IS NO DELAY INVOLVED IN THE FILING OF THE PRESENT APPEAL BY THE ASSESSEE, THEREFORE, WE PROCEED WITH THE ADJUDICATION OF THE SAME ON MERITS. 7. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL TOOK US THROUGH THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE . IT WAS SUBMITTED BY THE LD. A.R , THAT THE ASSESSEE IN ITS ADDITIONAL GROUND OF APPEAL HA S ASSAILED THE VALIDITY OF THE BOOK PROFIT DETERMINED BY THE A.O UNDER SEC.115JB , FOR THE REASON, THAT THE SAME WAS NOT AS PER THE MANDATE OF LAW. IT WAS AVERRED BY THE LD. A.R, THAT AS THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE INVOLVES A QUESTION OF LAW ON THE BASI S OF THE FACTS AVAILABLE ON RECORD, THEREFORE, THE SAME MAY BE ADMITTED . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) DID NOT SERIOUSLY OBJECT TO THE RAISING OF THE AFORESAID ADDITIONAL GROUND OF APPEAL . 8. WE HAVE PERUSED THE ADDIT IONAL GROUND OF APPEAL RAISED BY THE ASSESSEE AN D FIND THAT THE VALIDITY OF THE BOOK PROFIT DETERMINED BY THE A.O UNDER SEC.115JB HAS BEEN ASSAILED BY THE ASSESSEE BEFORE US. AS THE ASSESSEE BY RAISING THE AFORESAID ADDITIONAL GROUND HAS SOUGHT AN ADJUDICATION OF A LEGAL ISSUE BASED ON THE FACTS ALREADY AVAILABLE ON RECORD , THEREFORE, IN THE BACKDROP OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. NATIONAL THERMAL POWER COMPANY LTD. (1998) 229 ITR 383 (SC) , THE SAM E IS ADMITTED . 9. WE SHALL FIRST TAKE UP THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE BEFORE US. IT IS SUBMITTED BY THE LD. A.R , THAT THE ADDITIONS MADE BY THE A.O TO THE BOOK PROFIT UNDER SEC.115JB CLEARLY MILITATE S AGAINST THE EXPRESS PROVI SIONS OF THE SAID STATUTORY PROVISION WHICH DOES NOT PROVIDE FOR ANY SUCH MODIFICATIONS . I N SUPPORT OF HIS AFORESAID CONTENTION, THE LD. A.R HAD RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF APO L LO T Y RES LTD. VS. CIT (2002) 122 TAXMAN 562 (SC) . RELYING ON THE AFORESAID JUDGMENT, IT WAS SUBMITTED BY THE LD. A.R , THAT AS PER THE SETTLE D POSITION OF LAW THE ONLY ADDITIONS/REDUCTIONS FOR THE PURPOSE OF WORKING OUT THE BOOK PROFIT UNDER SEC.115JB WERE PRESCRIBED IN THE EXPLANATION TO THE SAID STATUTORY PROVISION. ACCORDINGLY, IT WAS AVERRED BY THE LD. A.R , THAT AS THE AFORESAID ADDITIONS/DISALLOWANCE MADE BY THE A.O VIZ. (I). DEPRECIATION ON PROPERTY ; AND (II). D ISALLOWANCE OF THE REPAIR AND MAINTENANCE EXPENSES OF PROPERTY , DOES NOT FALL WITHIN THE REALM OF THE ADDITIONS/REDUCTIONS ENVISAGED IN THE EXPLANATION TO SEC.115JB, THEREFORE, THE A.O HAD P A G E | 5 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) TRAVERSED BEYOND HIS JURISDICTION AND HAD WRONGLY ADDED THE SAME WHILE WORKING OUT THE BOOK PROFIT OF THE ASSESSEE COMPANY. AS REGARDS THE M ERITS OF THE CASE, IT WAS SUBMITTED BY THE LD. A.R , THAT AS BOTH OF THE AFORESAID TWO PROPERTIES VIZ. (I) FLAT AT AMBY VALLEY, LONAWALA ; AND (II) APARTMENT AT CWGV, NEW DELHI WERE BEING USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES, THEREFORE, THE LOWER A UTHORITIES WERE IN ERROR IN DISALLOWING THE CORRESPONDING DEPRECIATION AND THE REPAIR AND MAINTENANCE EXPENSES PERTAINING TO THE SAID PROPERT IES . IN ORDER TO FORTIFY HER CONTENTION THAT THE AFORESAID PROPERTIES WERE BEING USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES, IT WAS SUBMITTED BY THE LD. A.R THAT DEPRECIATION ON THE FLAT AT AMBY VALLEY, LONAWALA HAD BEEN ALLOWED BY THE REVENUE IN A.Y. 2013 - 14 AND A.Y. 2015 - 16. ALSO, IT WAS SUBMITTED BY HER THAT THE FLAT AT CWGV , NEW DELHI HAD BEEN SOLD BY THE ASSESSEE IN MAY, 2016 AND THE CAPITAL GAIN ARISING FROM THE SAID SALE TRANSACTION HAD BEEN SHOWN AS THE INCOME OF THE ASSESSEE COMPANY IN A.Y. 2017 - 18. ACCORDINGLY, IT WAS THE CLAIM OF THE LD. A.R THAT AS THE AFORESAID PROPERTIES HAD BEEN ACCEPTED BY THE REVENUE AS A BUSINESS ASSET IN THE AFORESAID PRECEDING/SUCCEEDING YEARS, THEREFORE, IT WOULD BE INCORRECT ON ITS PART TO ADOPT AN INCONSISTENT APPROACH AND DECLINE THE CLAIM OF DEPRECIATION AND REPAIR EXPENSES IN CONTEXT OF THE SAID PROPERTIES BY DRAWIN G A CONTRARY VIEW DURING THE YEAR UNDER CONSIDERATION . 10. PER CONTRA, THE LD. D.R RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R , THAT AS THE AFORESAID PROPERTIES WERE NOT BEING USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSE S, THEREFORE, THE CORRESPONDING CLAIM OF DEPRECIATION AND REPAIR EXPENSES HAD RIGHTLY BEEN DECLINED BY THE LOWER AUTHORITIES. 11. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIA L AVAILABLE ON RECORD . OUR INDULGENCE IN THE PRESENT APPEAL HA S BEEN SOUGHT BY THE ASSESSEE FOR ADJUDICATING FOUR ISSUES VIZ. (I) VALIDITY OF THE ADJUSTMENTS MADE BY THE A.O FOR WORKING OUT THE BOOK PROFIT UNDER SEC.115JB OF THE ACT; (II) THE SUSTAINABIL ITY OF THE DISALLOWANCE OF DEPRECIATION CLAIMED BY THE ASSESSEE IN RESPECT OF FLAT AT AMBY VALLEY, LONAWALA ; (III) THE SUSTAINABILITY OF THE DISALLOWANCE OF THE REPAIR AND MAINTENANCE EXPENSES INCURRED BY THE ASSESSEE IN RESPECT OF ITS AFORESAID PROPERTIES ; AND (I V ). ASSESSING OF THE NOT I ONAL ALV OF THE FLAT AT AMBY VALLEY, LONAVALA UNDER THE HEAD HOUSE PROPERTY . P A G E | 6 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) 12. WE SHALL FIRST ADVERT TO THE CLAIM OF THE ASSESSEE THAT THE A.O HAD ERRED IN CARRYING OUT MODIFICATIONS TO THE BOOK PROFIT UNDER SEC.115 JB , FOR THE REASON , THAT THE SAME DO NOT FALL WITHIN THE REALM OF THE ADDITIONS/REDUCTIONS PRESCRIBED IN THE EXPLANATION TO SEC.115JB OF THE ACT. ADMITTEDLY, AS PER THE SETTLED POSITION OF LAW, THE A . O WHILE COMPUTING THE BOOK PROFIT UNDER SEC.115JB HA S ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNTS ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT , AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE PROVISIONS THEREIN ENVISAGED. IN FACT, THE A.O THEREAFTER HAS THE LIMITED POWE R OF MAKING AD D ITIONS AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO THE SAID SECTION. TO PUT IT DIFFERENTLY, THE A.O DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT & LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION TO SEC. 115JB. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF APO L LO T Y RES LTD. VS. CIT (2002) 122 TAXMAN 562 (SC) . NOW, IN THE BACKDROP OF THE AFORESAID SETTLED POSITION OF LAW , WE ARE OF THE CONSIDERED VIEW THAT AS THE ADDITIONS MADE BY THE A.O VIZ. (I) DISALLOWANCE OF DEPRECIATION UNDER SEC.32 : RS.9,17,234/ - ; AND (II) DISALLOWANCE OF REPAIRS AND MAINTENANCE EXPENSES : RS.24,24,433/ - DO NOT FALL WITHIN THE REALM OF THE MODIFICAT IONS CONTEMPLATED IN THE EXPLANATION TO SEC.115JB, THEREFORE, THE WORKING OF THE BOOK PROFIT UNDER SEC.115JB BY THE A.O BY MAKING THE AFORESAID ADDITIONS TO THE NET PROFIT OF THE ASSESSEE , NOT BEING IN CONFORMITY WITH THE MANDATE OF LAW CANNOT BE SUS TAIN ED AND ARE LIABLE TO BE VACATED. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, THE ADDITIONS MADE BY THE A.O TO THE NET PROFIT FOR COMPUTING THE BOOK PROFIT UNDER SEC.115JB ARE VACATED . THE ADDITIONAL GROUND OF APPEAL RAISED B Y THE ASSESSEE IS ALL OWED. 13. WE SHALL NOW ADVERT TO THE CLAIM OF THE ASSESSEE THAT THE LOWER AUTHORITIES HAD ERRED IN DECLINING TO ALLOW THE ASSESSE S CLAIM FOR DEPRECIATION AND REPAIRS AND MAINTENANCE EXPENDITURE IN RESPECT OF ITS PROPERTY I.E FLAT AT AMBY VALLE Y , LONAW ALA . AS IS DISCERNIBLE FROM THE RECORDS, IT IS THE CLAIM OF THE ASSESSEE THAT THE AFORESAID PROPERTY WAS BEING USED FOR THE PURPOSE OF ITS BUSINESS. HOWEVER, THE A.O HAVING SERIOUS DOUBTS AS TO HOW THE ASSESSEE WHICH WAS HAVING ITS OFFICE AT NARIMAN POINT, MUMBAI, AND WAS ENGAGED IN THE BUSINESS OF SHARE TRADING AND MAKING OF INVESTMENTS IN SHARES/SECURITIES, MUTUAL FUNDS ETC. COULD HAVE USED THE AFORESAID PROPERT Y FOR THE PURPOSE OF ITS BUSINESS, THUS CALLED UPON IT TO JUSTIFY ITS CLAIM. WE FIND THA T THE ASSESSEE IN ORDER TO DRIVE HOME ITS CONTENTION THAT THE PROPERTY UNDER CONSIDERATION P A G E | 7 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) WAS BEING USED FOR ITS BUSINESS PURPOSES, HAD PLACED ON RECORD THE MINUTES OF ITS BOARD MEETING S DATED 26.09.2013 AND 25.02.2013 . AS WAS DISCERNIBLE FROM THE MINU TES OF THE BOARD MEETINGS, IT WAS NOTICED BY THE A.O THAT THE ISSUES TAKEN UP IN THE RESPECTIVE MEETINGS PERTAINED TO VIZ. (I). REPAIR WORK BEING CARRIED OUT IN THE PROPERTY AT AMBY VALLEY, LONAWALA ; AND (II). THE TELEPHONE EXPENSES OF THE DIRECTOR. ALSO, THE ASSESSEE IN OR D ER TO FORTIFY ITS CLAIM THAT MEETINGS ON THE AFORESAID RESPECTIVE DATES WERE CARRIED OUT AT THE ABOVEMENTIONED PROPERTY AT LONAVALA, HA D FILED WITH THE A.O THE COP IES OF THE TOLL TAX PAYMENT RECEIPTS AND ALSO THE COP IES OF THE PETROL BI LL S . OBSERVING, THAT THE EVIDENCE SUBMITTED BY THE ASSESSEE DID NOT INSPIRE MUCH OF CONFIDENCE, AS SUCH TRIVIAL MATTERS VIZ. DISCUSSION S ABOUT THE TELEPHONE EXPENSES ETC . , WOULD NOT HAVE REQUIRED TRAVELLING FOR SEVERAL HOURS FROM THE ROUTINE OFFICE PREMISE S AT NARIMAN POINT, MUMBAI TO LONAVALA , THE A.O DECLINED TO ACCEPT THE CLAIM OF THE ASSESSEE THAT THE AFORESAID PROPERTY WAS USED FOR ITS BUSINESS PURPOSES. ACCORDINGLY, ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE A.O DECLINED TO ALLOW THE ASSESSE S CLAIM FOR DEPRECATION AND ALSO THE REPAIR AND MAINTENANCE EXPENSES INCURRED IN RELATION TO THE AFORESAID PROPERTY. APART THERE FROM, THE A.O HAD ALSO BROUGHT THE ALV OF THE AFORESAID PROPERTY TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 14. INSO FAR THE AFORESAID OBSERVATIONS OF THE A.O ARE CONCERNED, WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT THE EVIDENCE FILED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM THAT THE PROPERTY UNDER CONSIDERATION VIZ. F LAT AT AMBY VALLEY, LONAWALA , WAS B EING USED FOR ITS BUSINESS PURPOSE , DOES NOT INSPIRE ANY CONFIDENCE. AT THE SAME TIME, WE ALSO CANNOT REMAIN OBLIVIOUS OF THE CONTENTION OF THE ASSESSEE THAT ITS CLAIM FOR DEPRECIATION IN RESPECT OF THE AFORESAID PROPERTY IN A.Y. 2013 - 14 AND A.Y. 2015 - 16 W AS ALLOWED BY THE REVENUE IN THE SAID RESPECTIVE YEARS . IN SUM AND SUBSTANCE, IT IS THE CLAIM OF THE ASSESSEE , THAT NOW WHEN THE AFORESAID FLAT AT AMBY VALLEY, LONAWALA HAD BEEN ACCEPTED BY THE REVENUE TO BE A BUSINESS ASSET WHICH WAS WHOLLY AND EXCLUSIV ELY USED FOR THE PURPOSE OF ITS BUSINESS IN THE IMMEDIATELY PRECEDING/SUCCEEDING YEAR S , THEREFORE, A N IN CONSISTENT AND A CONTRARY VIEW IN THE ABSENCE OF ANY CHANGE IN THE FACTS OF THE CASE COULD NOT HAVE BEEN DRAWN DURING THE YEAR UNDER CONSIDERATION. WE F IND SUBSTANCE IN THE AFORESAID CLAIM OF THE ASSESSEE . IN OUR CONSIDERED VIEW, IN LIGHT OF THE PRINCIP LE OF CONSISTENCY, IF THE FACTS PERMEATING THOUGH VARIOUS YEARS REMAIN ED THE SAME , THEN IT WOULD NOT BE PERMISSIBLE FOR THE REVENUE TO ADOPT AN INCONSISTEN T P A G E | 8 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) APPROACH AND TAKE A CONTRARY VIEW. OUR AFORESAID OBSERVATION IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC) . HOWEVER, AS THE AFORESAID CLAIM OF THE ASSESSEE THAT THE DEPRECIATION IN RESPECT OF THE AFORESAID PROPERTY I.E FLAT AT AMBY VALLEY , LONAWALA WAS ALLOWED BY THE REVENUE IN A.Y. 2013 - 14 AND A.Y. 2015 - 16 IS NOT VERIFIABLE FROM THE RECORD S BEFORE US , THEREFORE , FOR THE SAID LIMITED PURPOSE WE RESTORE THE MATTER TO THE FILE OF THE A.O. IN CASE, IF THE REVENUE IN THE COURSE OF AN ASSESSMENT FRAMED UNDER SEC. 143(3) FOR EITHER OF THE AFORESAID YEAR S I.E A.Y. 2013 - 14 OR A.Y. 2015 - 16 HAD ALLOWED THE ASSESSES CLAIM O F DEPRECIATION ON THE AFORESAID PROPERTY VIZ. FLAT AT AMBY VALLEY, LONAWALA , THEN IN THE BACKDROP OF THE PRINCIP LE OF CONSISTENCY, THE VIEW TO THE CONTRARY ARRIVED AT BY THE A.O DURING THE YEAR UNDER CONSIDERATION WOULD NOT BE JUSTIFIED . AT THIS STAGE, WE MAY HOWEVER CLARIFY , THAT IN CASE THE AFORESAID CLAIM OF THE ASSESSEE HAD NOT BEEN ACCEPTED PURSUANT TO A SCRUTINY ASSESSMENT , AND HAD ONLY SUMMARILY BEEN ACCEPTED , THEN THE SAME WILL HAVE NO BEARING ON THE OBSERVATIONS DRAWN BY THE A.O IN RESPECT OF THE AFORESAID ISSUES PERTAINING TO THE ABOVEMENTIONED PROPERTY DURING THE YEAR UNDER CONSIDERATION I.E A.Y 2014 - 15. ACCORDINGLY, THE GROUND S OF APPEAL NO. (I) TO (III) ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS . 1 5 . WE SHALL NO W ADVERT TO THE CLAIM OF THE ASSESSEE THAT THE A.O HAD ERRED IN DISALLOWING ITS CLAIM OF REPAIR AND MAINTENANCE EXPENSES OF RS.1,67,860/ - PERTAINING TO ITS APARTMENT AT CWGV, NEW DELHI. AS OBSERVED BY US HEREINABOVE, IT IS THE CLAIM OF THE LD. A.R, THAT AS THE PROPERTY UNDER CONSIDERATION WAS OWNED BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION , THEREFORE, ITS CLAIM FOR REPAIR AND MAINTENANCE EXPENSES IN RESPECT OF THE SAME WAS WELL IN ORDER. HOWEVER, THE A.O BEING OF THE VIEW THAT THE ASSESSEE COULD NOT SUBSTANTIATE THAT THE AFORESAID PROPERTY WAS USED WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSE OF ITS BUSINESS, THEREFORE , HAD DECLINED THE AFORESAID CLAIM OF EXPENSE SO RAISED BY IT . ADMITTEDLY, AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUT HORITIES , THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE BY LEADING ANY DOCUMENTARY EVIDENCE BEFORE THE LOWER AUTHORITIES THAT THE AFORESAID PROPERTY WAS BEING USED FOR ITS BUSINESS. AT THE SAME TIME, IT IS THE CLAIM OF THE ASSESSEE THAT THE AFORESAID PROP ERTY WAS SOLD IN MAY, 2016 AND THE RESULTANT CAPITAL GAIN ON ITS SALE HAS BEEN SHOWN AS THE INCOME OF THE ASSESSEE COMPANY IN A.Y. 2017 - 18. AS THE SAID CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED ON THE VERY FACE OF IT, THEREFORE , IN ALL FAIRNESS WE P A G E | 9 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2) RESTORE THE ISSUE TO THE FILE OF THE A.O FOR MAKING NECESSARY VERIFICATIONS AS REGARDS THE SAME . IN CASE THE AFORESAID CLAIM OF THE ASSESSEE IS FOUND TO BE IN ORDER AND THE CAPITAL GAIN ON THE SALE OF THE AFORESAID PROPERTY HAD BEEN ACCOUNTED FOR BY THE ASSESSEE COMPANY IN ITS RETURN OF INCOME FOR A.Y. 2017 - 18, AND ACCEPTED BY THE REVENUE, THEN IT W OULD BE INCORRECT TO CONCLUDE THAT THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS REPAIR AND MAINTENANCE OF THE SAID PROPERTY WAS NOT TO BE ALLOWED AS A DEDUCTION UNDER SEC. 37 OF THE ACT. WE THUS RESTORE THE ISSUE TO THE FILE OF THE A.O, WHO SHALL AFTER MAKING NECESSARY VERIFICATIONS IN TERMS OF OUR AFORESAID OBSERVATIONS READJUDICATE THE IS SUE . GROUND OF APPEAL NO. (IV) IS ALLOWED FOR STATISTICAL PURPOSES. 1 6 . THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 3 . 10.2019 S D / - S D / - ( PRAMOD KUMAR ) (RAVISH SOOD) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; 2 3 .10 .2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . P A G E | 10 ITA NO.4344/MUM/2018 A.Y.2014 - 15 PRASAD AGENTS PRIVATE LIMITED VS. ACIT - 3(2)(2)