ACIT 9(3), MUMBAI V. WEALTHY MILLENIUM INVESTMENTS & TRADING LTD, MUMBAI

ITA 4573/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55865 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 02-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 4573/MUM/2010 ASSESSMENT YEAR : 2005-06. ASSTT. COMMISSIONER OF INCOME-TAX, M/S WEALTHY MILLENIUM INVESTMENTS CIRCLE-9(3), MUMBAI. VS. & TRADING LTD., 203, AJAY APT., PANDURANG WADI , 5 TH ROAD, GOREGAON (E), MUMBAI 400 063. PAN AAACW 3434F. APPELLANT. RESPONDENT APPELLANT BY : SHRI A.K.NAYAK. RESPONDENT BY: NONE. DATE OF HEARING : 22-11-2011. DATE OF PRONOUNCEMENT : 30-11-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-20, MUMBAI DATED 16-03-2010 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF T HE LEARNED CIT(APPEALS) IN DELETING THE DISALLOWANCE OF RS.23,50,151/- MADE BY THE AO ON ACCOUNT OF EXPENSES RELATING TO COLABA PROPERTIES. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS MAINLY ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES. T HE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27-10-2005 D ECLARING A LOSS OF 2 ITA NO.4573/MUM/2010 ASSESSMENT YEAR: 2005-06 RS.54,87,671/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTICED BY THE AO THAT PART OF THE OVERHEAD EXPENSES CLAIMED BY TH E ASSESSEE ON ACCOUNT OF RENT, RATES AND TAXES WERE IN RESPECT OF COMPANYS PROPER TY AT COLABA. IT WAS CLAIMED BY THE ASSESSEE THAT THE COLABA PROPERTY WAS EXCLUSIVE LY USED FOR THE PURPOSE OF ITS BUSINESS ACTIVITIES AND THE EXPENSES CLAIMED IN REL ATION TO THE SAID PROPERTY WERE REQUIRED TO BE INCURRED BY IT IRRESPECTIVE OF WHETH ER THE BUSINESS ACTIVITIES PURSUED RESULTED INTO INCOME OR NOT. THIS EXPLANATION OF TH E ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE AO. ACCORDING TO HIM, THE EXPENSE S CLAIMED BY THE ASSESSEE WERE ON ACCOUNT OF CERTAIN IMPROVEMENTS TO THE COLA BA PROPERTY COUPLED WITH THE DAY TO DAY MAINTENANCE THEREOF WHICH THE ASSESSEE E VEN OTHERWISE WAS REQUIRED TO INCUR. HE HELD THAT THE USE OF COLABA PROPERTY FOR THE PURPOSE OF ITS BUSINESS WAS NOT SATISFACTORILY ESTABLISHED BY THE ASSESSEE AND ACCORDINGLY THE EXPENSES OF RS.23,50,151/- CLAIMED BY THE ASSESSEE IN RELATION TO THE SAID PROPERTY WERE DISALLOWED BY HIM IN THE ASSESSMENT COMPLETED U/S 1 43(3) VIDE AN ORDER DATED 22- 11-2007. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), A N APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) WHO DE LETED THE DISALLOWANCE MADE BY THE AO AFTER DEALING WITH THIS ISSUE IN PARAGRAP H NO. 3 AND 3.2 OF HIS IMPUGNED ORDER WHICH READ AS UNDER : 3. THE AO NOTICED THAT THE APPELLANT HAD ACQUIRED A PROPERTY COLABA, MUMBAI DURING THE FINANCIAL YEAR 2002-03. IT HAD CL AIMED EXPENSES OF RS.23,50,151 ON MAINTENANCE OF THE SAID PROPERTY WH ICH CONSTITUTED MAJOR PORTION OF THE BUSINESS LOSS CLAIMED BY IT. HE DISA LLOWED THEM HOLDING THAT NO INCOME HAD BEEN SHOWN AGAINST THE SAID PROPERTY. WHILE DOING SO HE REJECTED THE CLAIM OF THE APPELLANT THAT THE PROPER TY IN QUESTION WAS BEING USED AS ITS BUSINESS PREMISES. BEING AGGRIEVED, THE APPELLANT SUBMITS THAT NON GENERATION OF INCOME FROM INVESTMENT CANNOT BE A GROUND FOR DISALLOWANCE OF EXPENSES. IT POINTED OUT THAT THE AO HAD ALLOWED INTEREST 3 ITA NO.4573/MUM/2010 ASSESSMENT YEAR: 2005-06 EXPENSES ON THE CAPITAL BORROWED FOR INVESTMENT IN THE SAID PROPERTY. IT FURTHER POINTED OUT THAT NO SUCH DISALLOWANCE WAS M ADE IN SUBSEQUENT YEARS EVEN WHEN NO INCOME WAS GENERATED FROM THE PROPERTY . 3.2 I HAVE CONSIDERED THE ISSUE. IT IS SEEN THAT TH E AO HAS NOT REFUTED THE CONTENTION OF THE APPELLANT THAT THE PROPERTY WAS B EING USED AS SITS BUSINESS PREMISES. HAVING NOT DOUBTED THE GENUINENESS OF THE EXPENSES, THERE WAS NO REASON FOR THE AO TO MAKE ANY DISALLOWANCE. FURTHER , I SEE FROM THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEARS 20 04-05 AND 2007-08 THAT NO SUCH DISALLOWANCE WAS MADE AGAINST SIMILAR CLAIM IN THOSE YEARS. I, THEREFORE, DELETE THE ADDITION MADE OF THE IMPUGNED SUM OF RS.23,50,151. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, NONE HAS APPE ARED ON BEHALF OF THE ASSESSEE. THIS APPEAL OF THE REVENUE IS, THEREFORE, BEING DISPOSED OF EXPARTE QUA THE RESPONDENT ASSESSEE ON MERITS AFTER HEARING THE ARGUMENTS OF THE LEARNED DR AND PERUSING THE RELEVANT MATERIAL ON RECORD. AS RI GHTLY SUBMITTED BY THE LEARNED DR, THE CLAIM OF THE ASSESSEE OF HAVING USED THE CO LABA PROPERTY AS ITS BUSINESS PREMISES APPEARS TO HAVE BEEN ACCEPTED BY THE LEARN ED CIT(APPEALS) WITHOUT GIVING ANY REASONS WHATSOEVER IN HIS IMPUGNED ORDER . HE APPEARS TO HAVE SIMPLY RELIED ON THE FACT THAT NO SUCH DISALLOWANCE WAS MA DE IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2004-05 AND 2-007-08 IGNORING THE FACT THAT THE USE OF COLABA PROPERTY FOR THE PURPOSE OF ASSESSEES BUSINESS WAS SPECIFICALLY DISPUTED BY THE AO IN HIS ORDER FOR THE YEAR UNDER CONSIDERATION. W E, THEREFORE, CONSIDER IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE AO FOR GIVING THE ASSESSEE AN OPPORTUNITY TO ESTABLISH ITS CASE O F HAVING USED THE COLABA PROPERTY FOR THE PURPOSE OF ITS BUSINESS IN THE YEA R UNDER CONSIDERATION. 4 ITA NO.4573/MUM/2010 ASSESSMENT YEAR: 2005-06 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV.,2011. SD/- SD/- (V. DURGA RAO) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 30 TH NOV., 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI.