Suraj Limited( Formerly known as Suraj Stainless Ltd.), Ahmedabad V. The Dy.CIT, Circle-8, Ahmedabad

ITA 475/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7945 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VILAS SHINDE
• Assessee Lawyers: G C PIPARA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.475/AHD/2015 ( / ASSESSMENT YEAR : 2010-11) SURAJ LTD. (FORMERLY KNOWN AS SURAJ STAINLESS LTD.) SURAT HOUSE, VIDYANAGAR SOCIETY OPP. USMANPURA GARDEN USMANPURA, AHMEDABAD / VS. THE DCIT CIRCLE-8 AMBAWADI, AHMEDABAD # ./ ./ PAN/GIR NO. : AAGCS 6939 M ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI G.C. PIPARA, AR &#%(' / RESPONDENT BY : SHRI VILAS SHINDE, SR.DR )*(+ / DATE OF HEARING 18/12/2017 ,-./(+ / DATE OF PRONOUNCEMENT 20/12/2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTA NCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-8, AHMEDABAD [CIT(A) IN SHORT] DATED 15/12/2014 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.14 3(3) OF THE ITA NO.475/AHD/ 2015 SURAJ LTD. VS. DCIT ASST.YEAR 2010-11 - 2 - INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT') DATED 19/03/2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11 . 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION OF RS.15,75,000/- ON ACCOUNT OF RENT EXPENSES MADE BY THE AO ON THE GROUND THAT THE APPELLANT COULD NOT EXPLAIN AS TO H OW THE MAINTENANCE OF GUESTHOUSE IS RELEVANT TO THE BUSINE SS OF THE APPELLANT. THAT SINCE THE AO HAD MECHANICALLY RELI ED UPON THE REASONS MENTIONED IN ASSESSMENT ORDER FOR A.Y. 2009 -10 OF THE ERSTWHILE SURAJ LIMITED [AMALGAMATING COMPANY] WITH OUT CONSIDERING THE FACTS FOR THE YEAR UNDER CONSIDERAT ION OF THE AMALGAMATED COMPANY AND SINCE THE RENT EXPENSES HAV ING BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THE IMPUGNED ADDITION OF RS.15,75,000/- REQUIRES TO BE DELETED. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.96,326/- ON ACCOUNT OF PRIOR PERIOD EXPENSES MADE BY THE AO WITHOUT PROPER CONSIDERATION OF THE FACTS AN D EVIDENCES FILED. THE LD.CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CO NTENTION OF THE APPELLANT THAT THE AMOUNT OF RS.88,991/- BEING C.C. INTEREST INCLUSIVE IN THE TOTAL ADDITION HAD CRYSTALLIZED DU RING SUBSEQUENT YEAR I.E. A.Y. 2011-12 AND DEBITED IN THAT YEAR AS RECOVERED BY THE BANK IN THAT YEAR AND IS NOT DEBITED IN A.Y. 2010-1 1 AT ALL AND HENCE NO ADDITION IS WARRANTED IN THE YEAR IN DISPUTE. I N VIEW OF FACTS AND SUBMISSIONS FILED, THE IMPUGNED ADDITION TO THE EXT ENT OF RS.88,991/- REQUIRES TO BE DELETED. 2.1.THE APPELLANT STATES THAT THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE SAID AMOUNT OF RS.88,991/- OUT OF TOTAL AD DITION OF RS.96,326/- HAVING ALREADY BEEN DEBITED IN THE SUBS EQUENT YEAR I.E. A.Y. 2011-12 ON THE BASIS OF ADVICE ISSUED BY THE B ANK IN A.Y. 2011- ITA NO.475/AHD/ 2015 SURAJ LTD. VS. DCIT ASST.YEAR 2010-11 - 3 - 12 ITSELF, THE IMPUGNED ADDITION TO THE EXTENT OF R S.88,991/- EVEN OTHERWISE REQUIRES TO BE DELETED. 3. AT THE TIME OF HEARING, LD.AR FOR THE ASSESSEE EXPRESSED THAT HE DOES NOT WISH TO PRESS GROUND NO.2 & 2.1 RAISED BY THE ASSESSEE. ACCORDINGLY, THE AFORESAID GROUND NOS.2 & 2.1 STAND S DISMISSED. 4. IT LEAVES US WITH THE REMAINING GROUND NO.1 OF T HE ASSESSEES APPEAL. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT GROUND NO.1 CONCERNS DISALLOWANCE OF RS.15,75,000/- ON ACCOUNT OF RENT E XPENSES OF THE GUEST HOUSE OF THE ASSESSEE WHICH HAS BEEN TAKEN TO MEET BUSINESS EXIGENCIES. THE LD.AR SUBMITTED THAT THE ASSESSING OFFICER (AO) HAS DISALLOWED THE AFORESAID GUEST HOUSE EXPENDITURE PLACING RELIANCE UPON THE ASSESSMENT ORDER FOR AY 2009-10 OF THE ERSTWHILE SURAJ LTD. (A MALGAMATING COMPANY). THE LD.AR NEXT SUBMITTED THAT THE AFORES AID ISSUE HAS BEEN RESOLVED IN FAVOUR OF ASSESSEE IN ITS OWN CASE IN A Y 2009-10 IN ITA NO.1632/AHD/2012 ORDER DATED 09/01/2017. 6. THE LD.DR RELIED UPON THE ORDER OF THE AO. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THE ISSUE. WE FIND THAT THE IDENTICAL ISSUE OF ALLOWABILITY OF GUEST HOUSE ITA NO.475/AHD/ 2015 SURAJ LTD. VS. DCIT ASST.YEAR 2010-11 - 4 - MAINTENANCE EXPENSES WAS DELIBERATED BY THE COORDIN ATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE RELEVANT TO AY 2009 -10. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE COORDINATE BENCH READS AS UNDER:- 36. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL PLACED BEFORE US. THROUGH THIS GROUND ASSESSEE HAS CHALLENGED THE ORDER OF ID. CIT(A) CONFIRMING THE ACTION OF ID. ASSESSIN G OFFICER DISALLOWING RENT EXPENSES OF RS.9,00,000/-. WE OBSERVE THAT FOR THE FIRST TIME DURING THE YEAR UNDER APPEAL ASSESSEE HAS CLAIMED RENT EXP ENSES OF RS.9,00,000/- TOWARDS HIRING OF GUEST HOUSE AT MUMB AI FOR THE STAY OF DIRECTORS FREQUENTLY VISITING MUMBAI FOR OFFICE PUR POSES. WE FURTHER OBSERVE THAT ASSESSEE HAS ENTERED INTO LEAVE AND LI CENCE AGREEMENT ON 19.11.2008 WITH SHRI PANKIN LAXMICHAND SHAH AND SHR I KUNAL T. SHAH FOR TAKING TWO FLATS ON LEASE AT MONTHLY RENT OF RS .2,25,000/-. THERE IS NO DISPUTE TO THE GENUINENESS OF THE TRANSACTION WITH REGARD TO THE FLATS TAKEN ON LEASE, RENT PAID AFTER TDS AND THE IDENTIT Y OF THE LANDLORDS. THE ONLY DISPUTE RAISED BY ASSESSING OFFICER IS WITH RE GARD TO HIS OBSERVATION THAT THE ASSESSEE HAS NEVER CLAIMED SUCH EXPENDITUR E IN PAST AND AS THE ASSESSEE IS DEALING IN SHARE TRANSACTIONS WHICH DEA LT WITH ON-LINE THERE IS NO NEED TO TAKE A LEASE OF GUEST HOUSE IN MUMBAI. W E ARE UNABLE TO UNDERSTAND THAT HOW THE MODUS OPERAND! OF DOING BUS INESS CAN BE CONTROLLED OR CHECKED BY THE ASSESSING OFFICER. ASS ESSEE IS A LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS REGULARLY SI NCE LAST MANY YEARS. BOOKS OF ACCOUNTS ARE AUDITED, REGULAR FINANCIAL ST ATEMENTS ARE FILED WITH THE INCOME-TAX DEPARTMENT AS WELL AS REGISTRAR OF C OMPANIES, RENT TRANSACTIONS ARE PROPERLY EVIDENCED BY REGISTERED A GREEMENT ALONG WITH PAYMENT MADE BY CHEQUES AND TDS. 37. THERE IS FAIR POSSIBILITY OF SITUATION WHEN A COMPANY PLANS ITS FUTURE BUSINESS TREND AND MAY HAVE TO EXPLORE VARIOUS AVEN UES WITH RELATION THERETO. IT SEEMS THAT ASSESSEE WITH THE FORE-SIGHT EDNESS AND IN ORDER TO IMPROVE AND EXPAND BUSINESS AND ALSO TO SAVE EXTRA HOTEL CHARGES ITA NO.475/AHD/ 2015 SURAJ LTD. VS. DCIT ASST.YEAR 2010-11 - 5 - THOUGHT IT AMICABLE TO TAKE FLATS ON LEASE IN MUMBA I. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND IN ABSENCE OF ANY CONTRARY REASONS BROUGHT ON RECORD BY THE REVENUE AGAINST THE IMPUGN ED EXPENDITURE BOOKED BY THE ASSESSEE EXCEPT A CASUAL APPROACH, WE ARE INCLINED TO BELIEVE THAT ASSESSEE HAS CLAIMED GENUINE EXPENDITU RE OF RENT OF RS.9,00,000/-. WE SET ASIDE THE ORDER OF ID. CIT(A) AND ALLOW THIS GROUND. 8. AS THE ISSUE HAS ALREADY BEEN RESOLVED IN FAVOUR OF ASSESSEE, WE ALLOW GROUND NO.1 OF ASSESSEES APPEAL IN PARITY WI TH THE AFORESAID DECISION OF THE COORDINATE BENCH. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/ 12 /2017 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/ 12 /2017 3..),.)../ T.C. NAIR, SR. PS ITA NO.475/AHD/ 2015 SURAJ LTD. VS. DCIT ASST.YEAR 2010-11 - 6 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-8, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 18.12.17 (DICTATION-PAD 5- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.12.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.21.12.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.12.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER