M/s Dynamic Universal Ltd., New Delhi V. DCIT, New Delhi

ITA 5080/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2415 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: PUNEET THUKRAL
• Keywords: Business income; Business expenditure; Opportunity of being heard
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.5080/DEL/2016 ASSESSMENT YEAR: 2007-08 DYNAMIC UNIVERSAL LTD. 2/10, SHANTI NIKETAN NEW DELHI 110021 PAN NO.AAACD3043K VS DCIT CIRCLE 10 (1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. PUNEET THUKRAL, CA RESPONDENT BY MS. ASHIMA NEB, SR. DR DATE OF HEARING: 29/08/2019 DATE OF PRONOUNCEMENT: 04/09/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 09.06.2016 OF THE CIT(A)-3, NEW DELHI R ELATING TO A. Y. 2007-08. 2. THE ASSESSEE IN ITS ONLY EFFECTIVE GROUND OF APP EAL HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING TH E DISALLOWANCES OF EXPENSES OF RS.74,76,907/- MADE BY THE ASSESSING OFFICER. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PAGE | 2 COMPANY AND FILED ITS RETURN OF INCOME ON 30.10.200 7 DECLARING TOTAL INCOME OF RS.66,99,830/-. SUBSEQUENTLY THE CA SE WAS REOPENED BY RECORDING REASONS U/S. 147 AND NOTICE U /S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE ASSESSEE I N ITS REPLY SUBMITTED THAT THE ORIGINAL RETURN FILED EARLIER MA Y BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITION OF RS.74,76,907/-WH ICH IS THE SUBJECT MATTER OF APPEAL BY OBSERVING AS UNDER :- THE PERUSAL OF RECORDS REVEALED THAT DURING THE YE AR UNDER CONSIDERATION, THE ASSESSEE HAS EARNED INC OME OF RS. 15445471/- ON THE LEASING OF THE PROPERTY AN D PARKING CHARGES RECEIVED, FROM DIFFERENT PERSONS. THE PROPERTY ON WHICH THIS INCOME WAS EARNED WAS HE LD BY THE ASSESSEE AS STOCK IN TRADE. BESIDES THE ABOVE INCOME, THE ASSES SEE WAS NOT DOING ANY BUSINESS DURING THE YEAR AND CLAIMED RS 7476907/- AS BUSINESS EXPENDITU RE THOUGH THE RENTAL INCOME HAS BEEN OFFERED FOR TAXATION BY THE ASSESSEE, UNDER THE HEAD HOUSE PROPERTY, THE CORRESPONDING EXPENSES HAVE BEEN CLAIMED AS BUSINESS EXPENSES. SINCE, THESE EXP ENSES WERE INCURRED WITH REGARD TO THE RENTAL INCOME OF THE ASSESSEE, THE SAM E ARE NOT ALLOWABLE AS BUSINESS EXPENSE SINCE, THE EXPENSE ARE NOT RELATED TO THE I NCOME TAXABLE UNDER THE HEAD 'BUSINESS & PROFESSION' THE SAME EXPENSES AMOUNTING TO RS 74,76 ,907/- ARE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE PENALTY PROCEEDINGS U/S 271( 1 }(C} ARE BEING INITIATED SEPARATELY FOR CONCEALING TRUE INCOME OR FURNISHING INACCURATE PAR TICULARS OF SUCH INCOME. 4. IN APPEAL THE LD. CIT(A) SUSTAINED THE ADDITION SO MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 6. IN THE INSTANT CASE, THE APPELLANT IS HAVING TH E STEADY INCOME UNDER THE HEAD 'INCOME FROM THE HOUSE PROPERTY' AND RESORTED TO THE COLOURABLE DEVICE TO SHOW ARTIFICIAL LOSS UNDER THE HEAD 'BUSINESS IN COME' FROM THE CONSULTANCY. THE COUNSEL OF THE APPELLANT WAS ASKED VIDE ORDER SHEET ENTRY DATED 22.03.2016 TO SUBMIT THE COMPLETE DETAILS OF THE BUSINESS CONDUCTED. PAGE | 3 VARIOUS OPPORTUNITIES WERE GIVEN TO FILE THE DOCUME NTARY EVIDENCE TO ESTABLISH THE EXISTENCE OF BUSINESS RUN BY THE COMPANY. VIDE ORDER SHEET ENTRY DATED 02.05.2016, THE COUNSEL WAS UNABLE TO FILE ANY EVID ENCE REGARDING THE EXISTENCE OF GENUINE BUSINESS ACTIVITY. NOTHING WAS BROUGHT ON THE RECORD TO ESTABLISH THAT THE APPELLANT IS HAVING THE 'BUSINES S APPERATUS'. THE SINGLE RECEIPT OF RS. 1,80,000 HAS BEEN SHOWN WHICH HAS BEE N CLAIMED AS THE BUSINESS RECEIPT TO INDICATE THAT THE BUSINESS IS B EING CARRIED OUT. NO OTHER BUSINESS ACTIVITY HAS BEEN SHOWN. THE SAME PATTERN IS FOLLOWED IN THE PRECEDING AND SUBSEQUENT YEARS AS EVIDENT FROM THE CHART GIVEN IN THE EARLIER PARAS. THE COUNSEL DREW MY ATTENTION TO THE APPELLA TE ORDER OF MY PREDECESSOR PASSED FOR THE A.Y.2008-09 ON THE SIMILA R ISSUE. I HAVE CONSIDERED THE APPELLATE ORDER OF MY PREDECESSOR PA SSED IN THE PRECEDING YEAR AND CONCLUDE THAT THE FACTUAL ISSUE OF THE EXI STENCE OF BUSINESS APPARATUS AND NECESSARY WHERE WITHAL TO RUN THE BUS INESS ACTIVITY HAS NOT BEEN EXAMINED IN THAT YEAR. MOREOVER, THE COUNSEL C OULD NOT ESTABLISH THE EXISTENCE OF BUSINESS ACTIVITY DURING THE YEAR UNDE R CONSIDERATION. IN VIEW OF THE DISCUSSION, IT IS HELD THAT THE LOSS HAS BEEN C REATED BY RESORTING TO THE COLOURABLE DEVICES WHICH CANNOT BE PART OF THE TAX PLANNING. IT IS HELD THAT THE APPELLANT HAS NOT CARRYING OUT ANY BUSINESS ACTIVIT Y AND BUSINESS LOSS IS CREATED TO REDUCE THE INCOME UNDER THE HEAD HOUSE PROPERTY'. THE ORDER OF ASSESSMENT MADE BY THE ASSESSING OFFICER IS, THEREFO RE, SUSTAINED ON THIS ISSUE. 7. THE GROUND NO.5, 6 AND 7 HAVE BEEN RAISED REGARD ING THE FOLLOWING ADDITIONS:- INTEREST RS.27,27,127/- LEGAL EXPENSES RS. 40,0007- REPAIR AND MAINTENANCE RS.1,32,357/- 7.1 THESE EXPENSES FORM PART OF THE BUSINESS EXPENS ES OF RS.74,76,907/- AND IT HAS BEEN HELD IN THE EARLIER PARA'S THAT THE APPELL ANT IS NOT HAVING ANY BUSINESS - ACTIVITY AND THE BUSINESS LOSS HAS NOT BEEN ALLOWED TO BE ADJUSTED AGAINST THE HOUSE PROPERTY'. THE SEPARATE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTS TO DOUBLE ADDITION WHICH IS ACCORDINGLY DELETED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED PAGE | 4 THAT IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNA L IN ASSESSEES OWN CASE FOR A. Y. 2008-09 AND THE TRIBU NAL VIDE ITA NO.3573/DEL/2012 ORDER DATED 17.11.2016 HAD DISMISS ED THE APPEAL FILED BY THE REVENUE. THEREFORE, THIS BEING A COVERED MATTER IN FAVOUR OF THE ASSESSEE, THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 7. THE LD. DR ON THE OTHER HAND SUBMITTED THAT ALTH OUGH THE LD. CIT(A) FOR A.Y. 2008-09 HAS DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE, HOWEVER, THE LD. CIT(A) IN THE IMPUGN ED ASSESSMENT YEAR HAS NOT FOLLOWED THE DECISION OF HI S PREDECESSOR AND HAS DISTINGUISHED THE SAME. THE DE CISION OF THE TRIBUNAL WAS RENDERED SUBSEQUENT TO PASSING OF THE ORDER BY THE CIT(A). SHE SUBMITTED THAT THE ASSESSEE HAS CREDITED THE RENTAL INCOME IN THE PROFIT AND LOSS ACCOUNT COPY O F WHICH IS PLACED ON PAGE NO.42 OF THE PAPER BOOK. THE ASSESS EE HAS DEBITED ALL THE EXPENSES IN THE PROFIT AND LOSS ACC OUNT. SIMULTANEOUSLY THE ASSESSEE HAS ALSO CLAIMED DEDUCT ION U/S. 24 OF THE IT ACT. THUS THE ASSESSEE IS CLAIMING DOU BLE DEDUCTION I.E. ONE UNDER SECTION 24 AND AGAIN BY DEBITING VAR IOUS EXPENSES IN THE P & L ACCOUNT WHICH THE ASSESSEE CA NNOT DO. SHE ACCORDINGLY SUBMITTED THAT SHE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION O DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISIO N OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y.2008-09. 8. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R SUBMITTED THAT THE ASSESSING OFFICER HIMSELF HAS TREATED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. HOWEVER, HE AGREED THAT HE HAS PAGE | 5 NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESEES OWN CASE FOR A.Y.2008- 09. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSESSING OFFICER IN THE INSTANT CASE HAS MADE ADDI TION OF RS.74,76,907/- BEING THE VARIOUS EXPENSES CLAIMED B Y THE ASSESSEE AGAINST THE LEASE INCOME OF THE PROPERTY A ND PARKING CHARGES RECEIVED FROM DIFFERENT PERSONS. ALTHOUGH THE LD. CIT(A) IN ASSESEES OWN CASE FOR A.Y.2008-09 HAD DE CIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, HOWEVER, THE LD. C IT(A) IN THE IMPUGNED ORDER HAS DISTINGUISHED THE ORDER OF HIS P REDECESSOR AND SUSTAINED THE ADDITION MADE BY THE ASSESSING OF FICER THE REASONS OF WHICH HAVE ALREADY BEEN REPRODUCED IN TH E PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL IN ASSESSEES OWN CASE F OR A.Y.2008-09 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE APPEAL FILED BY THE REVENUE HAS BEEN DISMISSED. HOWEVER, A PERUSAL OF THE ORDER OF THE CIT(A) FOR THE IMPUGNED ASSESSMENT YEAR SHOWS THAT HE HAD NO BENEFIT OF THE DECISION O F THE TRIBUNAL IN ASSESSEES OWN CASE FOR A. Y. 2008-09 W HICH WAS PASSED ON 17.11.2016 WHICH IS SUBSEQUENT TO PASSING OF THE ORDER BY HIM WHICH IS ON 09.06.2016. UNDER THESE CIRCUMSTANCES WE DEEM IT PROPER TO RESTORE THE ISS UE TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE ISSU E AFRESH IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESEES OWN CASE FOR A.Y.2008-09 AND AS PER FACT AND LAW. NEEDLESS TO S AY THE LD. PAGE | 6 CIT(A) SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 04.09.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:-04 .09.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 29.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.08.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 04.09.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER