SH. MOHAMMAD IBRAHIM DAR, SRINAGAR V. INCOME TAX OFFICER, SRINAGAR

ITA 52/ASR/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7652 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 24-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M.P. SINGH LD
• Assessee Lawyers: JOGINDER SINGH LD
• Keywords: Unexplained investment; Depreciation
• Section: 69; 132; 133A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. VIKRAM SINGH YADAV , ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NOS.51 & 52(ASR)/2017 ASSESSMENT YEARS:2011-12 & 2012-13 SH. CHANDRER MOHAN ARORA, 789/A, GANDHI NAGAR, JAMMU [PAN:ACCPA 1863D] VS. DY. CIT CENTRAL CIRCLE, JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY: SH. JOGINDER SINGH (LD. CA) RESPONDENT BY: SH. M.P. SINGH (LD. D R) DATE OF HEARING: 13.06.2019 DATE OF PRONOUNCEMENT: 22.07.2019 ORDER PER N.K.CHOUDHRY, JM: THESE APPEAL HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS DATED 18/10/2016 PASSED BY THE LD. CIT(A)- 5, LUDHIANA, U/S 250(6) OF THE INCOME TAX ACT, 1961 HE REINAFTER CALLED AS 'THE ACT', WHEREBY THE LD. CIT(A) PARTLY AFF IRMED THE ASSESSMENT ORDERS DATED 21/03/2014 RELEVANT FOR THE ASST. YEARS:2011-12 & 2012-13. 2. AS THE ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON I N NATURE AND THEREFORE, HAVE BEEN TAKEN INTO CONSIDERAT ION SIMULTANEOUSLY, FOR ADJUDICATION BY WAY OF THIS COMPOSIT E ORDER. 3. LET US TO FIST DECIDE THE APPEAL I.E. ITA NO.51(ASR)/2 016 RELEVANT FOR THE ASST. YEAR:2011-12. ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 2 4. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S 132 OF THE A CT WAS CONDUCTED ON DATED 07.04.2011 AT THE BUSINESS PREMISE S OF THE ASSESSEE, WHICH RESULTED INTO ISSUING THE NOTICE U/S 1 53A(1) OF THE ACT ON DATED 22/01/2013 AND IN PURSUANCE TO WHI CH THE ASSESSEE HAD FILED HIS RETURN OF INCOME ON DATED 19/03/20 13 DECLARING AN INCOME OF RS.21,43,460/- . AS PER ASSESSMENT ORDER, AT THE TIME OF SURVEY U/S 133A AT THE PREMISES O F HOTEL CORPORATE, ONE DOCUMENT WAS FOUND AND IMPOUNDED AS PER ANNEXURE-JCB-3, A-3 AND P-51, ON THE BASIS OF WHICH, ONE GENERATOR/DG SET HAD BEEN PURCHASED FOR THE AMOUNT OF RS.4,40,000/-. AND THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF INVESTMENT QUA PURCHASE OF GENERATOR, THEREFOR E, THE AMOUNT RS.4,40,000/- WAS ADDED TO THE RETURN OF INCOME AS UNACCOUNTED INVESTMENT U/S. 69 OF THE ACT. FURTHER AS PER ASSESSMENT ORDER, THE ASSESSEE HAS PURCHASED 'HOTEL CORPORATE' FOR TOTAL CONSIDERATION OF RS.54,25,000/- AND ON THE BASIS OF REPLIES OF THE ASSESSE E, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE SAID HOTEL I S LOCATED IN COMMERCIAL AREA ON A 10 MARLAS PLOT, WHICH COM PRISES OF VACANT LAND, SOME SHOPS ON GROUND FLOOR AND HOTEL RO OMS ON FIRST AND SECOND FLOOR, THEREFORE, LAND COST AND THE SHOP S WERE HELD NOT BE PART OF THE HOTEL. THOUGH, THE ASSESSEE HAS CLAIMED THE DEPRECATION @ 10% OF THE WHOLE OF THE ABOVE AMO UNT, HOWEVER THE ASSESSING OFFICER RESTRICTED THE DEPRECIATION TO THE TUNE OF 5% ONLY AND RESULTANTLY MADE A DISALLOWANCE OF RS.2,71,250/-. FURTHER, THE ASSESSING OFFICER ALSO MADE A DISALLOWANCE OF RS.50,000/- OUT OF RS.1,49,478/- WHICH HAS BEEN CLAIMED AS ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 3 BUILDING REPAIR AND MAINTENANCE EXPENSES, CONSIDERING TH E EXPENSES INCLUDE SEVERAL SELF MADE VOUCHERS. 5. THE ASSESSEE CHALLENGED THE SAID ADDITIONS, BEFORE THE LD . CIT(A), HOWEVER, DID NOT GET MAJOR RELIEF, EXCEPT PA RTLY REDUCTION OF DISALLOWANCE FROM RS.50,000/- TO RS.20,000/ - ON ACCOUNT OF BUILDING REPAIR AND MAINTENANCE EXPENSES AND THEREFORE, BEING AGGRIEVED, THE ASSESSEE PREFERRED THE INSTANT APPEAL BEFORE US. 6. THE ASSESSEE ARGUED AGAINST THE ORDERS PASSED BY THE AUTHORITIES BELOW AND SUBMITTED THE RELEVANT DOCUMENT S FOR CONSIDERATION OF THE BENCH, WHEREAS THE LD. DR VEHEMEN TLY SUPPORTED THE ORDERS AND THE ACTIONS OF THE REVENUE AUT HORITIES SPECIFICALLY THE ORDER IMPUGNED HEREIN AND CLAIMED THA T THE ORDER UNDER CHALLENGE DOES NOT SUFFER FROM ANY PERVERSI TY, ILLEGALITY AND IMPROPRIETY. 7. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 7.1 GROUND NO.1 , IS GENERAL IN NATURE, THEREFORE DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 7.2 GROUND NO.2 , RELATES TO THE ADDITION OF RS.4,40,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. IT IS AN ADMITTED F ACT THAT THE GENERATOR/DG SET HAS BEEN PURCHASED ON DATED 10/02 /2010 WHICH PERTAINS TO ASST. YEAR: 2010-11 WHEREAS THE ADDIT ION HAS BEEN MADE IN THE FINANCIAL YEAR: 2010-11 RELEVANT T O THE ASSESSMENT YEAR 2011-12 AND IT IS ALSO ADMITTED FACT THAT HOTEL CORPORATE HAS BEEN PURCHASED BY THE ASSESSEE ONLY ON 21/05/2010 AS PER AGREEMENT TO SELL AND EVEN OTHERWISE IN THAT ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 4 DOCUMENTS, THERE IS NO BIFURCATION OF THE BUILDING LAN D AND/OR OTHER EQUIPMENTS SUCH AS GENERATOR ETC., THEREFORE, IT CANNOT BE SAID THAT THE GENERATOR IS NOT A PART OF THE HOTEL BU ILDING AND HAS BEEN PURCHASED SEPARATELY AND EVEN OTHERWISE THERE I S NO MATERIAL/EVIDENCE TO THE EFFECT THAT THE ASSESSEE HAS PAID ANY AMOUNT QUA GENERATOR/DG SET SEPARATELY ON DATED 10/1 2/2010 BEFORE PURCHASING THE HOTEL ON DATED 20/05/2010 , THE REFORE, ON THE AFORESAID CONSIDERATION, WE ARE INCLINED TO DELETE THE ADDITION OF RS.4,40,000/- ADDED ON ACCOUNT OF PURCHASE O F GENERATOR. GROUND NO. 2 STANDS ALLOWED . 7.3 GROUND NO.3, RELATES TO ADDITION OF RS.2,71,250/- WHICH IS RESTRICTION ON THE DEPRECATION QUA LAND AND BUILDING @ 5% AS AGAINST 10% AS CLAIMED BY THE ASSESSEE. THE LD. CIT(A) HAS OBSERVED THAT HOTEL CORPORATE COMPRISES OF LAND MEASURING 10 MARLA, 231 SQ. FT., DOUBLE STORIED BUILDING CONSISTING N INE SHOPS AND A WAITING AREA ON THE GROUND FLOOR AND HOTEL RO OMS ON FIRST AND SECOND FLOOR. THE LD. CIT(A) HAS FURTHER OBSERVED THAT THE ASSESSEE HAS PURCHASED THE LAND RIGHTS FROM VENDOR NO.2 NAMELY SH. VISHESHWAR GUPTA AND THE BUILDING FROM M/ S HOTEL CORPORATE A PARTNERSHIP FIRM AS PER AGREEMENT TO SALE, THEREFORE, IT CANNOT BE SAID THAT THE WHOLE OF THE PU RCHASED AMOUNT OF RS.54,25,000/- PAID BY THE ASSESSEE REPRESENTS T HE COSTS OF THE HOTEL BUILDING ON WHICH DEPRECATION @10% I S ALLOWABLE, THUS THE ASSESSEE IS NOT ENTITLED AND CANNOT CL AIM DEPRECATION IN RESPECT OF LAND COSTS FORMING PART OF TOTA L PURCHASED AMOUNT AND THE DEPRECIATION CAN ONLY BE CLAIME D ON THE COSTS ATTRIBUTABLE TO 1 ST & 2 ND FLOOR WHICH WERE USED FOR THE HOTEL BUSINESS. FURTHER THE OWNERSHIP OF THE LAND IS SEPA RATELY ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 5 MENTIONED IN THE AGREEMENT TO SALE AND THE PAYMENTS M ADE AND RECEIVED BY MR. VISHESHWAR GUPTA AS OWNER OF THE LAND WILL NOT QUALIFY FOR DEPRECIATION IN THE HANDS OF THE ASSESSEE. TH E ASSESSEE HAS DRAWN OUR ATTENTION TO THE ORDER DATED 13/0 3/2019 PASSED BY THE ITAT, DELHI BENCH (F) IN ITA NO.5739/DEL /2015 (ASST. YEAR: 2011-12) WHEREIN ALSO THE VALUE OF LAND W AS BIFURCATED FOR THE CONCLUSION OF DEPRECATION ON BUILDING S, HOWEVER THE ITAT BENCH WHILE FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF OSWAL AGRO MILLS LTD. [2011] 197 TAXMANN.COM 25 (DELHI), DELETED THE DISALL OWANCE OF RS. 5,00,000/- OUT OF DEPRECATION ON BUILDING. FOR TH E SAKE OF COMPLETENESS THE RELEVANT PART OF THE ORDER IS REPRODUCE D HEREIN BELOW. 5. AS REGARDS GROUND NO.1 RELATING TO DISALLOWANCE OF RS.5 LACS OUT OF DEPRECIATION ON BUILDINGS, THE LD. AR SUBMITTED THAT THE VALUE OF LAND WAS BIFURCATED FROM THE TOTAL CONSIDERATION OF RS.25 LACS BY REGISTRAR, NOIDA ONLY TO SERVE THE PURPOSE OF DE TERMINING THE AMOUNT OF STAMP DUTY PAYABLE AT THE TIME OF SALE CU M TRANSFER DEED PROPORTIONATE DISALLOWANCE ON HYPOTHETICAL VAL UE OF LAND IS UNJUST AND UNCALLED FOR. THE LD. AR FURTHER SUBMITT ED THAT THE ASSESSEE PAID RS. 1,25,00,000/- FOR THE INDUSTRIAL BUILD UP FACTORY AS PER THE TRANSFER CUM SALE DEED AND NOT F OR LAND AND BUILDING SEPARATELY AS ASSUMED BY THE ASSESSING OFF ICER. THUS, THERE IS NO BIFURCATION OF TOTAL CONSIDERATION OF R S.1,25,00,000/-. THE LD. AR POINTED OUT THAT THE ASSESSEE PURCHASED THE FULLY CONSTRUCTED BUILDING I.E. INDUSTRIAL BUILT UP FACTO RY AND THE DESIGN AND LAY OUT OF THE STRUCTURE OF THE BUILDING WAS BEST SUITABLE TO THE BUSINESS OF THE ASSESSEE. ALL CONSI DERATION FOR PURCHASE WERE MADE ONLY KEEPING IN VIEW THE SUITABI LITY OF BUILDING STRUCTURE FOR ASSESSEES BUSINESS. THE LD. AR ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 6 SUBMITTED THAT IN EARLIER ASSESSMENT YEAR AS WELL A S IN SUBSEQUENT ASSESSMENT YEARS, THE SAME HAS BEEN ALLO WED ON BUILDING BY THE REVENUE DEPARTMENT AND THERE IS A C HANGE OF OPINION/STAND IN THIS PARTICULAR YEAR AS WELL AS IN ASSESSMENT YEAR 2013-14. 6.. 7.. 8.. 9.. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN-FACT, FROM THE RECORDS IT C AN BE PERUSED THAT THE ASSESSEE PURCHASED THE FULLY CONSTRUCTED B UILDING I.E. INDUSTRIAL BUILT UP FACTORY AND NOT THE LAND. THERE FORE, BIFURCATING THE VALUE OF LAND BY THE REGISTRAR DOES NOT SPECIFY THE VALUE OF LAND AND BUILDING SEPARATELY. THEREFOR E, IN LIGHT OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN CAS E OF OSWAL AGRO MILLS LTD. (2011) 197 TAXMAN 25 (DELHI) WHEREI N IT IS HELD THAT IT IS DIFFICULT TO MAINTAIN THE DETAILS OF EAC H ASSETS SEPARATELY IN RESPECT OF THE LAND AND BUILDING CONS TRUCTIONS AND THE SAME WILL FRUSTRATE THE VERY PURPOSE OF THE PROVISIONS IF IT IS DONE SO. THE HON'BLE HIGH COURT FURTHER HE LD THAT IT IS ALSO ESSENTIAL TO POINT THAT THE REVENUE IS NOT PUT TO ANY LOSS BY ADOPTING SUCH METHOD AND ALLOWING DEPRECIATION A S THE SAME FORMS PART OF THE BLOCK OF ASSETS EVEN WHEN TH AT PARTICULAR ASSET IS NOT IN USE IN THE RELEVANT ASSE SSMENT YEAR. THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECI SION OF THE HONBLE DELHI HIGH COURT IN CASE OF OSWAL AGRO MILL S LTD. HENCE, GROUND NO.2 IS ALLOWED. WHILE COMING TO THE INSTANT CASE, WHEREIN THE REVENUE AUTHORITIES HAVE BIFURCATED THE LAND FROM THE BUILDIN G, DOES NOT SEEMS TO BE LOGICAL BECAUSE AS PER AGREEMENT TO SELL DATE D ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 7 20/05/2010, THERE IS NO SUCH BIFURCATION OF THE CONSIDER ATION AMOUNT OF RS.54,25,000/- IN RESPECT OF LAND AND BUILDI NG . IN FACTUM, THE ENTIRE BUILDING INCLUDING LAND APPURTENA NT THERETO HAS BEEN PURCHASED BY THE ASSESSEE ON A TOTAL CONSIDERATION OF RS.54,25,000/-, BUT NOT THE LAND SEPARATELY AND THERE FORE, THE BUILDING AND LAND CANNOT BE BIFURCATED FOR THE PURPO SE OF DEPRECIATION, WHICH IN OUR CONSIDERED VIEW, HAS BEEN ASS UMED WRONGLY BY THE REVENUE AUTHORITIES, HENCE WE DO NOT H AVE ANY HESITATION TO DELETE THE ADDITION OF RS.2,71,250/- ( RESTRICTION ON THE DEPRECATION OF BUILDING TO THE TUNE OF 5%). GROUND NO.3 STANDS ALLOWED . 7.4 GROUND NO.4 RELATES TO THE CONFIRMATION OF DISALLOWANCE TO THE TUNE OF RS.20,000/- OUT OF BUILDING REPAIR EX PENSES. THE ASSESSEE HAS CLAIMED RS.1,49,478/ UNDER THE HEAD OF REPAIR AND MAINTENANCE EXPENSES OF THE BUILDING, WHICH WAS RESTRICTED TO 50% BY THE ASSESSING OFFICER BY OBSERVING THAT THE EXPENSE S INCLUDES SEVERAL SELF MADE VOUCHERS. THE LD. CIT(A) SOUGHT COPY OF THE LEDGER ACCOUNT OF BUILDING AND REPAIR AND MAIN TENANCE FROM THE ASSESSEE WHO FILED TWO LEDGER ACCOUNTS NAMELY BUI LDING REPAIR AND LABOUR ACCOUNT WITH TOTAL EXPENSES OF RS.1,05 ,040/- AND BUILDING REPAIR AND MAINTENANCE WITH TOTAL EXPEN SES OF RS.44,438/-. AFTER PERUSING THE SAID DOCUMENTS, IT WAS OB SERVED BY THE LD. CIT(A) THAT PAYMENTS HAVE BEEN MADE BOTH BY WAY OF CASH AND THROUGH BANK HOWEVER, THE ASSESSEE HAS NOT PRODUCE D THE VOUCHERS AND CASH PAYMENTS ARE BEYOND CROSS VERIFICATION , SINCE THE NAMES AND ADDRESSES OF THE PARTIES HAVE NOT APPE ARING IN THE LEDGER ACCOUNT. IT IS ALSO TRUE THAT CERTAIN PAY MENTS ARE MADE THROUGH BANK AND THEREFORE UNDER CIRCUMSTANCES, TH E ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 8 DISALLOWANCE MADE BY THE ASSESSING OFFICER IS FOUND PARTL Y SUSTAINABLE TO THE EXTENT OF RS.20,000/-. THE APPELLA NT GETS RELIEF OF RS.30,000/-. WE REALIZED THAT THE ASSESSING OF FICER CONSIDERED THE BUILDING AND REPAIR MAINTENANCE EXPENSES TO THE TUNE OF RS.1,49,478/- AND OBSERVED THAT THE SAME INCLUD E SEVERAL SELF MADE VOUCHERS, HOWEVER, THE LD. CIT(A) OBSE RVED THAT THE AR HAS NOT PRODUCED THE VOUCHERS AND CASH PAYME NTS ARE BEYOND CROSS VERIFICATION, SINCE THE NAMES AND ADDRESSES OF THE PARTIES ARE NOT APPEARING IN THE LEDGER ACCOUNT. T HE ASSEEEE FAILED TO REBUT THE FINDINGS OF THE LD. CIT(A) AND E VEN AS PER OUR CONSIDERED VIEW, THE LD. CIT(A) HAS GIVEN REASONABLE R ELIEF BY CONSIDERING PROBABILITIES AND PECULIAR FACTS AND CIRCUMSTA NCES OF THE CASE, HENCE ON THIS ACCOUNT THE IMPUGNED ORDER DOES NO T SUFFER FROM ANY PERVERSITY AND/OR IMPROPRIETY, THUS NO INTERFERENCE IS CALLED FOR. GROUND NO. 4 STANDS DISMISSED. 8. ITA NO.52/ASR/17, 8.1 GROUND NO.1 DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION BECAUSE THE SAME IS FORMAL IN NATURE. 8.2 GROUND NO.2 RELATES TO THE CONFIRMATION OF THE ADDIT ION OF RS.2,71,250/- WHICH WAS RESTRICTED TO 5% ON THE DEPRECAT ION OF BUILDING. IN VIEW OF THE ADJUDICATION OF GROUND NO.3 OF ITA NO.51/ASR/2017 THE INSTANT GROUND NO.2 OF THIS APPEAL, STANDS ALLOWED. 8.3 GROUND NO.3 RELATES TO THE CONFIRMATION OF THE DISALLOWANCE OF RS.20,000/- OUT OF BUILDING REPAIR EXP ENSES. IN VIEW OF THE ADJUDICATION OF GROUND NO.4 OF ITA NO.5 1/ASR/2017, THE INSTANT GROUND NO.3 ALSO STANDS DISMISSED. ITA NOS.51 & 52/ASR/2017 (A.YS. 2011-12 & 2012-13) CHANDER MOHAN ARORA VS. DCIT 9 8.4 GROUND NO.4 , IS FORMAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 9. IN THE RESULT, BOTH THE APPEALS I.E. ITA NO.51/ASR/20 17 AND 52/ASR/2017 STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.07.2019. SD/- SD/- ( VIKRAM SINGH YADAV ) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED:22.07.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. CHANDER MOHAN ARORA, 789/A GANDHI NAGAR, JAMMU. (2) THE DY. CIT, CENTRAL CIRCLE, JAMMU. (3) THE CIT(A)-5, LUDHIANA (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER