ITO, New Delhi V. M/s. Maha Seer Infrastructure P Ltd., New Delhi

ITA 5258/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97936 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 01-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 26-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VED PRAKASH MISHRA
• Assessee Lawyers: SUDARSHAN LAL
• Keywords: Depreciation; Business expenditure
• Section: 143(3)

Judgement Text

1 ITA NO. 52 58/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT ME MBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NO.-5258/DE L/2014 (ASSESSMENT YEAR-2011- 12) ITO, WARD 6(1), NEW DELHI. VS MAHA SEER INFRASTRUCTURE P. LTD., HOUSE NO. 2, KASTURBA GANDHI MARG, NEW DELHI. AADCM5530B APPELLANT BY SH. VED PRAKASH MISHRA, SR. DR RESPONDENT BY SH. SUDARSHAN LAL, FCA ORDER PER BEENA PILLAI, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(A)-IX, NEW DELHI VIDE HIS ORDE R DATED 22/07/2014 FOR THE A.Y. 2011-12 ON THE FOLLOWING GR OUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) IS RIGHT IN ALLOWING THE EXP ENSES TO ASSESSEE OF RS. 23,86,371/- INCLUDING DEPRECIATION OF RS. 14,95,931/- IGNORING THE FACT THAT NO BUSINESS ACTI VITY HAS BEEN PERFORMED BY THE ASSESSEE? 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. DATE OF HEARING 01.12.2015 DATE OF PRONOUNCEMENT 02.12.2015 2 ITA NO. 52 58/DEL/2014 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FORGO ANY GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE AS RECORDED BY THE A UTHORITIES BELOW ARE AS UNDER: THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F REAL ESTATE. THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28/09/2011 DECLARING LOSS OF RS. 1 7,06,742/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSME NT WAS COMPLETED ON 30/01/2004 U/S 143(3) OF THE ACT AT AN INCOME OF RS. 6,79,630/-. THE ADDITION MADE BY THE LD. ASSESSING OFFICER INCLUDED EXPENSES INCLUDING DEPRECIATION AMOUNTING TO RS. 23,86,371/-. 3. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFI CER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD AS UNDER: THE ASSESSING OFFICER ALSO HOLD THAT SINCE THERE IS NO BUSINESS ACTIVITY DURING THE YEAR THE INCOME FROM O THER SOURCES CANNOT BE SET OFF AGAINST BUSINESS EXPENDIT URE. AGAINST THIS FINDING, THE APPELLANT SUBMITTED THE C OPIES OF AGREEMENT ENTERED WITH TWO VENDORS REGARDING PROPERTY TRANSACTIONS. FROM THE BALANCE SHEET AS O N 31.03.2011 IT CAN BE SEEN THAT IN SCHEDULE F THERE IS STOCK OF FLATS (PARASVNATH DEVELOPERS LTD.) TO THE TUNE OF RS. 3,96,58,754/-. THESE TRANSACTIONS PROVE THA T THE ASSESSEE WAS HAVING ESTABLISHMENT AND INCURRING EXPENSES FOR RUNNING HIS BUSINESS OF REAL ESTATE. THE ASSESSING OFFICER DID NOT VERIFY THESE FACTS. SINC E THE BUSINESS OF THE APPELLANT WAS GOING ON THE DEPRECIATION CLAIMED IS ALLOWABLE. SINCE THE BUSIN ESS HAS NOT BEEN CLOSED DOWN AND THERE IS PROBABILITY O F EARNING PROFIT IN FUTURE BECAUSE OF EFFORTS CARRIED OUT 3 ITA NO. 52 58/DEL/2014 DURING THIS YEAR, THE DEPRECIATION AND BUSINESS EXPENSES SHOULD BE ALLOWABLE. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS FILED BEFORE US. 6. THE LD. DR RELIES ON THE ORDER PASSED BY THE LD. ASSESSING OFFICER. 7. THE LD. AR ON THE CONTRARY SUBMITTED THAT THE RE AL ESTATE BUSINESS OF THE ASSESSEE WAS SET UP IN THE YEAR 200 5. THE ASSESSEE WAS ACTIVELY INVOLVED IN THE REAL ESTATE BUSINESS T ILL 2012. THE LD. AR FURTHER SUBMITS THAT IN THE YEAR UNDER CONSIDERA TION THE ASSESSEE HAS MADE AN INVESTMENT OF RS. 3.95 CRORES TOWARDS ACQUISITION OF LAND IN VASANT KUNJ AT DELHI. THE L D. AR SUBMITTED THAT THERE HAS BEEN EXPENSES FOR RUNNING ITS REAL E STATE BUSINESS, WHICH HAS NOT BEEN DISPUTED BY THE LD. ASSESSING OF FICER. THE LD. AR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 8. FROM THE RECORDS, WE SEE THAT THE ASSESSEE HAS S UBMITTED THE COPIES OF THE AGREEMENT ENTERED WITH TWO VENDORS RE GARDING PROPERTY TRANSACTIONS TO THE TUNE OF 3.96 CRORES. THE LD. ASSESSING OFFICER DID NOT VERIFY THESE FACTS AND HAS DISALLOW ED THE DEPRECIATION CLAIMED BY THE ASSESSEE. WE DO NOT FIND ANY INFIRM ITY IN THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE WAS HA VING RUNNING BUSINESS OF REAL ESTATE FOR WHICH IT HAD INCURRED E XPENSES. IT IS ALSO NOT DISPUTED THAT THE EXPENSES INCURRED BY THE ASSE SSEE WAS NOT FOR THE PURPOSES OF ITS BUSINESS. THUS, WE UPHOLD THE FINDINGS OF THE LD. CIT(A). THE GROUNDS FILED BY THE REVENUE IS TH US, DISMISSED. 4 ITA NO. 52 58/DEL/2014 9. THE APPEAL THEREFORE, STANDS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02/12/ 2015 SD/- SD/- (N.K. SAINI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 02.12.2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 52 58/DEL/2014 DATE 1. DRAFT DICTATED ON 01.12.15 2. DRAFT PLACED BEFORE AUTHOR 02.12.15 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 02.12.15 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 02.12.15 5. APPROVED DRAFT COMES TO THE SR.PS/PS 03.12.15 6. KEPT FOR PRONOUNCEMENT ON 02.12.15 7. FILE SENT TO THE BENCH CLERK 03.12.15 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.