EURO FRUITS P.LTD, MUMBAI V. ACIT 10(1), MUMBAI

ITA 5275/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8821 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B G SAKARIA
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.5275/MUM/2011 ASSESSMENT YEAR-2008-09 M/S. EURO FRUITS PVT. LTD., 301, VIKAS COMMERCIAL CENTRE, DR. C.G. ROAD, CHEMBUR, MUMBAI-400 074 PAN - AAACE 2180N VS. THE ACIT 10(1), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B.G. SAKARIA RESPONDENT BY: SHRI MANJUNATH KARKIHALLI DATE OF HEARING :12.09.2012 DATE OF PRONOUNCEMENT: 26.9.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)- 21, MUMBAI DT. 26.4.2011 PERTAINING TO ASSESSMENT Y EAR 2008-09. 2. THE ASSESSEE HAS RAISED THREE GROUNDS OF APPEAL. THE SUM AND SUBSTANCE OF THE ASSESSEES GRIEVANCE IS THAT THE L D. CIT(A) OUGHT NOT TO HAVE SUSTAINED ADDITION OF RS. 16,09,661/- MADE BY THE AO AS ALLEGED DEEMED RENT INCOME FROM HOUSE PROPERTY RELATING TO RESIDENTIAL FLAT AT EKTA, CHEMBUR @ 8% OF THE VALUE OF THE FLAT COMPLETELY IG NORING THE FACT THAT THE SAID FLAT WAS OCCUPIED AS RESIDENCE BY THE DIRECTOR OF THE ASSESSEE COMPANY. GROUND NOS. 2 & 3 ARE CONSEQUENTIAL TO THE FATE OF GROUND NO. 1. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE COMPANY IS IN THE BUSINESS OF FRESH FRUITS AS IMPORTER AND EXPORT ER FOLLOWING MERCANTILE ITA NO. 5275/M/2011 2 SYSTEM OF ACCOUNTING. FOR THE YEAR UNDER CONSIDERA TION, THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.9.2008 DECLARING TOTAL INCOM E AT RS. 1,80,00,065/-. THE SAID RETURN WAS SELECTED FOR SCRUTINY ASSESSMEN T AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, INTER ALIA, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS OWN ER OF A RESIDENTIAL FLAT AT EKTA, CHEMBUR. THE AO FURTHER OBSERVED THAT THE AS SESSEE HAS NOT CLAIMED ANY DEPRECIATION AND CONCLUDED THAT THE ASSESSEE HA S NOT PUT TO USE SUCH ASSET FOR THE PURPOSE OF ITS BUSINESS. THE AO WAS OF THE OPINION THAT SUCH FLAT SHOULD BE SUBJECTED TO DEEMED RENTAL INCOME TO BE COMPUTED @ 8% ON ITS VALUE AND EXPLANATION WAS CALLED FOR BY THE AO FROM THE ASSESSEE. ON RECEIVING NO RESPONSE, THE AO WENT ON TO COMPUTE AN NUAL VALUE @ 8% OF THE COST FOLLOWING THE RATIO LAID DOWN BY THE HONB LE ALLAHABAD HIGH COURT IN THE CASE OF RADHA DEVI DALMIA 125 ITR 134 AND MAD E AN ADDITION OF RS. 16,09,661/-. 5. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 6. AGGRIEVED BY THE FINDING OF THE LD. CIT(A), THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE APPELLATE ORDER PERTAINING TO ASSESSMENT YEAR 2009-10 AND SUBMITTED THAT ON IDENTICAL FACTS, THE SAME CIT(A) HAS ALLOWED THE APPEAL OF THE ASSES SEE HOLDING THAT FLAT AT EKTA, CHEMBUR WAS USED FOR THE PURPOSE OF BUSINESS AND THEREFORE IT WAS A BUSINESS ASSET. THE LD. COUNSEL FOR THE ASSESSEE C ONCLUDED THAT FACTS AND CIRCUMSTANCES BEING IDENTICAL, THE LD. CIT(A) ERRED IN TAKING A CONTRARY VIEW FOR THE YEAR UNDER CONSIDERATION. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE ELECTRICITY BILL, TELEPHONE BILL, CERTIFICAT E FROM HOUSING SOCIETY AND CERTIFIED COPY OF THE RESOLUTION PASSED BY THE BOD OF THE COMPANY IN RESPECT OF THE RESIDENTIAL FLAT AT EKTA, CHEMBUR AND SUBMIT TED THAT ALL THESE EVIDENCES GO TO SHOW THAT THE SAID FLAT WAS USED AS RESIDENCE OF THE MANAGING DIRECTOR ITA NO. 5275/M/2011 3 OF THE COMPANY AND THEREFORE USED FOR THE PURPOSE O F THE BUSINESS. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE AO AND SUBMITTED THAT NO SUCH DOCUMENTS/EVIDENCES WERE BEFORE THE AO . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND DOCUMENTS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF THE APPELLATE PROCEEDINGS. WE HAVE ALSO BENEFIT OF GOING THROUGH THE ORDER OF THE LD. CIT(A) FOR THE SUBSEQUENT ASSESSMENT YEA R I.E. A.Y. 2009-10. ON A CAREFUL PERUSAL OF THAT APPELLATE ORDER, WE FIND TH AT THE LD. CIT(A) HAS DELETED THE ADDITIONS BECAUSE OF THE EVIDENCES FILE D BY THE ASSESSEE. HOWEVER, WE FIND THAT FOR THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE DID NOT FILE ANY DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM THAT THE FLAT WAS USED AS A RESIDENCE OF THE MANAGING DIRECTOR OF THE COMPANY. WE HAVE CAREFULLY PERUSED THE DOCUMENTS/EVIDENCES SUBMITTED BY THE ASSESSEE AND FIND SOME FORCE IN COUNSELS SUBMISSION. HOWEVER, IN OUR CONSIDERATE VIEW, THE FIRST RIGHT TO EXAMINE SUCH DIRECT EVIDENCES LI ES WITH THE AO. THEREFORE, IN ALL FAIRNESS AND FOLLOWING THE PRINCIPLE OF NATU RAL JUSTICE, WE RESTORE THIS ISSUE BACK TO THE FILES OF AO. THE ASSESSEE IS DIR ECTED TO SUBMIT ALL THE RELATED DOCUMENTS/EVIDENCES PERTAINING TO THE RESID ENTIAL ACCOMMODATION OF THE MANAGING DIRECTOR IN EKTA, CHEMBUR. THE AO IS ALSO DIRECTED TO EXAMINE THESE EVIDENCES ACCORDINGLY AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (D.K. AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 26 TH SEPTEMBER, 2012 RJ ITA NO. 5275/M/2011 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI