NAGESH KUKUNOOR, MUMBAI V. ACIT 11(1), MUMBAI

ITA 5412/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH, MUMBAI , , ! '# $ $ $ $ , % && '# ' BEFORE SHRI N.K. BILLAIYA, AM AND SHRI SANJAY GA RG, JM ./ I.T.A. NO.5412/MUM/2012 ( ( ( ( ( / ASSESSMENT YEAR :2009-10 SHRI NAGESH KUKUNOOR, 4B GODREJ WALDORF APARTMENT, SWAMI SAMARATH ANGAN NAGAR OSHIWARA ANDHERI(W), MUMBAI-400 053 / VS. THE ACIT 11(1), AAYAKAR BHAVAN, MUMBAI-400 020 #) ! ./ %* ./ PAN/GIR NO. : ALBPK 2853R ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI ANIL THAKRAR ,-)+ / . / RESPONDENT BY: SHRI MALLIKARJUN UTTURE / 01! / DATE OF HEARING :25.03.2014 23( / 01! / DATE OF PRONOUNCEMENT :28.03.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-3, MUMBAI DT.27.07.2012 PERTAINING TO A.Y. 2009-10. ITA NO. 5412/M/2012 2 2. THE ASSESSEE HAS RAISED FOUR SUBSTANTIVE GROUNDS OF APPEAL. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATE D THAT HE IS NOT PRESSING GROUND NO. 3. THEREFORE, GROUND NO. 3 IS DISMISSED AS NOT PRESSED. 3. GROUND NO. 1 RELATES TO UPHOLDING OF THE ADDITIO N OF RS. 3,78,615/- MADE ON ADHOC BASIS. 4. IN THE COURSE OF THE SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED EXPEN DITURE AT RS. 18,93,074/- UNDER THE FOLLOWING HEAD: 1. BUSINESS PROMOTION RS. 1,97,364/- 2. INTEREST ON CAR LOAN RS. 23,205/- 3. MOTOR CAR EXPENSES RS. 16,952/- 4. STAFF WELFARE EXPENSES RS. 1,76,569/- 5. TELEPHONE & MOBILE CHARGES RS. 79,756/- 6. TRAVELLING EXPENSES RS. 7,21,378/- 7. FLOWERS & BOUQUETS RS. 49,369/- 8. MISC. EXPENSES RS. 83,698/- 9. MOTOR CAR DEPRECIATION RS. 94,025/- 10. CONVEYANCE EXPENSES RS. 4,50,758/- TOTAL RS.1 8,93,074/- 5. THE ASSESSEE WAS ASKED TO FURNISH BILLS AND VOUC HERS IN SUPPORT OF THE AFORESAID EXPENSES. THE BILLS AND VOUCHERS WER E PRODUCED FOR VERIFICATION. THE AO OBSERVED THAT SOME OF THE VOU CHERS WERE SELF-MADE AND SOME PAYMENTS ARE IN CASH. THE AO WENT ON TO D ISALLOW 20% OF THE ITA NO. 5412/M/2012 3 EXPENDITURE AND ADDED THE SUM OF RS. 3,78,615/- TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ALL THE EXPENSES WERE DULY SUPPORTED BY BILLS AND VOUCHERS. THE DISALLOWANCE HAS BEEN MADE ON ADHOC BASIS AND IS EXCESSIVE. 8. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E FINDINGS OF THE LD. CIT(A). 9. WE FIND THAT THE ASSESSEE IS A FILM DIRECTOR AND A STORY WRITER. CONSIDERING THE NATURE OF THE VOCATION OF THE ASSES SEE AND ALSO CONSIDERING THE NATURE OF EXPENSES CONSIDERED BY TH E AO, IN OUR CONSIDERED VIEW, A DISALLOWANCE OF 10% WOULD MEET T HE ENDS OF JUSTICE. WE, THEREFORE, DIRECT THE AO TO RESTRICT THE DISALL OWANCE TO 10% OF RS. 18,93,074/-. THE ASSESSEE WILL GET A RELIEF OF RS. 1,89,307/-. GROUND NO. 1 IS PARTLY ALLOWED. 10. GROUND NO. 2 RELATES TO UPHOLDING THE ADDITION OF RS. 3,91,950/- AS DEEMED RENT ON LET OUT PROPERTY. 11. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE AO OBSERVED THAT THE ASSESSEE HAS FOUR DIFFERENT PROPERTIES AT VARIOUS PLACES. THE ASSESSEE WAS SPECIFICALLY ASKED TO EXPLAIN THE NATU RE OF PROPERTY BEING A FLAT AT PUNE. IT WAS EXPLAINED THAT THE ASSESSEE IS USING THIS PROPERTY FOR MEETING WITH CLIENTS, STORY WRITINGS AND THEREFORE THE SAID PROPERTY CANNOT BE CONSIDERED AS DEEMED TO BE LET OUT UNDER THE HEA D INCOME FROM HOUSE PROPERTY. ITA NO. 5412/M/2012 4 12. THE AO DID NOT ACCEPT THIS SUBMISSION OF THE A SSESSEE DRAWING SUPPORT FROM THE PROVISIONS OF SEC. 23. THE AO WAS OF THE FIRM BELIEF THAT DEEMED ANNUAL LET OUT VALUE HAS TO BE DETERMIN ED IN RESPECT OF FLAT AT PUNE AND APPLYING 8% ON THE COST OF THE FLAT RS. 69 ,99,100/-, THE AO COMPUTED THE ALV AT RS. 5,59,928/- AND AFTER ALLOWI NG DEDUCTION OF 30% COMPUTED THE INCOME UNDER THE HEAD INCOME FROM HOUS E PROPERTY AT RS. 3,91,950/-, THE LD. CIT(A) CONFIRMED THIS ADDITION OF THE AO. 13. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT THE FACTS RELATING TO THE FLAT AT PUNE HAVE NOT BEEN PROPERLY APPRECIATED BY THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSE L THAT THE ASSESSEE GOT POSSESSION OF THE SAID PROPERTY ONLY IN THE MONTH O F FEBRUARY, 2009 WHEN THE SALE DEED WAS EXECUTED, THEREFORE, IF AT ALL AL V HAS TO BE DETERMINED, IT SHOULD BE ONLY FOR ONE MONTH FOR THE YEAR UNDER CONSIDERATION. 14. THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES. 15. WE FIND THAT THE AO HAS COMPUTED THE ALV APPLYI NG 8% ON THE COST OF THE FLAT WHICH IS NOT IN CONSONANCE WITH TH E PROVISIONS OF SEC. 23 OF THE ACT. FURTHER, THE STATEMENT OF THE LD. COUN SEL NEEDS VERIFICATION. WE, THEREFORE, RESTORE THIS ISSUE BACK TO THE FILE S OF THE AO. THE ASSESSEE IS DIRECTED TO FILE PROPERTY PAPERS RELATING TO PUN E FLAT AND ALSO THE MUNICIPAL RATABLE VALUE. THE AO IS DIRECTED TO VER IFY WHEN THE PROPERTY CAME IN POSSESSION OF THE ASSESSEE AND DETERMINE TH E ALV AS PER PROVISIONS OF LAW AFTER GIVING FRESH OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSE. 16. GROUND NO. 4 RELATES TO UPHOLDING OF THE ADDITI ON OF RS. 1,20,385/-. ITA NO. 5412/M/2012 5 17. DURING THE COURSE OF THE PROCEEDINGS THE AO NOT ICED THAT THE ASSESSEE HAS RECEIVED INTEREST AND HAS ALSO PAID IN TEREST UNDER HOUSING LOAN SCHEME. THE AO HAS MADE THE ADDITION BECAUSE N O RELIABLE EVIDENCES WERE SUBMITTED FOR VERIFICATION. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO HOLDING THAT THE ASSESSEE HAS FAIL ED TO FURNISH ANY RELIABLE EVIDENCE IN SUPPORT OF HIS CLAIM. 18. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE ONL Y SUBMITTED CAPITAL ACCOUNT OF THE ASSESSEE POINTING OUT THE TRANSACTIO NS RELATING TO THE INTEREST PAID AND INTEREST RECEIVED. IN OUR HUMBLE OPINION, THIS ISSUE NEEDS FRESH ADJUDICATION. WE, THEREFORE RESTORE TH IS ISSUE BACK TO THE FILES OF THE AO. THE ASSESSEE IS DIRECTED TO FILE ALL TH E NECESSARY DETAILS INCLUDING CONFIRMATION FROM THE BANK IN SUPPORT OF HIS CLAIM. THE AO IS DIRECTED TO DECIDE THE ISSUE AFRESH AFTER VERIFYING THE DETAILS FILED BY THE ASSESSEE AND GIVING REASONABLE OPPORTUNITY OF BEING HEARD. GROUND NO. 4 IS ALLOWED FOR STATISTICAL PURPOSE. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH, 2014 . '4 / 3( ! 5 6'7 28.3.2014 3 / & SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# /JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 6' DATED 28.3.2014 . . ./ RJ , SR. PS ITA NO. 5412/M/2012 6 '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 8(0 8(0 8(0 8(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :& ,0 , , / DR, ITAT, MUMBAI 6. &; < / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// = == = / > > > > % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI