TIMESTAR LTD, MUMBAI V. ADDL CIT CIR 9(3), MUMBAI

ITA 5500/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0531 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5500/MUM/2015 ASSESSMENT YEAR: 2011 - 12 & ITA NO. 5501/MUM/2015 ASSESSMENT YEAR: 2012 - 13 TIMESTAR LTD. 12, UDYOG NAGAR, S V ROAD, GOREGAON (W), MUMBAI - 400062 VS. ACIT - 13(3)(2) , ROOM NO. 229, 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI. PAN NO. AAACI13210M APPELLANT RESPONDENT ASSESSEE BY : MS. NEHA PARANJPE , AR REVENUE BY : MR. V. JUSTIN , DR DATE OF HEARING : 30 /01/2018 DATE OF PRONOUNCEMENT : 30/01/2018 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 21 , MUMBAI AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDIN G TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) RESTRICTING THE DISALLOWANCE OF EXPENSES TO THE TUNE OF 20% OF THE TOTAL ADMINISTRAT IVE EXPENSES. TIMESTAR LTD. ITA NOS 5500, 5501/MUM/2015 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2011 - 12 DISCLOSING TOTAL INCOME OF RS.1,92,21,231/ - AND RS.58,53,967/ - FOR THE AY 2012 - 13 . THE NATURE OF BUSINESS OF THE ASSESSEE IS LEASING OF COMMERCIAL PROPERTIES. T HE ASSESSING OFFICER (AO) DISALLOWED 20% OF THE ADMINISTRATIVE EXPENSES IN BOTH THE ASSESSMENT YEARS. THUS, HE MADE A DISALLOWANCE OF RS.12,68,318/ - IN THE AY 2011 - 12 AND RS.17,06,437/ - IN THE AY 2012 - 13. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) . WE FIND THAT THE LD. CIT(A) AGREED WITH THE DISALLOWANCE MADE BY THE AO AND DISMISSED T HE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE ITAT E BENCH, MUMBAI , IN ASSESSEES OWN CASE FOR THE AY 2010 - 11. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER PASSED BY THE LD. CIT(A) . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE AO H AS MENTIONED AT PARA 2 OF HIS ASSESSMENT ORDER DATED 21.03.2014 FOR THE AY 2011 - 12 AND DATED 31.10.2014 FOR THE AY 2012 - 13 THAT IN RESPONSE TO THE NOTICES, ANUP PANDYA, CHARTERED ACCOUNTANT ATTENDED FROM TIME TO TIME AS AUTHORIZED REPRESENTATIVE OF THE AS SESSEE, DISCUSSED THE CASE AND FILED THE DETAILS FROM TIME TO TIME . THUS THERE WAS SUFFICIENT COMPLIANCE BY THE ASSESSEE IN FILING THE DETAILS. TIMESTAR LTD. ITA NOS 5500, 5501/MUM/2015 3 WE ALSO FIND THAT SIMILAR ISSUE AROSE BEFORE THE ITAT E BENCH, MUMBAI IN ASSESSEES OWN CASE FOR THE AY 201 0 - 11 IN ITA NO. 6534/MUM/2013. THE TRIBUNAL HELD AS UNDER: 5 . AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE FINDING GIVEN IN THE IMPUGNED ORDERS AND MATERIAL PLACED BEFORE US, WE FIND THAT THE ASSESSEE HAS SHOWN INCOME FROM VARIOUS STREAMS INCLUDI NG CONSTRUCTION BUSINESS AND LOOSING INCOME / RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ADMINISTRATIVE AND OTHER EXPENSES DEBITED HAS BEEN SHOWN AT RS.32,47,554/ - . THE AUTHORITIES BELOW HAVE DISALLOWED THE PROPORTIONATE EXPENDITURE ON THE GROUND THAT THERE IS NO BIFURCATION OF ADMINISTRATIVE EXPENSES UNDER EACH HEAD AND HOW ALL THE ADMINISTRATIVE EXPENSES CAN BE HELD TO BE EXCLUSIVELY RELATED TO THE CONSTRUCTION BUSINESS. SUCH A REASONING CANNOT BE UPHELD BECAUSE, ONCE THE ASSESSEE HAD SHOWN INCOME FROM TWO DIFFERENT HEADS AND HAS COMPUTED THE INCOME ACCORDINGLY, THEN IT CANNOT BE HELD THAT EXPENSES DEBITED AGAINST THE BUSINESS INCOME SHOULD BE PROPORTIONATELY DISALLOWED ON THE GROUND THAT THE SAME MUST BE ALLOCATED IN RELATION TO THE OT HER INCOME ALSO. EVEN IF THERE IS NO CONSTRUCTION ACTIVITY CARRIED ON THIS YEAR THEN ALSO IT CANNOT BE HELD THAT ADMINISTRATIVE EXPENSES SHOULD BE ALLOCATED OR EVEN PROPORTIONATELY FOR EARNING OF RENTAL INCOME. BEFORE US, THE LD. COUNSEL HAD CATEGORICALLY STATED THAT, IN THE NEXT YEAR, THE CONSTRUCTION ACTIVITY HAS AGAIN STARTED. HE ALSO DREW OUR ATTENTION TO WORKING OF WORK - IN - PROGRESS AND ALSO THE DETAILS OF SALES DURING THE YEAR. THUS, ON THESE FACTS, WE ARE UNABLE TO APPRECIATE THE STAND TAKEN BY THE RE VENUE THAT, SOME PROPORTIONATE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENSES SHOULD BE MADE BY ALLOCATING THE SAME FOR EARNING OF LEASE / RENTAL INCOME, WHICH ADMITTEDLY IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY, GROUND NO . 1 IS TREATED AS ALLOWED. TIMESTAR LTD. ITA NOS 5500, 5501/MUM/2015 4 6.1 FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND DELETE THE AD - HOC DISALLOWANCE OF ADMINISTRATIVE EXPENSES MADE BY THE AO. 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/01/2018 SD/ - SD/ - (D.T. GARASIA) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 30/01/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI