ITO 19(3)(1), MUMBAI V. DIAMOND INVESTMENTS & PROPERTIES, MUMBAI

ITA 5537/MUM/2009

• Counselvise Citation: 553719914 RSA 2009
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Keywords: Business expenditure; Corroborative evidences; Surrender of tenancy right

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI R.K. PANDA. ACCOUNTANT MEMBER I.T.A. NO. 5537/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME-TAX OFFICER-19(3)(1) ROOM NO. 307, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400 012 VS. M/S. DIAMOND INVESTMENTS & PROPERTIES, MUMBAI 1 ST FLOOR, DIAMOND PALACE, HILL ROAD, BANDRA (WEST), MUMBAI-400 050 PAN: AADFD2804Q APPELLANT RESPONDENT ASSESSEE BY : SHRI JITENDRA YADAV RESPONDENT BY : NONE ORDER DATE OF HEARING: 20.07.2010 DATE OF ORDER: 29.07.2010 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 10 TH AUGUST, 2009 OF THE CIT(A)-XIX, MUMBAI RELATING TO ASSESSMENT YEAR 2005-06. 2. THIS APPEAL WAS FIXED FOR HEARING ON 2 ND JUNE, 2010 AND AT THE REQUEST OF THE LEARNED COUNSEL FOR THE ASSES SEE THE CASE WAS ADJOURNED TO 20 TH JULY, 2010. HOWEVER, ON 20 TH JULY, 2010 NONE APPEARED ON BEHALF OF THE ASSESSEE. AN ADJOUR NMENT PETITION WAS FILED SEEKING ADJOURNMENT OF THE CASE. THE REASONS GIVEN IN THE SAID ADJOURNMENT PETITION WERE NOT FOU ND SATISFACTORY BY THE BENCH FOR WHICH THE REQUEST FOR ADJOURNMENT BY THE ASSESSEE WAS REJECTED AND THE MATTER WAS TAK EN UP FOR HEARING ON THE BASIS MATERIAL AVAILABLE ON RECORD A ND AFTER HEARING THE LEARNED DR. I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 2 3. GROUNDS OF APPEAL NO. 1 BY THE REVENUE READS AS UND ER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETI NG THE ADDITION OF RS.24,46,000/- ON ACCOUNT OF SUPPRESSION OF SALE VALUE OF FLATS TO M/S. RAJ KIRA N PROPERTIES & INVESTMENTS PVT. LTD. WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD SOLD FL ATS TO M/S. CONCORD SHIPPING LTD. AND M/S. ROCHEM INDIA PVT. LTD. AT RATES MUCH HIGHER THAN THAT CHARGED TO M/S. RAJ KIRAN PROPERTIES AND INVESTMENTS PVT. LTD. THOUGH THE SALE TO THIS PARTY WAS EFFECTED MUCH LATER. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WITH TWO PARTNERS HOLDING EQUAL SH ARE. DURING THE RELEVANT PERIOD THE ASSESSEE FIRM WAS ENGAGED I N THE BUSINESS OF CONSTRUCTION AND SALE OF FLATS. IN THE COURSE OF ITS BUSINESS ACTIVITIES THE FIRM ACQUIRED AN OLD BUILDI NG CALLED MARIAM VILLA CONSISTING OF GROUND AND TWO FLOORS IN 1986 WHICH WAS OCCUPIED BY OLD TENANTS. IT IS STATED TH AT THE ASSESSEE DECIDED TO DEMOLISH THE OLD STRUCTURE AND CONSTRUCT A NEW BUILDING TO BE CALLED LAVLESH COURT. IT AGRE ED TO PAY COMPENSATION TO THE EXISTING THREE TENANTS FOR VACA TING THE PREMISES AND SURRENDERING THEIR TENANCY BY PROVIDIN G THEM ALTERNATE ACCOMMODATION IN THE NEW BUILDING. THE F IRM FOLLOWED PROJECT COMPLETION METHOD AND REALISED THE RESULTS IN A.Y. 2005-06. 5. ON SCRUTINY OF THE DETAILS FILED BY THE ASSESSEE, T HE ASSESSING OFFICER FOUND THAT TWO FLAT NOS. 101 AND 102 ADMEASURING 700 SQ. FT. EACH IN THE NEW BUILDING HA VE BEEN SOLD BY THE ASSESSEE TO RAJKIRAN PROPERTIES AND INVESTME NTS PVT. LTD. (RPIPL) @ RS.3,143 WHEREAS THE RATE OF SALE TO ANOT HER PARTY CONCORD SHIPPING LTD. (CSL) IS RS.4,429 AND RS.4,89 0 PER SQ. FT. (2 FLATS) AND TO YET ANOTHER PARTY ROCHEM INDIA PVT . LTD. (RIPL) AT RS.4,890 PER SQ. FT. THE ASSESSING OFFICER DID NOT FIND THE EXPLANATION OFFERED BY THE ASSESSEE AS SATISFACTORY AND HAS HELD I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 3 THAT THE ASSESSEE MUST HAVE OBTAINED ON MONEY FROM RPIPL FOR SELLING TWO FLATS AT RATES LOWER THAN TO OTHERS. N OT BEING SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSE E, THE ASSESSING OFFICER MADE ADDITION OF RS.24,46,000 ON ACCOUNT OF SUPPRESSION OF SALE VALUE TO RPIPL. 6. IN APPEAL, THE CIT(A) DELETED THE ADDITION BY HOLDI NGS AS UNDER: I HAVE PERUSED THE ASSESSMENT ORDER AND THE ARGUMENT OF THE APPELLANT. IT IS A FACT THAT THE S ALE RATE TO RAJKIRAN PROPERTIES & INVESTMENTS PVT. LTD. IS LOWER THAN THE RATE OF SALE TO OTHER PARTIES. HOWE VER, MERE SUSPICION ON THIS ACCOUNT IS NOT ENOUGH. SOMETHING MORE IN THE FORM OF EVIDENCE IS REQUIRED. THE AO HAS NOT UNEARTHED ANY EVIDENCE TO SHOW THAT ANY ON MONEY HAS PASSED HANDS BETWEEN THE PARTIES. IN THIS CONNECTION ARS RELIANCE ON SUPRE ME COURTS DECISION IN THE CASE OF K.P. VARGHESE (SUPR A) IS WELL FOUNDED. ANOTHER FACTOR WHICH SHOULD BE KE PT IN VIEW IS THE FACT THAT WHILE THE SALE RATE TO CON CORD SHIPPING VARIES FROM RS.4,429 TO RS.4,890 PER SQ. F T. AND THE AO HAS NOT RAISED ANY DOUBT ON THIS VARIATION. MORE IMPORTANTLY, THE CLAIM OF THE APPELLANT THAT THE REASON FOR THE LOWER RATE OF SAL E TO RAJKIRAN PROPERTIES & INVESTMENTS PVT. LTD. IS DUE TO THE FACT THAT TWO DIRECTORS OF THE COMPANY HAD PAID AN ADVANCE OF RS.62.00 LACS EVEN BEFORE THE COMMENCEMENT OF CONSTRUCTION IS A POWERFUL AND PERSUASIVE ONE. THE FACT COULD HAVE BEEN VERIFIED BY THE AO FROM EARLIER YEARS BALANCE SHEETS OF THE APPELLANT. A COPY OF EACH OF THE BALANCE SHEET FOR YEAR ENDING 31.3.1996 AND 31.3.2001 WHICH ARE AVAILABLE WITH THE DEPARTMENT ON RELEVANT FILES HAV E BEEN FILED BEFORE ME SHOW THE PAYMENT OF RS.62.00 LACS TO THE APPELLANT BY THE DIRECTORS. MONEY AND TIME ARE RELATED. MONEY HAS TIME VALUE AND IT IS COMMON KNOWLEDGE AND PRACTICE THAT THOSE WHO PAY AT THE INITIAL STAGE GET THE PROPERTY AT A LOWER RA TE THAN THOSE WHO MAKE PAYMENT LATER AND THAT TOO IN INSTALMENTS. BOTH THE SITUATIONS ARE NOT COMPARABL E. THE FACT THAT THE ASSESSEE IS NOT RELATED TO THIS P ARTY FURTHER STRENGTHENS THE CONCLUSION THAT THE TRANSACTION IS AT ARMS LENGTH. I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 4 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 8. WE HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED DR. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICE R IN PAGE 2 AT PARA 4 OF HIS ORDER HAS GIVEN A FINDING THAT PRO PERTIES SOLD TO RPIPL AS PER AGREEMENT DATED 13 TH DECEMBER, 2000 ARE @ RS.3,143 PER SQ. FT. HOWEVER, THE ASSESSEE HAD SO LD THE PROPERTY IN THE SAME BUILDING TO RIPL @ RS.4890 PER SQ. FT. AS PER AGREEMENT DATED 11.9.1998 AND TO CSL @ RS.4890 AS PER AGREEMENT DATED 11.9.1998. SIMILARLY THE BOOKING R ATE IN THE CASE OF RIPL IS 8 TH JULY, 1995 AND THAT OF CSL IS 29 TH JUNE, 1998. SIMILARLY, AS PER AGREEMENT DATED 4.11.1998 THE ASSESSEE HAS SOLD TWO FLATS TO CSL @ RS.4429 PER SQ. FT. WE , THEREFORE, DO NOT FIND ANY BASIS IN THE ORDER OF THE CIT(A) WHERE HE HAS GIVEN A FINDING THAT MERE SUSPICION ON THIS ACCOUNT IS NO T ENOUGH AND SOMETHING IN THE FORM OF EVIDENCE IS REQUIRED AND T HAT THE ASSESSING OFFICER HAS NOT UNEARTHED ANY EVIDENCE TO SHOW THAT ANY ON-MONEY HAS PASSED HANDS BETWEEN THE PARTIES. IN OUR OPINION, THE ASSESSING OFFICER HAS GIVEN CONCRETE E VIDENCE IN THE BODY OF THE ASSESSMENT ORDER THAT FLATS IN THE SAME BUILDING HAVE BEEN SOLD TO OTHER PARTIES AT MUCH HIGHER PRIC E WHEREAS FLATS TO THE RELATED PARTIES HAVE BEEN SOLD AT A MU CH LOWER PRICE. 9. AS FAR AS THE OBSERVATION OF THE LEARNED CIT(A) THA T THE ASSESSING OFFICER HAS NOT PROVED THAT PAYMENT OF AN Y ON-MONEY HAS PASSED BETWEEN THE PARTIES, IN OUR OPINION, TRA NSFER OF ANY ON-MONEY FROM ONE HAND TO THE OTHER IS BEST KNOWN T O THE PARTIES CONCERNED AND IT IS WITHIN THEIR EXCLUSIVE KNOWLEDGE. THE ASSESSING OFFICER CAN DRAW INFERENCE ONLY FROM THE SURROUNDING CIRCUMSTANCES UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF EACH CASE. SINCE IN THE INSTANT C ASE THE ASSESSING OFFICER HAS BROUGHT ON RECORD THAT FLATS IN THE SAME I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 5 BUILDING HAVE BEEN SOLD AT A HIGHER PRICE THAN THE SALE PRICE TO RPIL AND SINCE THE COMPANY HAS NOT PAID THE ADVANCE OF RS.62 LAKHS BUT ONLY THE DIRECTORS OF THE COMPANY HAVE PA ID SUCH ADVANCE, WE, THEREFORE, ARE OF THE OPINION THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESS ING OFFICER. THIS GROUND BY THE REVENUE IS ACCORDINGLY ALLOWED. 10. GROUNDS OF APPEAL NOS. 2 AND 3 BY THE REVENUE READ AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETI NG THE ADDITION OF RS.1,02,49,074/- MADE TOWARDS UNACCOUNTED PROFIT IN RESPECT OF THE TWO FLATS TO S HRI VINAY BHASIN, EX-PARTNER AND SON OF PRESENT PARTNER , ALLEGEDLY TOWARDS TENANCY RIGHTS WITHOUT APPRECIATING THE FACT THAT THE SAID TENANCY WAS NOT PROVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE THE ASSESSEE BEING CALLED UPON TO DO SO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN APPLYI NG THE JUDICIAL PRONOUNCEMENT IN THE CASE OF M/S. CADE LL WEAVING MILLS (249 ITR 65) WITHOUT APPRECIATING THE FACT THAT THE SAME WAS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE SINCE, THE ASSESSEE HAD NOT RECEIVED ANY COMPENSATION FOR SURRENDER OF ANY TENANCY RIGHTS AND THAT ON THE CONTRARY, THE ASSESSEE FIRM HAD PAID COMPENSATION FOR THE ALLEGED TENANCY WHICH WAS NEVER ESTABLISHED. 11. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D THAT TWO FLATS ADMEASURING 700 SQ. FT. ON 2 ND FLOOR HAVE BEEN ALLOTTED TO SHRI VINAY BHASIN, SON OF THE PARTNER OF THE ASSESS EE FIRM. ACCORDING TO THE ASSESSEE SHRI VINAY BHASIN WAS A T ENANT IN THE ERSTWHILE MARIAM VILLA AND THE FLATS ON THE SECON D FLOOR OF THE NEW BUILDING WERE ALLOTTED TO HIM ON ACCOUNT OF SUR RENDER OF TENANCY RIGHTS. THE ASSESSING OFFICER ASKED THE AS SESSEE TO I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 6 ESTABLISH THE TENANCY OF SHRI VINAY BHASIN BY PRODU CING THE EVIDENCES SUCH AS RENT RECEIPT ISSUED BY THE ERSTWH ILE LANDLORD, COPY OF RATION CARD INDICATING PROOF OF RESIDENCE, ELECTRICITY/ TELEPHONE BILLS, COPY OF THE RELEVANT CORRESPONDENC E WITH THE AUTHORITIES WHILE GETTING THE PLAN APPROVED, COPY O F THE AGREEMENT WITH TENANTS, ETC. FROM THE VARIOUS BILL S FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER NOTED THAT N O SUCH AGREEMENT HAS BEEN FILED IN RESPECT OF SURRENDER OF TENANCY RIGHTS BY SHRI VINAY BHASIN EXCEPT FOR A ZEROX COPY OF RENT RECEIPT DATED 6 TH DECEMBER, 1990 ALLEGEDLY ISSUED BY THE ASSESSEE FIRM IN THE NAME OF THE ALLEGED TENANT SHR I VINAY BHASIN. THE ASSESSING OFFICER NOTED THAT AS PER TH E COPY OF THE BILL SHRI VINAY BHASIN IS THE TENANT ON THE SECOND FLOOR AND THE BILL FOR THE PERIOD OCTOBER, 1990 AND NOVEMBER, 199 0 IS RS.282. THE ASSESSING OFFICER OBSERVED THAT THE GENUINENESS OF THIS BILL IS NOT ASCERTAINABLE SINCE THE SAME HAS BEEN ISSUED BY THE ASSESSEE FIRM TO THE ALLEGED TENANT WHO IS ALSO THE SON OF THE PARTNER. NO LEGAL DOCUMENTS OF ANY KIND OR ANY OTH ER SUPPORTING EVIDENCE WAS FILED TO PROVE THE GENUINEN ESS OF THE TENANCY. FROM THE VARIOUS DETAILS AVAILABLE ON REC ORD AND IN ABSENCE OF FURNISHING OF EVIDENCE BY THE ASSESSEE T O PROVE THE GENUINENESS OF THE TENANCY RIGHTS, THE ASSESSING OF FICER NOTED THAT THE FLATS ON FIRST AND SECOND FLOOR OF MARIAM VILLA WERE OCCUPIED BY THE MAKHIJA FAMILY WHO HAD BEEN COMPENS ATED BY AN AMOUNT OF RS.80 LAKHS. THEREFORE, THE TENANCY S O CLAIMED BY SHRI VINAY BHASIN IS BOGUS. THE ASSESSING OFFICER CALCULATED THE MARKET VALUE OF FLATS ALLOTTED TO SHRI VINAY BH ASIN AT RS.1,02,49,074 AND ADDED THE SAME TO THE TOTAL INCO ME OF THE ASSESSEE AS HIS UNACCOUNTED PROFIT. HE FURTHER NOT ED THAT THE MODUS OPERANDI FOLLOWED BY THE ASSESSEE IN THE ENTI RE TRANSACTION FALLS WITHIN THE AMBIT OF TERM COLOURA BLE DEVICES AS DISCUSSED IN THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MCDOWELL & CO. LTD. VS. CTO REPORTED IN 154 ITR 141. I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 7 12. BEFORE CIT(A), IT WAS SUBMITTED THAT INDIVIDUAL ASSESSMENT OF SHRI VINAY BHASIN HAS BEEN COMPLETED INVOLVING THIS POINT. SHRI VINAY BHASIN WAS GIVEN THE TWO FL ATS IN LIEU OF SURRENDER OF TENANCY RIGHTS BY MEANS OF AN AGREEMEN T DATED 03.12.1991. AT THAT TIME COMPENSATION RECEIVED ON SURRENDER OF TENANCY RIGHTS WAS NOT TAXABLE AS THE AMENDMENT TAXING THE SAME CAME INTO EFFECT FROM 01.04.1995. THE AO, DCI T, CENT. CIR. 33, MUMBAI WHO MADE THE ASSESSMENT FOR A.Y. 19 92-93 HAD NOT DISPUTED THE FACT THAT SHRI VINAY BHASIN WA S A TENANT I.E., THE TENANCY WAS FOUND TO BE GENUINE. HOWEVER , THE SAID AO HELD THAT THE COMPENSATION RECEIVED ON SURRENDER OF TENANCY RIGHTS WAS TAXABLE ON THE GROUND THAT BOMBAY HIGH C OURTS JUDGEMENT ON THIS ISSUE IN THE CASE OF CADELL WEAVI NG MILLS (249 ITR 65) HAD NOT BEEN ACCEPTED BY THE DEPARTMENT. H E ESTIMATED THE VALUE OF TWO FLATS AS RS.62.00 LACS AND ADDED T HE SAME. ON APPEAL TO CIT(A), THE LEARNED CIT(A) HAS DELETED TH E ADDITION. IN THIS CONNECTION, ITAT WHICH IS THE FINAL FACT FINDI NG BODY HAS UPHELD CIT(A)S ORDER AS CADELL WEAVING MILLS DECIS ION WAS UPHELD BY THE SUPREME COURT. THE FOLLOWING OBSERVA TIONS OF THE ITAT WERE BROUGHT TO THE NOTICE OF THE CIT(A): IT IS A FACT THAT THE ASSESSEE WAS A TENANT IN A BUILDING KNOWN AS MARIAM VILLA. ON THE BASIS OF A N AGREEMENT, THE ASSESSEE SURRENDERED HIS TENANCY RIGHTS IN THE SAID PROPERTY AND TRANSFERRED THE PREMISES IN A PEACEFUL MANNER TO THE OWNER OF THE BUILDING. THE SURRENDER OF THE TENANCY RIGHTS WAS COMPENSATED BY ALLOTMENT OF FLAT WHICH WAS VALUED BY THE ASSESSING AUTHORITY AT RS.62.00 LACS. 13. ON THE BASIS OF THE ARGUMENTS ADVANCED BY THE ASSES SEE, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER BY HOLDING AS UNDER: 4.3 IN VIEW OF ALL THE ABOVE FACTS AND CIRCUMSTANCES TAKEN I HOLD THAT THERE CANNOT BE ANY FURTHER DISPUTE ON THIS POINT. SINCE ANOTHER AO HA D ACCEPTED THE GENUINENESS OF THE FACTUM OF TENANCY I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 8 RIGHTS AND ALLOTMENT OF TWO FLATS FOR SURRENDERING THE TENANCY RIGHTS AND THE ITAT IN ITS ORDER QUOTED ABO VE AFFIRMS THE ABOVE POSITION, THE ADDITION SO MADE IS NOT SUSTAINABLE. 14. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF AUTHORITIES BELOW, WE FIND THE ASSESSING OFFICER HAD CONCLUSIVELY PROVED THAT THE TENANCY RIGHT IN CASE OF SHRI VINAY BHASIN IS A BOGUS ONE. WE FIND THE CIT(A) IN A VER Y BRIEF AND CRYPTIC ORDER DELETED THE ADDITION WITHOUT ANY SOUN D REASONING. IN OUR OPINION, IF ANY WRONG HAS BEEN DONE IN THE P AST THE SAME CANNOT BE PERPETUATED IN THE SUBSEQUENT ASSESSMENT YEARS. SINCE NO EVIDENCE WHATSOEVER WAS FURNISHED EITHER B EFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A) THAT SHRI VI NAY BHASIN WAS A TENANT IN THE ERSTWHILE MARIAM VILLA, THERE FORE, IN OUR OPINION, THE CIT(A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION MADE BY THE ASSESSING OFFICER. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THAT OF THE ASSESSI NG OFFICER. 15. GROUNDS OF APPEAL NO. 4 BY THE REVENUE READS AS UND ER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING TH E DISALLOWANCE OF DEDUCTION OF RS.76,519/- MADE IN RESPECT OF AMOUNTS PAID TO M/S. ARJUN CENTRE WITHOU T APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO FURNISH ANY CORROBORATIVE EVIDENCE TO ESTABLISH THA T THE EXPENDITURE WAS INDEED INCURRED IN RELATION TO THE BUSINESS OF THE ASSESSEE FIRM. 16. FACTS OF THE CASE, IN BRIEF, ARE THAT FROM THE DETA ILS FILED IN RESPECT OF THE BUSINESS CENTRE INCOME, THE ASSESSIN G OFFICER NOTICED THAT A SUM OF RS.76,519 HAS BEEN PAID TO AR JUN CENTRE. THE ASSESSEE FILED COPIES OF THE BILLS ISSUED BY AR JUN CENTRE IN THE NAME OF SHRI I.B. BHASIN WHICH ARE IN RESPECT O F MUNICIPALITY TAXES, MAINTENANCE CHARGES, RENT AND M AJOR REPAIRS FUND IN RESPECT OF SHOP NO. 203 ON THE SECO ND FLOOR. THE ASSESSING OFFICER OBSERVED THAT THE RELATION OF THE BILLS WITH THE BUSINESS OF THE ASSESSEE WAS NOT ESTABLISHED. HE A CCORDINGLY I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 9 DISALLOWED THE SAME AS NOT BEING INCURRED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 17. BEFORE CIT(A) IT WAS SUBMITTED THAT THE PREMISES NO . 203 IN ARJUN CENTRE WAS REQUIRED BY THE ASSESSEE TO STO RE CERTAIN BUILDING MATERIAL AND RELATED ARTICLES. IT WAS FUR THER SUBMITTED THAT ALTHOUGH THE PREMISES BELONGS TO THE PARTNER S HRI I.B. BHASIN, HE CHARGED ONLY THE ACTUAL OUTGOING AND NOT THE MARKET RENT. 18. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, TH E CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER: 5.1 I HAVE EXAMINED THIS ISSUE AND I AGREE WITH THE LEARNED AR OF THE APPELLANT THAT THE PREMISES WERE USED FOR THE BUSINESS OF THE APPELLANT AND THEREFORE, THE EXPENSES WERE INCURRED FOR THE PURPOSES OF THE BUSINESS. THE FACT THAT THE SAID EXPENSES ARE THE ACTUAL OUTGOINGS OF THE PREMISES, IS IMMATERIAL. IT IS ENOUGH IF THE EXPENSES ARE ACTUA LLY INCURRED AND THOSE EXPENSES ARE FOR THE PURPOSE OF THE BUSINESS. THERE IS NOTHING ON THE RECORD TO SUGGEST THAT THE PREMISES WAS NOT UTILISED FOR THE PURPOSE OF THE BUSINESS. I, THEREFORE, HOLD THESE EXPENSES AS ADMISSIBLE FOR DEDUCTION AND DELETE THE SUM OF RS.76,519/- DISALLOWED BY THE AO ON THIS ACCOUNT. 19. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 20. AFTER HEARING THE LEARNED DR AND ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE DO NOT FIND ANY SOUND BASIS ON THE PART OF THE CIT(A) DELETING THE DISALLOWANCE. HE H AS MERELY AGREED WITH THE ASSESSEE THAT THE PREMISES WERE USE D FOR BUSINESS OF THE ASSESSEE WITHOUT ANY SUPPORTING EVI DENCE. IT IS THE SETTLED PROPOSITION OF LAW THAT FOR CLAIMING AN Y EXPENDITURE AS BUSINESS EXPENDITURE THE ONUS IS ALWAYS ON THE A SSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF T HE ASSESSING OFFICER THAT SUCH EXPENDITURE IS WHOLLY AND EXCLUSI VELY FOR THE I.T.A. NO. 5537/MUM/2009 M/S. DIAMOND INVESTMENTS & PROPERTIES ============================= 10 PURPOSE OF BUSINESS OF THE ASSESSEE. IN THE INSTAN T CASE THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST ON I T. THE LEARNED CIT(A) WITHOUT ANY PROPER EVIDENCE WAS SIMP LY CARRIED AWAY BY THE MERE STATEMENT OF THE COUNSEL WHICH, IN OUR OPINION, IS NOT PROPER. WE, THEREFORE, SET ASIDE O RDER OF THE CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESS ING OFFICER. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY ALL OWED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2010 SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 29 TH JULY, 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XIX, MUMBAI 4. THE CIT-19, MUMBAI 5. THE DR D BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES, MUMBAI TPRAO