NIZALCO METALS P. LTD, MUMBAI V. DCIT RG 5(2), MUMBAI

ITA 5871/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70627 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H, MUMBAI !' , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO , AM ./I.T.A. NO.5871/M/2010 ( & ' (' / ASSESSMENT YEAR: 2006-2007) NIZALCO METALS PVT. LTD., F-12, EVEREST 7 TH FLOOR, 156, TARDEO ROAD, TARDEO, MUMBAI 400 034. & / VS. DCIT - RANGE 5(2), AAYAKAR BHAVAN, MUMBAI 400 020. ) $ ./PAN : AAACN 1439 K ( )* /APPELLANT) .. ( +,)* / RESPONDENT) )* - . / APPELLANT BY : SHRI K. GOPAL +,)* - . / RESPONDENT BY : SHRI PARESH JOHRI & - /$ /DATE OF HEARING : 4.7.2013 01( - /$ /DATE OF PRONOUNCEMENT : 2.8.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 23.7.2010 IS A GAINST THE ORDER OF CIT (A)- 9, MUMBAI DATED 9.5.2010 FOR THE ASSESSMENT YEAR 20 06-2007. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN ENHANCING THE INCOME OF YOUR APPELLANT BY RS. 24,52,817/- AND CONSEQUENTLY DISALLOWING A SUM OF R S. 27,02,817/- (DISALLOWANCE MADE BY AO OF RS. 2,50,000/- AS ENHANCED BY RS. 24, 52,817/-) AS UNDER:- GODOWN RENT RS. 24,00,000/- OTHER EXPENSES RS. 3,02,817/- TOTAL RS. 24,00,000/- YOUR APPELLANT SUBMITS THE LD CIT (A) ERRED IN HOLD ING THAT THE ABOVE EXPENDITURE WAS INCURRED FOR OTHER THAN BUSINESS PURPOSES. YOUR APPELLANTS SUBMIT THAT ABOVE EXPENSES BE ALLOWED AS CLAIMED BY YOUR APPELLANTS. 3. BEFORE US AND AT THE OUTSET, SRI K. GOPAL, LD CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE APPEAL RELAT ES TO THE ENHANCEMENT OF INCOME BY RS. 24,52,812/- HOLDING THAT THE ABOVE EXPENDITU RE WAS INCURRED FOR PURPOSES OTHER THAN THE BUSINESS PURPOSES. GIVING BRIEF FAC TS, LD COUNSEL MENTIONED THAT THE ASSESSEE TOOK A PREMISES ON RENT FROM ITS SISTER CO NCERN WITH THE CONDITION OF 2 MONTHLY RENT OF RS. 2 LACS. THE NAME OF THE SISTER CONCERN IS M/S. NISI METAL PVT. LTD. ON AD-HOC BASIS, NOT SUPPORTED BY ANY COMPARA BLE CASES OR EVIDENCES, THE AO CAME TO THE CONCLUSION THAT THE SAID PAYMENT OF REN T IS EXCESSIVE AND UNREASOSABALE AND INVOKED THE PROVISIONS OF SECTION 40A (2B) OF T HE ACT. FINALLY, AO MADE A DISALLOWANCE OF RS. 2.5 LACS OUT OF THE SAID YEARLY RENT OF RS. 24 LACS U/S 40A(2)(B) OF THE ACT. IN THE PROCESS, THE AO IGNORED ASSESSEES SUBMISSIONS THAT THE SAID PREMISES WAS RENTED OUT TO OUTSIDER IN SUBSEQUENT Y EARS FOR A MONTHLY RENT OF RS. 3.25 LACS, WHICH IS HIGHER THAN THE SUM OF RS. 2.5 LACS PAID BY THE ASSESSEE. THEREFORE, THE MONTHLY RENT @ RS 2 LAKHS IS NOT EXC ESSIVE OR UNREASONABLE. AO REJECTED THE SAID SUBMISSIONS AND MADE ADDITION ACC ORDINGLY. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, CIT (A) MADE OUT A NEW CASE AND CAME TO THE CONCLUSION THAT THE SAID PREMISES WAS NOT USED FOR THE BUSINESS PURPOSES AT ALL. ACCORDINGLY, HE ENHANCED THE ASSESSMENT BY RS. 24,52,812/-. THE CONTENTS OF PARA 2.4 PROVIDES NEC ESSARY FACTS AND DISCUSSION IN THIS REGARD. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL BRO UGHT OUR ATTENTION TO THE GROUNDS AND MENTIONED THAT THE USE OF THE RENTED PR EMISES FOR THE BUSINESS PURPOSES IS THE BONE OF CONTENTION BETWEEN THE ASSE SSEE AND THE CIT (A). BRINGING OUR ATTENTION TO SOME FURNISHED AS ADDITIONAL EVIDENCES VIDE THE LETTER DATED 28.6.2013, MR GOPAL REQUESTED IN THAT LETTER FOR AD MISSION OF THE ADDITIONAL EVIDENCES UNDER RULE 29 OF THE APPELLATE TRIBUNAL R ULES, 1963. IN THIS REGARD, LD COUNSEL RELIED ON CERTAIN DECISIONS IN SUPPORT OF T HE REQUEST FOR THE ADMISSION OF THE ADDITIONAL EVIDENCES. BRINGING OUR ATTENTION TO THE ADDITIONAL EVIDENCES PLACED AT PAGES 145-163 OF THE PAPER BOOK, LD COUNSEL REQUEST ED THAT THESE PAPERS GO TO THE ROOT OF THE MATTER RELATING TO THE USE OF THE PREM ISES FOR BUSINESS OF THE ASSESSEE AND THEREFORE, THE MATTER MAY BE REMANDED TO THE FI LES OF THE AO FOR EXAMINING THE ISSUE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENC ES WHICH CONSTITUTES AMPLE EVIDENCE IN SUPPORT OF THE ASSESSEES CLAIM THAT THE SAID PR EMISES WAS PUT TO USE FOR BUSINESS PURPOSES. 5. ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDER OF THE CIT (A). 3 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE. ON HEARING BOTH THE LD REPRESENTATIVES, WE FIND THAT THE ISSUE RELATING TO ADMISSION OF ADDITIONAL EVIDENCES IS REQUIRED TO BE CONSIDERED IN FAVOUR OF THE ASSESSEE AS THESE PAPERS THROW SUFFICIENT LIGHT ON THE USE OF THE PROPERTY FOR BUS INESS PURPOSES. IT IS IN THE INTEREST OF THE JUSTICE. IN THE REMAND PROCEEDINGS FOR FRESH ADJUDICATION OF THE ISSUE RAISED IN THE GROUND, AO SHALL GRANT REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE SET ASIDE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2.8.2013 SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 2& 2.8.2013 . & . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. 3/ ( ) / THE CIT(A)- 4. 3/ / CIT 5. 4 56 +/& , , / DR, ITAT, MUMBAI 6. 6!' 7 / GUARD FILE. ,4/ +/ //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI