The ACIT, Central Circle-3, Surat V. Shri Mahesh G.Pamnani, Surat

ITA 591/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0417 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Depreciation; Salary income; Opportunity of being heard; Question of law; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO.591 / AHD/2010 (ASSESSMENT YEAR 2007-08) ACIT, CC-3, SURAT VS. SHRI MAHESH G PAMNANI, 14-A, KADAMPALLI SOCIETY, TIMALIYAWAD, NANPURA, SURAT PAN/GIR NO. : AFOPP3343J (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI T SANKAR, SR. DR RESPONDENT BY: NONE (WRITTEN SUBMISSIONS) DATE OF HEARING: 26.02.2013 DATE OF PRONOUNCEMENT: 22.03.2013 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A) II, AHMEDABAD DATED 27.11.2009 FOR THE Y 2007-08. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELEIN G THE ADDITION ON ACCOUNT OF DISALLOWANCE AS PER THE APPLICABILITY OF SECTION 14A/37(1) OF RS.6,14,020/-. IT IS THEREFORE, PRAYE D THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RES TORED TO THE ABOVE EXTENT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE A PPOINTED DATE OF HEARING BUT WRITTEN SUBMISSIONS OF THE ASSESSEE DAT ED 20.10.2012 IS AVAILABLE ON RECORD IN WHICH IT IS SUBMITTED THAT T HE APPEAL MAY BE DECIDED AFTER CONSIDERING THESE WRITTEN SUBMISSIONS AND HENCE, WE I.T.A.NO.591 /AHD/2010 2 PROCEED TO DECIDE THE APPEAL OF THE REVENUE AFTER C ONSIDERING THE WRITTEN SUBMISSION OF THE LD. A.R. AFTER HEARING THE LD. D. R. 3. LD. D.R. SUPPORTED THE ASSESSMENT ORDER. HE ALS O SUBMITTED THAT IN THE PRESENT CASE, THE APPEAL OF THE REVENUE IS FILE D ON 19.2.2011. REGARDING THE JUDGEMENT OF HONBLE GUJARAT HIGH COU RT, RENDERED IN THE CASE OF SURESHCHANDRA DURGAPRASAD KATHOD HUF ON WHI CH RELIANCE HAS BEEN PLACED BY THE ASSESSEE IN HIS WRITTEN SUBMISSI ONS, IT WAS SUBMITTED THAT THIS JUDGEMENT IS OF DATED 24.08.2012 AND THE SAME WAS DULY CONSIDERED BY HONBLE GUJARAT HIGH COURT IN ANOTHER JUDGEMENT DATED 12.09.2012 RENDERED IN THE CASE OF CIT VS SHAMBHUBH AI MAHADEV AHIR IN TAX APPEAL NO.2213 OF 2010 AND IT WAS HELD THAT THE VIEW ADOPTED BY THIS COURT IN THE CASE OF SURESHCHANDRA DURGAPRASAD KATHOD (HUF) (SUPRA) REQUIRES RECONSIDERATION. HE ALSO PLACED R ELIANCE ON A JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT V S ATMA RAM PROPERTIES (P) LTD. AS REPORTED IN 25 TAXMAN.COM 30 3 (S.C.), WHEREIN IT WAS HELD THAT INSTRUCTION NO.3/2011 DATED 9.2.2011 SHOULD NOT BE APPLIED IPSO FACTO SPECIALLY WHEN THE MATER HAS A CASCADING EFFECT. 4. REGARDING MERIT OF THE PENALTY, IT WAS SUBMITTED BY THE LD. D.R. THAT LD. CIT(A) HAS FAILED TO CONSIDER THE PROVISIO NS OF SECTION 57 AND THE ASSESSEE FAILED TO COMPLY WITH THEM AND HENCE, THE PENALTY IMPOSED BY THE A.O. IS JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. REGARDING THIS CONTENTION OF THE ASSESSEE RAISED IN THE WRITT EN SUBMISSIONS THAT THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE BECAUSE O F THE LOW TAX EFFECT, WE FIND THAT AS PER A LATER DECISION DATED 12.09.20 12, IT WAS HELD BY HONBLE GUJARAT HIGH COURT THAT THE EARLIER DECISIO N RENDERED IN THE CASE OF SURESHCHANDRA DURGAPRASAD KATHOD (SUPRA) REQUIRE S RECONSIDERATION. I.T.A.NO.591 /AHD/2010 3 MOREOVER, THE APPEAL IN QUESTION WAS FILED BY THE R EVENUE MUCH PRIOR TO THE ISSUE OF INSTRUCTION NO.3 OF 2011 DATED 9.12.20 11 AND HENCE, THE APPEAL OF THE REVENUE CANNOT BE DISMISSED BECAUSE O F LOW TAX EFFECT. REGARDING THE MERITS OF DELETION OF ADDITION BY LD. CIT(A), WE FIND THAT LD. CIT(A) HAS DELETED THIS ADDITION ON THIS BASIS THAT THE ASSESSEE WAS RECEIVING OPERATION AND MAINTENANCE CHARGES FROM M/ S. ROYAL COACHING CLASSES P. LTD. WITH RESPECT TO THE PREMISES ALONG WITH FURNITURE AND FIXTURES, OFFICE EQUIPMENTS AND VEHICLE AND THE ABO VE AMOUNT WAS INSEPARABLE FORM THE RENT. WE HAVE ALSO NOTED THAT AS PER THE DECISION OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT VS JYOTSNA RANI SAHA 239 IR 216 (CAL.), NO QUESTION OF LAW IS PREFE RABLE IN RESPECT OF THE FINDING OF THE TRIBUNAL THAT WHEN RENT CHARGED BY T HE ASSESSEE FROM THE TENANT IS COMPOSITE RENT WHICH IS PARTLY ATTRIBUTAB LE TO THE SERVICES, THE TRIBUNAL WAS JUSTIFIED IN ARRIVING AT THE CONCLUSIO N THAT DEDUCTION ON ACCOUNT OF SALARY PAID TO GUARD, SWEEPER AND CARE T AKER AND ELECTRICITY CHARGES FROM GROSS ANNUAL RECEIPT IS ALLOWABLE. IN THE PRESENT CASE, THE DEDUCTION CLAIMED BY THE ASSESSEE WAS ON ACCOUNT OF ADMINISTRATIVE EXPENSE AND FINANCIAL EXPENSES OF RS.3,10,904/- AND DEPRECIATION ON VEHICLE OF RS.3,03,116/-. THE ASSESSEE IS HAVING I NCOME ON ACCOUNT OF RENT AND SALARY. LD. CIT(A) MIGHT HAVE ALLOWED THE EXPENSES SUCH AS SALARY PAID TO NIGH GUARD, SWEEPER AND CARE TAKER, ELECTRICITY CHARGE FROM SUCH RENTAL INCOME BUT THERE IS NO BASIS OF THE DEC ISION REGARDING DEDUCTIBILITY OF ADMINISTRATIVE EXPENSES AND FINANC IAL EXPENSES FROM RENAL INCOME AND SALARY INCOME. IN OUR CONSIDERED OPINION, THIS DECISION OF LD. CIT(A) IS NOT SUSTAINABLE BUT AT THE SAME TI ME, THIS IS ALSO TO BE NOTED THAT THIS FINDING IS ALSO GIVEN BY LD. CIT(A) THAT EVEN AFTER HOLDING RENTAL INCOME AS INCOME FROM HOUSE PROPERLY, THE A. O. HAS NOT ALLOWED DEDUCTION OF 30% OF SUCH RENAL INCOME U/S 24. WE, THEREFORE, FEEL IT FIT I.T.A.NO.591 /AHD/2010 4 AND PROPER THAT THIS MATTER SHOULD GO BACK TO THE F ILE OF LD. CIT(A) FOR A FRESH DECISION AFTER EXAMINING ALL ASPECTS OF THE M ATTER. HE SHOULD ALSO CONSIDER THE DECISION OF HONBLE APEX COURT RENDERE D IN THE CASE OF SHAMBHU INVESTMENTS PVT. LTD. VS. CIT AS REPORTED I N 263 IR 143 WHICH IS CITED BEFORE US BY THE LD. D.R. THEREAFTER, HE SHOULD PASS SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 6. IN THE RESULT, APPEAL OF THE REVENUE STANDS ALLO WED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 18/03/2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/03/2013OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22/03/2013 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.1/4 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 01/0 4/2013 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .