LALIT KUMAR, MUMBAI V. DCIT 10(1), MUMBAI

ITA 5976/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7638 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 09-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Salary income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.5976/MUM/2010 (ASSESSMENT YEAR: 2007-08) LALIT KUMAR, 20, LALIT BUILDING, 37, NATHALAL PAREKH MARG, MUMBAI -400 001 ...... APPELLANT VS DY. COMMISSIONER OF INCOME-TAX- 10(1), 455, M.K. ROAD, MUMBAI -400 020 ..... RESPONDENT PAN: AAKPK 0676 N APPELLANT BY: MISS TASNEEM VARAWALA RESPONDENT: SHRI V.V. SHASTRI DATE OF HEARING: 09.02.2012 DATE OF PRONOUNCEMENT: 28.03.2012 O R D E R PER R.S. PADVEKAR, JM : IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-21, MUMBAI DATED 13.05.2010 FOR THE A.Y. 2007-08. THE SOLITARY ISSUE FOR CONSIDERATION IS DISALLOWANC E OF THE BUSINESS LOSS OF RS. 14,06,348/- BY THE A.O. 2. THE ASSESSEE IS A DIRECTOR IN M/S. WOCKHARDT LTD AND M/S. RELIANCE LIFE SCIENCES LTD. IN THE RETURN FILED FO R THE A.Y. 2007-08 THE ASSESSEE DECLARED THE INCOME FROM SALARY AT RS. 1,84,38,571/-, INCOME FROM HOUSE PROPERTY AT RS. 47,28,083/-, BUSINESS LOSS AT RS. 14,06,348/-, CAPITAL GAINS AT RS. 4,99,441/- AND INCOME FROM OTHER SOURCES RS. 58,413/-. THE A.O. EXAMINED THE GENUINENESS OF THE BUSINESS LOSS CLAIMED BY THE ASSESSEE OF RS. 14,06,348/-. ON THE EXAMINATION OF THE PROFIT AND LOSS ACCOUNT IT WAS S EEN THAT THE ASSESSEE HAS DEBITED THE EXPENSES OF RS. 15,94,627/- WHICH INCLUDED ITA 5976/M/2010 LALIT KUMAR 2 THE MOTOR-CAR EXPENSES OF RS. 4,89,468/-. THERE WAS NO INCOME CREDITED TO THE PROFIT & LOSS ACCOUNT. IN THE COMP UTATION THE ASSESSEE HAS MADE SUO MOTO DISALLOWANCE OF 1/4TH OF THE MOTOR-CAR EXPENSES AND NET LOSS AT RS. 14,06,348/- WAS DECLARED. 3. THE ASSESSEE STATED BEFORE THE A.O. THAT ASSESSE E IS ENGAGED IN PROVIDING TECHNICAL AND SCIENTIFIC SERVICES. THE A SSESSEE UNDERTAKES THE TRAVELLING TO THE UDCT, IIT AS HE HAS TO LIAISO N WITH THE SCIENTISTS AND ENGINEERS. THE ASSESSEE HAS ALSO SPENT /INCURR ED ENTERTAINMENT EXPENSES ON THE SCIENTISTS AND ENGINEERS WHICH IS A BSOLUTELY TOWARDS THE BUSINESS EXIGENCY. THE ASSESSEE HAS ALSO TO UN DERTAKEN TRAVELLING TO OTHER CITIES. WHEN THE PROJECT IS SUCCESSFUL TH EN THE ASSESSEE GETS THE FEES AND IF THE PROJECT IS NOT SUCCESSFUL THEN NO FEES ARE NOT PAID. THE ASSESSEE ALSO PLACED HIS RELIANCE FOR DECLARING THE BUSINESS INCOME IN THE A.Y. 2006-07 AND 2008-09. IN THOSE A SSESSMENT YEARS, AS CLAIMED BY THE ASSESSEE, HE HAS DECLARED CONSULT ANCY FEES OF RS. 4,37,406/- AND RS. 24,66,606/-. THE A.O. HAS OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUPPORT T HE CLAIM THAT HE HAS ACTUALLY CARRIED OUT ANY PROFESSIONAL OR BUSINE SS ACTIVITY. 4. THE A.O. HAS ALSO OBSERVED THAT NO DETAILS OF AN Y SO CALLED PROJECTS WERE FILED. THE EXPENSES CLAIMED BY THE A SSESSEE MAINLY COMPRISING OF TELEPHONE EXPENSES, TRAVELLING EXPENS ES, MOTORCAR EXPENSES, WHICH IN THE OPINION OF THE A.O. WERE IN THE NATURE OF PERSONAL EXPENSES. THE A.O. ALSO CONSIDERED THE SU BMISSION OF THE ASSESSEE THAT IN THE IMMEDIATE PRECEDING YEAR THE A SSESSEE HAD SHOWN INCOME FROM CONSULTANCY FEES OF RS. 4,37,406/-. THE A.O. HAS OBSERVED THAT THE SAID INCOME WAS ASSESSED UNDER TH E HEAD INCOME FROM OTHER SOURCES. THE DEPRECIATION AND INTEREST COST WAS CLAIMED IN RESPECT OF TWO MOTOR-CARS. THE A.O. DECLINED TO ALLOW THE EXPENDITURE CLAIMED BY THE ASSESSEE AS NO OTHER EXP ENDITURE WAS CLAIMED IN RESPECT OF THE STAFF OR IN RESPECT OF OT HER HEADS. THE A.O., THEREFORE, DISALLOWED THE ENTIRE BUSINESS LOSS CLAI MED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. BEFO RE THE LD. CIT (A) BUT WITHOUT SUCCESS. NOW, THE ASSESSEE CHALLENGED THE ACTION OF THE ITA 5976/M/2010 LALIT KUMAR 3 A.O. BEFORE THE LD. CIT (A) BUT WITHOUT SUCCESS. N OW, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND PERUSED THE RECORDS. THE LD. COUNSEL SUBMITS THAT IT IS NOT DI SPUTED THAT THE ASSESSEE IS DOING PROFESSIONAL CONSULTING BY UNDERT AKING THE PROJECTS AND FOR THAT PURPOSE THE ASSESSEE HAS TO UNDERTAKE TRAVELLING AND ALSO TO INCUR EXPENDITURE ON THE ENTERTAINMENT. THE LD. COUNSEL ALSO PLACED HEAVY RELIANCE ON THE FEES DECLARED IN THE F INANCIAL YEAR 2006- 07 AND 2008-09. SHE SUBMITS THAT MERELY BECAUSE NO INCOME OR FEES ARE DECLARED IN THIS YEAR, THE LOSS CANNOT BE DISAL LOWED. WE HAVE ALSO HEARD THE LD. D.R. WHO SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. ON THE PERUSAL OF THE PAPER BOOK, MORE PARTICULA RLY, THE BALANCE-SHEET AT PAGE NOS.7 TO 9 OF THE PAPER BOOK, WE FIND THAT IN THE FIXED ASSET THE ASSESSEE HAS SHOWN COST OF MOTORCAR S AND TWO RESIDENTIAL FLATS ONE AT LALIT MUMBAI AND ANOTHER F LAT AT MAKER MUMBAI. THERE ARE NO OTHER ASSETS. SO FAR AS A.Y. 2006-07 IS CONCERNED, WE FIND THAT THE FEES DECLARED BY THE AS SESSEE WERE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES . IN THE A.Y. 2008-09, AS PER COMPUTATION STATEMENT, PAGE NOS.43 TO 46 OF THE COMPILATION, THE ASSESSEE DECLARED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION OF RS. 12,83,349/-. ADMITTEDLY, THE ASSESSEE IS A DIRECTOR IN TWO REPUTED COMPANIES AND ALSO HAS INCOME FROM INVESTMENT IN SHARES AS WELL AS THE MUT UAL-FUNDS. NOTHING IS THERE ON RECORD TO SUPPORT THE CASE OF T HE ASSESSEE IN RESPECT OF THE SO CALLED PROJECT FOR WHICH HE HAS T O UNDERTAKE TRAVELLING LIKE WHAT WAS THE NAME OF THE CLIENTS FO R WHOM HE WAS WORKING, NATURE OF PROJECTS, TO WHOM HE MET ETC. I N OUR OPINION, THE CLAIM MADE BY THE ASSESSEE IS NOT TENABLE. WE, ACC ORDINGLY, CONFIRM THE ORDER OF THE LD. CIT (A) AND DISMISS THE SECOND GROUND FILED BY THE ASSESSEE. 7. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ITA 5976/M/2010 LALIT KUMAR 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 8TH MARCH, 2012. SD/- (J. SUDHAKAR REDDY) ACCOUTANT MEMBER SD/- (R.S. PADVEKAR) JUDICIAL MEMBER MUMBAI, DATE: 28TH MARCH, 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-21, MUMBAI. 4) THE CIT M.C.-X, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN