LATE SURESH PAREKH THROUGH LEGAL HEIR, MUMBAI V. ITO 13(3)(1), MUMBAI

ITA 6123/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2007 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 16-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Keywords: Business expenditure; Revised return
• Section: 143(3); 54F; 54

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY , JM AND SHRI MANOJ KUMAR AGGARWAL , AM ./ I.T.A. NO. 6123/MUM/2014 ( / ASSESSMENT YEAR : 2010 - 11 ) LATE SURESH PAREKH THROUGH LEGAL HEIR SMT. BHAVNA SURESH PAREKH (WIFE) C/O. B. M. PAREKH & CO., CHARTERED ACCOUNTANTS, 3/203, NAVJIVAN SOCIETY, LAMINGTON ROAD, MUMBAI 400 008 / VS. INCOME TAX OFFICER WARD - 13 (3) (1), 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI ./ ./ PAN/GIR NO. AAWPP 6687L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESP ONDENT BY : SHRI SHRIKANT NAMDEO, DR / DATE OF HEARING : 16 /11 /2016 / DATE OF PRONOUNCEMENT : 16 /1 1 /2016 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY LEGAL HEIR OF THE ASSES SEE FOR A SSESSMENT Y EAR [AY] 2010 - 11 ASSAILS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 4 [CIT(A)], MUMBAI DATED 07/07/2014 ON THE FOLLOWING FOUR EFFECTIVE GROUNDS: - 2 ITA NO. 6 123 /MUM / 2014 LATE SURESH PAREKH THROUGH LH ASSESSMENT YEAR 2010 - 11 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSI ONER OF INCOME TAX , APPEALS - 24, MUMBAI, HEREINAFTER REFERRED TO AS THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE DISALLOWANCE OF RS.16892/ - BEING 10% OF TRAVELLING, TELEPHONE EXPENSES AND SUNDRY EXPENSE AS PERSONAL ELEMENT. THE SAID ADDITIONS ARE AD HOC ADDITION. WE REQUEST YOUR HONOR TO KINDLY DELETE SUCH AD HOC ADDITIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE DISALLOWANCE OF RS.1,27,261/ - BEING LOAN PROCESSING CHARGES AS PREP AID. THE SAID DISALLOWANCE IS NOT PROPER AND IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. YOUR HONOR IS REQUESTED TO KINDLY DELETE THE SAID ADDITION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN NOT GIVING BENEFIT U/S 54F. THE SAID BENEFIT MAY PLEASE BE GRANTED TO THE APPELLANT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.45 LAKHS BEING THE ENTIRE AMOUNT OF GROSS SALE CONSIDERATION. THE SAID ADDITION MAY PLEASE BE DELETED OR CONSEQUENTLY BENEFITS OF DEDUCTION U/S. 54 MAY PLEASE BE GRANTED TO THE APPELLANT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE BEING PROVIDED WITH SEVERAL OPPORTUNITIES AND RPAD NOTIC ES. THEREFORE, IT SEEMS THAT THE ASSESS EE IS NOT SERIOUS IN PURSUING IT S APPEAL. THEREFORE, WE PROCEED TO DECIDE THE APPEAL ON MERITS ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE ARGUMENTS OF THE REVENUE. 3 . FACTS QU A THE DISPU TE ARE THAT THE ASSESSEE WA S A RESIDENT INDIVIDUAL ENGAGED IN TRADING OF STEEL & CHEMICAL WHO FILED ITS RETURN OF INCOME FOR AY 2010 - 11 DECLA RING A TOTAL INCOME OF RS.12,67,840/ - . THE SAME WAS PICKED UP FOR SCRUTINY ASSESSMENT U/S 143(3) WHEREIN TOTAL INCO ME WAS DETERMINED AT RS.60,80,030/ - VIDE ORDER DATED 25/03/2013 AFTER MAKING CERTAIN ADJUSTMENTS AND DISALLOWANCES. THE ASSESSEE CLAIMED BUSINESS EXPENSES OF RS.1,68,921/ - TOWARDS TRAVELLING, TELEPHONE AND SUNDRY EXPENSES. THE AO MADE ADHOC ADDITION OF 10% AGAINST T HESE EXPENSES TO ACCOUNT FOR PERSONAL ELEMENT . SIMILARLY, ASSESSEE INCURRED CERTAIN AMOUNT AS LOAN PROCESSING CHARGES TOWARDS ANNUAL RENEWAL OF CREDIT FACILITIES. THE AO PROPORTIONED THE SAME ON ACCRUAL BASIS AND DISALLOWED PREPAID PORTION OF THE SE EXPENDITURE WHICH CAME TO RS.1,27,261 / - . FURTHER, T HE ASSESSEE SOLD GOLD ORNAMENTS, DIAMONDS AND TENANCY RIGHTS IN ONE GODOWN PROPERT Y SITUATED AT NARSHI NATHA STREET, MUMBAI AND DERIVED 3 ITA NO. 6 123 /MUM / 2014 LATE SURESH PAREKH THROUGH LH ASSESSMENT YEAR 2010 - 11 LONG TERM CAPITAL GAINS (LTCG) FROM THEM. THE LTCG ON SALE OF GOLD ORNAMENTS AND DIAMONDS CAME TO RS.3,49,030/ - ON WHICH CAPITAL GAIN WAS PAID @20%. THE TENANCY RIGHTS WERE SOLD FOR RS.45 LACS WHICH WERE NOT REPORTED IN THE RETURN OF INCOME. THE ASSESSEE ATTRIBUTED THE SAME TO MISTAKE ON THE PART OF THE ASSESSEE AND FURT HER CONTENDED THAT THE ASSESSEE HAS MADE INVESTMENT IN TWO RESIDENTIAL PROPERTIES AT CHEMBUR OUT OF SALE PROCEEDS OF TENANCY RIGHTS AND HENCE ELIGIBLE FOR BENEFIT OF SECTION 54 / 54F NOT ONLY ON SALE OF TENANCY RIGHTS BUT EVEN ON SALE OF GOLD ORNAMENTS / DIAMONDS. THE ASSESSEE REQUESTED THE AO TO GRANT THE BENEFIT OF SECTIONS 54/54F AGAINST LTCG BUT THE SAME WAS REJECTED ON THE GROUND THAT NEW / ADDITIONAL CLAIMS CAN BE MADE ONLY BY WAY OF FILING REVISED RETURN OF INCOME AND NOT BY WAY OF FILING OF REVISE D COMPUTATION OF INCOME DURING ASSESSMENT PROCEEDINGS. THEREUPON , A O COMPLETED THE ASSESSMENT AFTER ADDING RS.45 LACS AS LTCG ON SALE OF TENANCY RIGHTS TO THE INCOME OF THE ASSESSEE. THESE ISSUES WERE AGITATED UNSUC C ESSFU L LY BEFORE CIT(A) VIDE ORDER DA TED 07/07/2014. QUA MAJOR ADDITION OF LTCG, CIT(A) CONCLUDED THAT 54F APPLIES TO THE CASE OF ASSESSEE BUT AFTER NOTICING THE D ATES OF SALE / PURCHASE OF ASSETS AND CONDITIONS OF SECTION 54F , FURTHER CONCLUDED THAT ASSESSEE FAIL ED TO FU L FILL CONDITIONS OF SECTI ON 54F AND HENCE NOT ELIGIBLE FOR BENEFIT THEREOF. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. DR PLACED RELIANCE ON THE REASONING OF CIT(A). 4. WE HAVE HEARD THE CONTENTIONS AND PERUSED MATERIAL AVAILABLE ON RECORD. AS FAR AS GROUND NOS. 1 & 2 ARE CONCERNED, WE FIND THAT NO SERIOUS CONTENTIONS HAS BEEN RAISED BY THE ASSESSEE IN THE PAPER BOOK A N D THEREFORE, WE FIND THAT ADDITIONS ON THESE TWO ACCOUNTS MADE BY LOWER AUTHORITIES ARE REASONED ONE AND REQUIRE NO INTERFERENCE ON OUR PART. HENCE, THESE TWO GROUNDS ARE DISMISSED. 5. BY GROUND NO.4, THE ASSESSEE HAS REQUESTED FOR GRANT OF BENEFIT U/S 54. WE FIND THAT BENEFIT OF SECTION 54 IS AVAILABLE ONLY IN SITUATION OF SALE OF PROPERTY USED FOR RESIDENCE WHICH IS NOT THE CASE HERE. HENCE, THIS GROUND OF APPEAL IS ALSO DISMISSED. 4 ITA NO. 6 123 /MUM / 2014 LATE SURESH PAREKH THROUGH LH ASSESSMENT YEAR 2010 - 11 6. GROU ND NO. 3 IS RELATED WITH SECTION 54F BENEFIT. WE FIND THAT AO HAS REJECTED THE SAME ON THE GROUN D THAT THE SAME COULD BE AVAILABLE TO THE ASSESSEE ONLY BY WAY OF FILING OF REVISED RET U RN AND NOT OTHERWISE. THE RE FORE, HE HAD NO OCCASION TO CONSIDER THE CLAIM OF ASSESSEE ON MERITS AND THEREFORE, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF AO FOR LIMITED PURPOSE OF ENTERTAINING SECTION 54F CLAIM OF THE ASSESSEE WITH RESPECT TO LTCG ARISING OUT OF SALE O F GO LD ORNAMENTS, DIAMONDS AND TENANCY RIGHTS. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE HIS CLAIM IN THIS REGARD FORTHWITH BEFORE AO FAILING WHICH THE AO SHALL BE AT LIBERTY TO DECIDE THE SAME ON MERITS ON THE BA S IS OF MATERIAL AVAILABLE ON RECORD. NEEDLES S TO REITERATE HERE IS THAT JURISDICTIONAL HONBLE BOMBAY HIGH COURT I N M/S PRUTHVI BROKERS & SHAREHOLDERS ITA NO 3908 OF 2010 ORDER DATED 21/06/2012 , AFTER PERUSING VARIOUS PRONOUNCEMENTS OF APEX COURT / APPELLATE AUTHORITIES HAS CLEARLY HELD THAT AN ASSE SSEE IS ENTITLED TO RA ISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RA ISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE DISCRETION WHETHER O R NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. THE EXERCISE OF DISCRETION IS ENTIRELY DIFFERENT FROM EXISTENCE OF JURISDICTION. HENCE, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN NUTSHELL, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OP EN COURT ON 16TH NOVEMBER , 201 6 SD/ - SD/ - ( SAKTIJIT DEY ) ( MANOJ KUMAR AGGARWAL ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 16 .1 1 .201 6 LAXMIKANT DEKA, SR. PS 5 ITA NO. 6 123 /MUM / 2014 LATE SURESH PAREKH THROUGH LH ASSESSMENT YEAR 2010 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASST . REGISTRAR) , / ITAT, MUMBAI SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATT ACHED 16.11.16 SR.PS/PS 2 DRAFT DICTATED ON 16.11.16 SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR 16.11.16 SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE S R.PS/PS 17.11.16 SR.PS/PS 7 ORDER PRONOUNCEMENT ON 16.11.16 SR.PS/PS 8 FILE SENT TO THE BENCH CLERK 18.11.16 SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER