ACIT 15(2), MUMBAI V. RASHI DEVELOPERS, MUMBAI

ITA 615/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9278 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 25-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-01-2013
• Court: TRIBUNAL
• Keywords: Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI . , . , BEFORE SHRI D.MANMOHAN , VICE PRESIDENT AND SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER ./ ITA NO. 615 /M/201 3 ( / ASSESSMENT YEAR ; 200 8 - 0 9 ) ACIT 15(2) R.NO.110, MATRU MANDIR, 1 ST FLOOR, TARDEO RD, MUMBAI - 400007 / VS. RASHI DEVELOPERS, 101, SHANTI SADAN, NEAR MC DONALDS, LOKHANDWALA COMPLEX ANDHERI (W) MUMBAI - 400053 PAN: AAHFR2938P ( / APPELLANT) ( / RESPONDENT) REVENUE B Y : SHRI LOVE KUMAR (DR) RESPONDENT BY : NONE (AR) / DATE OF HEARING : 25 . 0 2 .201 5 / DATE OF PRONOUNCEMENT : 11.03 .201 5 / O R D E R PER D. KARUNAKARA RAO, A . M . : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) - 26, MUMBAI DATED 14.11.2012 FOR THE ASSESSMENT YEAR 2008 - 09. ONLY ISSUE RAISED IN TH E APPEAL OF THE REVENUE RELATES TO THE DELETION OF DISALLO WANCE OF LOSS OF RS.12,31,149/ - . 2. BRIEFLY STATED R ELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A BUILDER AND DEVELOPER AND FILED RETURN OF I NCOME DECLARING TOTAL LOSS OF RS.12,31 ,1 50/ - . DURING THE ASSESSMENT PROCEEDINGS, T HE AO NOTED THAT ASSESSEE HAS UNDER TAKEN ONLY ONE PROJECT AT GOREGAON (E) AND THE PROJECT IS UNDER CONSTRUCTION. CONSIDERING THE FACT ASSESSEE IS FOLLOWING P ROJECT COMPLETION METHOD, AO IT A NO. 615 /M/201 3 2 CAME TO THE CONCLUSION THAT ALL THE EXPENDITURE INCURRED SHOULD BE SHOWN AS WORK - IN - PROGRESS . T HEREFORE, CONSI DERING THE ABSENCE OF INFORMATION FROM THE ASSESSEE , AO DISALLOWED THE WHOLE OF THE LOSS CLAIMED IN THE RETURN. T HE TOTAL INCOM E OF AS SESSEE IS DETERMINED AT NIL AGAINST THE RETURN ED LOSS OF RS.1 2, 3 1 , 150/ - . 3. DURING T HE FIRST APPELLATE PROCEEDINGS, ASSESSEE SUBMITTED THAT THE LOSS IN QUESTION RELATES TO THE ADMINISTRATIVE EXPENDITURE INCURRED IN THE YEAR UNDER CONSIDERATION FOR CONDUCTING THE BUSINESS, NAMELY RENT, MAI NTENANCE , ELECTRICITY CHARGE , TELEPHONE ETC. IT WAS ALSO SUBMITTED THAT ASSESSEE EARNED SOME INTEREST INCOME FROM THE BANK RELATING TO THE FIX ED DEPOSIT S MADE OUT OF THE ADVANCES RECEIVED FROM THE BUYERS. THE LOSS IN QUESTION RELATES TO ROUTINE OFFICE EXPENSES AND THEREFORE, THE SAME SHOULD BE ALLOWED AS BUSINESS EXPENDITURE OF THE YEAR . THE CIT (A) CONSIDERED THE SAME FAVOURABLY AND DIS AP PROVED THE ADDITION MADE BY THE AO IN THE ASSESSMENT . C ONTENTS OF PARA 3.1 AND 3.2 ARE RELEVANT FOR THE FACTS AS WELL AS THE CONCLUSIONS OF THE CIT (A). AGGRIEVED WITH THE SAID RELIEF , R EVENUE IS IN APPEAL BEFORE US. 4. DURING THE PROCEEDINGS BEFORE US, A T THE OUTSET , IT IS NOTICED THAT THERE IS NONE TO REPRESENT THE ASSESSEE DESP ITE TH E NOTICE ISSUED AND THE CASE IS POSTED AT VARIOUS DATES. HOWEVER , THE LD. DR FOR THE REVENUE EXPLAINED THE FACTS OF THE CASE AND READ OUT THE RELEVANT PARAGRAPH FROM THE ORDERS OF THE REVENUE DEMONSTRATING THE FACTS AS WELL AS CONCLUSIONS OF THE AO AND CIT(A). HOWEVER, HE RELIED ON THE ORDER OF THE AO. 5. WE HEARD LD. DR AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND THE CONTENTS OF PARA 3, 3.1 & 3.2 OF THE CIT (A) ORDER IN PARTICULAR . FOR THE SAKE OF COMPLETENESS OF THIS ORDER PARA 3.1 & 3.2 ARE EXTRACTED AS UNDER: 3.1 IN THE APPEAL PROCEEDINGS, IT IS SUBMITTED THAT IN THE PROFIT & LOSS ACCOUNT, THE APPELLANT HAS DEBITED THE ADMINISTRATIVE EXPENDITURE AND AGAINST THE SAID EXPENDITURE , THE ASSESSEE HAS ADJUSTED THE INTEREST INCOME FROM LOAN AND BANK DEPOSITS AND AFTER THE ADJUSTMENT OF RECEIPTS AND EXPENDITURE, NET LOSS OF RS.12,31,150/ - WAS DISCLOSED. IT WAS FURTHER SUBMITTED THAT FOR CARRYING ANY BUSINESS CERTAIN EXPENSES ON RENT, MA INTENANCE, ELECTRICITY CHARGES, IT A NO. 615 /M/201 3 3 TELEPHONE ETC. ARE TO BE INCURRED WHICH DESERVES TO BE ALLOWED. IT WAS ALSO SUBMITTED THAT THE ASSESSEE DURING THE COURSE OF BUSINESS, DEPOSITED THE ADVANCE RECEIVED FROM BUYERS INTO FIXED DEPOSITS FROM WHERE INTEREST INCOME IS RECEIVED. THERE IS NO PERSONAL ELEMENT IN THIS DAY TO DAY EXPENDITURE. THEREFORE, THE DISALLOWANCE MADE BY THE AO DESERVES TO BE DELETED. 3.2 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE A.O. IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. AFTER CONSIDERING THE RIVAL SUBMISSION S , I DO AGREE WITH THE CONTENTION OF THE APPELLANT THAT THE EXPENDITURE CLAIMED BY THE APPELLANT ARE ROUTINE EXPENSE. SINCE DURING THE YEAR UNDER CONSIDERATION, THE INCOME IS LESS THAN THE EXPENDITURE, THEN IT HAS RESULTED IN THE LOSS CLAIMED BY THE APPELLANT. THE AO HAS SUMMARILY DISALLOWED THE ENTIRE LOSS WITHOUT POINTING OUT ANY DISCREPANCY IN THE EXPENSES CLAIMED BY THE APPELLANT. IN THE ASSESSMENT OR DER, HE HAS SIMPLY STATED THAT B OOKING OF LOSS SEEM S T O BE QUESTIONABLE AND NOT FREE FROM DOUBT. THIS MAY NOT BE HELD AS CORRECT REASONING FOR DISALLOWING THE 100% EXPENSES OR LOSS CLAIMED BY THE APPELLANT, THE DISALLOWANCE CANNOT BE MADE ON THE BASIS OF MERE DOUBT. ACCORDINGLY, THE DISALLOWANCE OF LOSS MADE BY THE AO IS DIRECTED TO BE DELETED AND APPEAL IS ALLOWED. 6 . FROM THE ABOVE, IT IS EVIDENT THAT THE LOSS OF RS.12 , 31 ,1 50/ - CONSIST S OF THE ROUTINE EXPENDITURE INCURRED FOR OFFICE ADMINISTRATION AFTER ADJUSTING THE INTEREST INCOME EARNED BY THE ASSESSEE AND THE SAME DOES NOT RELATE TO THE PROJECT SPECIFIC W ORK - IN - PROGRESS . IT IS A SETTLED ISSUE THAT TH E EXPENSES INCURRED ON RENT, MAI NTENANCE, ELECTRICITY CHARGES , TELEPHONE ETC. CONSTITUTES ROUTINE EXPENSES OF THE ASSESSEE AND ARE DESERVED TO BE ALLOW ED AS BUSINESS EXPENSES OF THE ASSESSEE DESPITE THE PROJECT C OMPLETION METHOD FOLLOWED BY THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THE CONCLUSION OF THE CIT(A) GIVEN IN PARA 3.2 OF HIS ORDER ABOVE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTE RFERE NCE . 7 . IN THE RESULT , APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.03 . 201 5 . 11.03 . 201 5 SD/ - SD/ - ( D.MANMOHAN ) ( D. K ARUNAKARA RAO ) VICE PRESIDENT ACCOUNTANT MEMBER / MUMBAI ; / DATED 11.03 . 201 5 * PATEL IT A NO. 615 /M/201 3 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / THE DR CONCERNED BENCH , 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI