ASST CIT CEN CIR 15 & 16, MUMBAI V. CINEYUG, MUMBAI

ITA 6196/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92230 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B K VORA
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 6196/M/2012 ASSESSMENT YEAR: 2007 - 08 ASSTT. COMMISSIONER OF INCOME - TAX, CENTRAL CIR.15 & 16, ROOM NO .401, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. CINEYUG, 301, ROSE APARTMENTS, JUHU CHURCH ROAD, JUHU, MUMBAI - 49 PAN: AAAFC7001P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIPUL JOSHI, A.R. REVENUE BY : SHRI B.K. VORA, D.R. DATE OF HEARING : 01.04. 201 5 DATE OF PRONOUNCEMENT : 01.04. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 16.07.2 012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007 - 08 . 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ER RED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.1 0,35,424/ - MADE ON ACCOUNT OF MUNICIPAL TAXES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO ESTABLISH THE OWNERSHIP OF THE PROPERTY WITH DOCUMENTARY EVIDENCE SUCH AS REGISTERED AGREEMENT, PA YMENT OF STAMP DUTY ETC., ON WHICH IT CLAIMED PAYMENT OF MUNICIPAL TAXES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE AN ADDITION OF RS. 1 , 1 9,723/ - BEING SOCIETY CHARGES, BY ADMITTING FRESH EV IDENCE WHICH IS IN CONTRAVENTION OF RULE 46A AND WHICH THE ASSESSEE NEVER PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ITA NO.6196/M/2012 M/S. CINEYUG 2 3. THE APPELLANT CRAVES TO LEAVE TO ADD, TO AMEND AND / OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 4. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROUNDS STATED ABOVE, THE ORDER OF THE CIT(A) - 39, MUMBAI, MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. GROUND NO.1 3. GROUND NO.1 RELATES TO THE DELETION OF ADDITION OF RS.10 , 35 , 424/ - REGARDING THE CLAIM OF MU NICIPAL TAXES PAID. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) REJECTED THE CLAIM OF THE ASSESSEE OBSERVING THAT THE ASSESSEE HAD FAILED TO PROVE ITS OWNERSHIP OVER THE PROPERTY REGARDING WHICH THE MUNICIPAL TAXES WERE CLAIMED TO HAVE BEEN PAID AND FURTHER THAT THE ASSESSEE HAD NOT FILED ANY VALID PROOF REGARDING THE ACTUAL PAYMENT OF SAID MUNICIPAL TAXES. 4. THE LD. CIT(A) , HOWEVER, ALLOWED THE CLAIM OF THE ASSESSEE AFTER APPRECIATION OF THE EVIDENCE IN REGARD TO THE OWNERSHIP OF THE PRO PERTY. HE OBSERVED THAT THE PROPERTY WAS OWNED BY THE ASSESSEE , THOUGH , THE SALE DEED WAS NOT REGISTERED AT THAT TIME. THE ASSESSEE WAS HAVING DOMAIN OVER THE PROPERTY AS THE ASSESSEE HAD BEEN USING THE SAID PROPERTY AS ITS OFFICE. THE ADDRESS OF THE AS SE SSEE WA S ALSO OF THE PROPERTY IN QUESTION WHICH HA D NOT BEEN DENIED BY THE AO. EVEN THE DEPARTMENT HAD ALSO ATTACHED THIS PROPERTY PROVISIONALLY , IN AN ACTION AGAINST THE ASSESSEE. AFTER CONSIDERING THE EVIDENCES PRODUCED BY THE ASSESSEE, THE LD. CIT(A ) OBSERVED THAT THE ASSESSEE WAS THE OWNER OF THE PROPERTY AND WAS LIABLE TO PAY THE MUNICIPAL TAXES IN RELATION TO THE SAID PROPERTY. HE, THEREFORE, ALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS COME IN APP EAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. THE LD. D.R. HAS ITA NO.6196/M/2012 M/S. CINEYUG 3 CONTENDED THAT THE ASSESSEE WAS NOT HAVING REGISTERED DEED OF THE PROPERTY IN HIS FAVOUR AT TH E RELEVANT TIME , S O, THE ASSESSEE COULD NOT BE HELD TO BE OWNER OF THE PROPERTY IN QUESTION. SHE FURTHER CONTENDED THAT EVEN THE LD. CIT(A) HAS PRESUMED THAT THE ASSESSEE HAS MADE THE PAYMENT OF THE MUNICIPAL TAXES , WHEREAS , THE AO HAS CATEGORICALLY OBSER VED THAT THE ASSESSEE HA D FAILED TO PRODUCE EVIDENCE REGARDING THE ACTUAL PAYMENT OF MUNICIPAL TAXES. 6. SO FAR AS THE FIRST CONTENTION OF THE LD. D.R. IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS CATEGORICALLY HELD , AFTER APPRECIATION OF THE EVIDENCE S ON THE FILE, THAT THE ASSESSEE WAS EXERCISING DOMAIN OVER THE PROPERTY AS OWNER IN POSSESSION. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE ASSESSEE WAS LIABLE TO PAY THE MUNICIPAL TAXES. 6.1 SO FAR AS THE SE COND CONTENTION OF THE LD. D.R. IS CONCERNED, WE FIND THAT THERE IS NO EVIDENCE ON THE FILE ABOUT THE ACTUAL PAYMENT OF THE MUNICIPAL TAXES IN QUESTION. HENCE, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFICATION OF THE RECE IPT /ACTUAL PAYMENT OF THE MUNICIPAL TAXES IN QUESTION TO THE BMC. IF THE ASSESSEE WILL PRODUCE THE NECESSARY EVIDENCES/PRO OF THAT THE MUNICIPAL TAXES HAVE ACTUALLY BEEN PAID DURING THE RELEVANT YEAR , THEN THE CLAIM OF THE ASSESSEE WILL BE ALLOWED BY THE A O. GROUND NO.2: 7. GROUND NO.2 IS RELATING TO THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.1,19,723/ - PAID ON ACCOUNT OF SOCIETY CHARGES. DURING TH E ASSESSMENT PROCEEDINGS , THE AO OBS ERV ED FROM THE P&L ACCOUNT THAT THE ASSESS EE HAD CREDI TED AN AMOUNT OF RS. 5,10,900/ - BEING RENT RECEIVED . I N THE DETAILS FI L ED, IT WAS STATED THAT THE SAID RENT INCOME WAS RECEIVED FROM M/S . ADLABS LTD . FOR LETTING OUT COMMERCE CENTRE PROPERTY . HOWEVER, THE ASSESSEE HAD SHOWN THE SAID RENTAL INCOME AS INC OME FROM BUSINESS AND NOT UNDER THE HEAD I NCOME FROM HOUSE PROPERTY . THE RENTAL INCOME SHOWN OF ITA NO.6196/M/2012 M/S. CINEYUG 4 RS . 5,10,900/ - WAS TREATED BY THE A O AS INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY AND TAXE D ACCORDINGLY , AFTER ALLOWING THE DEDUCTION IN RESPECT OF M UNICIPAL TAXES PAID OF RS . 90,723/ - AND STATUTORY DEDUCTION U/S . 24 OF THE I . T . ACT @ 30% . IT WAS FURTHER NOTED BY THE A O THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS . 1,60,663/ - AS SOCIETY MAINTENANCE CHARGES AND RS. 61,300/ - AS REPAIRS AND MAINTENANCE IN I TS P&L ACCOUNT . THE A. O HELD THAT SINCE THE ASSESSEE HAD BEEN ALLOWED DEDUCTION @ 30% FROM THE RENTAL INCOME, FURTHER EXPENDITURE OF SOCIETY MAINTENANCE CHARGES AND REPAIRS AND MAINTENANCE DEBITED TO P&L COULD NOT BE ALLOWED AND ACCORDINGLY ADDED BACK THE SAID SUM TO THE TOTAL INCOME OF THE ASSESSEE . 8. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT THE LEASE AGREEMENT WITH M/S. ADLABS LTD. WAS ENTERED INTO FROM 01.12.06 AND OUT OF RS.1,60,663/ - , RS.1,06,723/ - WERE PAID ON 03.10.06. THERE FORE, THE SUM OF RS.1,06,723/ - DID NOT RELATE TO THE PERIOD FOR WHICH THE PROPERTY WAS LEASED OUT. AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE, THE LD. CIT(A) HELD THAT THE PREMISES IN QUESTION WAS USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES UP TO NOVEMBER, 2006 AND FROM NOVEMBER, 2006 THE PREMISES WAS LET OUT TO M/S. ADLABS LTD. HE ADMITTED THE CONTENTION OF THE ASSESSEE THAT OUT OF RS.1,60,663/ - , A SUM OF RS.1,06,723/ - WAS PAID FOR THE PERIOD IN WHICH THE ASSESSEE WAS USING THE PREMISES FOR BUSI NESS PURPOSES. HE THEREFORE HELD THAT THE SAID AMOUNT IS TO BE ALLOWED AS DEDUCTION IN THE YEAR OF ITS ACTUAL PAYMENT IN VIEW OF SECTION 43B OF THE INCOME TAX ACT AND DIRECTED THE AO TO DO ACCORDINGLY. 9. BEFORE US, THE LD. D.R. HAS CONTENDED THAT THE LD. CIT(A) ADMITTED THE CONTENTION OF THE ASSESSEE MERELY ON THE BASIS OF ITS SUBMISSIONS. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THAT THE PREMISES WAS ACTUALLY USED DURING THE PERIOD UP TO NOVEMBER, 2006 FOR ITS BUSINESS PURPOSES. WE FIND ITA NO.6196/M/2012 M/S. CINEYUG 5 F ROM THE RECORD THAT ANY CONVINCING EVIDENCE IN THIS REGARD HAS NOT BEEN PRODUCED BY THE ASSESSEE. WE, THEREFORE, RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFICATION OF THE EVIDENCE/RECORD TO THE EFFECT THAT THE PREMISES I N QUESTION WAS ACTUALLY USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES UP TO NOVEMBER, 2006. IF THE ASSESSEE WILL BE ABLE TO PROVE THIS FACT, THE AO WILL ALLOW THE CLAIM ACCORDINGLY. GROUND NO.3 & 4 10. GROUND NOS.3 & 4 ARE GENERAL IN NATURE AND DO N OT REQUIRE ANY ADJUDICATION. 11. IN VIEW OF OUR ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04. 201 5 . SD/ - SD/ - ( SANJAY ARORA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 01.04.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.