M/s Cascade Enterprises, Delhi V. ACIT, New Delhi

ITA 6388/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7117 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 29-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 02-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA SENIOR
• Assessee Lawyers: R K KAPOOR
• Keywords: Depreciation; Business expenditure; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1: NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO.6388/DEL/2015 (ASSESSMENT YEAR : 2011-12) M/S. CASCADE ENTERPRISES, VS. ACIT, CIRCLE 20 (1) , 4, KAUL APARTMENTS, NEW DELHI. 39, RAJPUR ROAD, DELHI 110 054. (PAN : AAAFC2088C) (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. KAPOOR, CA REVENUE BY : SHRI F.R. MEENA, SENIOR DR DATE OF HEARING : 29.08.2016 DATE OF ORDER : 23.09.2016 O R D E R THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 14.10.2015 OF CIT(A) -32, NEW DELHI PERTAINING TO 2011-12 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS :- THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW I N CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING THE E XPENSES INCURRED BY THE ASSESSEE PERTAINING TO MALKAGANJ PROPERTY AM OUNTING TO RS. 749,154/- ON WHOLLY ILLEGAL, UNWARRANTED AND UNTENA BLE GROUNDS. THAT THE FINDINGS OF LEARNED CIT(A) THAT THE ASSES SEE ADMITTED THAT THE MALKAGANJ PROPERTY WAS NOT USED FOR ITS BU SINESS PURPOSES ARE FACTUALLY INCORRECT AND PERVERSE AND NOT BORNE FROM THE RECORDS. THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW I N HOLDING THAT THE USAGES OF RESIDENTIAL PROPERTY FOR COMMERC IAL PURPOSES WOULD DISENTITLE THE ASSESSEE FROM CLAIMING THE EXP ENDITURE IN RESPECT OF UPKEEP AND MAINTENANCE OF SUCH PROPERTY. ITA NO.6388/DEL/2015 2 THAT THE LEARNED CIT(A) HAS ERRED IN LAW IN DISALL OWING THE DEPRECIATION IN RESPECT OF JASOLA PROPERTY ON WHOLL Y UNTENABLE AND ILLEGAL GROUNDS. THAT THE FINDINGS OF THE LEARNED CIT(A) IN RESPECT OF JASOLA PROPERTY ARE SELF-CONTRADICTORY WHILE CONCLUDING TH AT JASOLA PROPERTY WAS NOT USED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 2. BOTH THE LD. AR AND THE LD. SENIOR DR WERE HEARD . IT WAS A COMMON STAND OF BOTH THE SIDES THAT THE ISSUE IN THE PRESE NT APPEAL PERTAINS TO THE ADDITION ON ACCOUNT OF MALKAGANJ PROPERTY HELD BY T HE ASSESSEE. THE PARTIES WERE REQUIRED TO ADDRESS THE NATURE OF ASSESSEES B USINESS. FROM PAGES 2 & 3 OF THE ASSESSMENT ORDER, IT WAS EVIDENT THAT THE ASSE SSEE CLAIMED TO HAVE UTILIZED THE SAID PREMISES FOR BUSINESS PURPOSES AND AS PER THE INSPECTORS REPORT DATED 20.09.2013 TAKEN INTO CONSIDERATION BY THE AO, TH E OFFICE ALLEGEDLY SHIFTED TO NOIDA, IN VIEW OF THE DRIVE OF THE MCD TO VACATE TH E RESIDENTIAL FLATS AND THIS FACT WAS INFORMED BY EMPLOYEE OF THE ASSESSEE NAND LAL, FOUND AT THE PREMISES. A PERUSAL OF PAGES 5 & 6 FURTHER SHOWS T HAT THE CONCLUSION AGAINST THE ASSESSEE WAS FURTHER BASED THE FACT THAT FOR TH E SPECIFIC PERIOD, CERTAIN MINIMUM ELECTRICITY BILLS WERE GENERATED. ACCORDIN GLY ON ACCOUNT OF THESE FACTS, THE ASSESSEES REPLY DATED 05.12.2013 WAS DI SMISSED HOLDING THAT THESE WERE NOT THE BUSINESS EXPENDITURE. ON FACTS WE FIN D THAT THERE IS NO DISCUSSION WHATSOEVER AS TO WHAT WAS THE BUSINESS OF THE ASSES SEE. IT HAS NEITHER BEEN ADDRESSED BY THE AO NOR BY THE CIT (A). THE LD. AR , RELYING UPON PAGE 5 OF THE ASSESSMENT ORDER, THOUGH SUBMITTED THAT THE ASS ESSEE WAS UTILIZING THE PREMISES FOR STORING SAMPLES ON ACCOUNT OF WHICH SO ME ORDERS WERE RECEIVED AND COMMISSION PRESUMABLY WAS EARNED. HOWEVER, HE WAS ALSO UNABLE TO ITA NO.6388/DEL/2015 3 ADDRESS THE NATURE OF ASSESSEES BUSINESS. IT WAS HIS STAND THAT NO DOUBT, THE SPECIFIC PREMISES WHICH ORIGINALLY WERE USED FOR TH E BUSINESS OF THE ASSESSEE HAD TO BE VACATED ON ACCOUNT OF DRIVE OF THE MCD AN D THEREAFTER, THE SAID PREMISES WERE UTILIZED ONLY FOR STORAGE OF RECORD A ND SAMPLES ETC. AND AN EMPLOYEE OF THE ASSESSEE ADMITTEDLY WAS FOUND EVEN IN SEPTEMBER, 2013 BY THE INSPECTOR. THUS, IT WAS ARGUED THE CLAIM THAT THE PREMISES WERE UTILIZED FOR THE BUSINESS OF THE ASSESSEE CANNOT BE DISCARDED. THE USAGE OF MINIMUM ELECTRICITY CHARGES INCURRED FOR THE BUSINESS IT WA S SUBMITTED SUPPORTS THE FACT THAT THE PREMISES WERE USED FOR STORAGE ONLY. EXAC TLY SAMPLES OF WHAT COMMODITY WERE STORED HE WAS UNABLE TO ADDRESS. IN THE ABSENCE OF ANY DISCUSSION ON WHAT WAS THE BUSINESS OF THE ASSESSEE , LD. AR SUBMITTED THAT HE HAS NO OBJECTION IF THE ISSUE IS RESTORED. THE LD. SENIOR DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW BUT WAS ALSO UNABLE TO ADDRESS WHAT WAS THE BUSINESS OF THE ASSESSEE AS THE TAX AUTHORITIES HAD ALSO FAILED TO ADDRESS THE SAME. 3. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSEES RETURN DECL ARING INCOME OF RS.17,77,906/- WAS SUBJECTED TO SCRUTINY ASSESSMENT. THE ASSESSEE WAS FOUND TO HAVE RECEIVED A COMMISSION INCOME OF RS.5,09,07,118/-. AS PER TH E INSPECTORS REPORT DATED 20.09.2013, EXTRACTED IN PAGES 1 & 2 OF THE ASSESSM ENT ORDER, THE INSPECTOR QUA THIS SPECIFIC PROPERTY I.E. 11, GANDHI SQUARE, MALK AGANJ NOTED AS UNDER :- ITA NO.6388/DEL/2015 4 ANOTHER PREMISE AT 11, GANDHI SQUARE, MALKA GANJ D ELHI WAS VISITED BY ME ON 24.09.2013 COMPRISES THREE FLOOR ( GROUND + TWO FLOORS). ALL THIS PROPERTY IS UNDER POSSESSION OF M /S. CASCADE ENTERPRISES, WHEREAS GROUND FLOOR IS VACANT, FIRST FLOOR IS RENTED OUT, SECOND FLOOR IS ALSO VACANT. ON ENQUIRY FROM M R. NANDLAL, CARETAKER OF THIS BUILDING, I CAME TO KNOW ME THAT THE OFFICE OF M/S CASCADE ENTERPRISES OPERATED FROM GROUND FLOOR UPTO YEAR 2008, AFTER THE DRIVE OF MCD TO VACATE THE RESIDENTIAL FL ATS USED FOR BUSINESS PURPOSE, THE OFFICE SHIFTED TO NOIDA. MR. NANDLAL WAS THE EMPLOYEE OF CASCADE ENTERPRISES.' 3.1. THE ELECTRICITY AND WATER EXPENSES TO THE EXTE NT OF RS.21,641/- AND RS.1085/- AND REPAIR & PAINTING EXPENDITURE TO THE TUNE OF RS.3,42,792/- WERE CLAIMED. CONSIDERING THE FACT THAT THE ASSESSEE HA D ACCEPTED THAT DUE TO IMPENDING ACTION OF THE MCD, THE OFFICE WAS SHIFTED , THE AO REJECTED THE CLAIM WHICH WAS SUSTAINED IN APPEAL BY THE CIT(A). 3.2. IN THE ABSENCE OF ANY DISCUSSION ON FACTS, THE CONCLUSION ARRIVES AT CANNOT BE SUSTAINED. WHETHER THE PREMISES, SPECIFICALLY G ROUND FLOOR AND BASEMENT STATED TO BE UNDER ASSESSEES OCCUPATION WAS USED F OR THE BUSINESS OF THE ASSESSEE OR NOT WOULD DEPEND ON WHAT WAS THE BUSINE SS. THE GENERAL ANSWER THAT SOME SAMPLES WERE BEING STORED CAN NEITHER BE ACCEPTED NOR REJECTED WITHOUT ANY DISCUSSION ON FACTS. IN THE CIRCUMSTAN CES, IT IS DEEMED APPROPRIATE TO ACCEPT THE PRAYER OF THE PARTIES AND RESTORE THE ISSUE BACK THE FILE OF THE AO WITH A DIRECTION TO FIRST ADDRESS THE NATURE OF ASS ESSEES BUSINESS AND THEREAFTER, EXAMINE WHETHER THE SPECIFIC PREMISES HAVE BEEN USE D AS A GODOWN/STORAGE PLACE BY THE ASSESSEE WHICH IS THE SPECIFIC CLAIM MADE BY THE ASSESSEE. THE FACT THAT THE INSPECTOR IN SEPTEMBER 2013 FOUND THA T THE BUSINESS PREMISES HAD SHIFTED ELSEWHERE PER SE DOES NOT DETRACT FROM THE ASSESSEES CLAIM AS ON THE ITA NO.6388/DEL/2015 5 CONTRARY IT SUPPORTS THE CLAIM THAT THE SPECIFIC PR EMISES WERE MANNED BY ASSESSEES EMPLOYEE. WHETHER SAMPLES WERE BEING ST ORED THERE OR NOT WOULD DEPENDED ON WHAT WAS THE BUSINESS OF THE ASSESSEE. ACCORDINGLY THE ISSUES ARE RESTORED WITH THE AFORE-MENTIONED DIRECTION BACK TO THE AO WHO SHALL PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. THE SAID ORDER WAS PRONOUNCED IN T HE PRESENCE OF THE PARTIES ON THE DATE OF HEARING ITSELF. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF SEPTEMBER, 2016. SD/- (DIVA SINGH) JUDICIAL MEMBER TS/AMIT KUMAR COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A)-32, NEW DELHI. 5. DR, ITAT. ASSTT. REGISTRAR, ITAT, NEW DELHI.