LOKHANDWALA ESTATES AND DEVELOPMENT COMPANY P. LTD, MUMBAI V. ITO 9(2)(2), MUMBAI

ITA 6615/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7721 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Business income; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6615/MUM/2013 ASSESSMENT YEAR: 2010-11 M/S. LOKHANDWALA ESTATES AND VS. ITO 9(2)(2 ) DEVELOPMENT COMPANY P. LTD. AAYAKAR BHAVAN, PLOT NO. 48, INDRANARAYAN RD. M.K. ROAD, SANTACRUZ (WEST), MUMBAI - 400020 MUMBAI 400054 PAN NO. AAACL1404E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIPUL JOSHI, AR REVENUE BY: SHRI B.S. BIST, DR DATE OF HEARING :11/01/201 7 DATE OF PRONOUNCEMENT:29/03/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 20, MUMBAI AND ARISES OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER MAKING DISALLOWANCE OF THE CLA IM OF WRITE OFF OF ADVANCES / DEPOSIT TO THE EXTENT OF RS. 19,11,212/- W HILE PASSING THE ASSESSMENT ORDER. ITA NO. 6615/MUM/2013 2 II. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER FAILED TO APPRECIATE THAT THESE ADVANCES / DEPOSITS ARE GIVEN IN NORMAL COURSE OF BUSINESS AND ARE WRITTEN OFF AS IRRECOVERABLE AND ARE DEDUCTIBLE IN CO MPUTING THE BUSINESS INCOME. III. THE APPELLANT THEREFORE PRAYS THAT THE DIRECTION MAY BE GIVEN TO REVENUE AUTHORITIES TO GIVE DEDUCTION OF THE WRITE OF F OF AN AMOUNT OF RS. 19,11,212/- BEING THE ADVANCE / DEPOSITS WRITTEN OFF IN THE NORMAL COURSE OF BUSINESS. 3 . BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE HAD WRITTEN OFF ADVANCES / DEPOSITS OF RS. 19,11,212/- AND CLAIMED THE SAME AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT. IN RESPON SE TO A QUERY RAISED BY ASSESSING OFFICER (AO), THE ASSESSEE FILE D THE FOLLOWING THE DETAILS OF ADVANCES / DEPOSITS WRITTEN OFF: SR. NO NAME OF THE PARTY AMOUNT NATURE OF PAYMENTS 1 SIPOREX INDIA LTD. 22,964/- ADVANCE AGAINST GOODS 2 MARSHAL ENTERPRISE 23,500/- ADVANCE AGAINST GOODS 3 EVERNOVA ENTERPRISE PVT. LTD. 1,05,469/- ADVANCE AGAINST GOODS 4 SCHINDLER INDIA P LTD. 2,50,500/- ADVANCE AGAINST GOODS 5 BSES LTD. 5,84,329/ DEPOSIT 6 BMC 2,42,086/ DEPOSIT 7 MSEB/BSES 81,821/- DEPOSIT 8 VERSOVA PROJECT 1,43,714/- ADVANCE TO PARTIES TO VERSOVA PROJECT 9 DWARKADHISJI TEMPLE TRUST 4,56,830/ ADVANCE TO PARTIES OF DWARKADHISJI TEMPLE PROJECT 3.1 THE A.O. NOTED THAT (I) THE ASSESSEE FAILED TO FILE THE ADDRESS OF THE PARTIES TO WHOM ADVANCES HAD BEEN GIVEN, (II) N O SUPPORTING EVIDENCE LIKE BILLS / VOUCHERS WERE BROUGHT ON RECO RD BY THE ASSESSEE. THE AO ALSO FOUND IT STRANGE THAT DEPOSITS KEPT WIT H GOVERNMENT AUTHORITIES LIKE BSES LTD., BMC, MSEB/BSES WERE WRI TTEN OFF WITHOUT TAKING INTO ACCOUNT THE FACT THAT THEY ARE PERMANEN T ENTITIES WHO DO ITA NO. 6615/MUM/2013 3 NOT SEIZE TO EXIST. THEREFORE, THE AO DISALLOWED TH E CLAIM OF ADVANCES / DEPOSITS WRITTEN OFF AMOUNTING TO RS. 19,11,212/- . 4. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORD ER OF THE AO BEFORE THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) HAS OBSERVED THAT IT IS THE RESPONSIBILITY OF THE ASSES SEE TO PROVE THAT SUCH EXPENDITURES WERE INCURRED DURING THE COURSE OF BUS INESS ACTIVITY RELATING TO VERIFIABLE PARTIES. THE LEARNED CIT(A) AGREED WITH THE REASONS RECORDED BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE F ILES (I) TAX AUDIT REPORT AND ASSESSMENT ORDER FOR A.Y. 2009-10, (II) ACCOUNTS, TAX AUDIT REPORT AND COMPUTATION OF INCOME FOR A.Y. 2010-11, (III) SUBMISSION DATED 19.12.2012 AND 26.12.2012 MADE BEFORE THE AO AND (IV) LEDGER EXTRACTS REGARDING ADVANCES AND DEPOSITS WRITTEN OF F. ALSO RELIANCE WAS PLACED BY HIM ON THE DECISION IN THE CASE OF SMITA CONDUCTORS LTD. VS. DCIT (2015) 152 ITD 417 (MUM-TRIB). 6. ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE O RDER OF THE LEARNED CIT(A) CONFIRMING THE DISALLOWANCE OF RS. 1 9,11,212/- MADE BY THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE CASE OF SMITA CONDUCTORS LTD. (SUPRA) IT HAS BEEN HELD THAT THE DEPOSITS / ADVANCES GIVEN IN CON NECTION WITH BUSINESS COULD NOT BE ALLOWED AS BAD DEBT BUT HAD T O BE CONSIDERED AS BUSINESS LOSS. THE FACT REMAINS THAT IN THE INSTANT CASE THE ASSESSEE FAILED TO FILE ADDRESS OF THE PARTIES TO WHOM THE A DVANCES WERE GIVEN. ALSO THE ASSESSEE FAILED TO FILE BEFORE THE AO THE SUPPORTING EVIDENCE LIKE BILLS / VOUCHERS. THEREFORE, THE AO COULD NOT VERIFY WHETHER (I) ITA NO. 6615/MUM/2013 4 THE LOSS WAS NOTIONAL OR FICTITIOUS, (II) WHETHER T HE LOSS WAS ON REVENUE ACCOUNT, (III) WHETHER THE LOSS HAD ACTUALL Y ARISEN AND (IV) WHETHER IT WAS INCIDENTAL TO THE CARRYING ON OF THE BUSINESS. IN VIEW OF THE ABOVE, THE ORDER OF THE LEARNED CIT(A) CONFIRMI NG THE DISALLOWANCE OF RS. 19,11,212/- MADE BY THE AO IS C ONFIRMED. 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2017 SD/ SD/ (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 29/03/2017 BISWAJIT, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI