Smt. Anita Anand, New Delhi V. ITO, New Delhi

ITA 6654/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7027 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GATRU SENIOR
• Assessee Lawyers: S R WADHWA
• Keywords: Business income; Question of law
• Section: 37(1); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6654/DEL./2013 (ASSESSMENT YEAR : 2009-10) SMT. ANITA ANAND, VS. INCOME-TAX OFFICER, 58, JOR BAGH, WARD 31 (4), NEW DELHI 110 003. NEW DELHI. (PAN : ADVPA2018A) ITA NO.6655/DEL./2013 (ASSESSMENT YEAR : 2009-10) SHRI RUPINDER ANAND, VS. INCOME-TAX OFFICER, 58, JOR BAGH, WARD 31 (4), NEW DELHI 110 003. NEW DELHI. (PAN : AABPA6407A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.R. WADHWA, ADVOCATE REVENUE BY : SHRI SHRAVAN GATRU, SENIOR DR DATE OF HEARING : 05.07.2016 DATE OF ORDER : 12.07.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : BOTH THE AFORESAID INTER-CONNECTED APPEALS RAISING IDENTICAL QUESTION OF LAW AND FACTS ARE TAKEN UP TOGETHER FOR DISPOSAL BY WAY OF CONSOLIDATED ORDER IN ORDER TO AVOID THE REPETIT ION OF DISCUSSION. ITA NOS.6654 & 6655/DEL./2013 2 2. THE APPELLANT, SMT. ANITA ANAND (HEREINAFTER REF ERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL BEING ITA NO.6654/DEL/2013 SOUGHT TO SET ASIDE THE IMPUGNED O RDER DATED 06.01.2012 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- XXVI, NEW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE ORDER DATED 11.11.2013 PASSED BY THE L D. CIT(A)-XXVI, NEW DELHI IS AGAINST FACTS AND IS BAD IN LAW. 2. THAT ON THE FACTS AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESS ING OFFICER IN DISALLOWING EXPENSES TO THE TUNE OF RS. 1,91,100/- CLAIMED AGAINST REMUNERATION AND INTERES T RECEIVED AS PARTNER FROM PARTNERSHIP-FIRM OF M/S DI AMATE EXPORTS. 3. THAT THE ABOVE EXPENSES INCURRED TOWARDS PAYMENTS MADE TOWARDS FOR DIWALI FESTIVAL EXPENSES , TAXI DRIVERS AND PETTY BACK OFFICE EXPENSES WERE INCURRE D WHOLLY AND EXCLUSIVELY FOR EARNING REMUNERATION AND INTEREST FROM THE PARTNERSHIP FIRM ASSESSABLE AS BU SINESS INCOME U/S 28(V) OF THE INCOME-TAX ACT, 1961 AND HE NCE, ALLOWABLE DEDUCTION U/S 37(1) OF THE ACT. 3. THE APPELLANT, SHRI RUPINDER ANAND (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL BEI NG ITA NO.6655/DEL/2013 SOUGHT TO SET ASIDE THE IMPUGNED O RDER DATED 11.11.2013 PASSED BY THE COMMISSIONER OF INCOME-TA X (APPEALS)- XXVI, NEW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUNDS INTER ALIA THAT :- ITA NOS.6654 & 6655/DEL./2013 3 1. THAT THE ORDER DATED 11.11.2013 PASSED BY THE L D. CIT(A)-XXVI, NEW DELHI IS AGAINST FACTS AND IS BAD IN LAW. 2. THAT ON THE FACTS AND IN LAW, THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING EXPENSES TO THE TUNE OF RS.3,12,000/ - CLAIMED AGAINST REMUNERATION AND INTEREST RECEIVED AS PARTNER FROM PARTNERSHIP-FIRM OF M/S DIAMATE EXPORT S. 3. THAT THE ABOVE EXPENSES INCURRED TOWARDS PAYMENTS MADE TO SECURITY GUARDS AND PEON WERE INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING REMUNER ATION AND INTEREST FROM THE PARTNERSHIP FIRM ASSESSABLE U NDER THE HEAD BUSINESS INCOME U/S 28(V) OF THE INCOME-TA X ACT, 1961 AND HENCE, ALLOWABLE DEDUCTION U/S 37(1) OF THE ACT. ITA NOS.6654 & 6655/DEL/2013 4. BRIEFLY STATED THE FACTS OF THIS CASE ARE : DURI NG SCRUTINY PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT ASSESSEE HAS CLAIMED EXPENSES TO THE TUNE OF RS.3,12,000/- F ROM THE BUSINESS AS WELL AS PROFESSIONAL INCOME. IN REPLY TO THE SHOW- CAUSE NOTICE, ASSESSEE STATED TO HAVE CLAIMED DEDUC TION TOWARDS EXPENSES INCURRED DIRECTLY TO EARN THE INCOME FROM THE BUSINESS. ASSESSEE FURTHER EXPLAINED THAT EXPENSES RELATED TO PAYMENT MADE TO THE SECURITY GUARD, PEON, DIWALI/FESTIVAL EXPENS ES, CUSTOMARY EXPENSES TO TAXI DRIVERS ETC. WERE NOT DEBITED IN T HE BOOKS OF THE FIRM. HOWEVER, EXPLANATION FURNISHED BY THE ASSESS EE FOUND NOT ACCEPTABLE BY THE AO ON THE GROUND THAT THE EXPENSE S CLAIMED ARE ITA NOS.6654 & 6655/DEL./2013 4 NOT ATTRIBUTABLE TO THE BUSINESS RUN BY THE ASSESSE E INDIVIDUALLY AND SEPARATE FROM THE FIRMS BUSINESS NOR THE ASSESSEE HAS FURNISHED ANY DOCUMENTARY EVIDENCE TO PROVE THE EXPENSES AND THEREBY DISALLOWED THE EXPENSES AMOUNTING TO RS.1,91,100/- AND RS.3,12,000/- IN CASE OF ITA NO.6654/DEL/2013 AND I TA NO.6655/DEL/2013 RESPECTIVELY. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF AN APPEAL WHO HAS DISMISSED THE APPEAL. FEELING AG GRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY CHALLEN GING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) BY WAY OF FILING THE PRESENT APPEAL. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. LD. COUNSEL FOR THE ASSESSEE CONTENDED INTER ALI A THAT ALL THE EXPENSES DISALLOWED BY THE AO HAVE BEEN INCURRED BY THE ASSESSEE BEING PARTNER IN THE INTEREST OF BUSINESS EXPEDIENC Y; THAT ASSESSEE HAS BEEN DEALING IN THE SALE OF PRECIOUS JEWELLERY AND THEIR CUSTOMER ARE MOSTLY FOREIGNERS AND NRIS; THAT SINCE THE REMUNERATION AND INTEREST INCOME REPRESENTED THE BU SINESS INCOME OF BOTH THE ASSESSEE IN VIEW OF SECTION 28 (V) OF T HE ACT, THEY ITA NOS.6654 & 6655/DEL./2013 5 CLAIMED THE EXPENDITURE IN THE INTEREST OF BUSINESS EXPEDIENCY FOR PROTECTING AND PRESERVING THEIR PROFIT EARNING ESTA TE. HOWEVER, ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY THE LD. CIT (A). 8. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES AND CONTENTIONS RAISED BY THE PARTIES, THE SOLE QUESTIO N ARISES FOR DETERMINATION IN BOTH THE CASES IS :- AS TO WHETHER ASSESSEES HAVE INCURRED AN AMOUNT OF RS.1,91,100/- AND RS.3,12,000/- IN CASE OF ITA NO.6654/DEL/2013 AND ITA NO.6655/DEL/2013 RESPECTIVELY BEING PARTNER OF M/S. DIAMATE EXPORTS FOR BUSINESS EXPEDIENCY ELIGIBLE TO BE ALLOWED AS BUSIN ESS EXPENSES? 9. UNDISPUTEDLY, BOTH THE ASSESSES WHO ARE HUSBAND AND WIFE ARE PARTNER OF M/S. DIAMATE EXPORTS AND INCURRED EX PENDITURE CLAIMED DURING THE YEAR UNDER ASSESSMENT AS PER PAR A 4 PAGE 2 OF THE SYNOPSIS TO THE FOLLOWING EFFECT :- ITA NO.6654/DEL/2013 (A) DIWALI FESTIVAL EXPENSES RS.45,000/- (B) TIPS TO TAX DRIVERS FOR BRAINING CUSTOMERS RS.97 ,000/- (C) PETTY BACK OFFICE EXPENSES RS.49,100/- RS.1,91,100/- ITA NO.6655/DEL/2013 (A) SECURITY GUARD (DAY AND NIGHT) RS.1,92,000/- (B) PEON RS.1,20,000/- RS.3,12,000/- ITA NOS.6654 & 6655/DEL./2013 6 10. IT IS ALSO NOT IN DISPUTE THAT AFORESAID EXPENS ES HAVE NOT BEEN INCURRED TO EARN THE INCOME BY BOTH THE ASSESSEE AS PARTNERS FROM M/S. DIAMATE EXPORTS. IT IS ALSO NOT IN DISPUTE TH AT BOTH THE ASSESSEES AS PARTNERS HAVE EARNED REMUNERATION FROM M/S. DIAMATE EXPORTS AT RS.40,000/- PER ANNUM BUT INCURRED THE E XPENSES OF RS.1,91,100/- IN CASE OF SMT. ANITA ANAND AND RS.3, 12,000/- IN CASE OF SHRI RUPINDER ANAND. 11. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FAC TS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT I T DOES NOT FIT INTO ANY BUSINESS MODEL THAT A PARTNER HAS INCURRED RS.1,91,100/- OR RS.3,12,000/- AS THE CASE MAY BE TO EARN RS.40,000/ - PER ANNUM AS REMUNERATION; THAT THESE EXPENSES BY THEIR VERY NAT URE ARE HAVING NO NEXUS WITH THE BUSINESS BEING RUN BY M/S. DIAMAT E EXPORTS OF WHICH BOTH THE ASSESSEES ARE PARTNERS BY ANY STRETC H OF IMAGINATION; THAT NO SUCH EXPENSES HAVE EVER BEEN C LAIMED BY THE ASSESSEE IN THE EARLIER YEARS NOR HAS COME UP WITH ANY EXPLANATION AS TO WHAT WAS THE BUSINESS EXPEDIENCY TO INCUR SUC H EXPENSES IN THE YEAR UNDER ASSESSMENT; THAT THESE EXPENSES ARE NOT REQUIRED TO BE INCURRED TO EARN THE MEAGER REMUNERATION AND INT EREST INCOME BY THE ASSESSEES AS PARTNERS FROM M/S. DIAMATE EXPO RTS. ITA NOS.6654 & 6655/DEL./2013 7 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE FI ND NO ILLEGALITY OR INFIRMITY IN THE FINDINGS RETURNED BY THE LD. CIT (A), HENCE BOTH THE AFORESAID APPEALS ARE HEREBY DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON THIS 12 TH DAY OF JULY, 2016. SD/- SD/- (N.K. SAINI) (KULDIP SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 12 TH DAY OF JULY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.