PAD COM LLP, Delhi V. ACIT, Circle- 36(1), New Delhi

ITA 6745/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9455 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 08-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAKESH GUPTA
• Keywords: Business expenditure

Judgement Text

1 ITA NO. 6745/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI (THROUGH VIDEO CONFERENCE) BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL ME MBER I.T.A .NO. 6745/DEL/2017 (A .Y 2014-15) M/S PAD COM LLP C/O. R.B.ARORA & CO., DSM- 127, DLF TOWERS, SHIVAJIMARG, MOTI NAGAR, NEW DELHI PAN : AAOFP9369B (APPELLANT) VS ACIT CIRCLE-36(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. SOMIL AGARWAL, ADV RESPONDENT BY SH. RAKESH GUPTA, SR. DR ORDER PER N.K.BILLAIYA, AM THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-25, NEW DELHI DATED 20.09.2017 PERTAI NING TO ASSESSMENT YEAR 2014-15. DATE OF HEARING 19.08.2020 DATE OF PRONOUNCEMENT 20.08.2020 2 ITA NO. 6745/DEL/2017 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 2.55 LACS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E APPELLANT IS A LIMITED LIABILITY PARTNERSHIP WHOSE RETURN WAS SELECT ED FOR SCRUTINY ASSESSMENT UNDER CASS AND ACCORDINGLY STATUTORY NOT ICES WAS ISSUED AND SERVED UPON THE ASSESSEE. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED RS. 1.17 CRORES AS RENT AND HAS ALSO SHOWN INCOME FROM FIXED DEPOSIT RS. 2,2 2,579/-. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS CLAIMED A BUSINESS LOSS OF RS. 2,55,125/-. THE AO WAS OF THE OPINION THAT SI NCE THE ASSESSEE IS NOT HAVING ANY BUSINESS THERE SHOULD NO T BE ANY CLAIM OF BUSINESS EXPENDITURE. 5. ACCORDINGLY, THE ASSESSEE WAS ASKED TO EXPLAIN TH E CLAIM OF BUSINESS EXPENDITURE. IN ITS REPLY THE ASSESSEE STA TED THAT AN AMOUNT OF RS. 2.50 LACS HAS BEEN PAID AS AUDITORS R EMUNERATION AND RS. 5,125/- HAS BEEN SPENT ON SURVIVAL EXPENSES OF THE COMPANY WHICH INCLUDES BANK CHARGES, PRINTING AND ST ATIONERY AND OTHER MISCELLANEOUS EXPENSES. 6. THE SUBMISSION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE AO WHO WAS OF THE FIRM BELIEF THAT SINCE STATUTOR Y DEDUCTION @ 30% HAS BEEN ALLOWED U/S 24(1)(A) OF THE ACT, THE B USINESS EXPENDITURE AS CLAIMED IS NOT ALLOWABLE. THE AO MADE THE ADDITION OF RS. 2,55,125/-. 3 ITA NO. 6745/DEL/2017 7. ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) BU T WITHOUT ANY SUCCESS. 8. BEFORE US THE COUNSEL FOR THE ASSESSEE VEHEMENTL Y STATED THAT TO MAINTAIN THE CORPORATE STATUS THE ASSESSEE HAD T O INCUR EXPENSES FOR THE SURVIVAL OF ITS BUSINESS. IT IS THE SAY OF THE COUNSEL THAT AUDITORS REMUNERATION IS ONLY TO COMPLY WITH THE STA TUTORY REQUIREMENTS, FILING OF ANNUAL REPORTS AND PREPARAT ION OF FINANCIAL STATEMENTS, THEREFORE, THE EXPENDITURES DESERVE TO BE ALLOWED. PER CONTRA, THE DR STRONGLY SUPPORTED THE FINANCE OF TH E AO. 9. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW. IT IS TRUE THAT TO MAINTAIN THE STATUS OF LIM ITED LIABILITY PARTNERSHIP THE ASSESSEE HAS TO INCUR EXPENDITURE T O COMPLY WITH THE STATUTORY REQUIREMENTS AND HENCE A REASONABLE E XPENDITURE HAS TO BE ALLOWED. IN OUR CONSIDERED OPINION, A REASONA BLE EXPENDITURE OF RS. 1 LAC SHOULD MEET THE ENDS OF JUSTICE AND TO PUT AN END TO THE LITIGATION. WE ACCORDINGLY DIRECT THE AO TO ALLOW T HE EXPENDITURE OF RS. 1 LAC., THE ASSESSEE SHALL GET PART RELIEF. 10. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST, 2020 . SD/- SD/- (SUCHITRA KAMBLE) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 20/08/2020 *BINITA* 4 ITA NO. 6745/DEL/2017 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 20 . 08 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20 .08.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 20 .08.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 20 .08.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 20 .08.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 20 .08.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 20 .08.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20 .08.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER