Dr. R.N. Kalra, New Delhi V. DCIT, New Delhi

ITA 6836/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5860 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: GAUTAM JAIN SH LALIT MOHAN
• Keywords: Depreciation; Salary income
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.6836/DEL/2015 ASSESSMENT YEAR: 2010-11 DR. R. N. KALRA J-1/61A, RAJOURI GARDEN NEW DELHI PAN AATPK4470H VS. DCIT CIRCLE 37 (1) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. GAUTAM JAIN, ADVOCATE SH. LALIT MOHAN, CA RESPONDENT BY SH. S. L. ANURAGI, SR. DR DATE OF HEARING: 05/02/2020 DATE OF PRONOUNCEMENT: 17/02/2020 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 02.11.2015 OF THE CIT(A)-20, NEW DELHI RELATING TO A.Y.2010-11. 2. THE GROUND OF APPEAL NO.1 BY THE ASSESSEE READS AS UNDER :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-5, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF PAGE | 2 RS.47,640.00 OUT OF TOTAL EXPENSES OF RS.3,47,640.0 0 CLAIMED UNDER BUSINESS PROMOTION DURING THE YEAR AS THE SUBMISS IONS MADE BOTH DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELL ATE PROCEEDINGS HAVE NOT BEEN PROPERLY APPRECIATED BY THE AUTHORITI ES BELOW. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A DOCTOR BY PROFESSION AND DERIVES INCOME FROM PROFESSION AN D SALARY INCOME. HE FILED HIS RETURN OF INCOME ON 13.10.201 0 DECLARING TOTAL INCOME AT RS.5,20,64,840/-. THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.47,640/- UNDER THE HEAD BUSINESS PROMO TION EXPENSES. FROM THE VARIOUS DETAILS FILED BY THE AS SESSEE HE NOTED THAT THESE EXPENSES ARE IN THE NATURE OF BILLS OF V ARIOUS RESTAURANTS AND CLUBS. SINCE PERSONAL ELEMENT IN T HESE EXPENSES CANNOT BE RULED OUT THE AO MADE DISALLOWANCE OF THE ENTIRE AMOUNT. IN APPEAL, THE LD. CIT(A) UPHELD THE ADDIT ION. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.47,640/- UNDER THE HEAD BUSINESS PR OMOTION EXPENSES. THE LD. CIT(A) HAD HELD THAT SOME OF THE EXPENSES INCURRED MIGHT HAVE BEEN FOR PERSONAL USE. THEREFOR E, IN OUR OPINION THE ENTIRE AMOUNT DEBITED TO THE P & L ACCO UNT SHOULD NOT HAVE BEEN DISALLOWED. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE DISALLOWANCE OF AN AMOUNT OF RS.25,000/- ON AD-HOC BASIS OUT OF BUS INESS PROMOTION EXPENSES WILL MEET THE ENDS OF JUSTICE. WE HOLD AND PAGE | 3 DIRECT ACCORDINGLY. GROUND NO.1 BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 6. GROUND OF APPEAL NO.2 BY THE ASSESSEE READS AS U NDER :- 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-5, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.1,59,368.00 BEING 1/10 TH OF THE TOTAL EXPENSES CLAIMED UNDER CAR RUNNING AND MAINTENANCE AND DEPRECIATION ON CAR CLA IMED DURING THE YEAR AS THE SUBMISSIONS MADE BOTH DURING THE ASSESS MENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS HAVE NOT BEEN PROP ERLY APPRECIATED BY THE AUTHORITIES BELOW. 7. AFTER HEARING BOTH THE SIDES WE FIND THE AO DISA LLOWED AN AMOUNT OF RS.1,59,368/- BEING 10% THE EXPENSES CLAI MED BY THE ASSESSEE UNDER THE HEAD CAR RUNNING AND MAINTENANCE OF RS.8,53,422/-AND UNDER THE HEAD DEPRECIATION OF CAR AND AMBULANCE OF RS.7,37,946/- ON THE GROUND THAT ELEME NT OF PERSONAL USE OF THE VEHICLES CANNOT BE RULED OUT AN D THE ASSESSEE DID NOT PRODUCE THE LOG BOOK OF VEHICLE EXPENSES ON THE GROUND THAT THE SAME IS NOT MAINTAINED. WE FIND THE LD. C IT(A) SUSTAINED THE ADDITION ON THE GROUND THAT ASSESSEE HAS NOT MA INTAINED ANY LOG BOOK AND THE ONUS IS ON THE ASSESSEE TO PROVE T HAT THE EXPENSES SO CLAIMED WERE INCURRED WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF BUSINESS. IT IS THE SUBMISSION OF THE L D. COUNSEL FOR THE ASSESSEE THAT THE DISALLOWANCE SO MADE BY THE A O AND UPHELD BY THE CIT(A) ARE ON THE HIGHER SIDE. IT IS ALSO H IS SUBMISSION THAT THERE CANNOT BE ANY PERSONAL ELEMENT OF EXPENS ES IN RUNNING AND MAINTENANCE OF THE AMBULANCE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED OPIN ION THAT DISALLOWANCE OF AN AMOUNT OF RS. 1,00,000 ON AD-HOC BASIS OUT OF PAGE | 4 THE MOTOR CAR RUNNING AND MAINTENANCE EXPENSES WILL MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. G ROUND NO.2 IS ACCORDINGLY PARTLY ALLOWED. 8. GROUND NO.3 OF APPEAL READS AS UNDER :- 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-5, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS. 1,09,517.00 BEING 1/10 TH OF THE TOTAL TELEPHONE EXPENSES CLAIMED DURING THE YEAR AS THE SUBMISSIONS MADE BOTH DURING THE AS SESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS HAVE N OT BEEN PROPERLY APPRECIATED BY THE AUTHORITIES BELOW. 9. AFTER HEARING BOTH THE SIDES WE FIND THE AO DISA LLOWED AN AMOUNT OF RS.1,09,5172/- BEING 10% OF THE TELEPHONE EXPENSES CLAIMED IN THE P & L ACCOUNT AT RS. 1,095,172/- ON THE GROUND THAT PERSONAL USE OF TELEPHONE CANNOT BE RULED OUT AND THE ASSESSEE FAILED TO PRODUCE THE DETAILS OF USE OF TE LEPHONE. WE FIND THE LD.CIT(A) UPHELD THE ACTION OF THE AO. CONSIDE RING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING T HE FACT THAT CERTAIN FREE CALLS ARE ALLOWED BY THE TELEPHONE DEP ARTMENT, WE ARE OF THE CONSIDERED OPINION THAT DISALLOWANCE OF RS.5 0,000/- ON AD- HOC BASIS OUT OF SUCH TELEPHONE EXPENSES WILL MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUN D NO 3 BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 10. GROUND NO.4 AND 5 BY THE ASSESSEE READS AS UNDE R :- 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)-5, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN ENHANCI NG THE ADDITION FROM 2,07,000.00 TO RS.5,54,505.00 TOWARDS EXPENSES INCU RRED ON BUILDING REPAIR AND MAINTENANCE WITHOUT APPRECIATING THE FAC T THAT THE PAYMENT PAGE | 5 TO THE CONTRACTOR DID NOT EXCEED THE LIMITS LAID DO WN UNDER SECTION 40A AND THAT THE PROVISIONS OF SECTION 40A(3) WERE NOT ATTRACTED. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, NEW DELHI HAS FURTHER ERRED IN NOT APPRECIATING THE SUBMISSIONS MADE BOTH DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEED INGS HAVE NOT BEEN PROPERLY APPRECIATED BY THE AUTHORITIES BELOW. 5. THAT IT IS THEREFORE, PRAYED THAT, IT BE HELD TH AT ASSESSMENT MADE BY THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX AN D SUSTAINED AND ENHANCED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE QUASHED AND , FURTHER ADDITION SO UPHELD BY THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) ALONG WITH INTEREST LEVIED BE DELETED AND APPEAL OF THE APPELLANT BE ALLOWED. 11. AFTER HEARING BOTH THE SIDES WE FIND THAT THE A O DISALLOWED AN AMOUNT OF RS.2,07,000/- OUT OF THE BUILDING AND REPAIR AND MAINTENANCE EXPENSES CLAIMED BY THE ASSESSEE AT RS. 15,18,225/- ON THE GROUND THAT THE BILLS AND VOUCHERS PRODUCED BY THE ASSESSEE ARE NOT IN ORDER. WE FIND THE LD. CIT(A) NOT ONLY SUSTAINED THE ADDITION BUT ENHANCED THE SAME TO RS. 5,54,505/-. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASS ESSEE THAT THE TOTAL EXPENSES BOOKED UNDER THE HEAD BUILDING REPAI RS AND MAINTENANCE ACCOUNT IS SHOWN AT RS.2,074,038/-. ALT HOUGH THE AO ALLEGED THAT PROPER BILLS AND VOUCHERS WERE NOT MAINTAINED, HOWEVER, NO SPECIFIC INSTANCE OF UNVERIFIABLE EXPEN SES HAS BEEN GIVEN IN THE ASSESSMENT ORDER OR BY THE CIT(A). IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DUE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE HIS CLA IM WAS NOT GIVEN BY THE AO BEFORE MAKING THE ADDITION. IT IS A LSO HIS SUBMISSION THAT GIVEN AN OPPORTUNITY THE ASSESSEE C AN PAGE | 6 SUBSTANTIATE THE CLAIM BEFORE THE LOWER AUTHORITY. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTERE ST OF JUSTICE WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO GIVE ONE FINAL OPPORTUNITY TO THE ASSE SSEE TO SUBSTANTIATE HIS CASE AND DECIDE THE ISSUE AS PER F ACT AND LAW. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17.02.2020. SD/- SD/- (BHAVNESH SAINI) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE17.02.2020 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 05.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05.02.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 17.02.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 17.02.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 17.02.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 17.02.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.0 2.2020 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER