M/S. SAYYED JAVED KASIM, MUMBAI V. THE ITO WD 24(2)(2),

ITA 6836/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1128 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 08-07-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 13-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S T BIDARI
• Assessee Lawyers: R K BOTHRA
• Keywords: Business income; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KUM AR ,(AM) ITA NO.6836/MUM/2007 ASSESSMENT YEAR : 2002-03 SAYYED JAVED KASIM R.K. BOTHRA 3/37, TARDEO A.C. MARKET TARDEO MUMBAI-400 034. ..( APPELLANT ) P.A. NO. (AACPS 9244 E) VS. INCOME TAX OFFICER WARD 24(2)(2) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI R.K. BOTHRA RESPONDENT BY : SHRI S. T. BIDARI O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 11.9.2007 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2002-03. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, DERIVES INCOME FROM EDITING AND PRODUCTIO N, FILED RETURN DECLARING TOTAL INCOME OF RS.1,77,075/-. ON THE BASIS OF THE INFORMATION GIVEN BY JCIT RANGE 24(2) VIDE LETTER DATED 25.7.2003 ITA NO.6836/M/07 A.Y:02-03 2 THAT (I) THE ASSESSEE HAS CLAIMED RS.3,29,455/- AS STANDARD DEDUCTION AND DEDUCTED THE AMOUNT FROM THE BUSINESS INCOME, (II) T HE ASSESSEE HAS SHOWN IN THE CAPITAL ACCOUNT RS.9,80,800/- AS PROFIT O N SALE OF FLAT BUT NO PROOF OF WORKING AS TO HOW THE PROFIT ARISES ON SALE AND THE AMOUNT OF CAPITAL GAIN AND (III) NO INCOME FROM INTER EST ON REFUND U/S.244A HAS BEEN SHOWN, THE ASSESSING OFFICER RE-OPENED T HE ASSESSMENT AND ISSUED NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 (THE ACT). IN RESPONSE TO THE NOTICE THE ASSESSEE REQUESTED FOR THE REASONS FOR RE-OPENING THE ASSESSMENT. THE ASSESSING OFFICER VIDE LETTER DATED 24.12.2004 INTIMATED THE REASONS FOR RE- OPENING THE ASSESSMENT. DURING THE COURSE OF ASSESSMENT THE ASSESSEE FILED DETAILS AS CALLED FOR AND ALSO PRODUCED BOOKS OF ACCOUNT F OR VERIFICATION. ON VERIFICATION OF BOOKS OF ACCOUNTS AND DETAILS IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS TO PR ODUCE 52 EPISODES OF THE SERIAL CALLED REHNUMA AND THE ASSESSEE HAS R ECEIVED RS.3,50,000/- PER EPISODE FOR 6 EPISODES TOTALING TO RS. 21,00,000/-. THE ASSESSEE HAS DEBITED THE PRODUCTION EXPENSES AMOUNTING TO RS.22,47,728/- AND MISCELLANEOUS EXPENSES OF RS.30,692/- A ND SHOWING NET LOSS OF RS.3,29,455/-. IT WAS OBSERVED BY TH E ASSESSING OFFICER THAT THE SERIAL WAS COMPLETED IN THE MONTH OF J ULY, 2001. HOWEVER, THE ASSESSEE HAS INCURRED THE EXPENSES AFTER JULY 2001 I.E., AFTER THE PRODUCTION IS STOPPED. ASSESSEE WAS ASKED TO PR ODUCE ITA NO.6836/M/07 A.Y:02-03 3 BILLS/VOUCHERS FOR THE EXPENSES INCURRED AFTER JULY, 20 01. HOWEVER, THE ASSESSEE HAS NOT PRODUCED THE SAME. IN THE ABSENCE OF BILLS A ND VOUCHERS, THE EXPENSES CLAIMED COULD NOT BE VERIFIED AND HENCE, THE ASSESSING OFFICER ALLOWED PROPORTIONATE EXPENSES FOR FOUR MONTHS UP TO THE PRODUCTION WORK AND DISALLOWED THE PRODUCTION E XPENSES AND MISCELLANEOUS EXPENSES NOT RELATED WITH THE PRODUCTION FO R REMAINING EIGHT MONTHS AMOUNTING TO RS.14,98,486/- OUT OF PROD UCTION EXPENSES AND RS.20,462/- OUT OF MISCELLANEOUS EXPENSES TOTALING TO RS.15,18,948/- AND DETERMINED THE PROFIT FROM REHBAR COMMUNICATION AT RS.11,89,493/- AND ADDED TO THE TOTAL INCOME OF TH E ASSESSEE AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.16, 96,020/- VIDE ORDER DATED30.3.2005 PASSED U/S.143(3) OF THE INCO ME TAX ACT, 1961 (THE ACT). ON APPEAL, THE LD. CIT(A) ON THE B ASIS OF ASSESSEE'S SUBMISSIONS ASKED FOR THE REMAND REPORT FROM THE ASSESSING O FFICER. THE LD. CIT(A) AFTER CONSIDERING THE ASSESSEE'S SUBMISSION A ND THE REMAND REPORT OF THE ASSESSING OFFICER WHILE REJECTING TH E ASSESSEE'S PLEA AGAINST THE RE-OPENING OF THE ASSESSMENT HELD ON MERITS VIDE PARA 4.2 OF HIS ORDER AS UNDER :- 4.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE LD. AUTHORISED REPRESENTATIVE CAREFULLY. THE DISALLOWANCE MADE BY THE ASSESSING O FFICER IS TOTALLY ON ADHOC BASIS. THE PRODUCTION OF THE SA ID SERIAL STOPPED IN JULY, 2001. SO, THE EXPENSE INCURRED ON THE PRODUCTION OF SERIAL UPTO JULY, 2001 WAS ALLOWABLE. LD. AR OF THE APPELLANT CATEGORICALLY STATED IN THE SUB MISSION DATED 20.3.2006 THAT EXPENDITURE OF ONLY RS.2,430/- WAS ITA NO.6836/M/07 A.Y:02-03 4 INCURRED AFTER JULY, 2001. THE ASSESSING OFFICER W AS ASKED TO VERIFY IT. THE ASSESSING OFFICER DID NOT MAKE ANY COMMENT ON THIS SPECIFIC SUBMISSION BUT REPEATED TH E FACTS MENTIONED IN THE ASSESSMENT ORDER IN HIS REMA ND REPORT. IN VIEW OF THESE FACTS I CONFIRM THE DISAL LOWANCE OF RS.2,430/- ONLY WHICH WAS ADMITTEDLY SPENT AFTER JULY, 2001 AND ITS CORRELATION WITH THE PRODUCTION COULD NOT BE ESTABLISHED. THE REMAINING AMOUNTS OF DISALLOWANCE OUT OF PRODUCTION EXPENSES AND MISCELLANEOUS EXPENSES A RE DELETED, SUBJECT TO VERIFICATION BY THE ASSESSING O FFICER WITH PROPER DOCUMENTS THAT SUCH EXPENSES WERE INCUR RED UPTO JULY, 2001. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE VALIDITY OF RE- OPENING OF ASSESSMENT U/S.148 AND THE DIRECTION OF THE L D. CIT(A) IN SENDING THE MATTER BACK TO THE ASSESSING OFFICER FOR VERI FICATION OF VARIOUS EXPENSES OF PRODUCTION AND OTHER MISCELLANEOUS EX PENSES ALLOWING SECOND INNINGS TO THE ASSESSING OFFICER. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT HE DOES NOT WANT TO PRESS GROUND NO.1-4 WHICH ARE AGAINST THE RE-OPENING OF THE ASSESSMENT. ON MERITS HE SUBMITS THAT SIN CE THE LD. CIT(A) HAS ALLOWED THE EXPENSES INCURRED ON THE PRODUCTI ON OF SERIAL UP TO JULY, 2001 AS THE SERIAL STOPPED IN JULY, 2001, THEREFORE, IN THE ABSENCE OF ANY CONTRARY MATERIAL THE LD. CIT(A) WAS NOT JUSTIFIED IN SENDING THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICE R WITH THE REMARK THAT THE SAME ARE DELETED SUBJECT TO VERIFICATIO N BY THE ITA NO.6836/M/07 A.Y:02-03 5 ASSESSING OFFICER. HE THEREFORE, SUBMITS THAT THE DISALLOWAN CE OF EXPENSES MADE BY THE ASSESSING OFFICER BE DELETED. 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE TH E LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED GROUND NO. 1-4 AGAINST THE VAL IDITY OF RE- OPENING OF ASSESSMENT, THEREFORE, IN THE ABSENCE OF ANY SUPPORTING MATERIAL THE SAME ARE REJECTED BEING NOT PRESSED. 7. ON MERITS WE FIND THAT THERE IS NO DISPUTE THE ASSESSEE HAS FILED COMPLETE DETAILS OF PRODUCTION EXPENSES AND MISCELLANEOUS EXPENSES. THE ASSESSING OFFICER OBSERVED THAT THE PRODUCTION WORK O F THE SERIAL WAS COMPLETED UP TO JULY, 2001 HENCE, THE ASSESSING OFFICE R ON PRO- RATA BASIS DISALLOWED THE EXPENSES FOR REMAINING 8 MONTH S AMOUNTING TO RS.15,18,948/-. IT WAS CONTENDED BY THE ASSESSEE THAT T HE PRODUCTION OF SERIAL WAS STOPPED FROM THE MONTH OF AUGU ST 2001, THEREFORE, ALL THE PRODUCTION EXPENSES WHICH WERE INCURR ED RELATED TO AND UP TO MONTH OF JULY, 2001 EXCEPT RS.2,430/- WHICH HAVE BEEN DEBITED AS PRODUCTION EXPENSES AFTER JULY, 2001 ARE ALL OWABLE. THE LD. CIT(A) ASKED THE ASSESSING OFFICER TO VERIFY IT AND SEND T HE REMAND REPORT. THE ASSESSING OFFICER DID NOT MAKE ANY COMMENT ON THE SAID ITA NO.6836/M/07 A.Y:02-03 6 SPECIFIC SUBMISSION BUT REPEATED THE FACTS ALREADY MENTION ED IN THE ASSESSMENT ORDER IN HIS REMAND REPORT. IN THE ABSENCE THE REOF THE LD. CIT(A) AFTER SUSTAINING THE ADDITION OF RS.2,430/- HEL D THAT THE REMAINING AMOUNTS OF DISALLOWANCE OUT OF PRODUCTION EX PENSES AND MISCELLANEOUS EXPENSES ARE DELETED, SUBJECT TO VERIFICATI ON BY ASSESSING OFFICER WITH PROPER DOCUMENTS. IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE BEYOND JULY, 2001, OR THE S AME ARE NOT ALLOWABLE AS REVENUE EXPENDITURE OR THE SAME ARE IN THE NATURE OF PERSONAL OR CAPITAL IN NATURE, WE ARE OF THE VIEW THA T THE ADHOC DISALLOWANCE OF EXPENSES MADE BY THE ASSESSING OFFICER ON PR O-RATA BASIS WITHOUT POINTING OUT ANY ITEM OF DISALLOWABLE NA TURE OR THE SAME HAVE BEEN INCURRED AFTER JULY, 2001 IS NOT SUSTAINABLE IN LAW AND ACCORDINGLY THE DISALLOWANCE OF EXPENSES RS.15,16,518/- (RS.15,18,948 RS.2,430) IS DELETED. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE, ALLOWED. 8. IN THE RESULT, THE ASSESSEE'S APPEAL STANDS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.7.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.7.2010. JV. ITA NO.6836/M/07 A.Y:02-03 7 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 8.7.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9.7.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 16.7.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 20.7.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER