ANTHONY LOBO, MUMBAI V. ITO RG 11(2)(1), MUMBAI

ITA 6946/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4281 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 13-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KALIK SINGH
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Business expenditure; Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI . , ! ' #'' '$ , % ! & BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 6946 / / 2011 A.Y. 2007-08 ITA NO. : 6946/MUM/2011 (ASSESSMENT YEAR : 2007-08) MR. ANTHONY LOBO, 9, WIND MERE, B.J. ROAD, BANDRA, MUMBAI -400 050 .: PAN: ABTPL 9747 P VS INCOME TAX OFFICER, WARD 11(2)(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH K. JOTWANI RESPONDENT BY : SHRI KALIK SINGH /DATE OF HEARING : 03-07-2013 !' / DATE OF PRONOUNCEMENT : 10 -07-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE APPEAL ARISES FROM THE ORDER OF CIT(A) 3, MUMBAI, DATE D 25.07.2011, WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED I N DISALLOWING A SUM OF RS. 4,65,285/- BEING TH SHARE OF EXPENSES REIMBURSED BY THE APPELLANT. THE SAME SHOU LD BE ALLOWED IN FULL. 1.2 THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE IS USING THE OFFICE PREMISES OF CALVIN CORPORATION AND THE SAID CONCERN HAS SHOWN THE SAID EXPENSES AS REIMBURSED F ROM YOUR ASSESSEE. HENCE THE SAID EXPENDITURE HAS NOT BEEN C LAIMED TWICE BY THE ASSESSEE AND CALVIN CORPORATION. 1.3 THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS BEEN EXPLAINED THAT THE ASSESSEE IS USING OFFICE PREMISE S OF CALVIN CORPORATION AND FOR THE SAME THERE IS AN MOU FOR TH E SAME BETWEEN THEM ON BASIS OF WHICH THE EXPENSES INCURRE D ARE SHARED. MR. ANTHONY L OBO ITA 6946/M/2011 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED I N DISALLOWING A SUM OF RS. 35,199/- ON ACCOUNT OF INT EREST OF CAR LOAN AND PROFESSIONAL FEES PAID. THE SAME SHOULD BE ALLOWED BEING BUSINESS EXPENSES AND THE BASIS OF CLAIMING U NDER THE WRONG HEAD SHOULD NOT BE USED FOR DISALLOWING THE S AME 2. GROUNDS NO. 1.1, 1.2 & 1.3 PERTAIN TO REIMBURSEM ENT OF EXPENSES TO THE EXTENT OF RS. 4,65,285/- TO M/S CALVIN CORPORAT ION. 3. THE FACTS ARE THAT THE ASSESSEE IS AN ARCHITECT BY PROFESSION. AS PER A MOU ENTERED BETWEEN THE ASSESSEE & CALVIN CORPORATI ON DATED 26.04.2006, TH EXPENDITURE RELATING TO THE FUNCTIONING OF THE OFF ICE OF CALVIN CORPORATION WILL BE DEBITED TO THE ASSESSEE, WHO SHALL REIMBURS E THE SAME TO CALVIN CORPORATION. ACCORDINGLY, ASSESSEE REIMBURSED THE E XPENSES INCURRED BY CALVIN CORPORATION TO THE EXTENT OF RS. 4,65,285/- (APB 13). THE ASSESSEE, COULD NOT FURTHER SATISFY THE AO BEYOND THE MOU AND DETAILS AS MENTIONED IN APB 13, AND AS A CONSEQUENCE, THE AO DISALLOWED THE EXPENSE. 4. THE CIT(A) SUSTAINED THE DISALLOWANCE MADE BY TH E AO. 5. THE ASSESSEE IS NOW BEFORE THE ITAT. 6. BEFORE US, THE AR SUBMITTED THAT THE ASSESSEE WA S ABLE TO PLACE THE EVIDENCE ON RECORD, WHICH WAS UNAVAILABLE AT THAT T IME. HE, THEREFORE, HAS PLACED CERTAIN OTHER DOCUMENTS, WHICH THE AR SUBMIT TED HAD NOT BEEN SUBMITTED BEFORE THE REVENUE AUTHORITIES, WHICH ACC ORDING TO HIM, WERE RELEVANT, IN SO FAR AS ADJUDICATION OF THE INSTANT GROUND OF DISALLOWANCE OF RS. 4,65,285/- WAS CONCERNED. 7. HE PRAYED, THAT THIS EVIDENCE MAY BE TREATED AS ADDITIONAL EVIDENCE AND THE ISSUE BE RESTORED TO THE FILE OF THE AO. 8. THE DR DID NOT HAVE ANY OBJECTION. 9. WE HAVE GONE THROUGH THE DOCUMENTS PLACED BEFORE THE REVENUE AUTHORITIES AND WE FIND THAT THE DOCUMENTS BEING PL ACED NOW AND REFERRED TO BY THE AR SHOULD BE READ IN CONJUNCTION WITH EACH O THER. ON THESE FACTS, WE ADMIT THE ADDITIONAL EVIDENCE PLACED BEFORE US AND RESTORE THE ISSUE TO THE FILE OF THE AO, TO EXAMINE THE ISSUE OF REIMBURSEME NT OF EXPENSES TO CALVIN MR. ANTHONY L OBO ITA 6946/M/2011 3 CORPORATION TO THE EXTENT OF RS. 4,65,285/- AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD. AS A CONSEQUENCE, CIT(A )S ORDER ON THIS ISSUE IS SET ASIDE. 10. THE GROUND IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO. 2 IS DISALLOWANCE OF RS. 35,199/- ON ACCOUNT OF PROFESSIONAL FEE PAID AND INTEREST ON CAR LOAN, I.E . RS. 5,000/- AND RS. 30,199/-. 12. THE AR POINTED OUT THAT RS. 5,000/- WAS PAID FO R PREPARATION OF RETURN OF INCOME AND RS. 30,1999/- IS INTEREST ON CAR LOAN . 13. FEE PAID FOR PREPARATION OF RETURN CANNOT BE AL LOWED AS AN EXPENSE, BUT INTEREST ON CAR LOAN, WHICH THE ASSESSEE IS PAY ING CANNOT BE IGNORED AND CANNOT BE HELD TO BE DISALLOWABLE. WE DO AGREE THAT CERTAIN ELEMENT OF PERSONAL USAGE COULD BE THERE, BUT DISALLOWANCE IN ENTIRETY WILL BE UNREASONABLE. TO MEET THE ENDS OF JUSTICE, WE SUSTA IN AN ADHOC AMOUNT OF RS. 5,000/- TOWARDS INTEREST ON CAR LOAN. 14. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A ) ON THE ISSUE OF INTEREST ON CAR LOAN AND DIRECT THE AO TO RESTRICT THE DISAL LOWANCE ON ADHOC BASIS AT RS. 5,000/- AND ALLOW THE EXPENSE OF RS. 25,199/-. 15. GROUND NO. 2 IS THEREFORE PARTLY ALLOWED. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY, 2013. SD/- SD/- ( . ) ( #'' '$ ) ! ! (B. RAMAKOTAIAH) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 10 TH JULY, 2013 MR. ANTHONY L OBO ITA 6946/M/2011 4 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-3, MUMBAI. 4) & & ' 11, MUMBAI / THE CIT11, MUMBAI. 5) ()* + , , & + , -. / THE D.R. A BENCH, MUMBAI. 6) */ 0 COPY TO GUARD FILE. &12 / BY ORDER [ 3 / 4 5 & + , -. DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS