ITO, WARD- 4 (1), Nagpur V. SHRI SWAPNIL ANIL AHIRKAR, Nagpur

ITA 70/NAG/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9655 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Capital asset; Business income; Assessment record
• Section: 40A(3); 142(1); 14A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K. BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 70/NAG./2015 ( ASSESSMENT YEAR : 200910 ) INCOME TAX OFFICER WARD4(1), NAGPUR APPELLANT V/S SHRI SWAPNIL ANIL AHIRKAR AHIRKAR NIWAS, GANJAKHET CHOWK GANDHIBAGH, NAGPUR .... RESPONDENT ASSESSEE BY : SHRI MANOJ MORYANI REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 22.06.2017 DATE OF ORDER 30.06 .2017 O R D E R PER AMARJIT SINGH, J.M. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E IMPUGNED ORDER DATED 28 TH OCTOBER 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, RELEVANT TO THE ASSESSMENT YEA R 200910. 2. THE GROUNDS RAISED BY THE ASSESSEE IS REPRODUCED BE LOW: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), NAGPUR ERRED IN DELETING THE AD DITION OF RS.42,49,485/ MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF COMMISSION, WITHOUT APPRECIATING THE FACT THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL EVIDENCE TO SUBSTANTIATE HIS CLAIM OF COMMISSION BEFORE THE A.O. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A)-I, NAGPUR ERRED IN DELETING THE ADDITION OF RS. 2 SHRI SWAPNIL ANIL AHIRKAR 24,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF DISALLOWANCE U/S 40A(3), ON ACCOUNT OF CASH PAYMENT S OF RS.12 LAKHS EACH IN RESPECT OF LAND IN KH.NO. 60/2 & 60/3 , P.H. NO.46, MOUZAISANANI, THE. HIGNA, DISTRICT NAGPUR. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A)-I, NAGPUR ERRED IN DELETING THE ADDITION OF RS. 9,60,000/- BEING DISALLOWANCES OF RENT EXPENSES. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 29 TH SEPTEMBER 2009, DECLARING TOTAL INCOME TO THE TUNE OF ` 7,94,850. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) ON 5 TH SEPTEMBER 2010. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PU RCHASING AND SELLING OF LAND AFTER DEVELOPING. THE BUSINESS IS R UN BY THE PROPRIETOR CONCERNED IN THE NAME AND STYLE OF DREAM DEVELOPERS, NAGPUR ESTABLISHED IN THE YEAR JULY 2007. THE ASSESSEE ALS O DERIVED HIS INCOME FROM INTEREST DURING THE YEAR. THE BOOKS OF ACCOUNT WERE DULY AUDITED AND AUDIT REPORT IN FORM 3CB AND 3CD WAS FIL ED THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICES UNDER SECTION 143(2) / 142(1) WAS ISSUED AND SERVED UPON THE ASSESSEE. AFTER VERIFICATION OF THE FACTS OF THE CASE, THE AS SESSING OFFICER DISALLOWED THE COMMISSION TO THE TUNE OF ` 42,49,485 AND ALSO DISALLOWED THE AMOUNT OF ` 24 LAKH UNDER SECTION 40A(3) AND ALSO DISALLOWED RENT EXPENDITURE TO THE TUNE OF ` 9,60,000 AND ASSESSED THE TOTAL INCOME TO THE TUNE OF ` 85,54,335. FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED COMMISS IONER (APPEALS) 3 SHRI SWAPNIL ANIL AHIRKAR WHO ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, T HE REVENUE IS IN APPEAL BEFORE US. ISSUE NO.1 3. UNDER THIS ISSUE, THE REVENUE HAS CHALLENGED THE DEL ETION OF ADDITION OF ` 42,49,485 ON ACCOUNT OF COMMISSION. NOW IT IS TO B E SEEN WHAT ARE THE REASONS TAKEN BY THE LEARNED COMMISSIO NER (APPEALS) FOR THE DELETION OF THE SAID ADDITION. THEREFORE, IT IS NECESSARY TO ADVERT THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) ON RECORD. 7.0 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER, THE SUBMISSIONS OF THE AR OF THE APPELLANT AND THE AFOR ESAID JUDICIAL DECISIONS RELIED UPON BY THE AO AND THE APPELLANT. 7.1 ON CAREFUL EXAMINATION OF THE FACTS, IT IS SEEN THAT THE APPELLANT HAS BOOKED THE COMMISSION ON SALE OF PLOT S ON ACCRUAL BASIS. HOWEVER, SALE IS BOOKED WHEN SALE DEED IS EX ECUTED AND POSSESSION OF THE PLOT SOLD IS GIVEN TO THE BUYER O N EXECUTION OF THE AGREEMENT TO SALE. IT IS BUT FOR THIS METHOD OF ACC OUNTING FOLLOWED BY THE APPELLANT THAT THE APPELLANT HAS CLAIMED THE COMMISSION ON ACCRUAL BASIS ON FINALISATION OF DEALS AND RECEIPT OF ADVANCE AGAINST SALE OF PROPERTY BUT THE SALE HAS BEEN BOOKED IN TH E SUBSEQUENT YEAR. THE APPELLANT IN THIS REGARD HAS SUBMITTED TH E NAMES AND ADDRESSES OF THE PERSONS TO WHOM COMMISSION HAS BEE N PAID ALONG WITH THEIR CONFIRMATION LETTERS FOR HAVING RECEIVED THE COMMISSION BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. TH E APPELLANT ALSO FURNISHED THE PLOT-WISE DETAILS OF THE COMMISS ION PAID. THE PAYMENT FOR COMMISSION HAS BEEN MADE BY ACCOUNT PAY EE CHEQUES TO ALL THE PARTIES AND SUCH PARTIES HAVE DECLARED S UCH COMMISSION RECEIPTS IN THEIR RESPECTIVE RETURNS OF INCOME FILE D, WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT. THIS FACT WAS ALSO SUBM ITTED BEFORE THE AO. HOWEVER, THE AO HAS RESTRICTED, THE ALLOWAN CE OF COMMISSION @15% OF THE SALES ON AD-HOC BASIS WITHOU T ASSIGNING ANY LOGICAL REASONING FOR APPLYING THE PERCENTAGE O F 15% OF COMMISSION ON TOTAL SALES. ON PERUSAL OF THE RECORD S AND THE ASSESSMENT ORDER, IT BECOMES OBVIOUS THAT THE AO HA S NOT CHALLENGED THE ISSUE OF PAYMENT OF COMMISSION AS SU CH, HOWEVER, BY RESTRICTING SUCH PAYMENT OF COMMISSION @ 15% OF SALES, THE 4 SHRI SWAPNIL ANIL AHIRKAR A.O. HAS INFERRED THE EXCESSIVE PAYMENT ON ACCOUNT OF COMMISSION BY THE APPELLANT. AS DISCUSSED ABOVE, THE APPELLAN T HAS FURNISHED BEFORE THE AO, THE NAMES AND ADDRESSES OF THE PARTI ES TO WHOM THE COMMISSION HAS BEEN PAID ALONG WITH THE CONFIRM ATION LETTERS. BUT, THE LD.AO HAS OMITTED TO TAKE COGNIZANCE OF TH IS FACT AND PROCEEDED TO RESTRICT THE COMMISSION @ 15% OF TOTAL SALES WITHOUT ANY COGENT BASIS. IT IS AN UNDISPUTED FACT AS EMANA TED FROM THE ORDER OF THE AO AND THE ASSESSMENT RECORDS THAT THE AO HAS NOT POINTED OUT ANY INFIRMITIES IN THE CONFIRMATION LET TERS FILED BY THE APPELLANT IN SUPPORT OF HIS CLAIM FOR PAYMENT. 7.2 COMING TO THE METHOD OF ACCOUNTING OF COMMI SSION AND SALES, IT IS FOUND THAT THE APPELLANT HAS RIGHTLY B OOKED THE COMMISSION ON THE BASIS OF FINALISATION OF THE DEAL OF SALE OF PLOT AND RECEIPT OF ADVANCE WHICH IS IN CONFORMITY TO TH E MERCANTILE METHOD OF ACCOUNTING. SO FAR AS SALES ARE CONCERNE D, THE APPELLANT HAS ACCOUNTED FOR THE SALES ON EXECUTION OF AGREEME NTS TO SALE AND DELIVERY OF POSSESSION. IN THIS REGARD IT IS S IGNIFICANT TO NOTE THAT THE LD.AO HAS ACCEPTED THE PROFITS ON THE SALE S DECLARED BY THE APPELLANT IN THE RESPECTIVE YEARS, INCLUDING TH E YEAR UNDER APPEAL WITHOUT QUESTIONING THE TAXABILITY OF THE PR OFIT EMBEDDED IN SUCH SALES. THE AO, IN FACT AS SUCH HAS ALSO NOT DI SPUTED THE CLAIM FOR COMMISSION DEBITED BY THE APPELLANT IN THE YEAR IN WHICH IT HAS ACCRUED TO THE APPELLANT. THUS, THE ASSESSING OFFIC ERS ACTION THAT HAVING ADMITTED THE CLAIM FOR COMMISSION, WITHOUT C HALLENGING THE VERACITY OF ITS GENUINENESS AND BY NOT DISTURBING T HE TAXABILITY OF PROFITS ATTRIBUTABLE TO SUCH SALES IN THE RESPECTIV E YEARS, WITHOUT POINTING OUT ANY INFIRMITY, AMOUNTS THE ACCEPTANCE OF MERCANTILE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT . IT IS NOT A CASE WHERE TAXABILITY EMBEDDED IN THE TRANSACTION OF SAL E HAS BEEN OMITTED OR THAT THE COMMISSION ACTUALLY HAS NOT BEE N PAID. THE AO HAS BROUGHT TO TAX, THE INCOME EMBEDDED IN THE TRAN SACTION OF SALE OF PLOTS BY THE APPELLANT WITHOUT DISTURBING THE ME THOD OF ACCOUNTING FOLLOWED BY THE APPELLANT. THE A.O. HAS ALSO NOT CHALLENGED THE GENUINENESS OF THE ACTUAL PAYMENT OF THE COMMISSION. THE BOOKS OF ACCOUNT OF THE APPELLANT A RE DULY AUDITED AND SUCH AUDIT REPORT WAS FURNISHED BY THE ASSESSEE BEFORE THE A.O. ALONG WITH THE BOOKS OF ACCOUNT AND BILLS AND VOUCHERS WHICH WERE EXAMINED BY THE AO AS IS OBVIOUS FROM THE FIND ING RECORDED IN PARA 2 OF THE ASSESSMENT ORDER WITHOUT POINTING OUT ANY DEFECT AS SUCH IN THE BOOKS OF ACCOUNT AND BILLS & VOUCHER S. IF, THERE WAS ANY DEVIATION IN THE METHOD OF ACCOUNTING THE COMMI SSION AND SALES, ACCORDING TO THE AO, IN THAT CASE, IT WAS IN CUMBENT FOR AO TO INVOKE PROVISIONS OF SECTION 145 OF THE ACT INSTEAD OF ACCEPTING AND TAXING THE PROFITS ARISING OUT OF ALL SUCH TRANSACT IONS OF SALES IN RESPECT OF WHICH COMMISSION WAS CLAIMED BY THE APPE LLANT. THEREFORE, AFTER HAVING CONSIDERED ALL THE CUMULATI VE FACTORS, I DO NOT FIND ANY JUSTIFICATION FOR RESTRICTING THE COMM ISSION @ 15% WITHOUT ANY BASIS. THEREFORE, THE ADDITION MADE BY THE AO OF 5 SHRI SWAPNIL ANIL AHIRKAR RS.42,49,485/- ON ACCOUNT OF DISALLOWANCE OF COMMIS SION IS DIRECTED TO BE DELETED. HENCE, THIS GROUND IS ALLOW ED. 4. ON APPRAISAL OF THE ABOVE FINDINGS, IT IS QUITE CLE AR THAT THE ASSESSING OFFICER DID NOT CONSIDER THE EVIDENCE ADD UCED BY THE ASSESSEE AT THE TIME OF ASSESSMENT, HOWEVER, THE LE ARNED COMMISSIONER (APPEALS) CONSIDERED THE EVIDENCE ADDU CED BY THE ASSESSEE AND ALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER DISALLOWED THE COMMISSION @ 15% WITHOUT REJECTING T HE CLAIM OF THE ASSESSEE RAISED IN THE BOOKS OF ACCOUNT. THE ASSESS ING OFFICER DID NOT INVOKE THE PROVISIONS OF SECTION 145 OF THE ACT. TH E ASSESSEE BOOKED THE COMMISSION ON SALE OF PLOT ON ACCRUAL BASIS ON THE FINALIZATION OF THE DEAL AND RECEIPT OF ADVANCE AGAINST THE SALE OF PROPERTY BUT THE SALE HAS BEEN BOOKED IN THE SUBSEQUENT YEARS. THE A PPELLANT SUBMITTED THE NAME AND ADDRESS OF THE PERSON TO WHO M THE COMMISSION WAS PAID. CONFIRMATION LETTERS WERE ALSO PRODUCED BEFORE THE ASSESSING OFFICER. THE ASSESSEE FURNISHED THE P LOTWISE DETAILS OF COMMISSION PAID. THE PAYMENT WAS MADE BY ACCOUNT PA YEE CHEQUES TO ALL THE PARTIES AND THE PARTIES DECLARED SUCH RE CEIPT IN THEIR RESPECTIVE RETURN OF INCOME FILED BEFORE THE DEPART MENT WHICH WAS ALSO ACCEPTED BY THE DEPARTMENT. THE BOOKS OF ACCOU NT HAVE NOT BEEN REJECTED. WE FIND NO REASON TO RESTRICT THE COMMISS ION @ 15%. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER (APPEALS) HAS RIGHTLY ALLOWED THE COMM ISSION AFTER 6 SHRI SWAPNIL ANIL AHIRKAR GOING THROUGH THE RECORD PRODUCED BY THE ASSESSEE A ND BY GOING THROUGH THE DETAILS OF EACH AND EVERY PERSON TO WHO M THE COMMISSION WAS PAID. IN VIEW OF THE SAID CIRCUMSTANCE, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER (APPEALS) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY AND NO INTERFERENCE IS REQUIRED AT THIS A PPELLATE STAGE. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CO MMISSIONER (APPEALS) AND DISMISSED THE GROUND RAISED BY THE RE VENUE. ISSUE NO.2 5. UNDER THIS ISSUE, THE REVENUE HAS CHALLENGED THE DEL ETION OF ADDITION OF ` 24 LAKH MADE BY THE ASSESSING OFFICER ON ACCOUNT O F DISALLOWANCE UNDER SECTION 14A(3) ON ACCOUNT OF CAS H PAYMENT OF ` 12 LAKH EACH IN RESPECT OF LAND IN KHASRA NO.7/2, 7/3, PH. NO.46, MOUZA, ISANAMI, TEH. HINGNA, DIST. NAGPUR. ON VERIFICATION OF THE RETURN OF INCOME AND DOCUMENTS, THE ASSESSING OFFICER OBSERVE D THAT THE ASSESSEE PAID THE AMOUNT OF ` 24 LAKH OTHERWISE THAN THROUGH AN ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT. THEREFORE, TH E ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 14A AND ACCORDIN GLY, AN AMOUNT OF ` 24 LAKH WAS ADDED TO THE INCOME OF THE ASSESSEE. BE FORE GOING FURTHER, IT IS NECESSARY TO ADVERT THE FINDING OF T HE LEARNED COMMISSIONER (APPEALS) ON RECORD. PARA9 OF THE LEA RNED COMMISSIONER (APPEALS)S ORDER IS REPRODUCED BELOW: 7 SHRI SWAPNIL ANIL AHIRKAR 9.0 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE AR OF THE APPELLANT AND THE AFORESAID JUDICIAL DECISIONS RELIED UPON BY THE AO AND THE APPELLANT. 9.1 THE APPELLANT IS A DEVELOPER. THE APPELLANT PUR CHASES THE AGRICULTURAL LAND, GETS IT CONVERTED INTO N.A. AND SELL THE SAME AFTER DOING PLOTTING. THE CONTENTION OF THE AR OF THE APP ELLANT IS THAT THE LAND PURCHASED WAS ORIGINALLY AGRICULTURAL LAND AND THE VENDOR (SELLER) BEING THE AGRICULTURIST FROM THE SMALL VIL LAGE 'DEMANDED CERTAIN PORTION OF AMOUNT IN CASH. IT IS IN VIEW OF THIS FACT THAT OUT OF THE TOTAL CONSIDERATION OF RS.120 LAKHS, A SUM O F RS. 24 LAKHS WAS PAID BY THE APPELLANT TO THE SAID VENDORS IN CA SH IN ORDER TO HONOUR THE TERMS AND CONDITIONS OF SALE, TO AVERT A NY BREACH OF CONTRACT AND TO PREVENT ANY FOUL PLAY FROM THE VEND OR. THE APPELLANT FURTHER ARGUED THAT THE DISALLOWANCE U/S 40A(3) IS NOT WARRANTED KEEPING IN VIEW OF THE FACT THAT THE CASH PAYMENT MADE WAS DULY REFLECTED IN THE SALE DEED, SELLER OF THE LAND WERE AGRICULTURISTS FROM THE SMALL VILLAGE, THE APPELLAN T PURCHASED THE LAND AS CAPITAL ASSETS FOR THE PURPOSE OF CONVERTIN G THE SAME INTO STOCK-IN-TRADE. THE APPELLANT FINALLY ARGUED THAT T HE CASH PAID ON PURCHASE OF LAND WAS NOT CLAIMED AS AN EXPENDITURE BY DEBITING THE SAME TO THE PROFIT & LOSS ACCOUNT AND THE ACCOUNT A ND THE COST OF THE LAND WAS DEBITED TO THE WORK-IN-PROGRESS, THERE FORE, CONTENDED THAT THE PROVISIONS OF SECTION 40A(3) ARE NOT APPLI CABLE TO THE CASE OF THE APPELLANT. 9.2 THE APPELLANT IN THIS REGARD HAS RELIED ON THE DECISION OF THE HON'BLE 1TAT DELHI BENCH IN ITA NO.3303/2013 IN OF HONBLE ITAT. THE FACTS OF THE CASE OF THE PRESENT APPELLANT ARE SQUARELY COVERED BY THE DECISION OF THE HON'BLE ITAT, DELHI BENCH RE FERRED ABOVE. THE HON'BLE ITAT IN THAT CASE HAS HELD AS UNDER : THE LD.CIT(A) HAS NOT DISPUTED THE APPLICABILITY O F SECTION 40A(3) IN RESPECT OF CASH PAYMENT MADE BY THE ASSESSEE. HO WEVER, ANY EXPENDITURE CAN BE DISALLOWED ONLY WHEN THE DEDUCTI ON IN RESPECT OF EXPENDITURE IS CLAIMED BY THE ASSESSEE. IN THIS CASE ADMITTEDLY, THE ASAESSEE HAS NOT CLAIMED THE EXPENDITURE ON PUR CHASE OF LAND BY DEBITING THE SAME TO THE PROFIT & LOSS ACCOUNT B UT HE EXPENDITURE FOR PURCHASE OF LAND HAS BEEN DEBITED T O WORKIN PROGRESS. 9.3 THE APPELLANT HAS REFLECTED THE AMOUNT AS WORK- IN-PROGRESS IN THE BALANCE SHEET AS ON 31.03.2009. SINCE THE RATIO -DECIDENDI OF THE ABOVE JUDGEMENT IS MUTATIS-MUTANDI APPLICABLE T O THE FACTS OF THE CASE OF THE PRESENT APPELLANT, HENCE RESPECTFUL LY FOLLOWING THE SAME, THE DISALLOWANCE MADE BY THE AO IS DIRECTED T O BE DELETED. HENCE, THIS GROUND IS ALLOWED. 8 SHRI SWAPNIL ANIL AHIRKAR 6. ON APPRAISAL OF THE ORDER PASSED BY THE LEARNED COM MISSIONER (APPEALS) IN QUESTION, WE NOTICED THAT THE APPELLAN T IS A DEVELOPER AND PURCHASED THE LAND TO GET IT CONVERTED INTO THE NON AGRICULTURAL LAND. THE SAME WAS TO BE SOLD AFTER PLOTTING. IT IS NOT I N DISPUTE THAT THE AMOUNT OF ` 24 LAKH WAS PAID IN CASH TO THE VENDOR. THE SAID A MOUNT WAS NOT CLAIMED AS EXPENDITURE TO THE PROFIT & LOSS ACCOUNT THE COST OF LAND WAS DEBITED TO THE WORKINPROGRESS. IN VIEW O F THIS FACTUAL POSITION, THE LEARNED COMMISSIONER (APPEALS) HAS DE LETED THE ADDITION ON THE BASIS OF THE FINDING OF THE COORDINATE BENCH OF THE TRIBUNAL, DELHI BENCH, IN ITA NO.330/DEL./2013 IN THE CASE OF M/S. AT PROPERTIES PVT. LTD. THE FACTUAL POSITION IS ALSO THE SAME. SI NCE THE MATTER OF CONTROVERSY HAS BEEN DECIDED BY THE LEARNED COMMISS IONER (APPEALS) ON THE BASIS OF FINDING OF THE TRIBUNAL, DELHI BENC H, CITED SUPRA, THEREFORE, WE ARE OF THE VIEW THAT THE LEARNED COMM ISSIONER (APPEALS) HAS DECIDED THE MATTER JUDICIOUSLY AND CORRECTLY SP ECIFICALLY IN THE CIRCUMSTANCES THAT NO DISTINGUISHABLE MATERIAL HAS BEEN PLACED ON RECORD BEFORE US. THEREFORE, THE FINDING OF THE LEA RNED COMMISSIONER (APPEALS) IS NOT LIABLE TO BE INTERFERED WITH AND W E AFFIRM THE SAME. THE GROUND RAISED BY THE REVENUE IS DISMISSED. ISSUE NO.3 7. UNDER THIS ISSUE, THE REVENUE HAS CHALLENGED THE DEL ETION OF DISALLOWANCE BY THE ASSESSING OFFICER OF A SUM OF ` 9.60 LAKH ON 9 SHRI SWAPNIL ANIL AHIRKAR ACCOUNT OF RENT EXPENDITURE. THE ASSESSEE CLAIMED T HE RENT EXPENDITURE TO THE TUNE OF ` 9.60 LAKH IN HIS PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER ASKED THE DETAILS IN CONNECTION W ITH THE CLAIM. THE ASSESSEE SUBMITTED THE COPY OF MUNICIPAL TAX RECEIP T IN RESPECT OF ONE PROPERTY BELONGING TO SHRI ANIL G. AHIRKAR AND SMT. SUREKHA A. AHIRKAR. WITH REGARD TO THE OTHER PROPERTY, THE ASS ESSEE EXPLAINED THAT THE BUSINESS OPERATIONS WERE BEING CONDUCTED FROM T HESE PREMISES AND WERE REFLECTED AS RENT IN THE RETURN OF INCOME FILED BY THE RECIPIENT. THE ASSESSING OFFICER WAS OF THE VIEW TH AT THE RENT TO THE TUNE OF ` 1.20 LAKH WAS PAID EACH TO SHRI ANIL G. AHIRKAR AN D SMT. SUREKAH A. AHIRKAR, IN CONNECTION WITH ONE PREMISES I.E., PLOT NO.6, 7 AND 8, VIJAY NAGAR, BEHRAMJI TOWN, NAGPUR. THEREFORE , DISALLOWED THE CLAIM OF ONE PERSON I.E., TO THE TUNE OF ` 9.60 LAKH AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. NOW, IT IS TO BE SEEN IN WHICH CIRCUMSTANCES THE LEARNED COMMISSIONER (APPEALS) HA S ALLOWED THE SAME. THE FINDING OF THE LEARNED COMMISSIONER (APPE ALS) IS REPRODUCED HEREIN BELOW: 11.0 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE AR OF THE APPELLANT AND THE MATE RIAL PLACED ON RECORD. ON CAREFUL EXAMINATION OF THE FACTS, IT IS SEEN THAT THE APPELLANT HAS PAID THE RENT FOR PREMISES USED FOR T HE PURPOSE OF BUSINESS THROUGH ACCOUNT PAYEE CHEQUES ON WHICH TDS HAS ALSO BEEN MADE. THE LD. AO HAS NOT POINTED OUT ANY INFIRMITY AS REGARDS TO THE USE OF THE PREMISES FOR THE PURPOSE OF BUSINESS BY THE APPELLANT AND MERELY BA SED ON THE PHYSICAL INSPECTION AND HOARDINGS NOT BEING DISPLAYED ON SUCH PREMISES, MUC H AFTER THE END OF THE RELEVANT FINANCIAL YEAR, INFERRED THAT T HE PREMISES WERE 10 SHRI SWAPNIL ANIL AHIRKAR NOT USED BY THE APPELLANT. THE INFERENCE DRAWN BY THE AO HAS NO LEGS TO STAND. IT IS QUITE MANIFEST FROM THE MATERIAL FACTS THAT THE APPELLANT HAS PAID THE AFORESAID AMOUNT OF RENT BY CHEQUE AND SAME AMOUNT WERE DULY REFLECTED IN THE RETURN OF IN COME OF THE LANDLORD GANPATRAO AHIRKAR, ANIL AHIRKAR AND SUREKH A AHIRKAR, AND TAX ON THE INCOME FROM RENT WERE DULY PAID BY ABOVE SAID PERSONS. THESE ASPECTS HAVE NOT BEEN DISPUTED BY THE A.O. TH EREFORE, THE ADDITION MADE BY ETH A.O. OF RS.9,60,000 ON ACCOUNT OF DISALLOWANCE OF RENT IS DIRECTED TO BE DELETED. HEN CE, THIS GROUND IS ALLOWED. 8. ON APPRAISAL OF THE ABOVE MENTIONED FINDINGS, WE NO TICED THAT THE APPELLANT WAS PAYING THE RENT OF THE PREMISES T HROUGH ACCOUNT PAYEE CHEQUE ON WHICH THE TDS HAS ALSO BEEN DEDUCTE D. IT IS NOT DISPUTED THAT THE APPELLANT WAS NOT USING THE SAID PREMISES THE LANDLORD HAS ALSO REFLECTED THE RENT IN THEIR RETUR N OF INCOME AND ACCORDINGLY THEY ALSO PAID THE TAX. THIS FACTUAL PO SITION WAS NOT IN DISPUTE. THEREFORE, IN THE CIRCUMSTANCES, BY GOING THROUGH THE FACTS OF THE CASE AND BY GOING THROUGH THE RECORD OF THE ASS ESSEE AND EVEN ON GOING THROUGH THE RECORD OF THE LANDLORD NAMELY SHR I GANPATRAO AHIRKAR, SHRI ANIL AHIRKAR AND SMT. SUREKHA AHIRKAR , LEARNED COMMISSIONER (APPEALS) HAS ARRIVED AT THE CONCLUSIO N THAT THERE IS NO AMBIGUITY OF ANY KIND IN THE TRANSACTION. THESE FAC TS ARE NOT DISTINGUISHABLE AT THIS STAGE ALSO. THE LEARNED COM MISSIONER (APPEALS) PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERED WITH AT THIS APPELLATE STAGE. ACCORDINGL Y, WE AFFIRM THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) ON T HIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 11 SHRI SWAPNIL ANIL AHIRKAR 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2017 SD/ - P.K. BANSAL VICE PRESIDENT SD/ - AMARJIT SINGH JUDICIAL MEMBER NAGPUR, DATED: 30.06.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR