R.M. INVESTMENT & TRADING P. LTD, KOLKATTA V. DCIT CEN CIR -1(2), MUMBAI

ITA 7033/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7736 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 11-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: CHETAN KARIA LD
• Keywords: Depreciation; Business expenditure
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , ' , % BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.7032/MUM/2017 ( &'& &'& &'& &'& / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.7033/MUM/2017 ( &('& &('& &('& &('& / ASSESSMENT YEAR: 2010-11) R.M. INVESTMENT & TRADING P VT. LTD. 9, ROWDON STREET, UDYANCHAL BUILDING FLAT NO. 20, 5 TH FLOOR KOKATTA-700 017 / VS. D CIT - CE NTRAL CIRCLE - 1 (2) ROOM NO.906, 9 TH FLOOR OLD CGO COMPLEX, MK ROAD MUMBAI-400 020. )#$ ./ ./PAN/GIR NO. AABCR-6026-P ( )+ /APPELLANT ) : ( ,-)+ / RESPONDENT ) ASSE SSEE BY : SHRI CHETAN KARIA- LD.AR REVENUE BY : SHRI D.G. PANSARI- LD. DR ./ $ / DATE OF HEARING : 22/04/2019 0' ./ $ / DATE OF PRONOUNCEMENT : 25/04/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [AY] 2009-10 AND 2010-11 CONTEST SEPARATE ORDERS OF FIRST APPELL ATE AUTHORITY ON COMMON 2 GROUNDS OF APPEAL. SINCE COMMON ISSUES ARE INVOLVED , THE APPEALS ARE BEING DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. ITA NO. 7032/MUM/2017, AY: 2009-10 2.1 THE APPEAL CONTESTS THE ORDER OF LD. COMMISSION ER OF INCOME-TAX (APPEALS)-47, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-4 7/AP.12888/16-17 DATED 25/09/2107 ON FOLLOWING GROUNDS OF APPEAL: - 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S 254 OF INCOME TAX AC T, 1961 DETERMINING TOTAL INCOME AT RS. 18,41,901/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN NOT DISCUSSING THE GROUND NO. 1 CONTAINING GROUNDS FROM ITEM NO. 1.1 T O 1.4. 3. THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) ERRED IN CONFIRMING DISALLOWANCE OF THE FOLLOWING BUSINESS EXPENDITURE. SR. NO . NATURE OF BUSINESS EXPENDITURE AMOUNT (RS.) 1. RENT OF OFFICE PREMISES 2,400 2. SALARIES TO STAFF 93,200 3. MISCELLANEOUS EXPENDITURE 10,973 4. AUDIT FEES 2,840 5. DEPRECIATION (AS PER IT ACT) 74,080 TOTAL 1,83,493 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ENHANCING THE DISALLOWANCE OF RS.74,080/- 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS.15,99,886/- MADE ON ACCOUNT OF CESSION OF OUTSTANDING LIABILITIES 6. APPELLANT PRAYS THAT, A. MODIFY THE ASSESSMENT ORDER PASSED U/S. 143(3) R .W.S 254. B. DELETE THE ADDITION MADE OF RS.1,83,493/- ON ACC OUNT OF DISALLOWANCE OF EXPENDITURE INCURRED. C. DELETE THE ADDITION MADE OF RS.15,99,886/- ON ACCOU NT OF CESSION OF OUTSTANDING LIABILITIES. D. DEMAND OF DISPUTED DEMAND MAY BE STAYED TILL THE HEARING AND DISPOSAL OF APPEAL ON MERIT. E. ANY OTHER RELIEF YOUR HONOUR MAY DEEM FIT. 3 2.2 THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED U/S 1 43(3) ON 14/12/2011 AT RS.18.41 LACS AFTER CERTAIN ADDITIONS WHICH WAS CONTESTED UP TO THE LEVEL OF THIS TRIBUNAL. HOWEVER, THE MATTER OF ADDITION WAS REMITTED BACK BY TRIBUNAL TO THE FILE OF LD. AO FOR FRESH AD JUDICATION VIDE ITA NOS. 731-32/MUM/2013 ORDER DATED 09/09/2015. HOWEVER, IT IS NOTED THAT THE ASSESSMENT HAS AGAIN BEEN REFRAMED AT RS.18.41 LACS AFTER MAKING SIMILAR ADDITIONS. THE FOLLOWING ADDITIONS AS CONFIRMED BY LD. FIRST APPELLATE AUTHORITY ARE UNDER CHALLENGE BEFORE US: - SR.NO. NATURE OF ADDITIONS AMOUNT (RS.) 1. DISALLOWANCE OF EXPENDITURE 1,22,015/- 2. ENHANCEMENT BY LD. CIT(A) BY WAY OF DEPRECIATION DISALLOWANCE 74,080/- 3. CESSATION OF LIABILITY 15,99,886/- WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLACED IN TH E PAPER-BOOK. OUR GROUND WISE ADJUDICATION FOLLOWS IN SUCCEEDING PARA GRAPHS. 3.1 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE DEBITED EXPENDITURE OF RS.1,22,015/- AS RENT, SALARIES TO STAFF & MISC. EXPENSES. HOWEVER, IN SUPPORT OF THE SAME, THE ASSESSEE ONLY PRODUCED SELF-MADE VOUCHERS AND COULD NOT PROVIDE THE SOURCE OF PAYMENT THEREOF SINCE ALL EXPENSES WERE INCURRED IN CASH. RESULTANT LY, THESE EXPENDITURES WERE DISALLOWED. THE LD. FIRST APPELLATE AUTHORITY, WHILE CONFIRMING THE SAME, ENHANCED THE SAME BY DISALLOWING DEPRECIATION OF RS.74,080/- IN VIEW OF THE FACT THAT NO BUSINESS ACTIVITY WAS BEIN G CARRIED OUT BY THE ASSESSEE DURING IMPUGNED AY. 4 3.2 UPON PERUSAL OF PAGE NO.24 OF THE PAPER-BOOK , WE FIND THAT THESE EXPENDITURES ARE IN THE NATURE OF AUDIT FEES, BANK CHARGES, SALARIES TO TWO EMPLOYEES AND RENT PAID BY THE ASSESSEE. THESE EXPE NSES, IN OUR OPINION, WERE NECESSARY ROUTINE EXPENDITURE SO AS TO MAINTAI N THE CORPORATE PERSONALITY OF THE ASSESSEE. SO FAR AS THE SOURCE O F THE SAME IS CONCERNED, IT IS FOUND THAT BOOKS OF ACCOUNTS WERE DULY AUDITE D AND THE ASSESSEE WAS HAVING CLOSING CASH BALANCE OF RS.22,894/-. THEREFO RE, THERE COULD BE NO JUSTIFIABLE REASON TO DISALLOW THE SAME. SIMILARLY, THE DISALLOWANCE OF DEPRECIATION WAS NOT JUSTIFIED SINCE THE BUSINESS H AD NOT CLOSED DOWN AND THE BLOCK OF ASSET CONTINUE TO EXIST IN THE BOOKS. THEREFORE, BY DELETING BOTH THESE ADDITIONS, WE ALLOW GROUND NOS. 3 & 4. 4.1 THE LAST ADDITION OF RS.15,99,886/- REPRESENT A DDITION OF SUNDRY CREDITORS, BEING REFLECTED IN THE ASSESSEES FINANCIAL STATEME NTS. THE SAME HAS BEEN DISALLOWED FOR WANT OF PROPER EXPLANATION. THE STAND OF LD.AO, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US. 4.2 UPON PERUSAL, WE FIND THAT THE BREAK-UP OF THES E LIABILITIES IS AS FOLLOWS: - SR.NO. HEAD AMOUNT (RS.) 1. NEW LIABILITIES INCURRED DURING THE YEAR 28,280/- 2. KASHINATH TAPURIAH 13,21,606/- 3. RAGHAV CORPORATION 2,50,000/- TOTAL 15,99,886/- UPON PERUSAL OF THE DETAILS, WE FIND THAT NEW LIABI LITIES INCURRED DURING THE YEAR REPRESENT AUDIT FEES PAYABLE TO AUDITORS, OUTS TANDING STAFF SALARY & 5 PROFESSIONAL TAX. THESE ARE CURRENT LIABILITIES AND NOTHING ON RECORD SUGGEST THAT THESE LIABILITIES HAVE CEASED TO EXIST. THE ST AND OF LOWER AUTHORITIES, THEREFORE, COULD NOT BE SUSTAINED TO THAT EXTENT. THE AMOUNT OF RS.13,21,606/- REPRESENT AMOUNT DUE T OWARDS ONE OF THE DIRECTORS OF ASSESSEE COMPANY. THE ASSESSEE HAD ALR EADY FILED CONFIRMATION OF THE CONCERNED DIRECTOR. IT IS NOTED THAT THE ASSESSEE HAS RECEIVED FURTHER SUM OF RS.1.20 LACS FROM THE SAID DIRECTOR DURING THE YEAR WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. HOWE VER, THE SAME HAS ALREADY BEEN DELETED BY LD. FIRST APPELLATE AUTHORI TY UPON FINDING THAT THE ASSESSEE FULFILLED THE ONUS OF PROVIDING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SAID DIRECTOR. NOTHING ON R ECORD SUGGEST THAT THE LIABILITY OF THE ASSESSEE COMPANY HAS CEASED TO EXI ST AND THEREFORE, NO ADDITION WOULD BE WARRANTED ON THIS ACCOUNT. THE AMOUNT OF RS.2.50 LACS SHOWN TO BE DUE AGAINST M/S RAGHAV CORPORATION HAS BEEN CONFIRMED BY THE SAID PARTY AS EVIDENT FRO M PAGE NO 88 OF THE PAPER-BOOK. THEREFORE, THE ADDITION TO THAT EXTENT COULD ALSO N OT BE SUSTAINED. 4.3 IN NUTSHELL, GROUND NO. 5 AS WELL AS ASSESSEES APPEAL STANDS ALLOWED. ITA NO. 7033/MUM/2017, AY: 2010-11 5. THE ASSESSEE HAS SIMILARLY BEEN ASSESSED FOR AY 2010-11 AND SADDLED WITH EXPENSE DISALLOWANCE OF RS.1,81,315/- AND ADDITION ON ACCOUNT OF CESSATION OF LIABILITY FOR RS.28,810/-. IDENTICAL GROUNDS HAVE BEEN RAISED UNDER THE APPEAL. MATERIAL FACTS BEING PARI-MATERIA THE SAME, OUR OBSERVATION, CONCLUSION AS WELL AS ADJUDICATION AS FOR AY 2009-10 SHALL 6 MUTATIS-MUTANDIS APPLY TO THIS YEAR ALSO. RESULTANTLY, BOTH THE ADDI TIONS STAND DELETED AND THE APPEAL STANDS ALLOWED. CONCLUSION 6. BOTH THE APPEALS STAND ALLOWED IN TERMS OF OUR A BOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2019. SD/- SD/- (SANDEEP GOSAIN) (MANOJ KUMAR AGGARWAL) ( (( ( / JUDICIAL MEMBER ( (( ( / ACCOUNTANT MEMBER ( MUMBAI; DATED : 25/04/2019 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. '#$ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.