POWERMATIC PACKAGING PVT. LTD., CHENNAI V. ITO, CORPORATE WARD - 5 (2), CHENNAI

ITA 732/CHNY/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8928 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 19-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T. SEETHARAMAN LD
• Keywords: Depreciation; Business expenditure
• Section: 143(3)

Judgement Text

आयकर अपीलीय अिधकरण ‘बी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI माननीय +ी महावीर िसंह, उपा12 एवं माननीय +ी मनोज कु मार अ7वाल ,लेखा सद: के सम2। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENT AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.732/Chny/2020 (िनधाCरण वषC / Assessment Year: 2014-15) Powermatic Packaging Pvt. Ltd. C/o Sri T.N. Seetharaman (Advocate) #384 (Old No.196), Lloyds Road, Chennai – 600 086. बनाम/ V s. ITO, Corporate Ward-5(2), Chennai. थायी लेखा सं./जीआइ आर सं./P AN /GI R No . AAC C P -4 7 3 5 - A (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओरसे/ Appellant by : Shri T. Seetharaman (Advocate)-Ld. AR थ की ओरसे/Respondent by : Shri V. Sreedhar - (Addl. CIT) –Ld. Sr. DR सुनवाई की तारीख/Date of Hearing : 09-06-2022 घोषणा की तारीख /Date of Pronouncement : 09-06-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals)-3, Chennai [CIT(A)] dated 04-03-2020 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 16-12-2019. The only ground urged in the appeal is disallowance of business expenditure. 2. The Ld. AR assailed the conclusion of Ld. AO that only 1% of the expenses would be allowable as business expenditure. The ld. ITA No.732/Chny/2020 - 2 - Sr. DR controverted the same and submitted that the assessee was entitled for statutory deduction only. Having heard rival submissions, our adjudication to the subject matter of appeal would be as under. 3. The Registry has noted delay of 103 days in the appeal. However, considering the fact that impugned order was passed on 04.03.2020 which was followed by lockdown situation arising out of Covid-19 pandemic, we condone the delay and admit the appeal for adjudication on merits. 4. The assessee received rental income and allied charges which was offered and accepted under the head Income from House Property. Under this head, the assessee is allowed statutory deduction of 30% for deemed expenditure irrespective of actual expenditure incurred by the assessee towards properties so rented out. The other income was merely 1% of total receipts of the assessee. The point of dispute arose due to the fact that the assessee claimed business expenditure of Rs.36.21 Lacs which include depreciation of Rs.4.31 Lacs. In the opinion of Ld. AO, the same could not be allowed to the assessee. The assessee defended its stand, inter-alia, by submitting that renting out of property was business activity. To maintain the company, overhead expenditure is to incurred. However, Ld. AO held that the assessee would be entitled only for 1% of expenditure thus claimed. The stand of Ld.AO, upon confirmation by Ld. CIT(A), is in further appeal before us. Our findings and Adjudication 5. This is undisputed fact that majority of the income is assessed under the head Income from House Property wherein the assessee ITA No.732/Chny/2020 - 3 - is entitled for statutory deduction of 30% and other specified deductions irrespective of actual expenditure incurred towards the property. At the same time, to main corporate personality, the assessee is required to incur administrative costs, salaries and professional charges etc. Further, depreciation allowance is statutory deduction which is allowable to the assessee. Considering the peculiar facts of the case, wed direct Ld. AO to allow 50% of the expenditure as claimed by the assessee as business expenditure instead of 1% as allowed from interest income. The interest income shall continue to be assessed under the head Income from other sources. The business expenditure, to the tune of 50% shall be disallowed and added back to the assessee’s income. 6. The appeal stands partly allowed in terms of our above order. Order pronounced on 09 th June, 2022. Sd/- (MAHAVIR SINGH) उपा12 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद: / ACCOUNTANT MEMBER चे*ई / Chennai; िदनांक / Dated : 09-06-2022 EDN/- आदेश की Vितिलिप अ7ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु (अपील)/CIT(A) 4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF