DIMPLE CINE ADVERTISING P.LTD, MUMBAI V. ITO RG 9(1)(3), MUMBAI

ITA 7373/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100726 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN ,AM AND LALIT KUMAR, JM ./ I.T.A. NO .7373 / MUM/20 1 0 ( / ASSESSMENT YEAR : 20 0 6 - 07 ) DIMPLES CINE ADVE RTISING PVT.LTD., PARKE AVENUE, 16 TH /29 TH ROAD, JUNCTION, NEAR PALI MARKET, BANDRA (W), MUMBAI - 400050 / VS. INCOME TAX OFFICER, 9(1)(3), MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAAC D3788P / APPELLANT BY NONE / RSPONDENT BY MS.ANU AGGARWAL / DATE OF HEARING : 1 8 .8 . 201 5 / DATE OF PRONOUNCEMENT: 1 8 . 8. 201 5 / O R D E R PER B.R.BASKARAN, AM: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 02 - 08 - 2010 PASSED BY LD CIT(A) - 19, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2007 - 08. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. FROM THE ORDER SHEET NOTING, WE N OTICE THAT THE ASSESSEE HAS REFUSED TO RECEIVE THE NOTICE SENT BY THE REGISTRY. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX - PARTE WITHOUT THE PRESENCE OF THE ASSESSEE. ITA NO. 7373 / MUM/20 1 0 2 3. WE HEARD LD D.R AND PERUSED THE RECORD. FOLLOWING TWO ISSUES ARE URGED BEFORE US BY THE ASSESSEE: - ( A ) DISALLOWANCE MADE U/S 40A(2)(B) OF THE ACT. ( B ) DISALLOWANCE OF RENT . THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF LEASING, FINANCE, CINEMA ADVERTISING AND MANPOWER SUPPLY SERVICES. ON A PERUSAL OF THE PROFIT AN D LOSS ACCOUNT OF THE ASSESSEE, THE AO NOTICED THAT THE BUSINESS RECEIPTS OF THE ASSESSEE HAS FALLEN DOWN BY 20%, WHERE AS THE EXPENSES CLAIMED BY THE ASSESSEE HAS INCREASED FOUR TIMES. ON A FURTHER CLOSER EXAMINATION OF THE EXPENSES, THE AO NOTICED THAT THE SALARY PAID TO THE DIRECTORS HAS GONE UP FROM RS.60,000/ - TO RS.10,20,000/ - , I.E., IN THE IMMEDIATELY PRECEDING YEAR THE ASSESSEE HAD PAID A SALARY OF RS.60,000/ - TO ITS DIRECTOR, WHEREAS DURING THE YEAR UNDER CONSIDERATION, THE SALARY HAS BEEN PAID TO THE TUNE OF RS.10,20,000/ - . HENCE THE AO CONSIDERED THAT THE SALARY PAYMENT MADE TO THE DIRECTORS IS EXCESSIVE AND UNREASONABLE. ACCORDINGLY INVOKED THE PROVISIONS OF SEC. 40A(2)(A) OF THE ACT AND RESTRICTED THE DEDUCTION TOWARDS SALARY PAID TO THE DIREC TORS TO RS.2,40,000/ - AND DISALLOWED THE BALANCE AMOUNT OF RS.7,80,000/ - . THE ASSESSEE HAD CLAIMED RENT EXPENDITURE OF RS.1,80,000/ - . THE AO NOTICED THAT THE ASSESSEES SISTER CONCERN IS ALSO OPERATING FROM THE SAME PREMISES AND ACCORDINGLY RESTRICTED TH E DEDUCTION TOWARDS RENT AT RS.90,000/ - AND ACCORDINGLY DISALLOWED THE BALANCE AMOUNT OF RS.90,000/ - . 4. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) CONFIRMED BOTH THE DISALLOWANCES CITED ABOVE AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. THE LD D.R SUBMITTED THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE SALARY PAYMENT OF RS.10,20,000/ - MADE TO THE DIRECTORS, PARTICULARLY WHEN THE BUSINESS OF THE ASSESSEE IS GOING DOWN. ACCORDINGLY, THE LD D.R ITA NO. 7373 / MUM/20 1 0 3 SUBMITTED THAT THE ASSESSING OFFICER WAS REASONA BLE IN RESTRICTING THE DEDUCTION OF SALARY PAID TO THE DIRECTORS AT RS.2,40,000/ - . WITH REGARD TO THE RENT EXPENDITURE ALSO, THE LD D.R SUBMITTED THAT THE SAME PREMISES WAS USED BY TWO CONCERNS AND HENCE THE AO WAS JUSTIFIED IN DISALLOWING 50% OF THE RENT CLAIM. 6. ON CONSIDERATION OF THE LD D.RS SUBMISSIONS AND THE FACTS PREVAILING IN THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN CONFIRMING BOTH THE DISALLOWANCES REFERRED ABOVE. BEFORE US, NO MATERIAL WAS PLACED BY THE ASSESSEE IN ORDER TO CONTRADICT THE VIEWS TAKEN BY THE TAX AUTHORITIES. ACCORDINGLY, WE HAVE NO OTHER OPTION BUT TO CONFIRM THE ORDER PASSED BY LD CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 1 8 TH AUGUST 2015. 1 8 TH AUGUST, 2015 SD SD ( LAL IT KUMAR) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 18 TH AUG , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNE D 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI