MANHARLAL H. PAREKH (HUF), MUMBAI V. ITO 12(2)(4), MUMBAI

ITA 754/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3434 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 16-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI KIRAN
• Keywords: Charitable institution; Bad and doubtful debts; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO. 754/MUM/2011 (ASSESSMENT YEAR : 2006-07) MANHARLAL H. PAREKH (HUF), B-45, SEA LORD, CUFFE PARADE, COLABA, MUMBAI 400005 PAN: AABHM 9157R ... APPELLANT VS. THE ITO, WARD 12(2)(4), MUMBAI. .... RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI RAVI KIRAN DATE OF HEARING : 16/05/2016 DATE OF PRONOUNCEMENT : 18/05/2016 ORDER PER MAHAVIR SINGH, J.M: THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORD ER OF CIT(A)-23 MUMBAI IN APPEAL NO. CIT(A)-23/ITO-12(2)(4)/IT-481/ 08-09 DATED 03/11/2010. ASSESSMENT WAS FRAMED BY ITO, WARD 12( 2)(4) MUMBAI UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 31 ST DECEMBER, 2008. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS WRITTEN OFF. FOR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.1:- 2 ITA NO. 754/MUM/2011 (ASSESSMENT YEAR : 2006-07) 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS IN NOT ALLOWING BAD DEBT WRITTEN OFF OF RS .4,00,000/- 3. BRIEFLY STATED, THE FACTS RELATING TO THE ABOVE ISSUE ARE THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF BAD DEBTS BY OBSERVING THAT THE ASSESSEE IS AN HUF, DECLARED INCOME FROM LEASE RENT FROM LETTING OF HOUSE PROPERTY. ACCORDING TO ASSESSING OFFICER, TH E ASSESSEE HAS NOT PROVED THAT THERE IS ANY AMOUNT OUTSTANDING IN THE NAME OF SHRI KISHORE SHAH AMOUNTING TO RS.4.00 LACS AND ALSO NOT PROVED THAT THE DEBT WAS INCIDENTAL TO BUSINESS OF THE ASSESSEE. A CCORDINGLY, HE DISALLOWED THE CLAIM OF BAD DEBT OF RS.4.00 LACS. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A), WHO CONFIRMED TH E ACTION OF ASSESSING OFFICER BY OBSERVING IN PARA -3.3. OF HI S ORDER AS UNDER:-- 3.3. I FIND THAT THE APPELLANT HAS NOT SHOWN THAT THE DEBT WAS INCIDENTAL TO THE BUSINESS OF THE APPELLANT, STATEM ENT TO THIS EFFECT HAS BEEN MADE WITHOUT ANY SUPPORTING EVIDENCE. AS P OINTED OUT BY THE ASSESSING OFFICER , IT HAS ALSO NOT BEEN SHOWN THAT THE SAID AMOUNT WAS SHOWN AS RECOVERABLE IN AN EARLIER YEAR. ONLY IF A DEBT DUE TO THE APPELLANT IS OUTSTANDING AND BECOMES BAD OR RECOVERABLE THE WRITE OFF IS TO BE ALLOWED AND TO BE TREATED AS A DEDUCTION FOR BAD DEBT. THUS, THE ASSESSING OFFICERS ACTION IS CONFIRMED. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD LD. SR.D.R AND GONE THROUGH THE FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESS EE CLAIMED BAD DEBT OF RS.4.00 LACS, WHEREBY IT WAS CLAIMED THAT CHEQUE OF RS.4.00 LACS ISSUED BY HIM RETURNED UNPAID AND COMPLAINT UNDER S ECTION 138 OF THE NEGOTIABLE INSTRUMENT ACT WAS ALSO FILED. WE FIND THAT THE CIT(A) WITHOUT GOING INTO THE FACTS OF THE CASE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. ADMITTEDLY, THE CIT(A) ADMITTE D THE FACT THAT THE AMOUNT OF BAD DEBT OF RS.4.00 LACS WAS SHOWN AS REC OVERABLE IN EARLIER 3 ITA NO. 754/MUM/2011 (ASSESSMENT YEAR : 2006-07) YEARS BUT HAS NOT DISCUSSED HOW IT IS NOT INCIDENTA L TO THE BUSINESS OF THE ASSESSEE DESPITE A PLEA RAISED BEFORE HIM. AC CORDINGLY, WE RESTORE THE MATTER BACK TO THE FILE OF CIT(A) TO GIVE A FIN DING OF FACT ON THE ISSUE AND PASS AN ORDER WITH A REASONING. THIS ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A). THIS ISSUE OF ASSESSEES APPEA L IS ALLOWED FOR STATISTICAL PURPOSES. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST OR OF CIT(A) CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ISALLOWING INTEREST PAID TO BANK AMOUNTING TO RS.1,73,969/-. 6. WE HAVE HEARD LD. SR. DR AND GONE THROUGH THE FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESS EE HAS PAID INTEREST TO CENTRAL BANK OF INDIA AMOUNTING TO RS.1,73,969/- AND THE LOAN TAKEN WAS EDUCATION LOAN FOR HIGHER EDUCATION OF KARTAS SON MR. VISHAL N. PARIKH. WE FIND THAT THE FINDING OF LOWER AUTHORIT IES IS THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80 E OF THE ACT FOR THE REASON THAT THE ASSESSEE IS AN HUF, WHEREAS DEDUCTI ON UNDER SECTION 80E OF THE ACT IS AVAILABLE ONLY TO INDIVIDUAL. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 80E OF THE ACT AND NOTED THAT THE DEDUCTION UNDER SECTION 80E OF THE ACT IS AVAILABLE TO INDIVIDUAL O NLY AND NOT HUF. THE RELEVANT PROVISIONS OF SECTION 80E(1), WHICH READ A S UNDER CLEARLY SHOWS THAT THE DEDUCTION IS AVAILABLE TO INDIVIDUALS ONL Y:- SECTION 80E. (1) IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE, BEING AN INDIVIDUAL, THERE SHALL BE DEDUCTED, IN AC CORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, ANY AMOU NT PAID BY HIM IN THE PREVIOUS YEAR, OUT OF HIS INCOME CHARGEABLE TO TAX, BY WAY OF INTEREST ON LOAN TAKEN BY HIM FROM ANY FINANCIAL IN STITUTION OR ANY APPROVED CHARITABLE INSTITUTION FOR THE PURPOSE OF PURSUING HIS HIGHER EDUCATION 97 [OR FOR THE PURPOSE OF HIGHER EDUCATION OF HIS RELATIVE]. 4 ITA NO. 754/MUM/2011 (ASSESSMENT YEAR : 2006-07) ACCORDINGLY, WE CONFIRM THE ORDER OF LOWER AUTHORIT IES AND THIS ISSUE OF ASSESSEES APPEAL IS DISMISSED. 7. THE NEXT ISSUE, IN THIS APPEAL OF THE ASSESSEE I S AGAINST ORDER OF CIT(A) IN NOT ALLOWING REPAIR EXPENSES OF RS.14,08, 889/- ON ACCOUNT OF REPAIR OF OFFICE. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.3. 3. LEARNED COMMISSIONER OF INCOME TAX (APPEALS0 ER RED IN LAW AND ON FACTS IN NOT ALLOWING CHIRA BAZAR OFFICER REPAIR EXPENSES OF RS.14,08,989/- 8. WE HAVE HEARD LD. SR. DR AND GONE THROUGH THE FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESS ING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS DISALLOWED THE CLAIM OF REPAIR EXPENSES OF RS.14,08,989/- CLAIMED ON REPAIR OF CHI RA BAZAAR OFFICE OF THE ASSESSEE. THE ASSESSEE CLAIMED THAT CHIRA BAZA AR PROPERTY WAS ACQUIRED IN THE YEAR 1998 AND THE EXPENSES INCURRE D FOR REPAIR BECAUSE THE BUILDING IS ABOUT 80 YEARS OLD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE BY NOTING THAT THE RENTED PRE MISES WAS ACQUIRED BY ONE SHRI NITIN PAREKH AND SMT. LEENA N. PAREKH I N THEIR INDIVIDUAL CAPACITY, WHICH IS NO WAY RELATED TO ASSESSEE HUF, OF WHICH SHRI NITIN PAREKH IS KARTA. BEFORE THE CIT(A) ASSESSEE REIT ERATED THAT THE TENANTED PREMISES IN THE NAME OF KARTA SHRI NITIN P ARIKH WAS USED BY ASSESSEE FOR ITS BUSINESS AND FOR SAFETY PURPOSES T HE NAME OF SMT. LEENA N. PAREKH WIFE OF KARTA SHRI NITIN M. PARIKH WAS INCLUDED IN THE TENANCY. ACCORDING TO ASSESSEE THE TENANCY FOR ALL PRACTICAL PURPOSES VESTS IN SHRI M.H.PAREKH HUF, KARTA SHRI NITIN M. P ARIKH ONLY. IT WAS CONTESTED BEFORE CIT(A) THAT THE OBSERVATION OF THE ASSESSING OFFICER IS 5 ITA NO. 754/MUM/2011 (ASSESSMENT YEAR : 2006-07) TO THE PREMISES BELONG TO SHRI NITIN M. PAREKH AND SMT. LEENAN. PAEIKH IS ERRONEOUS AND FAR FROM FACTUAL ASPECT OF THE CAS E. IT WAS CLAIMED THAT THE TENANCY IN THE CHIRA BAZAAR OFFICE IS OF ASSESS EE HUF ONLY. IT WAS CLAIMED THAT THIS REPAIR AND MAINTENANCE EXPENSE WA S INCURRED ONLY TO HAVE PROPER AND JUST USE OF THE TENANTED PREMISES B UT CIT(A) NEGATED THE CLAIM OF THE ASSESSEE BY A MERELY NON-SPEAKING ORDER, PARA-5.3 OF WHICH READ AS UNDER:- 5.3 THE ASSESSING OFFICERS REASONING IS FOUND COR RECT. THE PROPERTY IN QUESTION CANNOT BE SAID TO BE EITHER AN CESTRAL PROPERTY OR PROPERTY ACQUIRED WITH THE AID OF ANCESTRAL PROP ERTY OR SELF ACQUIRED PROPERTY TRANSFERRED BY MEMBER OF THE HUF TO THAT HUF. THE CLAIM FOR EXPENSES THUS IS NOT ALLOWABLE. THE ASSESSING OFFICERS ACTION IS CONFIRMED. WE FIND THAT CIT(A) HAS NOT CONSIDERED THE FAC TS OF THE CASE AND PASSED A CRYPTIC ORDER WITHOUT GOING INTO THE FACTS OF THE CASE. THE DUTY OF THE CIT(A) IS TO PASS SPEAKING ORDER AFTER CONSI DERING ALL FACTS OF THE CASE. IN TERM OF THE ABOVE, WE RESTORE THE MATTER B ACK TO THE FILE OF CIT(A) FOR ADJUDICATION OF THIS APPEAL AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE AND BY PASSING A SPEAKING ORDER. T HIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18/05/ 2016. SD/- SD/- (ASHWANI TANEJA) (MAHAVIR SINGH) ACCOUNTNAT MEMBER JUDICIAL M EMBER MUMBAI, DATED 18/05/2016 VM , SR. PS 6 ITA NO. 754/MUM/2011 (ASSESSMENT YEAR : 2006-07) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI