SULAKSHANA SECURITIES LTD, MUMBAI V. ITO 1(3)(2), MUMBAI

ITA 7541/MUM/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0913 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 22-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWA
• Assessee Lawyers: K K VED
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 7541 / MUM . /2016 ( ASSESSMENT YEAR : 20 06 07 ) SULAKSHANA SECURITIES LTD. MAFATLAL HOUSE, H.T. PAREKH MARG BACKBAY RECLAMATION MUMBAI 400 020 PAN AABCS1783L . APPELLANT V/S INCOME TAX OFFICER WARD 1( 3 )( 2 ), MUMBAI . RESPONDENT ASSESSEE BY : SHRI K.K. VED REVENUE BY : SHRI SWAPAN KUMAR BEPARI DATE OF HEARING 24 .0 9 .2018 DATE OF ORDER 05.10.2018 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 1 4 TH OCTOBER 2016 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 3 , MUMBAI, FOR THE ASSESSMENT YEAR 20 06 07 . 2 . T HE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO PART DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE. 3 . BRIEF FACTS ARE, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 17 TH NOVEMBER 2006, DECLARING LOSS OF ` 3,63,414. IN COURSE OF THE 2 SULAKSHANA SECURITIES LTD. ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE VERIFYING THE RETURN O F INCOME FILED BY THE ASSESSEE NOTICED THAT THE ASSESSEE HAS OFFERED RENTAL INCOME OF ` 13,28,434, AS INCOME FROM HOUSE PROPERTY , WHEREAS , AIR CONDITIONING CHARGES AND OTHER CHARGES OF ` 1,84,239, WAS SHOWN AS INCOME FROM OTHER SOURCES. FURTHER, HE FOUND THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF ` 21,91,176, TOWARDS PROPERTY MAINTENANCE EXPENSES. WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) THE ASSESSING OFFICER TREATED AIR CONDITIONI NG CHARGES AND OTHER CHARGES OF ` 12,84,239, AS INCOME FROM HOUSE PROPERTY AND ALLOWED THE STATUTORY DEDUCTION UNDER SECTION 24 OF THE ACT. HOWEVER, HE DISALLOWED THE PROPERTY MAINTENANCE EXPENDITURE OF ` 21,91,176. BEING AGGRIEVED WITH THE ASSESSMENT ORDE R SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS) AND THEREAFTER BEFORE THE TRIBUNAL. THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL VIDE ORDER PASSED IN ITA NO.7271/MUM./2011, DATED 11 TH APRIL 2014, RESTORED THE ISSUE TO TH E ASSESSING OFFICER TO CONSIDER ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 57 OF THE ACT. IN THE ASSESSMENT PROCEEDINGS, IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSING OFFICER AGAIN CALLED FOR NECESSARY DETAILS FROM THE ASSESSEE AND ALSO CA LLED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM OF EXPENDITURE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND TAKING NOTE OF THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER ASSESSMENT YEARS , THE 3 SULAKSHANA SECURITIES LTD. ASSESSING OFFICER ACCEPTED ASSESSEES CLA IM THAT THE INCOME RECEIVED ON ACCOUNT OF AIR CONDITION AND OTHER CHARGES ARE TO BE TREATED AS INCOME FROM OTHER SOURCES. HOWEVER, AS REGARDS ASSESSEES CLAIM OF EXPENDITURE OF ` 21,91,176, THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH EXPENDITURE HAS TO BE RESTRICTED TO THE INCOME SHOWN BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY, HE ALLOWED EXPENDITURE TO THE TUNE OF ` 12,84,239. BEING AGGRIEVED OF THE PART DISALLOWANCE OF EXPENDITURE CLAIMED, THE ASSESSEE PREFERRED APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD OBSERVED THAT WHILE THE ASSESSEE HAS SHOWN INCOME OF AIR CONDITIONING AND OTHER FACILITIE S PROVIDED TO THE TENANT AS INCOME FROM OTHER SOURCES, IT HAS CLAIMED EXPENSES TOWARDS WATER, ELECTRICITY, FIRE FIGHTING EQUIPMENTS, MAINTENANCE, ETC. THUS, HE HELD THAT THE EXPENDITURES WHICH ARE NOT CONNECTED OR RELATED TO AIR CONDITIONING AND OTHER FACI LITIES PROVIDED TO THE TENANT ARE NOT ALLOWABLE. ACCORDINGLY, HE UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS DIRECTLY RELATED TO THE INCOME EARNED F ROM AIR CONDITIONING AND OTHER FACILITIES PROVIDED TO THE TENANT. 4 SULAKSHANA SECURITIES LTD. HE SUBMITTED , RIGHT FROM ASSESSMENT YEAR 2003 04 TO 2008 09, THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER TO EXAMINE ASSESSEES CLAIM OF EXPENDITURE DIRECTLY RELATABLE TO AIR CONDITION AND OTHER FACILITIES PROVIDED TO THE TENANTS AND ALLOW THE SAME. HE SUBMITTED , WHILE CARRYING OUT SUCH DIRECTIONS OF THE TRIBUNAL IN ASSESSMENT YEAR 2003 04, THE ASSESSING OFFICER HAS FULLY ALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE . IN THI S CONTEXT, HE DREW MY ATTENTION TO THE ASSESSMENT ORDER PASSED FOR ASSESSMENT YEAR 2003 04 , A COPY OF WHICH IS PLACED AT PAGE 101 OF THE PAPER BOOK. DRAWING MY ATTENTION TO THE DETAILS OF EXPENDITURE CLAIMED IN ASSESSMENT YEAR 2003 04 AND IN THE IMPUGNED A SSESSMENT YEA , HE SUBMITTED THAT THE EXPENDITURES ARE IDENTICAL. THEREFORE, HE SUBMITTED , NO DISALLOWANCE SHOULD HAVE BEEN MADE OUT OF THE EXPENDITURES MADE. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) AND THE ASSESSING OFFICER. 7 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN, THIS IS THE SECOND ROUND OF LITIGATION BEFORE THE TRIBUNAL. IN THE FIRST ROUND, THE HEAD OF INCOME RELATING TO AIR CONDITIONING AND OTHER CHARGES WAS NOT ONLY IN DISPUTE, BUT THE ALLOWABILITY OF EXPENDITURE CLAIMED AGAINST SUCH INCOME WAS ALSO IN DISPUTE BETWEEN THE PARTIES. AS REGARDS THE HEA D OF INCOME, AS PER THE 5 SULAKSHANA SECURITIES LTD. FACTUAL POSITION EMERGING FROM RECORD, IT IS CLEAR THAT THE DEPARTMENT HAS ACCEPTED ASSESSEES CLAIM OF AIR CONDITION AND OTHER CHARGES TO BE ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE DISPUTE IS ONLY WITH REGARD TO TH E QUANTUM OF EXPENDITURE ALLOWABLE TO THE ASSESSEE. WHILE THE ASSESSING OFFICER HAS DISALLOWED PART OF THE EXPENDITURE CLAIMED BY THE ASSESSEE ON THE REASONING THAT IT CANNOT EXCEED THE INCOME EARNED BY THE ASSESSEE, THE LEARNED COMMISSIONER (APPEALS) HAS HELD THAT SOME OF THE EXPENDITURES ARE NOT RELATABLE TO THE AIR CONDITIONING FACILITIES. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE EXPENDITURE OF ` 21,91,176 WAS CLAIMED BY THE ASSESSEE TOWARDS AIR CONDITIONING AND OTHER EXPENSES, LIFT FACI LITIES, COMMON SECURITIES, FIRE FIGHTING SYSTEM, WATER CHARGES, ELECTRICITY AND OTHER PERSONAL COST. NOTABLY, IN ASSESSMENT YEAR 2003 04, AGAINST INCOME OF ` 62,25,957 TOWARDS AIR CONDITIONING AND OTHER CHARGES, THE ASSESSEE HAD CLAIMED PROPERTY MAINTENANC E EXPENSES OF ` 82,54,091. WHILE EXAMINING THE ALLOWABILITY OF THE AFORESAID EXPENDITURE CLAIMED BY THE AS SESSEE, IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSING OFFICER HAVING FOUND SUCH EXPENDITURE TO BE DIRECTLY RELATABLE TO THE INCOME EAR NED FROM AIR CONDITIONING AND OTHER CHARGES HA S ALLOWED THEM FULLY . THIS IS EVIDENT FROM THE COPY OF THE ASSESSMENT ORDER PASSED FOR A.Y. 2003 04 AS SUBMITTED IN THE PAPER BOOK. ON A PERUSAL OF THE DETAILS OF EXPENDITURE CLAIMED IN THE IMPUGNED ASSESSMENT YEAR AS WELL AS IN ASSESSMENT YEAR 2003 04, I 6 SULAKSHANA SECURITIES LTD. FIND THEM TO BE OF IDENTICAL NATURE. THEREFORE, I DO NOT FIND ANY REASON FOR DISALLOWING A PART OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAI NED BY THE LEARNED COMMISSIONER (APPEALS) IS DELETED. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.10.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 05.10.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI