CAMORON FINANCE AND INVESTMENT, MUMBAI V. ADDL CT CIR 12(3), MUMBAI

ITA 7648/MUM/2010

• Counselvise Citation: 764819914 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: HARESH G BUDH; JEHA NGIR D MISTRI NIRAJ SHETH
• Keywords: Business expenditure; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 7648/M/10 ASSESSMENT YEAR: 2007 - 08 M/S. CAMORON FINANCE AND INVESTMENT, 139 - 140B SHIV CROSSING, SAHAR ROAD AND W.E. HIGHWAY VILE PARLE (E), MUMBAI 400 057 PAN: AAAFC5210A VS. ADDITIONAL COMMISSIONER OF INCOME TAX, CIRCLE 12(3), MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : S/ SHRI JEHA NGIR D. MISTRI, NIRAJ SHETH & HARESH G. BUDH REVENUE BY : SHRI ASHOK SURI, D.R. DATE OF HEARING : 02.12.13 DATE OF PRONOUNCEMENT : 06.12.13 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAI NST THE ORDER OF THE CIT(A) DATED 07.09.10 RELEVANT TO ASSESSMENT YEAR 2007 - 08. GROUND NO.I THE GROUND NO. I OF THE ASSESSEES APPEAL READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 23 (THE CIT(A)) ERRED IN UPHOLDING THE ACTION OF ADDITIONAL COMMISSIONER OF INCOME TAX, CIRCLE 12(1), MUMBAI (THE AO) IN DISALLOWING BROKERAGE EXPENSES INCURRED BY THE APPELLANT AMOUNTING TO RS.61,73,200/ - ON THE GROUND THAT THE EXPENDITURE WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS. ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 2 2. THE APP ELLANT, THEREFORE PRAYS THAT THE ABOVE EXPENDITURE BE TREATED AS BUSINESS EXPENDITURE ALLOWABLE UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961 (THE ACT ). 2. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE FIRM HAS BEEN ENGAGED IN THE BUSINESS OF FINANC E, INVESTMENT AND REAL ESTATE DEVELOPMENT. THE ASSESSEE HAD BEEN PURSUING THE DEVELOPMENT OF BAHAR PROPERTY DURING THE FINANCIAL YEAR 2006 - 07 RELEVANT TO ASSESSMENT YEAR 2007 - 08. A PART OF THE BAHAR PROPERTY WAS LEASED OUT DURING THE YEAR. BROKERAGE OF RS.61,73,200/ - WAS PAID TO THE BROKER FOR ARRANGING FOR THE LESSEE OF THE PROPERTY. IT WAS CONTENDED BEFORE THE AO THAT THE BROKERAGE WAS PAID FOR THE SERVICES OF THE BROKER IN ASSISTING THE LETTING OUT OF THE PROPERTY ON LEASE. THE AO, HOWEVER, OBSERVED THAT THE ASSESSEE ITSELF HAD CLAIMED THE MONTHLY LEASE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND HAD ALSO CLAIMED STATUTORY DEDUCTIONS OF SUM EQUAL TO 30% OF THE ANNUAL LETTING VALUE UNDER SECTION 24 OF THE INCOME TAX ACT. SINCE THE E XPENDITURE OF BROKERAGE PAID WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE HENCE THE SAME WAS DISALLOWED. IN FIRST APPEAL, THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT SUCH TYPE OF EXPENDITURE RELATING TO BROKERAGE PAID FOR FACILITATION/ARRANGING FOR THE LESSEE FOR LETTING OUT OF THE PROPERTY WAS NOT ALLOWABLE AS BUSINESS EXPENDITURE , H ENCE CONFIRMED THE ORDER OF THE AO ON THIS ISSUE. 3. BEFORE US , THE SUBMISSIONS OF THE LD. A.R. HAVE BEEN THAT THE ASSESSEE IN FACT HAS BE EN IN THE BUSINESS OF DEVELOPMENT AND SALE OF PROPERTY. THERE WAS LULL/SLOW DOWN IN THE REAL ESTATE BUSINESS. HENCE THE ASSESSEE COULD NOT SELL HIS PROPERTY AND TO AVOID LOSSES AND ALSO ACTING ON THE PRINCIPLE OF COMMERCIAL EXPEDIENCY , IT WAS DECIDED TO LEASE OUT THE PROPERTY TILL THE MARKET BECOMES FAVOURABLE FOR THE SALE OF THE PROPERTY. IT HAS BEEN FURTHER CONTENDED BY THE LD. A.R. THAT LETTING OUT OF THE PROPERTY FOR A SHORT DURATION WAS INCIDENTAL TO THE ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 3 COMMERCIAL BUSINESS OF REAL ESTATE OF THE ASS ESSEE, HE NCE THE BROKERAGE WAS PAID IN THE COURSE OF BUSINESS OF THE ASSESSEE AND AS SUCH THE SAME WAS AN ALLOWABLE DEDUCTION. HE HAS FURTHER CONTENDED THAT THOUGH THE RENTAL INCOME HAS BEEN ASSESSED BY THE ASSESSEE IN ITS RETURN OF INCOME AS INCOME FROM HOUSE PROPERTY, HOWEVER BEFORE THE LETTING OF THE PROPERTY , THE EXPENDITURE INCURRED BY THE ASSESSEE WAS FOR THE PURP OSE OF BUSINESS OF THE ASSESSEE. HE HAS ALSO RELIED UPON AN ORDER OF THE CIT(A) DATED 16.11.11 RELEVANT TO ASSESSMENT YEAR 2000 - 01 WHEREIN THE CIT(A) HAS HELD THAT THE ASSESSEES BUSINESS OF REAL ESTATE DEVELOPMENT HAD CONTINUED UP TO 31.03.06 AND THE ASSET WAS CAPITALIZED IN THE FINANCIAL YEAR 2006 - 07. IT HAS BEEN FURTHER CONTENDED THAT THERE WAS CERTAIN LITIGATION/ARBITRATION PROCEEDINGS THEREAFTER AND AFTER THE SETTLEMENT/COMPLETION OF THOSE ARBITRATION PROCEEDINGS /LITIGATION THE BUSINESS OF THE ASSESSEE WAS AGAIN REVIVED. IT WAS FURTHER CONTENDED THAT THE EXPENDITURE INCURRED FOR THE PURPOSE OF DEVELOPMENT OF PROPERTY DURING THE PERIOD FOR WHICH THE BUSINESS REMAINED SUSPENDED WAS AN ALLOWABLE DEDUCTION. ON THE OTHER HAND, THE LD. D.R. BEFORE US HAS CONTENDED THAT THERE WAS NO PROVISION UNDER THE ACT FOR ALLOWING THE BROKERAGE PAID FOR LETTING OUT THE PROPERTY IN QUESTION. THE ASSESSE E HAS BEEN ENTITLED TO STATUTORY DEDUCTION UNDER SECTION 24 OF THE INCOME TAX ACT WHICH HAS ALREADY BEEN CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME AND ALLOWED BY THE AO . 4 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD. REPRESENTATIVES OF BOT H THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORD. THOUGH THE LD. A.R. OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE EXPENDITURE INCURRED FOR THE PAYMENT OF BROKERAGE WAS PRIOR TO THE LETTING OUT THE PROPERTY AND THE SAME WAS RELATING TO THE DEVELOPMEN T BUSINESS OF THE ASSESSEE , BUT HAS FAILED TO CONVINCE US AS TO HOW THE SAID BROKERAGE PAID WAS RELATED TO BUSINESS OF THE ASSESSEE. THE BROKERAGE WAS PAID NEITHER FOR THE DEVELOPMENT OF THE PROPERTY ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 4 NOR FOR THE SALE OF THE PROPERTY. IT WAS PAID ONLY FOR LETTING OUT OF THE PROPERTY , INCOME FROM WHICH HAS BEEN ASSESSED BY THE ASSESSEE IN ITS RETURN OF INCOME AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS ALSO CLAIMED STATUTORY DEDUCTION OF 30% ON THE ANNUAL RENTAL INCOME. THE ACT OF PAYMENT OF BROKERAGE FOR THE PURPOSE OF LETTING OF THE PROPERTY NEITHER CAN BE SAID TO BE RELATED TO THE BUSINESS OF THE ASSESSEE NOR CAN BE SAID TO BE INCIDENTAL TO THE BUSINESS OF THE ASSESSEE , ESPECIALLY WHEN THE RENTAL INCOME HAS BEEN CLAIMED UNDER THE HEAD INCOME FROM H OUSE PROPERTY AND THE STATUTORY DEDUCTION UPON WHICH HAS ALSO BEEN CLAIMED. THE LD. A.R. HAS RELIED UPON AN AUTHORITY OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHARMILA TAGORE [ (2006) 150 TAXMAN 4 (MUM) ] AND ALSO ANOTHER AUTHORITY IN TH E CASE OF SUMAN DIDWANIA (ITA NO.58 0 5/M/10) DECIDED ON 15.02.12 WHEREIN THE PAYMENT OF MAINTENANCE CHARGES/NON OCCUPANCY CHARGES PAID TO HOUSING SOCIETY HAVE BEEN HELD TO BE ALLOWABLE DEDUCTION , WHILE ARRIVING AT ANNUAL LETTING VALUE OF THE PROPERTY. 5. ON THE OTHER HAND THE LD. D.R. HAS RELIED UPON AN AUTHORITY OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. H.G. GUPTA & SONS [ (1984) 149 ITR 253 (DELHI) WHEREIN THE HONBLE DELHI HIGH COURT HAS HELD THAT IF A PARTICULAR TYPE OF EXPENDITURE IS NOT SPECIFICALLY PROVIDED TO BE DEDUCTABLE UNDER SECTION 23 & 24 OF THE I.T.ACT, THE SAME CANNOT BE CLAIMED AS DEDUCTION OUT OF THE ANNUAL LETTING VALUE OBSERVING THAT THE PROVISIONS OF SECTION 23 & 24 OF THE INCOME TAX ACT ARE EXHAUSTIVE. THE RELEVANT PA RT OF THE OBSERVATIONS OF THE HONBLE DELHI HIGH COURT IS REPRODUCED AS UNDER: THE ANNUAL VALUE OF THE PROPERTY, WHICH IS THE SUBJECT OF CHARGE, WAS ORIGINALLY DEFINED IN SECTION 23(1) AS 'THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR'. THE ANNUAL VALUE IS THUS THE SUM FOR WHICH A LANDLORD COULD LET THE PREMISES HAVING REGARD TO THE CONDITION OF THE PROPERTY AND OF THE PREVAILING CIRCUMSTANCES AS THE LANGUAGE SUGGESTS. THE TAXES ARE CHARGED ON THE ARTIFICIAL OR NO TIONAL INCOME. IT IS BASED ON THE ANNUAL VALUE OF THE PROPERTY. THE AUTHORITIES UNDER THE ACT, THEREFORE, HAVE TO MAKE THE ASSESSMENT ON THE BASIS OF THE ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 5 NOTIONAL ANNUAL VALUE. SECTION 23 LAYS DOWN HOW THE ANNUAL VALUE IS TO BE DETERMINED. SECTION 24 PROVI DES THAT INCOME CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' SHALL, SUBJECT TO THE PROVISIONS OF SUB - SECTION (2), BE COMPUTED AFTER MAKING THE DEDUCTIONS SPECIFIED THEREIN. THE LEGISLATURE HAS USED THE WORD 'NAMELY' AND THIS SHOWS THAT THE HEADS OF EXPENDITURE WHEREFOR DEDUCTION CAN BE CLAIMED ARE EXHAUSTIVE. THE EXPENSES INCURRED IN PROVIDING THE PROPER STAMP PAPER IN THE CASE OF A LEASE OR AGREEMENT TO LEASE IS BY VIRTUE OF THE PROVISIONS CONTAINED IN SECTION 29 OF THE INDIAN STAMP ACT, 1899, AN D IS ON THE LESSEE OR INTENDED LESSEE, IN THE ABSENCE OF AN AGREEMENT TO THE CONTRARY. IT MAY BE FOR THIS REASON THAT THE LEGISLATURE DID NOT INCLUDE SUCH EXPENSES IN THE PERMISSIBLE DEDUCTIONS UNDER SECTION 23 OR SECTION 24. IF A PARTICULAR TYPE OF EXPEND ITURE IS NOT SPECIFICALLY PROVIDED TO BE DEDUCTIBLE, DEDUCTION THEREFORE CANNOT BE CLAIMED FROM OUT OF THE ANNUAL VALUE. NEITHER SECTION 23 NOR SECTION 24 PROVIDES FOR THE DEDUCTION OF THE EXPENSES INCURRED TOWARDS STAMP DUTY OR REGISTRATION CHARGES IN RES PECT OF THE LEASE. 6. I T MAY BE OBSERVED THAT THOUGH THE DIFFERENT BENCHES OF THE TRIBUNAL HAVE HELD THAT THE PAYMENT OF MAINTENANCE CHARGES ETC. PAID TO THE HOUSING SOCIETY IS AN ALLOWABLE DEDUCTION ON THE PRINCIPLE THAT THE SAME IS IN THE SHAPE OF TAXE S AND CHARGES ETC. WHICH HAVE A CONSIDERABLE BEARING ON THE ACTUAL LETTING VALUE OF THE PROPERTY. HOWEVER, THE PAYMENT OF BROKERAGE FOR ARRANGING FOR A LESSEE CANNOT BE SAID TO HAVE ANY BEARING EFFECT ON THE ANNUAL LETTING VALUE OF THE PROPERTY. THE LD. D.R. HAS FURTHER BROUGHT INTO OUR NOTICE AN AUTHORITY OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF EXCELLENT ASSOCIATES [(2005) 96 ITD 57 (MUM.)/[2005] 96 TTJ (MUM.) 1124 ] AND FURTHER IN THE CASE OF SCAFFOLD PROPERTIES PVT. LTD. (ITA NO. 4 03/MUM/2008) DECIDED ON 25.04.12, WHEREIN THE CO - ORDINATE BENCHES OF THE TRIBUNAL HAVE SPECIFICALLY HELD THAT THE BROKERAGE AND COMMISSION PAID TO LEASE OUT THE PROPERTY IS NOT AN ALLOWABLE DEDUCTION WHILE DETERMINING THE ANNUAL LETTING VALUE OF THE PROPER TY. IN VIEW OF THE LAW LAID DOWN BY THE HONBLE DELHI HIGH COURT AS WELL AS THE SPECIFIC FINDINGS ON THE ISSUE UNDER CONSIDERATION OF THE CO - ORDINATE BENCHES OF THE TRIBUNAL , WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND THIS GROUND OF T HE APPEAL IS ACCORDINGLY DISMISSED. ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 6 GROUND NO. II GROUND NO. II OF THE APPEAL IS REPRODUCED AS BELOW: 1. THE CIT(A) ERRED IN NOT ALLOWING THE BROKERAGE EXPENSES OF RS.61,73,200/ - AS A REDUCTION, WHILE COMPUTING ANNUAL LETTING VALUE OF THE LEASED PREM ISES ON THE ALLEGED GROUND THAT THERE WAS NO SPECIFIC PROVISION U/S 24 OF THE ACT FOR ALLOWING SUCH EXPENSES AS A DEDUCTION. 2. THE APPELLANT PRAYS THAT THE ABOVE EXPENDITURE OF RS.61,73,200/ - BE CONSIDERED AS A REDUCTION WHILE C OMPUTING ANNUAL LETTING VALUE. 7. THIS GROUND OF APPEAL HAS BEEN TAKEN BY THE ASSESSEE AS AN ALTERNATIVE TO GROUND NO.I . AS OBSERVED ABOVE, THE PAYMENT OF BROKERAGE FOR LETTING OUT THE PROPERTY NEITHER HAS ANY BEARING ON THE ANNUAL LETTING VALUE OF THE PROPERTY NOR THE SAME I S AN ALLOWABLE DEDUCTION UNDER SECTION 23 AND 24 OF THE INCOME TAX ACT AND HENCE THE SAID SUM CANNOT BE REDUCED WHILE COMPUTING THE ANNUAL LETTING VALUE OF THE LEASED PREMISES. THE SAME HAS BEEN SPECIFICALLY SO HELD BY THE CO - ORDINATE BENCHES OF THE TRIBU NAL IN THE CASE S OF EXCELLENT ASSOCIATES (SUPRA) AND M/S. SCAFFOLD PROPERTIES PVT. LTD. (SUPRA). HENCE, GROUND NO.II OF THE APPEAL IS DISMISSED. GROUND NO.III GROUND NO.III IS REPRODUCED AS UNDER: 1. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING PROFESSIONAL FEES OF RS.10 , 25 , 0 00/ - INCURRED BY THE APPELLANT ON THE GROUND THAT THE EXPENDITURE WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS. 2. THE APPELLANT , PRAYS THAT THE ABOVE EXPENDITURE BE TREATED AS BUSINESS EXPENDITURE ALLOWABLE UNDER THE PROVISIONS OF THE ACT . 8. THE ASSESSEE HAS CLAIMED THE PAYMENT OF RS.10,25,000/ - AS BUSINESS EXPENDITURE TOWARDS PR OFESSIONAL FEES PAID FOR ATTENDING TO ALL MEETINGS, DRAFTING AND SETTLING LETTER OF INTENT/LEASE AGREEMENT ETC. IN RESP ECT OF LEASING ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 7 OUT OF THE PROPERTY AND HAS CLAIMED AS BUSINESS EXPENDITURE. AS OBSERVED ABOVE , NEITHER THE LETTING OUT OF THE PROPERTY WAS BUSINESS OF THE ASSESSEE NOR ANY STEPS TAKEN FOR LETTING OUT THE PROPERTY IN QUESTION WERE RELATED TO BUSINESS OF THE ASSESSEE AND AS SUCH ANY EXPENDITURE INCURRED FOR PAYMENT OF PROFESSIONAL FEES ETC. AS MENTIONED ABOVE CANNOT BE SAID TO BE AN ALLOWABLE DEDUCTION. IN VIEW OF OUR FINDINGS GIVEN IN DETAIL WHILE DECIDING THE GROUND NO.I , THIS GROUND IS ALSO DECIDED AGAINS T THE ASSESSEE AND THE SAME IS HEREBY DISMISSED. GROUND NO.IV GROUND NO.IV IS REPRODUCED AS UNDER: 1. THE CIT(A) ERRED IN NOT ALLOWING THE PROFESSIONAL FEES OF RS.10 , 25 , 0 00/ - AS A REDUCTION, WHILE COMPUTING ANNUAL LETTING VALUE OF THE LEASED PREMISE S ON THE ALLEGED GROUND THAT THERE WAS NO SPECIFIC PROVISION U/S 24 OF THE ACT FOR ALLOWING SUCH EXPENSES AS A DEDUCTION. 2. THE APPELLANT PRAYS THAT THE ABOVE EXPENDITURE OF RS.10,25,000/ - BE CONSIDERED AS A REDUCTION WHILE COMPUTING ANNUAL LETTING VAL UE. 9. THIS GROUND HAS BEEN TAKEN AS AN ALTERNATIVE TO GROUND NO.III BY THE ASSESSEE. W E HAVE ALREADY HELD THAT NEITHER THE PAYMENT OF PROFESSIONAL FEES OF RS.10,25,000/ - WAS RELATING TO BUSINESS OF THE ASSESSEE NOR THE SAME CAN BE SAID TO BE ALLOWABLE D EDUCTION FOR DETERMINING THE ANNUAL LETTING VALUE OF THE PROPERTY. THE SAID EXPENDITURE CANNOT BE SAID TO BE HAVING ANY BEARING ON THE ANNUAL LETTING VALUE OF THE PROPERTY AND IN VIEW OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF H.G. GU PTA & SONS (SUPRA) AND THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASES OF EXCELLENT ASSOCIATES (SUPRA) AND SCAFFOLD PROPERTIES PVT. LTD. (SUPRA), THIS ISSUE IS ALSO DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 8 GROUND NO.V GROUND NO.V IS REPRODUCED AS UNDER: 1. THE CIT(A) ERRED IN DISALLOWING VARIOUS PROFESSIONAL EXPENSES AGGREGATING TO RS.1,65,554/ - INCURRED FOR THE BUSINESS OF THE APPELLANT ON THE ALLEGED GROUND THAT ONLY ADMINISTRATIVE EXPENSES CAN BE CLAIMED AS A DEDUCTION DUR ING THE PERIOD OF DORMANT BUSINESS. 2. THE APPELLANT PRAYS THAT THE ABOVE EXPENDITURE THAT HAD BEEN INCURRED DURING A TEMPORARY LULL IN THE BUSINESS BE ALLOWED UNDER THE PROVISIONS OF THE ACT. 10. THE AO OBSERVED FROM THE PROFIT & LOSS ACCOUNT THAT THE ASSESSEE HAD CLAIMED THE FOLLOWING EXPENSES AS BUSINESS EXPENDITURE. ADVISE & CONSULTATION 28,060 ERA ARCHITECTS 56,120 CONSULTANCY 39,284 VALUATION OF PROPERTY 16,836 VALUATION FEES PAID FOR CINEMA THEATRE 25,254 _ ______ TOTAL 1,65,554 11. THE AO OBSERVED THAT THE SAID EXPENDITURE WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE, HENCE HE DISALLOWED THE SAME. THE LD. CIT(A) ALSO CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO. HENCE THE ASSESSEE IS IN APPEA L BEFORE US ON THIS ISSUE ALSO. 12. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORDS. OUR FINDINGS REGARDING ALLOWABILITY OF EACH OF THE ABOVE NOTED EXPENSES ARE AS UNDER: I) ADVISE AND CONSULTATION: RS. 28,060/ - : THE SAID EXPENDITURE HAS BEEN CLAIMED TO BE INCURRED FOR PAYMENT TO M/S. JEEVAN STROAT AS CONSULTATION CHARGES IN RELATION TO RAIN WATER HARVESTING SYSTEM INSTALLATION IN THE BUILDING. SINCE THE BUSINESS OF THE ASSESSEE HAS BEEN ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 9 DEVELOP MENT AND SALE OF THE PROPERTY AND THE INSTALLATION OF RAIN WATER HARVESTING SYSTEM WAS A PART OF THE DEVELOPMENT ACTIVITY AND THE CONSULTATION CHARGES WERE PAID IN RELATION TO INSTALLATION OF THE SAID SYSTEM, IN OUR VIEW , IT CAN BE SAFELY SAID TO BE INCURRED IN RE LATION PROPERTY DEVELOPMENT BUSINESS OF THE ASSESSEE. HENCE, IN OUR VIEW, THE SAME IS AN ALLOWABLE DEDUCTION AND IS HEREBY DIRECTED TO BE ALLOWED. II) ERA ARCHITECHTS : RS.56,120/ - THE ABOVE EXPENDITURE HAS BEEN CLAIMED TO BE INCURRED TOWARDS INTERIOR D ESIGNING WORK OF THE SINGLE SCREEN CINEMA. IT IS THE CASE OF THE ASSESSEE THAT APART FROM PROPERTY DEVELOPMENT BUSINESS, THE ASSESSEE WAS ALSO IN THE CINEMA BUSINESS. THE SAID BUSINESS WAS SUSPENDED FOR SOME TIME AND THE SAME HAS BEEN REVIVED DURING THE YEAR 2010. THERE IS NO DISPUTE TO THE FACT THAT THE CINEMA HAS BEEN THE PART OF THE BAHAR PROPERTY OF THE ASSESSEE AND THE PAYMENT TOWARDS DESIGNED WORK OF SINGLE SCREEN CINEMA CAN BE SAID TO BE TOWARDS IMPROVEMENT/DEVELOPMENT OF THE SAID PROPERTY. HENC E , IN OUR VIEW, THE SAME IS AN ALLOWABLE DEDUCTION AND IS HELD ACCORDINGLY. III) RAJAN D. HATE: RS.39,284/ - : THE SAID EXPENDITURE HAS BEEN CLAIMED TO BE INCURRED FOR DIFFERENT CONSULTANCY CHARGES SUCH AS SUPERVISION CHARGES FOR SET BACK AREA, HANDLING OVER, SUPERVISION AND LIASON FOR STORM WATER DRAINAGE COMPILATION, SUPERVISION AND LIASON FOR TREE AUTHORITY , NOC , PHOTOGRAPHY OF TREES, SUPERVISING COMPLETION CERTIFICATE FOR OCCUPATION CERTIFICATE. 13. IN VIEW OF OUR FINDINGS ABOVE, EXPENDITURE PAID TOWARDS CONSULTANCY FOR SUPERVISION, IMPROVEMENT AND DEVELOPMENT OF THE PROPERTY WAS RELATED TO ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 10 BUSINESS OF THE ASSESSEE, HENCE THIS EXPENDITURE IS ALSO HELD TO BE AN ALLOWABLE DEDUCTION AND IS DIRECTED ACCORDINGLY. IV) VALUATION OF PROPERTY: RS.16,836/ - THE SAID EXPENDITURE HAS BEEN CLAIMED TO BE INCURRED FOR GETTING THE VALUATION OF THE PROPERTY DONE FOR THE PURPOSE OF ITS LETTING OUT. THE SAID EXPENDITURE AS OBSERVED CAN NOT BE SAID TO BE IN RELATION TO THE BUSI NESS OF THE ASSESSEE A S THE LETTING OU T OF THE PROPERTY HAS NEVER BEEN THE BUSINESS OF THE ASSESSEE. IN VIEW OF OUR FINDINGS GIVEN ABOVE, WHILE DEALING WITH THE GROUND NO.I & II OF THE PRESENT APPEAL, THIS EXPENDITURE CANNOT BE HELD TO BE ALLOWABLE DEDUCTION AND HENCE THE ORDER OF THE LOWER A UTHORITIES RELATING TO DISALLOWANCE OF THIS EXPENDITURE IS UPHELD. V) VALUATION FEES PAID FOR CINEMA THEATRE: RS.25,254/ - THIS EXPENDITURE HAS BEEN CLAIMED TOWARDS FEES PAID FOR VALUATION OF CINEMA THEATRE FOR GIVING IT TO MUNICIPAL CORPORATION. AS O BSERVED ABOVE, THE VALUATION OF FEES PAID FOR THE PURPOSE OF LETTING OUT OF THE PROPERTY CANNOT BE SAID TO BE A BUSINESS EXPENDITURE IN THE CASE OF THE ASSESSEE . HENCE, THE FINDING OF THE LOWER AUTHORITIES IN RESPECT OF DISALLOWANCE OF EXPENDITURE INCURRE D IN THIS RESPECT IS HEREBY UPHELD. GROUND NO.VI GROUND NO.VI IS REPRODUCED AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ERRED IN COMPUTING INTEREST CHARGED U/S. 234 OF THE ACT. THE APPELLANT PRAYS THAT THE INTEREST CHARGE ABLE U/S. 234 OF THE ACT BE ACCORDINGLY DELETED/REDUCED. 14. IN VIEW OF THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KAR A NV I R SINGH GOSSAL VS. CIT [(2012) 349 ITR 692 (S.C.)] AND FURTHER IN THE CASE OF CIT VS. ANJU M GH ASWAL A [(2001) 252 ITR 1 (S.C.)] WHEREIN ITA NO .7648/M/10 M/S. CAMORON FINANCE & INVESTMENT 11 IT HAS BEEN HELD THAT LEVY OF INTEREST UNDER SECTION 234 OF THE ACT IS MANDATORY AND COMPULSORY IN NATURE AND FURTHER THAT IN APPROPRIATE CASES ONLY CHIEF COMMISSIONER HAS AN AUTHORITY TO WAIVE THE I NTEREST, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE ACCORDINGLY. 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.12. 2013. SD/ - SD/ - ( P.M. JAGTAP ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 06.12. 2013. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, M UMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITA T, MUMBAI.