ACIT 5(2), MUMBAI V. PROLIFIC CREDITS & CAPITALS P. LTD, MUMBAI

ITA 7708/MUM/2010

• Counselvise Citation: 770819914 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-09-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 10-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: S V JOSHI
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M ./ I.T.A. NO. 7708/MUM/2010 ( / ASSESSMENT YEAR : 2000-01) AND ./ I.T.A. NO. 7122/MUM/2010 ( / ASSESSMENT YEAR: 2004-05) DY. COMMISSIONER OF IN- COME-TAX5(2), R. NO.571, AAYKAR BHAVAN, M.K.ROAD, MUMBAI- 400026 / VS. M/S PROLIFIC CREDITS & CAPI- TALS PVT. LTD. KEJRIWAL HOUSE, 7 N. GAMA- DIA ROAD, MUMBAI-400026 ./ PAN : AAACP3204C ( ! / APPELLANT ) .. ( '#! / RESPONDENT ) ! $ % / APPELLANT BY : SHRI ASHOK SURI '#! $ % / RESPONDENT BY : SHRI S.V. JOSHI $ & / DATE OF HEARING : 05-12-2013 '( $ & / DATE OF PRONOUNCEMENT : 13-12-2013 )* / O R D E R PER P.M.JAGTAP,AM : THESE TWO APPEALS PREFERRED BY THE REVENUE AGAINST TWO SEPARATE ORDERS PASSED BY THE LD. CIT(A)-9, MUMBAI, DATED 12 .08.2010 AND 13.09.2010 FOR A.Y. 2004-05 AND 2000-01 INVOLVE A C OMMON ISSUE AND THE SAME THEREFORE HAVE BEEN HEARD TOGETHER AND ARE BEI NG DISPOSED OF BY A SINGLE CONSOLIDATED ORDER. 2. THE SOLITARY COMMON ISSUE INVOLVED IN THESE TWO APPEALS RELATES TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION OF RS.10 ,29,711/- MADE BY THE AO IN EACH OF THE TWO YEARS UNDER CONSIDERATION ON ACC OUNT OF EXPENSES CLAIMED BY THE ASSESSEE AS DEDUCTIION AGINST INCOME FORM OT HER SOURCES. 2 ITA NO.7708/M/2010 & 7122/M/2010 M/S PROLIFIC CREDITS & CAP ITALS PVT. LTD. 3. THE ASSESSEE IS IN THE PRESENT CASE AS A COMPANY WHICH IS DERIVED INCOME FROM SUBLEASING AND INTEREST. IN THE RETUR N OF INCOME FILED FOR BOTH THE YEARS UNDER CONSIDERATION INCOME RECEIVED FROM RENT AND OTHER INCEDENTIAL SERVICES WAS TAKEN BY THE ASSESSEE ITS BUSINESS INCOME. THE RETURN OF INCOME ONLY FILED BY THE ASSESSEE FOR A.Y .2000-01 GIVING THIS TREATMENT WAS INTIALLY ACCEPTED BY THE AO U/S 143(1 ). IN THE ASSESSMENT COMPLETED IN THE SECTION 143(3) FOR A.Y. 2004-05, T HE AO HOWEVER ASSESSEED THE INCOME RECEIVED BY THE ASSESSEE FROM SUBLEASIN G ARE SUBLETTING OF PROPERTY AS WELL AS INCEDENTAL SERVICES AS INCOME F ROM OTHER SOURCES AND ALLOWED DEDUCTION ON ACCOUNT OF RENT AND ELECTRICIT Y CHARGED AND PAID. AGAISNT SAID INCOME, THE DEDUCTION CLAIMED BY THE A SSESSEE ON ACCOUNT OF OTHER EXPENSES AGGREGATING TO RS.10,29,711/- HOWEVE R DISALLOWED BY HIM, HOLDING THAT THE SAME WERE NOT INCURRED BY THE ASSE SSEE FOR EARNING THE INCOME FROM RENT AND INCIDENTAL SERVICES. ON THE B ASIS OF ASSESSMENT MADE FOR A.Y. 2004-05, THE AO REOPENED THE ASSESSMENT FO R A.Y. 2000-01 AND MADE SIMILAR DISALLWANCE ON ACCOUNT OF INCURRED BY THE ASSESSEE AFTER BRINGING TO TAX INCOME FROM RENT AND INCIDENTIAL SE RVICES UNDER THE HEAD INCOME FROM OTHER SORUCES. ON APPEAL, THE LD. CI T(A) DELETED THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF OTHER EXP ENSES FOR BOTH THE YEARS UNDER CONSIDERATION AND THAT THE MATTER VISIT ED TO THE TRIBUNAL IN APPEAL FILED BY THE DEPARTMENT FOR A.Y. 2004-05. THE TRIB UNAL RESTORED THE MATTER TO THE FILE OF THE LD. CIT(A) WITH THE FOLLOWING OB SERVATIONS AND DIRECTIONS GIVEN IN PARAGRAPH NO. 4 OF ITS ORDER DATED 16/10/2 009 PASSED IN ITA NO.4385/MUM/2008. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. ADMITTEDLY THERE IS NO CROSS APPEAL BY TH E ASSESSEE WHICH IMPLIES THAT THE FINDINGS OF THE AUTHORITIES BELOW ON THE T REATMENT OF RENTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES HAS BEEN ACCEPTED BY THE 3 ITA NO.7708/M/2010 & 7122/M/2010 M/S PROLIFIC CREDITS & CAP ITALS PVT. LTD. ASSESSEE. NOW THE QUESTION ARISES WHETHER OR NOT T HE ASSESSEE IS ENTITLED TO DEDUCTION OF THESE EXPENSES U/S 57 OF THE ACT. THE LEARNED CIT(A), WITHOUT GOING INTO THE DETAILS AND NATURE OF SUCH EXPENSES, HAS ACCEPTED THE CLAIM OF THE ASSESSEE IN A SKETCHY MANNER VIDE PARA4.2 OF THE IMPUGNED ORDER. IT WAS INCUMBENT UPON HIM TO PASS REASONED ORDER MORE SPECIFICALLY WHEN HE WAS OVERTURNING THE FINDINGS OF THE ASSESSING OFFIC ER. FURTHER IT WAS NECESSARY TO EXAMINE THE NATURE OF EXPENSES AND SEE WHETHER OR NOT THESE ITEMS OF EXPENSES FALL UNDER THE SPECIFIC CLAUSE OF SECTION 57. NOTHING OF THAT SORT HAS BEEN DONE BY THE LEARNED CIT(A). UND ER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT IT WILL BE IN THE INTEREST OF JUSTICE IF THE IMPUGNED ORDER IS CONSIDERED OPINION THAT IT WI LL BE IN THE INTEREST OF JUSTICE IF THE IMPUGNED ORDER IS SET ASIDE ON THIS SCORE AND THE MATTER IS RESTORED TO THE FILE OF LD. CIT(A) FOR DECIDING IND IVIDUALLY THE DEDUCTIBILITY OR OTHERWISE OF SUCH EXPENSES U/S 57, BY WAY OF SPE AKING ORDER, AS PER LAW AFRESH AFTER ALLOWING A REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 4. AS PER THE DIRECTION OF THE TRIBUNAL THE LD. CIT (A) DECIDED A ISSUE AFRESH AND DELETED THE DISALLOWANCE OF RS.23,77,407 /- MADE BY THE AO ON ACCOUNT OF OTHER EXPENSES IN A.Y. 2004-05 FOR THE F OLLOWING REASONS GIVEN IN PARAGRAPH NO. 2.1 OF HIS IMPUGNED ORDER:- I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AS SESSING OFFICER, DECISION OF MY PREDECESSOR ON THIS ISSUE AND THE DI RECTIONS OF THE HONBLE ITAT. I HAVE ALSO CONSIDERED THE DETAILS FILED AND SUBMISSIONS MADE BY THE APPELLANT BEFORE ME. THE APPELLANT HAS FILED A NOT E TO JUSTIFY THE EXPENSES INCURRED BY THE COMPNAY. IT IS ALSO VERIFIED THAT WHEREVER IT WAS APPLICABLE, TDS WA SALSO MADE ONTHE PAYMENTS MADE A ND NONE OF THE RECIPIENT OF THE PAYMENTS WERE RELATED TO THE APPEL LANT. THEREFORE, AFTER EXAMINING THE ENTIRE DETAILS, I AM OF THE VIEW THAT THE DECISION TAKEN BY MY PREDECESSOR IN HIS APPELLATE ORDER REGARDING ALLOWA BILITY OF THE EXPENDITURE TOTALING TO RS.23,27,407/- WAS AS PER F ACTS BECAUSE THE 4 ITA NO.7708/M/2010 & 7122/M/2010 M/S PROLIFIC CREDITS & CAP ITALS PVT. LTD. EXPENDITURE INCURRED HAS DIRECT NEXUS WITHTHE INCOM E EARNED UNDER THE HEAD INCOME FROM OTHER SOURCES. THEREFORE, ASSESSI NG OFFICER IS DIRECTED TO ALLOW THESE EXPENSES OF RS.23,27,407/- AND THE A PPEAL IS PARTLY ALLOWED. 5. FOLLOWING HIS DECISION RENDERED IN A.Y. 2004-05 AS ABOVE, THE LD. CIT(A) ALSO DELETED THE DISALLOWANCE MADE BY THE TH E AO ON ACCOUNT OF OTHER EXPENSES IN A.Y. 2000-01. AGGRIEVED BY THE O RDERS OF THE LD. CIT(A) FOR A.Y. 2004-05 AND 2000-01, THE REVENUE HAS PREFE RRED THESE APPEALS BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE ISSUE RELATING TO DISALLOWANCE OF OTHER EXPENSES TO THE FILE OF THE L D. CIT(A), SPECIFIC DIRECTION WAS GIVEN BY THE TRIBUNAL TO THE LD. CIT(A) TO EXAM INE THE NATURE OF RELEVANT EXPENSES AND TO SEE WHETHER OR NOT SUCH EXPENSES WE RE FALLING UNDER SPECIFIC CLAUSE OF SECTION 57 A DIRECTION WAS ALSO GIVEN BY THE TRIBUNAL TO THE LD. CIT(A) TO DECIDE INDIVIDUALLY THE DEDUCTIBILITY OR OTHERWSIE ALL THE EXPENSES CLAIMED BY THE ASSESSEE U/S 57 BY WAY OF SPECIFIC O RDER. THESE DIRECTIONS ARE SPECIFICALLY GIVEN BY THE TRIBUNAL TO THE LD. CIT(A ) AFTER TAKING NOTE OF ALL THE FACT THAT THE CLAIM OF THE ASSESSEE WAS EARLIER GRA NTED BY HIM IN SKETCHY MANNER WITHOUT GOING INTO DETAILS AND NATURE OF THE RELEVATN EXPENSES. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT IT WAS INCUMBENT UPON HIM TO PASS REASONED ORDER MORE SPECIFICALLY WHEN HE WAS OVERTU RNING THE FINDINGS OF THE ASSESSING OFFICER. ... OF THE IMPUGNED ORDER PASSE D BY THE LD. CIT(A) HOWEVER SHOWS THAT HE HAS NOT FOLLOWED THE DIRECTIO NS SPECIFICALLY GIVEN BY THE TRIBUNAL AND HAS GONE REPEATED THE SAME MISTAKE BY ACCEPTING THE CLAIM OF THE ASSESSEE IN SKETCHY MANNER WITHOUT GOING INT O THE DETAILS AND NATURE OF THE RELEVANT EXPENSES AND WITHOUT DECIDING INDIVIDU ALLY THE DEDUCTIBILITY OR 5 ITA NO.7708/M/2010 & 7122/M/2010 M/S PROLIFIC CREDITS & CAP ITALS PVT. LTD. OTHERWISE OF SUCH EXPENSES U/S 57. WHILE DEPLORIN G THIS APPROACH AND ATTITUDE OF THE LD. CIT(A), WE RESTRAINED OURSELVES FROM MAKING FURTHER COMMENT AND RESTORE THE MATTER AGAIN TO THE LD. CIT (A) WITH THE HOPE THAT HE WILL DECIDE SAME AFRESH FOLLOWING THE DIRECTION GIV EN BY THE TRIBUNAL VIDE ITS ORDER DATED 16/10/2013 FOR A LETTER AND SPIRIT OF T HE LAW.. 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE TR EATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER 2013 )* $ '( +), 13 TH DECEMBER 2013 ( $ - SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) ) JUDICIAL MEMBER ) /ACCOUNTANT MEMBER MUMBAI ; +) DATED 13.12.2013 F{X~{T? P.S. )*.$.'&/0.10& / COPY OF THE ORDER FORWARDED TO : (1) 2& / THE ASSESSEE; (2) 3 / THE REVENUE; (3) . 456 / THE CIT(A); (4) . 4. . / THE CIT, MUMBAI CITY CONCERNED; (5) 07-.'& 8... 8. / THE DR, ITAT, MUMBAI; (6) -9.: / GUARD FILE .'& / TRUE COPY )* / BY ORDER ; / <.3 / (DY./ASSTT. REGISTRAR) .. 8. / ITAT, MUMBAI