R.N.B.J INVESTMENT & DEVELOPMENT P. LTD, MUMBAI V. ITO 2(3)-1, MUMBAI

ITA 7882/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9075 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-12-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 15-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A B KOLI SR
• Assessee Lawyers: D V LAKHANI
• Keywords: Opportunity of being heard; Revenue expenditure; Capital expenditure
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.7882/M/2010 ASSESSMENT YEAR:2004-2005 M/S. R.N.B.J. INVESTMENT & DEVELOPMENT PVT. LTD., BALLARD HOUSE, 2 ND FLOOR, ADI MARZBAN PATH, BALLARD ESTATE, MUMBAI 400 038. PAN:AAACR 2481B VS. INCOME TAX OFFICER-2(3)-1, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.V. LAKHANI RESPONDENT BY : SHRI A.B. KOLI, SR.AR DATE OF HEARING: 6.12.2012 DATE OF ORD ER:21.12.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 15.11.2010 IS AGAINST THE ORDER OF CIT (A)-6, MUMBAI DATED 1.9.2010 FOR THE ASSESSMENT YEA R 2004-2005. 2. THE ASSESSEE IS A COMPANY AND ENGAGED IN THE CON STRUCTION ACTIVITIES AT MAHABALESHWAR. ASSESSEE FILED ITS RETURN OF INCOME DECLARING THE TOTAL INCOME AT RS. 1,37,140/-. SCRUTINY ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 18,38,115/- AFTER MAKING VA RIOUS ADDITIONS. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, A SSESSEE GOT A PART RELIEF AND CIT (A) CONFIRMED CERTAIN ADDITIONS TOO AND THESE ADDIT IONS ARE THE BONE OF CONTENTION IN THE APPEAL BEFORE THE TRIBUNAL. THE GROUNDS RAISED THE ASSESSEE READ AS UNDER: 1. THE CIT (A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF LEGAL AND PROFESSIONAL FEES AMOUNTING TO RS. 1,36,000/-. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT THE DISALLOWANCE OF EXPENDITURE OF RS. 1,36,000/- IS NOT JUSTIFIED AND BE DELETED. THE APPELLANT SUBMIT THAT THEY ARE ENTITLED TO DEDUCTION F THE EX PENDITURE OF RS. 1,36,000/- UNDER THE HEAD LEGAL & PROFESSIONAL CHA RGES. 2. THE LD CIT (A) HAS ERRED IN CONFIRMING THE DISAL LOWANCE OF MISCELLANEOUS EXPENSES AMOUNTING TO RS. 30,273/-. ON THE FACTS & 2 CIRCUMSTANCES OF THE CASE AND APPELLANT SUBMIT THAT THE DISALLOWANCE OF MISCELLANEOUS EXPENSES OF RS 30, 273/- IS NOT JUSTI FIED AND BE DELETED. THE APPELLANT SUBMIT THAT THEY ARE ENTITLED TO DEDUCTIO N OF THE EXPENDITURE OF RS. 30,273/- UNDER THE HEAD MISCELLANEOUS EXPENSES . 3. THE CIT (A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF FOREIGN TRAVELLING AMOUNTING TO RS. 2,50,757/-. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT THE DISALLOWA NCE OF FOREIGN TRAVELLING OF RS. 2,50,757/- IS NOT JUSTIFIED AND BE DELETED. THE APPELLANT SUBMIT THAT THEY ARE ENTITLED TO DEDUCTION OF THE EXPENDITURE O F RS. 2,50,757/- UNDER THE HEAD FOREIGN TRAVELLING. 4. THE CIT (A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF REPAIRS & MAINTENANCE AMOUNTING TO RS. 7,74,876/-. ON THE FACTS & CIRCUMSTANCES OF THE CAW3 THE APPELLANT SUBMIT THAT THE DISALLOWANCE OF EXPENDITURE OF RS. 7,74,876/- IS NOT JUSTIFIED AND BE DELETED. THE APPELLANT SUBMIT THAT THEY ARE ENTITLED TO DEDUCTION OF THE E XPENDITURE OF RS. 7,74,876/- UNDER THE HEAD REPAIRS & MAINTENANCE. 5. THE CIT (A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF SERVICE CHARGE AMOUNTING TO RS. 6,500/-. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT THE DISALLOWANCE OF EXPENDITURE OF RS. 6,500/- IS NOT JUSTIFIED AND BE DELETED. THE APPEL LANT SUBMIT THAT THEY ARE ENTITLED TO DEDUCTION OF EXPENDITURE OF RS. 6,500/- UNDER THE HEAD OFFICE EXPENSES. 6. THE CIT (A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF BROKERAGE AND COMMISSION AMOUNTING TO RS. 29,400/-. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT THE DISALLOWANCE OF EXPENDITURE OF RS. 29,400/- IS NOT JUSTIFIED AND BE DELETED. THE APPELLANT SUBMIT THAT THEY ARE ENTITLED TO DEDUCTION OF THE E XPENDITURE OF RS. 29,400/- UNDER THE HEAD BROKERAGE AND COMMISSION. 7. THE CIT (A) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B. ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE APPEL LANT SUBMIT THAT LEVY OF INTEREST U/S 234B IS NOT JUSTIFIED AND BE DELETED. 3. ISSUE-WISE FACTS AS WELL AS THE ADJUDICATION IS G IVEN IN THE SUCCEEDING PARAGRAPHS. 4. GROUND NO.1 RELATES TO CONFIRMING THE DISALLOWAN CE OF LEGAL AND PROFESSIONAL FEES OF RS. 1.36 LAKHS. RELEVANT FACTS ON THIS IS SUE ARE THAT THE ASSESSEE DEBITED THE SAID AMOUNT FOLLOWING THE FACT THAT THE AMOUNT WAS PAID TO M/S. HEC-ARCHITECTS AND INTERIOR DESIGNERS FOR SERV ICES RENDERED BY THEM IN RESPECT OF PROPERTY DEVELOPMENT AT MAHABLESHWAR. ASSESSEE DEBITED THE SAME TO THE P& L ACCOUNT. PER CONTRA, AO IS OF THE VIEW THAT THE SAID AMOUNT CONSTITUTES CAPITAL WORK IN PROGRESS AND THEREFORE, IT SHOULD BE SHOW AS PAR T OF THE WIP ACCOUNT. ON THE OTHER HAND, THE CASE OF THE ASSESSEE IS THAT THE SA ID AMOUNT WAS PAID TO THE ARCHITECTS AND DESIGNERS FOR PROVIDING PROFESSIONAL SERVICES IN CONNECTION WITH THE 3 MAHABALESWAR PROJECT. AS PER THE ASSESSEE, THE SAM E CONSTITUTE REVENUE EXPENDITURE CONSIDERING THE ASSESSEES BUSINESS IE DEVELOPMENT OF PROPERTY AT MAHABLESHWAR. ON HEARING THE ASSESSEE, CIT (A) MEN TIONED THAT THE SAID EXPENDITURE INCURRED IN CONNECTION WITH DEVELOPMENT OF PROPERTY AT MAHABLESHWAR WHICH IS REFLECTED AS CAPITAL WORK IN PROGRESS IN T HE BOOKS OF ACCOUNT. ACCORDINGLY, CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 5. GROUND NO.2 RELATES TO THE CONFIRMING OF DISALLO WANCE OF MISCELLANEOUS EXPENSES AMOUNTING TO RS. 30,273/-. AS PER ASSESSM ENT ORDER THESE EXPENSES ARE INCURRED FOR TRANSPORTATION OF LABOUR, PURCHASE OF COAL, TAR, MANURE, GRAIN, GROCERY SEEDS AND PIPES AND OTHER PAYMENTS TO THE STORES ET C. ADMITTEDLY, THESE EXPENSES WERE ALSO INCURRED IN DEVELOPMENT OF PROPERTY AT MA HABLESHWAR. CIT (A) CONFIRMED THE DISALLOWANCE FOR THE SAME REASONING THAT THE SA ID EXPENDITURE INCURRED IN CONNECTION WITH THE DEVELOPMENT OF PROPERTY AT MAHA BLESHWAR WHICH IS ASSESSED IN BOOKS OF ACCOUNT AS CAPITAL WORK IN PROGRESS. 6. GROUND NO.3 RELATES TO CONFIRMING THE DISALLOWA NCE OF RS. 2,50,757/- AND IT IS CLAIMED TO HAVE BEEN INCURRED IN CONNECTION WITH FOREIGN TRAVEL TO USA. RELEVANT FACTS IN THIS REGARD ARE TABULATED AS UNDER: S.NO. DATE PARTY NAME REASON FOR PAYMENT . (RS.) 1. 11.7.2003 RAJNI ARAUJO TRAVEL TO US FOR BUSINESS PROMOTION 1,00,000/ - 2. 14.7.2003 - DO - TICKET (BO M - JKF - BOM) 53,157/ - 3. 11.03.2004 HEC - ARCHITECT & INTERIOR DESIGNER WORK CARRIED OUT AT MAHABLESHWAR 80,000/ - 4. 12.3.2004 TEZT AIR TRAVELS APPLICATION FOR VISA 17,600/ - TOTAL 2,50,757/ - 7. IN THIS REGARD, AO MENTIONED THAT THE ABOVE SUM O F RS. 2,50,757/- INCLUDES THE EXPENDITURE OF RS. 80,000/- PAID TO HEC ARCHI TECH AND INTERIOR DESIGNER IN CONNECTION WITH THE PROJECT AT MAHABALESWAR AND THE SAME HAS TO BE DISALLOWED CONSIDERING ITS CONNECTIVITY TO THE PROPERTY UNDER DEVELOPMENT AT MAHABLESHWAR. REGARDING THE BALANCE OF RS. 1,70,757/-, ASSESSEE S UBMITTED THAT THE CONSULTANT OF ASSESSEE NAMELY M/S. RAJNI ARAUJO HAD TRAVELLED TO USA AND OTHER COUNTRIES FOR 4 FINDING OUT PARTNER FOR DEVELOPMENT OF PROPERTY AT MAHABLESHWAR. UNDISPUTEDLY, THIS EXPENDITURE RELATES TO THE DEVELOPMENT OF PROPERTY AT MAHABLESHWAR. CONSIDERING ITS NEXUS TO THE PROPERTY AT MAHABLESHWAR, CIT (A) CONFIRMED THE ADDITION AND HELD THAT THE SAID EXPENDITURE REQUIRED TO BE CAPITALIZE D AS WORK-IN-PROGRESS. 8. GROUND NO.4 RELATES TO CONFIRMING THE ADDITION O F RS. 7,74,876/- ON ACCOUNT OF REPAIRS & MAINTENANCE AGAIN CONNECTED WITH PROPERTY DEVELOPMENT AT MAHABLESHWAR. FOR THE SIMILAR REASONS OF ITS NEXUS WITH THE CAPITAL WORK IN PROGRESS, CIT (A) CONFIRMED THE SAME. 9. GROUND NO.5 RELATES TO CONFIRMING OF ADDITION OF RS. 6,500/- ON ACCOUNT OF SERVICE CHARGES . AS PER THE ASSESSEE, THIS AMOUNT WAS INCURRED IN CONNECTION WITH THE SAID PROPERTY AT MAHABLESHWAR. ALL THESE AMOUN TS WERE PAID FOR PROTECTING THE BUSINESS ASSET OF THE COMPANY. THESE AMOUNTS WERE SHOWN AS PART OF THE HEAD OFFICE EXPENSES. 10. CIT (A) GROUPED ALL THE ABOVE ISSUES OF DISALL OWANCE IE LEGAL AND PROFESSIONAL CHARGES, MISCELLANEOUS EXPENSES, FOREIGN TRAVEL EXP ENDITURE, REPAIRS AND MAINTENANCE EXPENDITURE, SERVICES CHARGES EXPENDITU RE AND NOTICED THAT ALL THESE EXPENDITURE RELATED TO THE PROPERTY AT MAHABLESHWAR AND ADJUDICATED THE ISSUES BY GIVING COMMON REASONING WHICH IS EVIDENT FROM PARA 4 OF THE IMPUGNED ORDER. 11. TO SUM UP, THE CLAIM OF THE ASSESSEE THAT THE P ROPERTY AT MAHABLESHWAR WAS DEVELOPED BY THE ASSESSEE TO GENERATE RESIDENTIAL U NITS AND THE SAID UNITS ARE CLAIMED TO HAVE BEEN TREATED AS STOCK-IN-TRADE, WHI CH ARE LEFT UNSOLD DURING THE PERIOD, WAS NOT APPRECIATED BY THE CIT(A). THE CLAI M THAT THE IMPUGNED EXPENDITURE WAS INCURRED FOR MAINTAINING THE SAID STOCK-IN-TRAD E WAS NOT ACCEPTED. THE WIP, AT THE END OF THE AY 2004-2005 IS RS. 39,47,813/- WHI CH SHOWED THE ASCENDING TREND IN THE SUBSEQUENT YEARS WAS HIGHLIGHTED TO DEMONSTR ATE THAT THE WIP OF A COMPLETED PROJECT MUST NOT INCREASE. VIDE PARA 4. 4 OF THE IMPUGNED ORDER, CIT (A) CONCLUDED STATING THAT THE LEGAL EXPENSES, MISCELLA NEOUS EXPENSES, FOREIGN TRAVEL EXPENSES, REPAIRS AND MAINTENANCE AND THE SERVICES CHARGES ARE DIRECTLY RELATE TO 5 THE MAHABLESHWAR PROPERTY WHICH WAS SHOWN AS WORK-I N-PROGRESS AND NOT AS STOCK- IN-TRADE. AS THE PROJECT WAS NOT COMPLETED, THE IM PUGNED EXPENDITURE NEEDS TO BE BOOKED TO THE WIP ACCOUNT ONLY AND NOT THE P & L AC COUNT AS DONE BY THE ASSESSEE. THE CONTENTS OF SAID PARA 4.4 IS REPRODUCED AS UNDE R: 4.4: I HAVE CONSIDERED THE FACTS OF THE ISSUE AND THE SUBMISSIONS MADE BY THE AR BUT DO NOT FIND MERIT IN THEM. THE SCHEDULE OF CAPITAL WORK IN PROGRESS GIVEN BY THE AR IN HIS WRITTEN SUBMISSIONS SUPPORTS THE CASE OF THE AO THAT THE WORK RELATING TO MAHABLESHWAR PROPERTY WAS NOT YET COMPLETED AND THE SAME WAS RIGHTLY CARRIED OVER AS CAPITAL W ORK IN PROGRESS. AS PER THE SCHEDULE ABOVE, IN THE YEAR U NDER CONSIDERATION, IE AY 2004-2005, THERE IS CLEARLY AN ADDITION IN THE CAPITAL WORK IN PROGRESS AS COMPARED TO AY 2003-2004. ALSO, THE ABOVE SCHED ULE INDICATES FURTHER ADDITION TO WORK IN PROGRESS IN THE AYS 2007-2008 A ND 2008-2009. THESE ADDITIONAL FACTS BROUGHT OUT BY THE AR CLEARLY SUPP ORT THE CASE OF THE A THAT THE CONSTRUCTION WORK AT MAHABLESHWAR WAS STILL IN PROG RESS NECESSITATING THE CAPITALIZATION OF THE EXPENDITURE RELATING TO SUCH PROPERTY. THUS, ALL EXPENSES IDENTIFIED BY THE AO AS RELATING TO MAHABLESHWAR PROPERTY HAVE RIGHTLY BEEN CAPITALIZED BY THE AO. HENCE, TH E DISALLOWANCE MADE BY THE AO AS DISCUSSED IN PARA 4.1 ABOVE ARE CONFIRMED . CONSEQUENTLY, GROUNDS NO.2, 3, 4, 5 AND 11 ARE DISMISSED. 12. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET , LD COUNSEL BROUGHT OUR ATTENTION TO SCHEDULE-7 AND FAIRLY MENTIONED THAT T HE CAPITAL WORK IN PROGRESS OF THE MAHABLESHWAR PROPERTY IS SHOWN AS WIP AND UNDER THE HEAD STOCK-IN-TRADE. HE ALSO BROUGHT OUR ATTENTION SCHEDULE-11 TO THE PROFI T & LOSS ACCOUNT AND DEMONSTRATED THAT THE ASSESSEE HAS NOT MADE ANY SAL E OF THE STOCK DURING THE YEAR. LD COUNSEL REITERATED THE SUBMISSION MADE BEFORE TH E LOWER AUTHORITIES AND PRAYED FOR REVERSAL OF THE DECISION OF THE CIT(A). ON THE OTHER HAND, LD DR FOR THE REVENUE STRONGLY RELIED ON THE ORDER OF THE AO AND THE CIT( A). 13. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF THE REVENUE AND THE PAPER BOOK FILED BEFORE US. THE CASE OF THE REVENUE IS THAT THE PROJECT IS INCOMPLETE AS EVIDENCED FROM THE BOOK ENTRIES WHEN THE EXPEND ITURE IS SHOWN AS CAPITAL WORK IN PROGRESS. RELEVANT SCHEDULE IS PL ACED IN THE PAPER BOOK. WE FIND THAT THE SAID CAPITAL WORK IN PROGRESS IS NOT TRANS FERRED TO THE TRADING ACCOUNT WHICH IS NECESSARILY DONE BY THE ASSESSEE, WHEN THE PROJE CT IS COMPLETE AND STOCK IN TRADE IS READY FOR SALE. FURTHER, THE FIGURES OF THE CAP ITAL WORK IN PROGRESS FOR THE AY 6 2008-09 SUGGEST THAT THE SAME IS INCREASING FROM THAT OF THE CURRENT AY SUGGESTING THE INCOMPLETENESS OF THE PROJECT IN THE YEAR UNDER CONSIDERATION. THUS, AS PER THE REVENUE, THE IMPUGNED EXPENDITURE CONSTI TUTES CAPITAL EXPENDITURE CONSIDERING THE FACT THAT THE SAME RELATES TO THE M AHABALESWAR PROJECT, WHICH IS STILL SHOWN IN BOOKS AS CAPITAL WIP. THE PAPER BOOK FILED BEFORE US DOES NOT CONTAIN TRADING ACCOUNT SHOWING TO DEMONSTRATE THE TRANSFER OF WIP ACCOUNT TO STOCK IN TRADE ACCOUNT IN THE TRADING ACCOUNT. ALTHOUGH THER E IS REFERENCE TO THE STOCK IN TRADE IN THE BALANCE SHEET, THE SAME IS MENTIONED UNDER THE HEADING WORK IN PROGRESS ACCOUNT. FAIRLY, LD COUNSEL MENTIONED TH AT THE CAPITAL WORK IN PROGRESS WENT ON INCREASING FROM THE FIGURES OF RS. 39,47,81 3/- TO RS. 54,90,657/- AT THE END OF THE AY 2008-2009. WHY SHOULD THERE BE INCREASE IN THE WIP ACCOUNT WHEN THE PROJECT IS COMPLETE? HAS THE ASSESSEE STARTED ANY O THER PROJECT ON SAME LOCATION? THERE ARE NO DETAILS ON THIS ISSUE. IN ANY CASE, IT IS NOT THE CASE OF THE ASSESSEE THAT THE SAID MAHABALESWAR PROJECT IS EXTENDED AND THERE FORE, THE INCREASE IN THE WIP. THERE IS NO POSITIVE AND INDEPENDENT EVIDENCE FILED BEFORE US OR THE REVENUE TO SUGGEST THE ABOVE. IN THESE CIRCUMSTANCES, IT IS LO GICAL TO INFER THAT THE PROJECT IS STILL INCOMPLETE AS HELD BY THE REVENUE. AS SUCH, THE ONU S IS ON THE ASSESSEE AND HE HAS NOT TAKEN EFFORTS TO DEMONSTRATE THAT THE PROJECT I S COMPLETE IN ALL RESPECTS AND THE INCREASE IN WIP DOES NOT RELATE TO THE MAHABALESWAR PROJECT. ABSENCE OF SALE OF THE RESIDENTIAL UNITS ALSO SUGGESTS THE EXISTENCE OF SO ME PROBLEMS WITH THE PROJECT. IN OUR OPINION, THIS ASCENDENCY IN VALUE OF THE CAPITA L WORK IN PROGRESS SHOWS THAT THE PROJECT IS NOT COMPLETED AND THE SAME GOES AGAINST THE ARGUMENTS. FROM THIS POINT OF VIEW, IN OUR OPINION, THE FINDING GIVEN BY THE C IT (A) IS AN ORDER. THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) DO ES NOT CALL ANY INTERFERENCE ON THE DECISION RELATING TO LEGAL EXPENSES, MISCELLANEOUS EXPENSES, FOREIGN TRAVEL EXPENSES, REPAIRS AND MAINTENANCE AND THE SERVICES CHARGES. 14. WE HAVE ALSO EXAMINED THE NATURE OF THE IMPUGNE D EXPENDITURE AND NOTICED THAT IT CANNOT BE INFERRED ON THE FACE OF IT THAT T HEY ARE SPECIFIC TO THE COMPLETED PROJECT OF RESIDENTIAL UNITS. THE ISSUES RELATING T O WHY THE FOREIGN TRAVEL WAS UNDERTAKEN AFTER THE COMPLETION OF MAHABALESWAR PRO JECT AND WHY THE ARCHITECTS OR 7 INTERIOR DESIGNERS ARE PUT INTO SERVICE AFTER THE C OMPLETION OF UNITS OF THE SAID PROJECT ARE ALSO LEFT UNATTENDED IN THE ORDERS OF T HE REVENUE. THUS, THERE IS FAILURE ON PART OF THE ASSESSEE IN DEMONSTRATING THE CLAIMS WITH EVIDENCE. THEREFORE, IN THE GIVEN FACTS OF THE CASE, THE FINDING OF THE CIT(A) IS REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS NO. 1 T O 6 ARE DISMISSED . 15. FINALLY, GROUND NO.6 RELATES TO SUSTAINING OF A DDITION OF RS. 29,400/- WHICH WAS PAID TOWARDS BROKERAGE AND COMMISSION. RELEVAN T FACTS ARE THAT THE ASSESSEE INCURRED THE SAID EXPENSES EITHER FOR THE PURPOSE O F PROVIDING AMENITIES OR FOR ENJOYING THE SERVICES OF ARRANGING A TENANT IN THE PREMISES AT MAHABLESHWAR. THE DETAILS OF THE AMENITIES ARE NOT SUBMITTED. THERE I S NO CLARITY ON EXACT NATURE OF SERVICES PROVIDED BY THE PAYEE. BUT IT IS FACT THAT THE IMPUGNED EXPENDITURE WAS INCURRED IN CONNECTION WITH WOODS PREMISES WHOSE IN COME WAS SO OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, ASSESS EE DEBITED THE EXPENDITURE TO THE P AND L ACCOUNT WHICH WAS NOT ALLOWED BY THE AO . CIT(A) CONFIRMED THE SAME VIDE HIS FINDINGS IN PARA 4 OF THE ORDER AND HE IS OF THE OPINION THAT THE SAID EXPENSES ARE NOT COVERED BY SERIES OF DEDUCTIONS AL LOWED UNDER SECTION 24 OF THE ACT. BEFORE US, REGARDING THE ALLOWABILITY OF BROKE RAGE AND COMMISSION IT IS THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSEE IS ENTIT LED TO DEDUCTION WHILE ARRIVING AT THE ONLY RATABLE VALUE, THE AO IS NOT JUSTIFIED AS HE IS OF THE OPINION THAT AMOUNT RELATES TO TRANSACTIONS OF LEASE OF THE FLAT. 16. BEFORE US, IN RESPONSE TO THE QUERY FROM THE BE NCH, THE PARTIES COULD NOT DEMONSTRATE THE EXACT NATURE OF SERVICES RECEIVED B Y THE ASSESSEE FOR WHICH THE EXPENDITURE WAS INCURRED. IN OUR OPINION, FOR DECID ING THE IMPUGNED ISSUE AT GROUND 6, THERE IS NEED FOR CLARITY ON THE NATURE OF SERVI CES RENDERED BY THE PAYEE. WHILE SOME DOCUMENTS SUGGEST THAT THE SERVICES RECEIVED A RE IN TERMS OF ARRANGING A TENANT FOR THE ASSESSEES PREMISES AND THERE ARE OT HERS ALSO TO SUGGEST FOR ARRANGING THE AMENITIES IN THE WOODS PREMISES. THE BILL GIVEN BY THE PAYEE SUGGESTS THAT PAYMENTS IS FOR ARRANGING AMENITIES AS IS EVIDENT F ROM THE NARRATION IN THE SAID BILL PLACED IN THE PAPER BOOK. THE ORDERS OF THE REVENUE DO NOT CONTAIN ANY DISCUSSION ON THE ACTUAL SERVICES RECEIVED BY THE ASSESSEE. TH EREFORE, IN OUR OPINION, THE 8 GROUND RELEVANT SHOULD BE SET ASIDE TO THE FILES OF THE CIT(A) FOR APPRECIATING THE FACTS AND DECIDE THE ISSUE AFRESH AFTER GRANTING RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE GROUND 7 IS SET ASIDE . 17. IN THE RESULT OF THE APPEAL IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF DECEMBER, 2012. SD/- SD/- (D. MANMOHAN) (D. KARUNAKARA RAO) VICE PRESIDENT ACCOUNTANT MEMBER DATE : 21.12.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR D, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI