SHREE PAREKH ESTATE P. LTD, MUMBAI V. ITO WD 5(3)-4, MUMBAI

ITA 7962/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8418 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH

Judgement Text

1 ITR NO. 7962/MUM/210 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI SMC BENCH SMC BENCH SMC BENCH SMC BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE SHRI P M JAGTAP, ACCOUNTANT MEMBER BEFORE SHRI P M JAGTAP, ACCOUNTANT MEMBER BEFORE SHRI P M JAGTAP, ACCOUNTANT MEMBER BEFORE SHRI P M JAGTAP, ACCOUNTANT MEMBER ITA NO. 7962/MUM/2010 ITA NO. 7962/MUM/2010 ITA NO. 7962/MUM/2010 ITA NO. 7962/MUM/2010 (ASST YEAR 2007 (ASST YEAR 2007 (ASST YEAR 2007 (ASST YEAR 2007- -- -08) 08) 08) 08) SHREE PARKESH ESTATE P LTD 14 PAREKH MARKET 39 KENNADY BRIDE OPERA HOUSE MUMBAI 400 004 VS THE INCOME TAX OFFICER WARD 5(3)(4), MUMBAI (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO.AACCS9343R PAN NO.AACCS9343R PAN NO.AACCS9343R PAN NO.AACCS9343R ASSESSEE BY SHRI K GOPA L & SHRI JITENDRA SINGH REVENUE BY SHRI R K GUPTA/DR PER P M JAGTAP, AM PER P M JAGTAP, AM PER P M JAGTAP, AM PER P M JAGTAP, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER OF THE LD CIT(A)-9, MUMBAI DATED 19.8.2010 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SU STAINED BY THE LD LD CIT(A) OUT OF ADMINISTRATION EXPENSES. 2 THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, WHIC H WAS EARLIER ENGAGED IN THE MANUFACTURING ACTIVITY. THE SAID ACTIVITY WAS CLOSED DOWN IN THE YEAR 1970 AND THEREAFTER IT WAS EARNING INCOME ONLY FROM RENT, INTER EST AND CAPITAL GAIN. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED I NCOME FROM RENT, INTEREST, SALE OF SCRAP ETC., AND AFTER CLAIMING VARIOUS EXPEN SES AGAINST THE SAID INCOME, THE NET INCOME WAS DECLARED BY THE ASSESSEE UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AT NIL IN THE ORIGINAL RETURN FILED ON 31. 10.2007. IN THE ASSESSMENT COMPLETED U/S 143(3), THE RENTAL INCOME RECEIVED BY TH E ASSESSEE WAS BROUGHT TO 2 ITR NO. 7962/MUM/210 TAX BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FR OM HOUSE PROPERTY AFTER ALLOWING DEDUCTION FOR PROPERTY TAX OF RS. 16,213/- AN D THE STANDARD DEDUCTION AT 30% FOR REPAIR AND MAINTENANCE. INTEREST INCOME RECE IVED BY THE ASSESSEE ON NABARD BOND AND SALES OF SCRAP WAS BROUGHT TO TAX BY TH E ASSESSING OFFICER UNDER THE HEAD INCOME FROM OTHER SOURCES AND DEDUCTION TO TH E EXTENT OF 15% OF THE SAID INCOME WAS ALLOWED BY HIM ON ACCOUNT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE RESULTING IN DISALLOWANCE OF THE BALANCE AM OUNT OF EXPENSES. 3 ON APPEAL, THE LD CIT(A) INCREASED THE ALLOWANCE OF THE SAID EXPENSES TO 25% OF THE INCOME ASSESSED UNDER THE HEAD INCOME FROM OTH ER SOURCES. STILL AGGRIEVED, THE ASSESSEE HAS PREFERRED THIS APPEAL BEF ORE THE TRIBUNAL. 4 I HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. I HAVE ALSO CAREFULLY GONE THROUGH THE COPY OF THE P&L ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATI ON PLACED AT PAGE 17 OF THE PAPER BOOK. AS IT IS EVIDENT FROM THE DETAILS OF EXP ENSES DEBITED IN THE SAID P&L ACCOUNT, CERTAIN EXPENSES WERE INCURRED IN RELATION TO EARNING OF RENTAL INCOME WHICH HAS BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESS EE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AFTER ALLOWING PERMISSIBLE DEDUC TION ON ACCOUNT OF PROPERTY TAX AND REPAIR AND MAINTENANCE. SUCH EXPENSES DEBIT ED BY THE ASSESSEE IN THE P&L ACCOUNT, THUS ARE NOT ALLOWABLE AS DEDUCTION SEPAR ATELY. 4.1 AS REGARDS THE REMAINING EXPENSES, I FIND MERIT I N THE CONTENTION RAISED BY THE LD COUNSEL FOR THE ASSESSEE THAT THE SAME TO THE EXTEN T INCURRED FOR ADMINISTRATION OF THE AFFAIRS OF THE ASSESSEE COMPANY TO MAINTAIN ITS STATUS AS A 3 ITR NO. 7962/MUM/210 COMPANY ARE ELIGIBLE FOR DEDUCTION. SIMILARLY, THE EXPENSES INCURRED BY THE ASSESSEE COMPANY FOR MAINTENANCE OF ITS ASSETS SUCH AS PROPERTY AT BHOR ARE ALSO ELIGIBLE FOR DEDUCTION. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER TO THE FILE OF THE ASSES SING OFFICER WITH A DIRECTION TO EXAMINE THE EXACT NATURE OF EXPENSES CLAIMED BY THE ASSESSEE UNDER DIFFERENT HEADS IN ORDER TO ASCERTAIN THEIR ALLOWABILITY INSTEAD OF ALLOWING THE SAME ON AD-HOC BASIS AS CERTAIN PERCENTAGE OF INCOME FROM OTHER SOUR CES. 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TR EATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 23 RD , DAY OF FEB 2011 SD/- (P (P(P (P M JAGTAP ) M JAGTAP ) M JAGTAP ) M JAGTAP ) ACCOUNTANT MEMBER. PLACE: MUMBAI : DATED: 23 RD , FEB 2011 RAJ* 4 ITR NO. 7962/MUM/210 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI 5 ITR NO. 7962/MUM/210