Uppu Karunasesh, CHENNAI V. ACIT, CHENNAI

ITA 804/CHNY/2013

• Counselvise Citation: 80421714 RSA 2013
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 26-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: UTTAM JOSEPH CHERIYAN
• Keywords: Unexplained investment; Business income
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.804/MDS/2013 ASSESSMENT YEAR : 2008-09 SHRI UPPU KARUNASESH 22, SHANTHI MAIN ROAD RAJARAM MEHTA NAGAR CHENNAI 600 029 VS THE ASSTT. COMMISSIONER OF INCOME-TAX MEDIA CIRCLE I CHENNAI [PAN AAHPK 8083C ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI UTTAM JOSEPH CHERIYAN, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 03-12-2013 DATE OF PRONOUNCEMENT : 10-12-2013 O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008-09, IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME- TAX-IV CHENNAI DATED 18.3.2013, PASSED IN C. NO.46( 7)/CIT-IV/2012- 13 REVISING REGULAR ASSESSMENT UNDER SECTION 26 3 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A.NO.804/13 :- 2 -: 2. IN THE COURSE OF HEARING, THE ASSESSEE STRONGLY A RGUES THAT THE CIT HAS ERRED IN REVISING THE REGULAR ASSESSMEN T FINALIZED BY THE ASSESSING OFFICER. IT IS SUBMITTED BY THE ASSESSE E THAT SINCE HE HAD RAISED CONSTRUCTION ON THE LEASED LAND AND SUB-LET IT, HE IS ENTITLED FOR THE EXPENSES OF ` 22.10 LAKHS SPENT ON EQUIPMENT HIRE CHARGES AND RENT OF ` 30 LAKHS PER MONTH. 3. THE REVENUE JUSTIFIES THE ORDER PASSED BY THE CIT R EVISING THE ASSESSMENT U/S 263 OF THE ACT ON THE GROUND TH AT IN ADDITION TO THE STANDARD DEDUCTION U/S 24 OF THE ACT, THE ASS ESSEE IS NOT ENTITLED FOR THE AFORESAID EXPENSES IN QUESTION. 4. THE ASSESSEE IS AN INDIVIDUAL. IN THE IMPUGNED ASSESSMENT YEAR, HE HAD INCOME FROM HOUSE PROPERTY, REAL ESTAT E AND OTHER SOURCES. ON 24.9.2008, THE ASSESSEE HAD FILED RE TURN DECLARING INCOME OF ` 1,94,75,590/- WHICH WAS SUMMARILY PROCESSED. THEREAFTER, THE ASSESSING OFFICER FRAMED REGULAR ASSESSMENT VIDE ORDER DATED 15.12.2010 AFTER ADDING A SUM OF ` 58,34,458/- IN THE SHAPE OF UNEXPLAINED INVESTMENT U/S 69B OF THE ACT . 5. THE ASSESSEE HAD TAKEN ON LEASE LAND FROM FOUR LAN D OWNERS NAMELY MASTER U.SANDESH, MASTER U. SANKALP, SMT.U. VIJAYA I.T.A.NO.804/13 :- 3 -: AND A PARTNERSHIP FIRM BY THE NAME SANDESH & SANKAL P SYNDICATES. HE HAD CONSTRUCTED A BUILDING THEREUPON MEASURING 5 2,000 SQ FT HAVING SIX FLOORS AS A BIG OFFICE COMPLEX. ON 5.2. 2004, HE ENTERED INTO TWO MORE LEASE AGREEMENTS WITH THE AFORESAID FIRM R EGARDING EQUIPMENTS LETC. THERE IS NO DISPUTE THAT THE AFOR ESAID FACTUAL POSITION CONTINUES TILL DATE AND THE ASSESSEE HAS BEEN PAYING THE AFORESAID RENT AND LEASE CHARGES TO THE LESSORS. O N 27.3.2004, THE ASSESSEE SUB-LET THE BUILDING ETC. TO M/S OFFICE T IGER DATABASE SYSTEMS INDIA PVT. LTD. FOR A RENT OF ` 33/- PER SQ FT. COMING TO THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD DEBITE D A SUM OF ` 22.10 LAKHS AS EQUIPMENT HIRE CHARGES AND ` 30 LAKHS AS RENT PAID TO LESSORS (SUPRA) AND CLAIMED EXPENSES. IN THE OPINI ON OF THE CIT, THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE AFORESAID IT EMS AS EXPENDITURE SINCE SECTION 24 OF THE ACT BARS SUCH A RELIEF OVER AND ABOVE 30% OF THE ANNUAL VALUE AND THOSE SPECIFIED ALONGWITH THE SAME I.E INTEREST ETC. THEREFORE, HE ISSUED SECTION 263 NOTICE TO TH E ASSESSEE ON THE GROUND THAT THE ASSESSMENT FINALIZED HEREINABOVE A CCEPTING THE AFORESAID CLAIM OF ` 52.10 LAKHS I.E SUM TOTAL OF EQUIPMENT HIRE CHARGES AND RENT PAID WAS ERRONEOUS AND CAUSED PREJ UDICE TO THE INTEREST OF THE REVENUE. I.T.A.NO.804/13 :- 4 -: 6. IN RESPONSE, THE ASSESSEES CONTENTION WAS THAT HE IS ENTITLED TO CLAIM THE AFORESAID EXPENSES. WE NOTIC E THAT IN THE ORDER UNDER CHALLENGE, THE CIT HAS HELD THAT THE ASSESSIN G OFFICER OUGHT TO HAVE DISALLOWED THE AFORESAID EXPENSES AS PER SECTI ON 24 OF THE ACT. WHILST HOLDING SO, HE HAS PLACED RELIANCE UPON THE CASE LAW OF RADIO COMPONENTS & TRANSISTORS CO. LTD VS ITO [2012] 18 T AXMANN.COM 102 (MUM.) AND DIRECTED THE ASSESSING OFFICER TO TREAT THE DISALLOWANCE AS INCOME. THEREFORE, THE ASSESSEE IS IN APPEAL. 7. WE HAVE HEARD BOTH PARTIES AT LENGTH AND PERUSED TH E CASE FILE. WE MAKE IT CLEAR THAT IN THE COURSE OF ARGUM ENTS, THE ASSESSEE HAS NEITHER FILED ANY PAPER BOOK SO AS TO POINT OUT THE FACTUAL MISTAKES; IF ANY, IN THE CITS ORDER NOR ANY CASE L AW HAS BEEN QUOTED IN ORDER TO CONTROVERT THE DECISION OF MUMBAI TRI BUNAL (SUPRA). THIS IS NOT THE CASE OF THE ASSESSEE THAT HE HAD NOT DE CLARED THE IMPUGNED RECEIPT AS INCOME FROM HOUSE PROPERTY. WE REITERAT E THAT THE PRESENT IS NOT A CASE OF THE BUSINESS INCOME WHERE ALL KIND S OF EXPENSES INCURRED IN ORDER TO EARN THE SAME, SUBJECT TO RELE VANT PROVISIONS OF LAW, ARE ALLOWABLE. IN OUR VIEW, BEING A CASE OF I NCOME FROM HOUSE PROPERTY WHEREIN ONLY SPECIFIED DEDUCTIONS U/S 24 ARE ADMISSIBLE, I.T.A.NO.804/13 :- 5 -: THERE IS NO ILLEGALITY OR INFIRMITY IN THE ORDER PA SSED BY THE CIT REVISING THE ASSESSMENT IN ORDER TO TREAT THE EQUIPMENT HI RE CHARGES AND LEASE MONEY AS UNALLOWABLE EXPENDITURE U/S 24 OF T HE ACT. CONSEQUENTLY, THE ASSESSEES APPEAL FAILS. IT IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 10 TH OF DECEMBER, 2013, AT CHENNAI SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 10 TH DECEMBER, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR