VAZIFDAR BUILDERS P.LTD, MUMBAI V. ITO WD 3(3) (3), MUMBAI

ITA 8270/MUM/2010

• Counselvise Citation: 827019914 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P PATHAK
• Section: 37(1)

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI .. , ! ' # $$, % ', & BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM ITA NOS.8269 & 8270/MUM/2010 ASST.YEARS 2005-2006 & 2006-2007 M/S.VAZIFDAR BUILDERS PRIVATE LIMITED 17 CORINTHIAN, GROUND FLOOR OFF. ARTHUR BUNDER ROAD, COLABA MUMBAI 400 020. PAN : AAACV1854C. THE INCOME TAX OFFICER WARD 3(3)(3) MUMBAI. ( '( / // / APPELLANT) * * * * / VS. ( +,'(/ RESPONDENT) '( - -- - . . . . / APPELLANT BY : SHRI NISHIT GANDHI +,'( - . - . - . - . / RESPONDENT BY : SHRI C.P.PATHAK * - /! / / / / DATE OF HEARING : 21.08.2013 012 - /! / DATE OF PRONOUNCEMENT : 23.08.2013 ' 3 ' 3 ' 3 ' 3 / / / / O R D E R PER R.S.SYAL (AM) : THESE TWO APPEALS BY THE ASSESSEE RELATE TO THE ASS ESSMENT YEARS 2005-2006 AND 2006-2007. SINCE COMMON ISSUE IS RAIS ED IN BOTH THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DIS POSE THEM OFF BY THIS CONSOLIDATE ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2005-2006 2. THE ONLY ISSUE RAISED IS AGAINST THE CONFIRMATIO N OF DISALLOWANCE OF ` 4,74,591 ON ACCOUNT OF CERTAIN EXPENSES. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF PAINTING. IT ALSO EARNED INCOM E FROM DIVIDEND, ITA NOS.8269 & 8270/MUM/2010. M/S.VAZIFDAR BUILDERS PVT.LTD. 2 INTEREST AND DIVIDEND. THE ASSESSING OFFICER NOTICE D THAT TOTAL EXPENSES OF ` 31.11 LAKH WERE DEBITED TO THE PROFIT AND LOSS ACCO UNT, OUT OF WHICH ADMINISTRATIVE, OPERATING AND OTHER EX PENSES AMOUNTED TO ` 15.85 LAKH. ON BEING CALLED UPON TO JUSTIFY SUCH EX PENSES, THE ASSESSEE FILED ITS REPLY DATED 05.02.2007 WHICH HAS BEEN REPRODUCED ON PAGES 4-5 OF THE ASSESSMENT ORDER. THROUGH THIS REPLY, THE ASSESSEE SUBMITTED DETAILS AND REASONS FOR THE CLAI M OF DEDUCTION IN RESPECT OF EACH EXPENDITURE DISTINCTLY. THE ASSESSI NG OFFICER HELD THAT : THE REASONS GIVEN BY THE ASSESSEE FOR SUCH AN EXCESSIVE CLAIM OF EXPENSES ARE NOT ACCEPTABLE. THEREFORE AFTER CON SIDERING THE EXPLANATION GIVEN BY THE ASSESSEE COMPANY, THE FOLL OWING DISALLOWANCE U/S 37(1) OF THE I.T.ACT, 1961 ARE MAD E:- EXPENSES CLAIMED DISALLOWED RENT 6,22,379 NIL RATES & TAXES 98,350 88,350 REPAIRS & MAINTENANCE 1,49,841 1,49,841 INSURANCE CHARGES 20,332 NIL PRINTING & STATIONERY 28,815 14,400 MOTORCAR EXPENSES 2,03,913 50,000 AD. PUB 13,494 3,000 TRAVELLING 19,258 8,000 PROFESSIONAL & LEGAL EXPENSES 34,540 10,000 DIRECTORS SITTING FEES 4,750 NIL DIRECTORS CLUB FEES 31,312 16,000 TELEPHONE CHARGES 83,090 17,000 REMUNERATION TO AUDITORS 22,040 NIL DONATION 1,000 1,000 MISCELLANEOUS EXPENSES 1,15,116 75,000 OFFICE EXPENSES 20,410 5,000 DIRECTORS REMUNERATION 60,000 NIL FUEL 56,688 28,000 ITA NOS.8269 & 8270/MUM/2010. M/S.VAZIFDAR BUILDERS PVT.LTD. 3 2.1 RESULTANTLY, AN ADDITION OF ` 4,74,591 WAS MADE OUT OF SUCH EXPENSES. THE LEARNED CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER ON THIS ISSUE. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT TH E ASSESSEE GAVE DUE EXPLANATION IN SUPPORT OF DEDUCTION OF EXP ENSES HEAD- WISE. FOR EXAMPLE, IN SUPPORT OF DEDUCTION FOR REPA IRS AND MAINTENANCE AMOUNTING TO ` 1,49,841, THE ASSESSEE SUBMITTED THAT : DETAILS IS ALREADY SUBMITTED TO YOUR HONOUR . REPAIR IS FOR THE OFFICE PREMISES OF THE COMPANY. THE ASSESS ING OFFICER DISALLOWED THE ENTIRE EXPENDITURE WITHOUT GIVING AN Y REASON WORTH THE NAME. SIMILAR IS THE POSITION ABOUT OTHER DISALLOWANCES MADE BY THE ASSESSING OFFICER IN RESP ECT OF WHICH THE ASSESSEE FURNISHED DETAILS AND ALSO REASO NS FOR THE ALLOWABILITY. SUCH AN APPROACH ADOPTED BY THE ASSES SING OFFICER IN ARBITRARILY DISALLOWING EXPENDITURE WITH OUT CONTRADICTING THE EXPLANATION GIVEN BY THE ASSESSEE , IS TOTALLY UNCALLED FOR. WHEN AN ASSESSEE GIVES EXPLANATION IN SUPPORT OF DEDUCTION FOR AN EXPENSE, IT BECOMES THE DUTY OF TH E ASSESSING OFFICER TO EITHER ACCEPT OR REJECT THE SAME. IN CAS E HE ACCEPTS THE EXPLANATION, THE MATTER ENDS. NO ADDITION CAN B E MADE. FOR MAKING ANY DISALLOWANCE IT IS INCUMBENT UPON THE AS SESSING OFFICER TO SHOW AS TO WHERE THE EXPLANATION GIVEN B Y THE ASSESSEE WAS WRONG. SIMPLY SAYING THAT THE CLAIM I S UNREASONABLE OR EXCESSIVE, WITHOUT GOING INTO THE D ETAILS ITA NOS.8269 & 8270/MUM/2010. M/S.VAZIFDAR BUILDERS PVT.LTD. 4 FURNISHED BY THE ASSESSEE OR SHOWING THAT HOW IT IS UNREASONABLE OR EXCESSIVE, IS NOT WARRANTED. THE LEARNED CIT(A) ALSO FOLLOWED THE SUIT BY SIMPLY REJECTING T HE GROUND BY WRITING THREE LINES AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE. THE A.O. HAS DISCUSSED THE ISSUE IN DETAIL AND GIVEN REASONS FOR THE DISAL LOWANCE. I AGREE WITH THE A.O. THAT IN THE ABSENCE OF DETAILS AND VERIFIABILITY , ESTIMATED DISALLOWANCE HAS TO BE MADE. THE DISALLOWANCE MADE BY THE A.O. IS REASONABLE AND THE REFORE CONFIRMED. 3.1 IT IS APPARENT THAT THE REASONING GIVEN BY THE LEARNED CIT(A) IS ALSO INCORRECT BECAUSE THE ASSESSEE GAVE THE DETAIL S OF SUCH EXPENSES WHICH FACT HAS BEEN ADMITTED AND RECORDED ON PAGES 4 AND 5 OF THE ASSESSMENT ORDER. IN THE GIVEN CIRCUMSTANCES, WE AR E OF THE CONSIDERED OPINION THAT THERE IS NO BASIS FOR MAKIN G OR SUSTAINING ANY SUCH DISALLOWANCE OF EXPENSES. WE, THEREFORE, OVERT URN THE IMPUGNED ORDER ON THIS ISSUE AND ORDER FOR THE DELETION OF A DDITION. ASSESSMENT YEAR 2005-2006 4. THE FACTS FOR THIS YEAR ARE ADMITTEDLY MUTATIS MUTANDIS SIMILAR TO THOSE FOR ASSESSMENT YEAR 2005-2006. FOLLOWING T HE SAME PATTERN AS ADOPTED IN THE EARLIER YEAR, THE ASSESSING OFFIC ER MADE DISALLOWANCES OUT OF CERTAIN EXPENSES ON AN ARBITRA RY BASIS. SUCH DISALLOWANCES WORKED OUT TO ` 6.51 LAKH. THE LEARNED CIT(A), FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2004-2005, SUSTAINED THE ADDITION. AS NO DISTINCTION IN THE FACTS AND CIRCUM STANCES OF THE CASE ITA NOS.8269 & 8270/MUM/2010. M/S.VAZIFDAR BUILDERS PVT.LTD. 5 FOR THE INSTANT ASSESSMENT YEAR HAS BEEN BROUGHT TO OUR NOTICE, FOLLOWING THE VIEW TAKEN HEREINABOVE FOR ASSESSMENT YEAR 2005-2006, WE ORDER FOR THE DELETION OF ADDITION OF ` 6,51,898 FOR THE CURRENT YEAR. 5. 4 /5 6 / - #/ 78 9 IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF AUGUST, 2013. ' 3 - 012 :'*5 1 - $ SD/- SD/- (SANJAY GARG) (R.S.SYAL) % ' % ' % ' % ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; :'* DATED : 23 RD AUGUST, 2013. DEVDAS* ' 3 - +%/;< = <2/ ' 3 - +%/;< = <2/ ' 3 - +%/;< = <2/ ' 3 - +%/;< = <2// COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. +,'( / THE RESPONDENT. 3. > () / THE CIT, MUMBAI. 4. > / CIT(A) 7, MUMBAI. 5.