Vintage Enterprises, Raigad V. Addl CIT Rg- Panvel., Panvel

ITA 835/PUN/2012

• Counselvise Citation: 83524514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 27-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 835 / P N/ 20 1 2 ASSESSMENT YEAR : 2008 - 09 VINTAGE ENTERPRISES, SHOP NO. 1, PLOT NO. 1, 31 & 32 PATEL PARADISE, SECTOR 35 E, OWE KHARGAR, RAIGAD VS. ADDL. COMMISSIONER OF INCOME TAX, PANVEL RANGE, PANVEL (APPELLANT) (RESPONDENT) PAN NO. AAFFV5688J REVENUE BY: SHRI S.P. WALIMBE ASSESSEE BY: SHRI NIKHIL PATHAK DATE OF HEARING : 1 1 - 1 1 - 2013 DATE OF PRONOUNCEMENT : 24 - 12 - 2013 ORDER PER R.S . PADVEKAR , JM : - THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - I, THANE DATED 30 - 01 - 201 2 FOR THE A.Y. 2008 - 09. THE ASSESSEE HAS TAKEN FOLLOWING GR OUNDS IN THE APPEAL: 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE BROKERAGE PAID OF RS.15,50,000/ - PERTAINING TO NEVALI PLOT WAS NOT AN ALLOWABLE EXPENDITURE. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE BROKERAGE PAID OF RS.15,50,000/ - WAS NOT A GENUIN E EXPENDITURE AND THEREFORE, THE SAME COULD NOT BE ALLOWED AS A DEDUCTION WHILE COMPUTING THE INCOME OF THE APPELLANT. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE BROKERAGE PAID OF RS.15,50,000/ - WAS A GENUINE EXPENDITURE INCURRED BY THE APPELLANT FO R SALE OF NEVALI PLOT AND THEREFORE, THE SAME OUGHT TO HAVE BEEN ALLOWED AS A DEDUCTION WHILE COMPUTING THE INCOME. 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE I S A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER AND DEA LING IN PLOTS IN NAVI MUMBAI AREA SINCE JULY 2005 . THE ASSESSEE 2 ITA NO. 835/PN/2012, VINTAGE ENTERPRISES, RAIGAD IS CONSISTENTLY FOLLOWING PROJECT COMPLETION METHOD. THE ASSESSEE HAS FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,39,50,230/ - FOR THE A.Y . 2008 - 09. THE ASSESSEES CASE HAS BEE N SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143( 3 ) OF THE INCOME - TAX ACT. 3. THE SOLITARY ISSUE FOR OUR CONSIDERATION IS WHETHER THE BROKERAGE OF RS.15,50,000/ - CLAIMED BY THE ASSESSEE IS ALLOWABLE EXPENDITURE OR NOT. THERE WAS A SURV EY ACTION IN THE CASE OF THE ASSESSEE ON 03 - 03 - 2008 AND DURING THE COURSE OF SURVEY THE ASSESSEE DECLARED THE PROFIT ON SALE OF PLOT AT NEVALI AT RS.1,56,61,000/ - . IN RESPECT OF THE PRESENT ISSUE IN RESPECT OF NEVALI LAND , THE ASSESSING OFFICER HAS GIVEN THE BREAK - UP OF THE EXPENSES INCURRED ON NEVALI LAND UP TO 31 - 03 - 2007 AND IN BETWEEN 01 - 04 - 2007 TO 31 - 03 - 2008. THE ASSESSEE CLAIMED THE BROKERAGE OF RS.15.50 LAKHS, WHICH WAS INCURRED AFTER THE DATE OF SURVEY. THE ASSESSEE ALSO CONTENDED THAT SALE OF PLO T HAS TAKEN PLACE ON 22 - 02 - 2008 JUST TEN DAYS PRIOR TO THE DATE OF SURVEY. THE ASSESSING OFFICER HAS RESERVATION IN ALLOWING THE EXPENDITURE OF BROKERAGE OF RS.15.50 LAKHS WHICH WAS INCURRED AFTER THE DATE OF SURVEY . THE ASSESSING OFFICER ALSO NOTED THAT THE AMOUNTS OF BROKERAGE PAID APPEAR TO BE INFLATED I.E. AT 5% ON CERTAIN TRANSACTIONS. HE ALSO NOTED THAT HIGH BROKERAGE RATIO IS NOT PREVALENT IN REAL ESTATE BUSINESS IN SIMILAR OTHER CASES OF THIS AREA. THE ASSESSING OFFICER, THEREFORE, DECLINED TO A LLOW THE BROKERAGE EXPENDITURE CLAIMED BY THE ASSESSEE IN RESPECT OF SALE OF NEVALI PLOT. 4. THE ASSESSEE CHALLENGED THE SAID DISALLOWANCE BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESS AS THE SAID EXPENDITURE WAS NOT ALLOWED TO THE ASSESSEE. THE RELEVANT DISC USSION BY THE LD. CIT(A) IS IN PARA NO. 5.3 WHICH IS AS UNDER: 5.3. IN RESPECT OF CLAIM OF EXPENSES AMOUNTING TO RS. 22,61, 752/ - AND RS. 74,665/ - IN RESPECT OF THE SAFE OF NAVELI PLOT AND ROAD PALI PLOT RESPECTIVELY, I FIND THAT THESE EXPENSES PERTAIN TO D IFFERENCE IN COST OF LAND RS. 2,68,000/ - , DIFFERENCE IN STAMP DUTY REGISTRATION FEES RS. 30,440/ - , DIFFERENCE IN BROKERAGE RS. 90,000/ - , RECOVERY OF 3 ITA NO. 835/PN/2012, VINTAGE ENTERPRISES, RAIGAD DEVELOPMENT EXPENSES RS. ( - ) 30,970/ - , DEVELOPMENT EXPENDITURE RS. 3,16,028 AND BROKERAGE OF RS. 15,50,000/ - TOTALING TO RS. 22,23,498/ - REGARDING NEVALI PLOT AND DIFFERENCE IN COST OF LAND RS. 5,525/ - , REGISTRATION FEE RS. 30,320/ - AND STAMP DUTY RS. 38,820/ - TOTALING TO RS. 74,665/ - REGARDING ROADPALI PLOT. EXCEPT FOR BROKERAGE OF RS. 15,50,000/ - , THE A.O HAS NOT POINTED OUT ANYTHING ABOUT THEIR GENUINENESS AND BUSINESS EXPEDIENCY. HOWEVER, THE BROKERAGE EXPENSES ON SALE OF THE LAND ARE STATED TO BE INCURRED AFTER THE DATE OF SURVEY. SINCE THE LAND IN QUESTION WAS ALREADY SOLD AND THERE WAS NO MENTION A T THE TIME OF SURVEY THAT THE LAND HAS BEEN SOLD THROUGH THE BROKERS, THE CLAIM OF THE APPELLANT IN THIS REGARD IS NOT GENUINE. MERE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT FOR CLAIMING THE EXPENDITURE PARTICULARLY WHEN THE SERVICES HAVE NO T BEEN PROVED. IT IS NOT OUT OF THE PLACE TO MENTION THAT ON PURCHASE OF THESE LANDS, THE APPELLANT HAS CLAIMED BROKERAGE AT RS. 12,15,000/ - AND THE SAME WERE ALSO MENTIONED DURING THE COURSE OF SURVEY BY THE PARTNER OF THE APPELLANT FIRM VIDE ANSWER TO QUESTION NO. 16, THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE BROKERAGE ON SALE OF THE PLOTS AT RS. 15,50,000/ - IS NOT A GENUINE EXPENDITURE AND HENCE THE SAME CANNOT BE ALLOWED. OTHER EXPENSES WHICH MOSTLY PERTAIN TO REGISTRATION OR DEVELOPMENT OF LA NDS, CAN NOT BE DISALLOWED AS THEY ARE GENUINE BUSINESS EXPENSES. GROUNDS NO. 3 & 4 ARE ACCORDINGLY, ALLOWED PARTLY AND APPELLANT GETS RELIEF OF RS.7,48,163/ - (RS. 22,23,498 +74,665 - RS. 15,50,000). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD. COUNSEL ARGUES THAT IT IS TRUE THAT AT THE TIME OF SURVEY ACTION , THE BROKERAGE WAS NOT POINTED OUT BY THE ASSESSEE. HE REFERRED TO THE PAPER BOOK , MORE PARTICULARLY PAGE NO. 18 AND HE SUBMIT S THAT THE RECIPIENT OF THE BROKERAGE HAS ACKNOWLEDGED AND CONFIRMATION IS ALSO GIVEN ON 01 - 05 - 2008 WHICH IS PLACED ON RECORD AT PAGE NO. 18. HE SUBMITS THAT THE TDS WAS ALSO DEDUCTED FROM THE PAYMENT OF THE BROKERAGE AND THIS IMPORTANT DOCUMENTARY EVIDENCE HAS NOT BEEN CONSIDERED B Y BOTH THE AUTHORITIES BELOW . HE ARGUES THAT ONLY REASON GIVEN BY BOTH THE AUTHORITIES BELOW FOR RAISING THE QUESTION ON THE GENUINENESS OF THE PAYMENT OF THE SAID BROKERAGE IS THAT AT THE TIME OF SURVEY T HE ASSESSEE DID NOT MENTION ABOUT IT. HE SUBMITS THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION. WE HAVE ALSO HEARD THE LD. DR. 4 ITA NO. 835/PN/2012, VINTAGE ENTERPRISES, RAIGAD 6. WE HAVE PERUS ED THE ORDER S OF BOTH THE PARTIES. THE ONLY REASON WE FIND THAT AT THE TIME OF SURVEY ACTION U/S. 133(A) THERE WAS NO REFERENCE BY THE ASSESSEE IN RESPECT OF THE PAYMENT OF BROKERAGE TO BE MADE WHICH WAS CLAIMED TO HAVE BEEN PAID IN RESPECT OF THE NEVALI LAND. WE HAVE GONE THROUGH THE CONFIRMATION LETTER FROM THE BROKER WHICH IS PLACED IN PAPER BOOK . IN OUR OPINION, THIS ISSUE NEED S RE - CONSIDERATION. WE, ACCORDINGLY, RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND MATTER IS REFERRED BACK TO THE FILE OF THE ASSESSING OFFICER TO D ECIDE SAME DE NOVO . NEEDLESS TO SAY THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY BEING HEARD TO THE ASSESSEE AND ALSO CONSIDERED THE EVIDENCE IS GIVEN BY THE ASSESSEE. WE DO NOT EXPRESS ANYTHING ON THE MERIT ON THIS ISSUE. ACCORDINGLY, THE GROUNDS T AKEN BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24 - 12 - 20 1 3 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , D ATED : 24 TH DECEMBER, 20 1 3 COPY TO 1 DEPARTMENT 2 ASSESSEE 3 THE CIT(A) - I , THANE 4 THE CIT - I , THANE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// B Y ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE