SUJATA CHINAI, MUMBAI V. ASST CIT 11(1), MUMBAI

ITA 8635/MUM/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0466 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Business income; Non-deduction of tax; Capital expenditure
• Section: 143(3)

Judgement Text

1 ITA 8635/MUM/2011 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.8635/MUM/2011 (ASSESSMENT YEAR: 2008-08 ) SUJATA CHINAI 72, BHARATIYA BHAVAN, MARINE DRIVE, MUMBAI-400 020 PAN : ADUPC0630K VS ACIT-11(1), MUMBAI APPELLANT BY NONE REVENUE BY SHRI V JUSTIN DATE OF HEARING 24-01-2018 DATE OF PRONOUNCEMENT 31-01-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-3, MUMBAI DATED 19-10-2011 AND IT PERTAINS T O AY 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-0 9 ON 16-06-2008 DECLARING TOTAL INCOME AT RS.51,09,029. THE ASSESS MENT WAS COMPLETED U/S 143(3) ON 03-12-2010 DETERMINING TOTAL INCOME A T RS.1,10,70,730 INTERALIA MAKING ADDITIONS TOWARDS DISALLOWANCE OF PROFESSIONAL CHARGES AND RENT U/S 40(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE UNDER RESPECTIVE PROVISIONS, DISALLOWANCE OF STUDIO EXPENSES BEING C APITAL IN NATURE AND 2 ITA 8635/MUM/2011 ADHOC DISALLOWANCE OF VARIOUS EXPENSES. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 3. BEFORE CIT(A), ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS AND CHALLENGED EACH ITEM OF ADDITION MADE BY THE AO . INSOFAR AS DISALLOWANCE OF PROFESSIONAL CHARGES AND RENT U/S 4 0(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE, ASSESSEE SUBMITTED THAT SINCE EXPENDITURE INCURRED HAVE BEEN PAID WITHIN THE SAME FINANCIAL Y EAR, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA). IN THIS REGARD, RELIED UPON THE DECISION OF ITAT, HYDERABAD BENCH IN THE CASE OF TEJA CONSTRUCT IONS VS CIT (2010) 39 SOT 13 (HYD). AS REGARDS DISALLOWANCE OF STUDIO EXPENSES TREATING THE SAME AS CAPITAL EXPENDITURE, THE ASSESSEE HAS S UBMITTED THAT IT HAS FURNISHED COPIES OF BILLS OF CHARGES TO WHOM PAYMEN T OF MORE THAN RS.50,000 WAS MADE. THEREFORE, THE AO WAS INCORREC T IN DISALLOWING EXPENDITURE. SIMILARLY, INSOFAR AS DISALLOWANCE OF 20% OF ADHOC EXPENSES, THE AO HAS DISALLOWED EXPENSES ON HIS OWN WITHOUT CALLING FOR ANY DETAILS. THE CIT(A), AFTER CONSIDERING REL EVANT SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED APPEAL FILED BY THE ASS ESSEE WHEREIN HE SUSTAINED ADDITION MADE BY THE AO TOWARDS DISALLOWA NCE OF PROFESSIONAL CHARGES AND RENT U/S 40(A)(IA) AND ALSO DISALLOWANC E OF STUDIO EXPENSES BY TREATING THE SAME AS CAPITAL EXPENDITURE; HOWEVE R, ALLOWED PARTIAL RELIEF IN RESPECT OF ADHOC DISALLOWANCE OF EXPENDIT URE AND SCALED DOWN THE DISALLOWANCE TO 10% INSTEAD OF 20% MADE BY THE AO. AGGRIEVED BY 3 ITA 8635/MUM/2011 THE ORDER OF CIT(A), ASSESSEE IS IN APPEAL BEFORE U S. 4. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD THE LD.DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. INSOFAR AS DISALLOWANCE OF PROFESSIONAL CHARGES AND RENT FOR FAILURE TO DEDUCT TAX AT SOURCE, THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION FOR NOT DEDUCTING TDS EXCEPT STATING THAT EXPENDITURE INCURRED HAS BEEN P AID WITHIN THE FINANCIAL YEAR, THEREFORE, NO DISALLOWANCE CAN BE M ADE U/S 40(A)(IA) FOR FAILURE TO DEDUCT TDS IN VIEW OF THE DECISION OF HY DERABAD BENCH OF THE TRIBUNAL IN TEJA CONSTRUCTIONS (SUPRA). WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE ASSESSEE FOR THE REASON THAT THE HO NBLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICES PVT LTD VS CIT (2017 394 ITR 300 (SC) HAS CONSIDERED THE ISSUE OF WORDS PAIDAN D PAYABLE IN THE LIGHT OF SECTION 40(A)(IA) AND HELD THAT THE WORD PAYABLE OCCURRING IN SECTION 40(A)(IA) NOT ONLY COVERS CASES WHERE AMOUN T IS YET TO BE PAID BUT ALSO THOSE CASES WHERE AMOUNT HAS ACTUALLY BEEN PAID. THEREFORE, WE ARE OF THE OPINION THAT THE AO WAS RIGHT IN DISA LLOWING PROFESSIONAL CHARGES AND RENT U/S 40(A)(IA) FOR NON DEDUCTION OF TDS. 5. AS REGARDS DISALLOWANCE OF STUDIO EXPENSES BY TREAT ING THE SAME AS CAPITAL EXPENDITURE, THE CIT(A) HAS GIVEN CATEGORIC AL FINDING THAT ON PERUSAL OF THE BILLS SUBMITTED BY THE ASSESSEE IT W AS FOUND THAT THE ASSESSEE HAS PURCHASED CAPITAL ITEMS LIKE AIR CONDI TIONERS, FURNITURE AND FIXTURES AND EQUIPMENTS, ETC. WHICH ARE IN THE NATU RE OF CAPITAL 4 ITA 8635/MUM/2011 EXPENDITURE AND HENCE, NOT ALLOWABLE AS DEDUCTION. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCES TO JUSTIFY EXPENDITURE CLAIMED UNDER STUDIO EXPENSES IS ALLOWABLE AGAINST BUSINESS INCOME. THE REFORE, WE ARE OF THE VIEW THAT THE CIT(A) WAS RIGHT IN CONFIRMING AD DITION MADE BY THE AO TOWARDS DISALLOWANCE OF STUDIO EXPENSES AS CAPITAL IN NATURE AND HIS FINDING IS UPHELD. 6. SIMILARLY, INSOFAR AS ADHOC DISALLOWANCE OF 20% EXP ENSES OUT OF BUSINESS PROMOTION EXPENSES, MOTOR CAR EXPENSES, DE PRECIATION ON MOTOR CAR AND COSTUME EXPENSES, THE CIT(A) HAS SCAL ED DOWN THE DISALLOWANCE TO 10% BY CONSIDERING THE FACT THAT T HE ASSESSEE HAS FAILED TO FURNISH ANY KIND OF EVIDENCE TO JUSTIFY E XPENSES. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ). HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE CIT(A) AND R EJECT GROUND RAISED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 31 ST JANUARY, 2018 PK/- 5 ITA 8635/MUM/2011 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI