M/s RKA Realtors Pvt. Ltd., Kolkata V. D.C.I.T., Circle-4(2), Kolkata

ITA 918/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8762 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 25-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: S K TULSIYAN
• Keywords: Set aside

Judgement Text

I.T.A. NO. 918/KOL/2019 ASSESSMENT YEAR: 2 012-2013 RKA REALTORS PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 918/KOL/2019 ASSESSMENT YEAR: 2012-2013 RKA REALTORS PVT. LIMITED,......................... ................................APPELLANT 14, NETAJI SUBHAS ROAD, 1 ST FLOOR, KOLKATA-700001 [PAN:AABCV6976A] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .....................RESPONDENT CIRCLE-4(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI S.K. TULSIYAN, ADVOCATE , FOR THE APPELLA NT SMT. RANU BISWAS, ADDL. CIT, FOR THE RESPONDE NT DATE OF CONCLUDING THE HEARING : DECEMBER 11, 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 17, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7, KOLKATA DAT ED 25 TH FEBRUARY, 2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATE S TO THE DISALLOWANCE OF RS.1,23,398/- AND RS.28,89,337/- MADE BY THE ASS ESSING OFFICER OUT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 28.09.2012 DECLARING TOTAL INCOME OF RS.39,05,690/-. IN THE SA ID RETURN, RENTAL INCOME I.T.A. NO. 918/KOL/2019 ASSESSMENT YEAR: 2 012-2013 RKA REALTORS PVT. LIMITED 2 AMOUNTING TO RS.2,00,16,719/- RECEIVED DURING THE Y EAR UNDER CONSIDERATION WAS SHOWN BY THE ASSESSEE AND AFTER C LAIMING DEDUCTIONS, NET INCOME OF RS.85,09,355/- WAS DECLARED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION, GROSS INCOME OF RS.28,20,349/- WAS DIS CLOSED BY THE ASSESSEE AND NET LOSS OF RS.46,03,670/- WAS DECLARED AFTER C LAIMING THE FOLLOWING EXPENSES AGGREGATING TO RS.72,23,342/-:- (I) EMPLOYEE BENEFIT EXPENSES RS.25,98,822/ - (II) ESTABLISHMENT CHARGES RS. 7,20,000/ - (III) PROFESSIONAL CHARGES RS. 3,02,347/ - (IV) REPAIRING TO OTHERS RS. 29,665/ - (V) MISCELLANEOUS EXPENSES RS. 1,28,891/ - (VI) INTEREST PAID TO BODY CORPORATE RS.34,43,617/ - ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE-CO MPANY HAVING EARNED ONLY 12.35% OF ITS TOTAL REVENUE FROM THE BUSINESS ACTIVITIES, THE LARGE PORTION OF THE EXPENSES INCURRED WAS NOT RELATED TO THE BUSINESS ACTIVITIES BUT THE SAME WAS RELATED TO INCOME FROM HOUSE PROPERTY FOR WHICH STANDARD DEDUCTION UNDER SECTION 24 WAS SEPAR ATELY CLAIMED BY THE ASSESSEE. HE ACCORDINGLY ESTIMATED 40% OF THE TOTAL EXPENSES OF RS.72,23,342/- CLAIMED BY THE ASSESSEE UNDER THE VA RIOUS HEADS AS RELATED TO INCOME FROM HOUSE PROPERTY AND DISALLOWA NCE TO THE EXTENT OF RS.28,89,337/- WAS MADE BY HIM. HE ALSO MADE A FURT HER DISALLOWANCE OF RS.1,23,398/- ON ACCOUNT OF INTEREST SEPARATELY CLA IMED BY THE ASSESSEE FOR LOAN TAKEN FROM M/S. KALAKAR COMMERCIAL PVT. LI MITED AND M/S. DARSHAN CONSULTANT PVT. LIMITED AS THE SAID LOAN HA D BEEN USED FOR REGISTRATION AND OTHER MISCELLANEOUS COST RELATED T O THE HOUSE PROPERTY. THE ASSESSING OFFICER HELD THAT THE SAID EXPENDITUR E INCURRED ON INTEREST WAS OF CAPITAL NATURE. I.T.A. NO. 918/KOL/2019 ASSESSMENT YEAR: 2 012-2013 RKA REALTORS PVT. LIMITED 3 3. THE DISALLOWANCES OF RS.28,89,337/- AND RS.1,23, 398/- MADE BY THE ASSESSING OFFICER WERE CHALLENGED BY THE ASSESSEE I N THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND SINCE THE SUBMISSIO N MADE BY THE ASSESSEE IN SUPPORT OF ITS CASE ON THIS ISSUE WAS N OT FOUND SATISFACTORY BY HIM, THE LD. CIT(APPEALS) PROCEEDED TO CONFIRM THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORD ER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AS WELL AS BEF ORE THE TRIBUNAL, THE INTEREST EXPENDITURE OF RS.1,27,398/- WAS ADMITTEDL Y INCURRED BY THE ASSESSEE IN RESPECT OF THE LOANS WHICH HAD BEEN USE D FOR REGISTRATION AND OTHER MISCELLANEOUS COST RELATED TO THE HOUSE PROPE RTY AND THE SAME, THEREFORE, WAS ALLOWABLE AS DEDUCTION UNDER SECTION 24(B) OF THE ACT WHILE COMPUTING THE INCOME OF THE ASSESSEE UNDER TH E HEAD INCOME FROM HOUSE PROPERTY. HE HAS SUBMITTED THAT SIMILARLY IN TEREST PAID TO BODY CORPORATE AMOUNTING TO RS.34,43,617/- WAS ALLOWABLE AS DEDUCTION UNDER SECTION 24(B) OF THE ACT, BUT THE DEDUCTIBILITY OF THE SAME UNDER THE SAID PROVISION WAS NOT CONSIDERED EITHER BY THE ASSESSIN G OFFICER OR BY THE LD. CIT(APPEALS). HE HAS INVITED OUR ATTENTION TO CLAUS E(B) OF SECTION 24, WHICH PROVIDES THAT WHERE THE PROPERTY HAS BEEN AC QUIRED, CONSTRUCTED, REBATE, RENEWED OR RE-CONSTRUCTED WITH BORROWED CAP ITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH BORROWINGS IS ALLOWABL E AS DEDUCTION WHILE COMPUTING THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE LD. D.R. IN THIS REGARD HAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACC OUNT OF INTEREST UNDER SECTION 24(B) WAS NOT SPECIFICALLY MADE BY THE ASSE SSEE BEFORE THE ASSESSING OFFICER AND SINCE THE SAME WAS MADE FOR T HE FIRST TIME BEFORE THE LD. CIT(APPEALS), THE ASSESSING OFFICER DID NOT GET ANY OPPORTUNITY TO VERIFY THE SAME. SHE HAS CONTENDED THAT THIS ISSUE MAY, THEREFORE, BE SENT BACK TO THE ASSESSING OFFICER FOR GIVING HIM SUCH O PPORTUNITY. THE LD. I.T.A. NO. 918/KOL/2019 ASSESSMENT YEAR: 2 012-2013 RKA REALTORS PVT. LIMITED 4 COUNSEL FOR THE ASSESSEE HAS ALSO NOT RAISED ANY OB JECTION FOR SENDING THE MATTER BACK TO THE ASSESSING OFFICER FOR SUCH VERIF ICATION. HE HAS CONTENDED THAT EVEN THE OTHER EXPENSES CLAIMED BY T HE ASSESSEE UNDER THE VARIOUS HEADS, GOING BY THEIR VERY NATURE ARE N OT RELATING TO THE INCOME FROM HOUSE PROPERTY AND WITHOUT VERIFYING TH E EXACT NATURE OF THE SAID EXPENSES, THE ASSESSING OFFICER WAS NOT JUSTIF IED IN MAKING A DISALLOWANCE OF 40% OF SUCH EXPENSES BY TREATING TH E SAME AS THE EXPENSES RELATED TO THE INCOME EARNED FROM HOUSE PR OPERTY. A PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R ALSO SHOWS THAT NOT A SINGLE INSTANCE WAS POINTED OUT BY THE ASSESSING OFFICER TO SHOW THAT ANY OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER T HE VARIOUS HEADS WAS RELATED TO HOUSE PROPERTY INCOME NOR ANY BASIS WAS GIVEN BY HIM TO ESTIMATE SUCH EXPENSES TO THE EXTENT OF 40% AS RELA TED TO THE INCOME EARNED BY THE ASSESSEE FROM HOUSE PROPERTY. WE, THE REFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(APPEALS) CONFI RMING THE DISALLOWANCE OF RS.1,27,398/- AND RS.28,89,337/- MA DE BY THE ASSESSING OFFICER ON ACCOUNT OF VARIOUS EXPENSES AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRE SH AFTER VERIFYING THE EXACT NATURE OF EXPENSES CLAIMED BY THE ASSESSEE UN DER THE VARIOUS HEADS AND AFTER VERIFYING THE CLAIM OF THE ASSESSEE FOR D EDUCTION ON ACCOUNT OF INTEREST EXPENDITURE UNDER SECTION 24(B) OF THE ACT . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 17, 2020. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT KOLKATA, THE 17 TH DAY OF JANUARY, 2020 COPIES TO : (1) RKA REALTORS PVT. LIMITED, 14, NETAJI SUBHAS ROAD, 1 ST FLOOR, KOLKATA-700001 I.T.A. NO. 918/KOL/2019 ASSESSMENT YEAR: 2 012-2013 RKA REALTORS PVT. LIMITED 5 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-7, KOLKATA , (4) COMMISSIONER OF INCOME TAX , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.