Sudha Satnaliwala, Kolkata V. ACIT, Circle - 31, Kolkata, Kolkata

ITA 923/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54738 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-06-2011
• Court: TRIBUNAL
• Department Lawyers: A K PARAMANIK
• Assessee Lawyers: M SATNALIWALA
• Keywords: Depreciation
• Section: 143(3); 14A

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B, KOL KATA [ , . .. . . .. . , , , , !' ] BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SRI C.D. RAO, ACCO UNTANT MEMBER # # # # / ITA NO. 923 (KOL) OF 2011 $% &' / ASSESSMENT YEAR 2007-08 SUDHIR SATNALIWALA, KOLKATA. (PAN-AJVPS2252C) ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE-31, KOLKATA. (*+ / APPELLANT ) - $ - - VERSUS - (./*+/ RESPONDENT ) *+ 0 1 !/ FOR THE APPELLANT: / SRI M. SATNALIWALA ./*+ 0 1 ! / FOR THE RESPONDENT: / SRI A.K. PARAMANIK 2$3 0 ' / DATE OF HEARING : 21/10/2011 4& 0 ' / DATE OF PRONOUNCEMENT : 09/12/2011 !5 / ORDER ( . .. . . .. . ), !' (C.D. RAO), ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. C.I.T.(A)-XIX, KOLKATA DATED 25/04/20110 FOR ASSESSMENT YEAR 2007- 08. 2. THE ASSESSEE, AN INDIVIDUAL, OWNS A PROPRIETARY BUSINESS UNDER THE NAME & STYLE OF M/S. ESSKAY OVERSEAS INC. HE MAINTAINS TWO SEPA RATE ACCOUNTS, ONE FOR HIS PROPRIETARY BUSINESS AND THE OTHER AS INDIVIDUAL. AS OBSERVED BY THE LD. A.O., AS PER COMPUTATION SHEET OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE DERIVED INCOME FROM THE FOLLOWING SOURCES :- A) INCOME AS MERCHANT EXPORTER FROM HIS PROPRIE TARY BUSINESS. B) SHARE IN PROFIT OF PARTNERSHIP FIRM. C) INCOME FROM HOUSE PROPERTY. D) DIVIDEND; AND E) INTEREST INCOME. 2 RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED SHOWING TOTAL INCOME OF RS.12,81,079/-, WHICH WAS ASSESSED AT RS.25,41,770/ - IN THE ASSESSMENT FRAMED U/S. 143(3) OF THE ACT, THEREBY MAKING SEVERAL DISALLOWA NCES/ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE FIRST GROUND RAISED IN THIS APPEAL BY THE A SSESSEE READS AS UNDER :- 1) THAT THE LEARNED COMMISSIONER OF INCOME TA X(A)-XIX, KOLKATA WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION FOR DEEMED RENTAL INCOME OF PROPERTIES AT ROHINI, BRAHMANAND & DEOGHAR, THOUGH DECISION OF ITAT, DELH I AND ITAT MUMBAI ON THE SAME FACT WAS SUBMITTED BEFORE HIM. THE LD. A.O. OBSERVED THAT THE ASSESSEE HAS SHOWN R ENTAL INCOME OF RS.7,90,000/- P.A. FROM THE PROPERTY AT 14A, BURDWAN ROAD, KOLKATA ONL Y OUT OF HIS 6 PROPERTIES, THE DETAILS OF WHICH ALONG WITH THEIR USAGE STATUS ARE AS UNDER :- I) 14A, BURDWAN ROAD, KOLKATA - LET OUT TO EQUINOX P.LTD. @ RS.7,90,000 P.A. II) OFFICE BUILDING AT 10, R.S.RD.,KOL - USED FOR OWN OFFICE. III) RESIDENTIAL BLDG. AT 88/1B, RB AVENUE - RESIDENCE. IV) 2BHK RESIDENTIAL FLAT IN ROHINI - VACANT V) 2BHK RESIDENTIAL FLAT IN NEW BRHMANAND - VACANT VI) 2BHK RESIDENTIAL FLAT IN DEOGHAR - VACANT ACCORDING TO THE LD. A.O., PROVISIONS OF SEC.23(4) OF THE ACT ARE ATTRACTED IN THE ASSESSEES CASE AND HE THUS TAKING INTO CONSIDERATI ON THE ANNUAL VALUE AS PER MUNICIPAL VALUATION, RENT RECEIVED, FAIR RENT FOR THE VACANT PROPERTIES AND DEDUCTION ADMISSIBLE U/S. 24 OF THE ACT IN RESPECT OF LET OUT PROPERTY A ND OTHER VACANT THREE PROPERTIES, THE DETAILS OF WHICH ARE GIVEN ON PAGE-4 OF THE ASSESSM ENT ORDER, RECOMPUTED THE INCOME FROM HOUSE PROPERTY AT RS.7,97,447/-. 4. ON APPEAL BEFORE THE LD. C.I.T.(A), THE ASSESSE E SUBMITTED THAT THE LD. A.O. ESTIMATED THE DEEMED RENTAL INCOME FROM THE PROPERT IES WHICH REMAINED VACANT FOR THE FULL YEAR WHICH SHOULD BE DELETED. IN SUPPORT, THE ASSESSEE REFERRED TO THE DECISIONS OF ITAT, MUMBAI IN THE CASE OF PREMSUDHA EXPORTS (P ) LTD. VS. ACIT [(2008) 110 ITD 158 (BOM)] AND IN THE CASE OF KAMAL MISHRA VS. ITO [(2008) 19 SOT 251 (DEL)]. THE LD. C.I.T.(A), HOWEVER, HELD THAT THE LD. A.O. ACTED IN ACCORDANCE TO PROVISIONS OF SEC.23(4)(B) OF THE ACT AND THUS UPHELD THE ACTION OF THE LD. A.O. 3 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. SUB-SECS. (2) AND (4) OF SEC. 23 OF THE ACT READS AS UNDER :- (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PART OF A HOUSE WHICH ( A ) IS IN THE OCCUPATION OF THE OWNER FOR THE PURPOSE S OF HIS OWN RESIDENCE; OR ( B ) CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY REASO N OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSION CARRIED ON AT AN Y OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLACE IN A BUILDING NOT BELONGING TO HIM , THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL . (3) .. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN ONE HOUSE ( A ) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ON LY IN RESPECT OF ONE OF SUCH HOUSES, WHICH THE ASSESSEE MAY, AT HIS OPTION, SPEC IFY IN THIS BEHALF; ( B ) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, OTHER TH AN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISED AN OPTION UNDER CLAUSE ( A ), SHALL BE DETERMINED UNDER SUB-SECTION (1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET. ON PLAIN READING OF THE AFORESAID SUB-SECTIONS OF S EC. 23 OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEES CASE FALLS UNDE R CLAUSE (B) OF SEC.23(4) OF THE ACT. AS PER CHART GIVEN ON PAGE-4 OF THE ASSESSMENT ORDE R AND DISCUSSED ABOVE, WHICH IS NOT DISPUTED, THE ASSESSEE LET OUT HIS PROPERTY AT 14A BURDWAN ROAD, KOLKATA. HE IS USING PROPERTY AT 10, R.S. ROD, KOLKATA FOR HIS OFFICE PU RPOSES AND FOR HIS RESIDENTIAL PURPOSE, HE IS USING PROPERTY AT 88/1B, R.B. AVENUE, KOLKATA . THEREFORE, AS PER CLAUSES (A) & (B) OF SEC.23(2) OF THE ACT, THE ASSESSEE IS OCCUPYING HIS HOUSE AS AN OWNER FOR RESIDENCE PURPOSE AND HAS NOT OCCUPIED ANY RENTED HOUSE FOR S UCH PURPOSES. THEREFORE, THE ASSESSEE HAS ALREADY EXERCISED AN OPTION IN TERMS O F CLAUSE (A) OF SEC. 23(4) OF THE ACT. IN SUCH SITUATION, CLAUSE (B) OF SEC. 23(4) OF THE ACT, REFERRED TO ABOVE, IS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE, WHICH SAYS THAT FOR THE PURPOSE OF SEC. 22, THE ANNUAL VALUE OF THE PROPERTY SHALL BE DETERMINED U/ S. 23(1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET OUT. THE ASSESSEES LEARNED COUNSEL R ELIED ON THE ORDERS OF I.T.A.T., MUMBAI IN THE CASE OF PREMSUDHA EXORTS (P) LTD. VS. ACIT (SUPRA) AND ORDER OF I.T.A.T., DELHI IN THE CASE OF KAMAL MISHRA VS. ITO (SUPRA). IN THESE CASES, THE TRIBUNAL HAS DISCUSSED THE ISSUE ON THE SCOPE OF SEC. 23(1)(C) O F THE ACT, WHEREAS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE BEFORE US, IN OUR CONSIDERED VIEW, THE ASSESSEES CASE 4 CLEARLY FALLS U/S. 23(4)(B) OF THE ACT. THEREFORE, THE DECISIONS OF THE TRIBUNAL IN THE AFORESAID CASES ARE NOT APPLICABLE TO THE CASE OF T HE PRESENT ASSESSEE. IN THAT VIEW OF THE MATTER, WE FIND NO INFIRMITY IN COMPUTING THE D EEMED RENTAL INCOME OF PROPERTIES AT ROHINI, BRAHMANAND AND DEOGARH AND ADDITION THEREOF MADE BY THE A.O. AND THE LD. C.I.T.(A) HAS RIGHTLY UPHELD THE SAME. THIS GROUND OF THE ASSESSEE, THEREFORE, FAILS. 6. THE OTHER GROUND RAISED IN THIS APPEAL BY THE A SSESSEE IS AGAINST DISALLOWANCES OF THE FOLLOWING EXPENSES, WHICH WERE CONFIRMED BY THE LD. C.I.T. (A) :- A) MOTOR CAR EXPENSES RS.11,369/- B) TRAVELLING & CONVEYANCE RS.10,000/- C) ELECTRICITY CHARGES RS.17,024/- D) BUSINESS PROMOTION RS.47,387/- E) DEPRECIATION RS.1,33,049/- F) LEGAL EXPENSES RS.56,559/- THE LD. A.O. OBSERVED THAT THE ASSESSEE IS THE PROP RIETOR OF M/S. ESSKAY OVERSEAS INC. AND PARTNER IN M/S. AKSHAY EXPORTS. FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION THE ASSESSEE HAS FILED P/L ACCOUNT AND BALANCE SHEET F OR HIS PROPRIETARY CONCERN AND ALSO FILED INDIVIDUAL INCOME & EXPENDITURE ACCOUNT ALONG WITH BALANCE SHEET SEPARATELY. THE LD. A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS ALR EADY DEBITED THE AFORESAID EXPENSES IN HIS PROPRIETARY CONCERN AND HENCE HE DISALLOWED THE EXPENSES CLAIMED UNDER INDIVIDUAL CAPACITY. 7. ON APPEAL, THE LD. C.I.T.(A) OBSERVED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE AFORESAID EXPENDITURE WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE EARNING OF INCOME FROM OTHER SOURCES. HE, THEREFORE, UPHELD T HE ACTION OF THE LD. A.O. IN HAVING DISALLOWED THE AFORESAID EXPENSES INCLUDING THE DEP RECIATION CLAIMED BY THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED BEFORE US. ON PERUSAL OF PAGES-3 TO 5 OF THE PAPER BOOK, WHICH AR E PERSONAL INCOME & EXPENDITURE ACCOUNT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION , WE OBSERVE THAT THE ASSESSEE HAS ALREADY CLAIMED THE AFORESAID EXPENDITURE AND AT TH E SAME TIME EXPENDITURE UNDER THE SAME HEADS OF EXPENDITURE ARE ALSO BOOKED IN THE AC COUNTS PREPARED FOR HIS PROPRIETARY CONCERN, WHICH ARE APPEARING ON PAGES 6 TO 9 OF THE PAPER BOOK. BEFORE US ALSO, THE ASSESSEE COULD NOT JUSTIFY HOW THE AFORESAID EXPENS ES SHOWN IN HIS PERSONAL ACCOUNT 5 WERE ACTUALLY RELATED TO HIS RUNNING OF THE PROPRIE TARY CONCERN. FURTHER, THE ASSESSEE HAS CLAIMED DEPRECIATION IN THE SUM OF RS.1,33,049/ - IN HIS PERSONAL ACCOUNT AS PER SCHEDULE-C (PAGE-5 OF THE PAPER BOOK) FOR THE HOUSE HOLD ITEMS LIKE MOTOR CAR, AIR- CONDITIONER, MOTOR CYCLE & SCOOTER, MOBILE PHONE & WATER FILTER. HE HAS ALSO CLAIMED DEPRECIATION ON THESE SAME TYPES OF ITEMS, AS WOULD BE EVIDENT FROM SCHEDULE-D OF THE FIRMS ACCOUNT PLACED AT PAGE-9 OF THE PAPER BOOK. THEREFORE, IN OUR CONSIDERED OPINION THE ITEMS SHOWN UNDER SCHEDULE-C OF THE PERSONAL AC COUNT WERE FOR NON-BUSINESS PURPOSES AND DEPRECIATION CLAIMED ON SUCH ITEMS HAS RIGHTLY BEEN DISALLOWED BY THE LD. AUTHORITIES BELOW. WE, THEREFORE, UPHOLD THE ORDER OF THE LD. C.I.T.(A) ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. SD/- SD/- ( ) ( . .. . . .. . ) !' (MAHAVIR SINGH) JUDICIAL MEMBER (C.D. RA O), ACCOUNTANT MEMBER ( (( ( ' ' ' ') )) ) DATE: 09 -12-2011 !5 0 .6 7!6&8- COPY OF THE ORDER FORWARDED TO: 1. *+ / THE APPELLANT : SUDHIR SATNALIWALA, 308, CENTRAL PLAZA, 2/6, SAR AT BOSE ROAD, KOLKATA-700 020. 2 ./*+ / THE RESPONDENT : A.C.I.T., CIRCLE-31, KOLKATA. 3. 5$ () : THE CIT(A) XIX, KOLKATA. 4. 5$/ THE C.I.T., KOL - 5 <= .$ / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . /6 ./ TRUE COPY, !5$2/ BY ORDER, (DKP) > ? / DY/ASSTT. REGISTRAR .