SULAKSHANA SECURITIES LIMITED, MUMBAI V. INCOME TAX OFFICER 1(3)(2), MUMBAI

MA 443/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8177 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: Business income
• Section: 143(1); 147

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/MUM/2016) ASSESSMENT YEAR: 2010-11 SULAKSHANA SECURITIES LTD., 4 TH FLOOR, MAFATLAL HOUSE, H.T. PAREKH MARG, BACKBAY RECLAMATION, MUMBAI 400 020. / VS. INCOME TAX OFFICER-1(3)(2), MUMBAI ROOM NO.541, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI- 400 020. ( !'#$ % /ASSESSEE) ( & / REVENUE) P.A. NO. AABCS1783 L !'#$ % / ASSESSEE BY SMT. ARATI VISSANJI, ADV. & / REVENUE BY SHRI SATISHCHANDRA RAJORE, (DR) ' !&( ) % * / DATE OF HEARING : 28/12/2018 ) % * / DATE OF PRONOUNCEMENT 28/12/2018 SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 2 / O R D E R PER JOGINDER SINGH (VICE PRESIDENT) BY WAY OF THIS MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 (HEREINA FTER THE ACT) IS BY THE ASSESSEE, SEEKING MODIFICATION OF THE ORDER OF THE TRIBUNAL DATED 06/03/2018. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE, MS. AARTI VISANJI, CONTENDED THAT THE TRI BUNAL HAS FOLLOWED THE ORDER OF THE TRIBUNAL FOR ASSESSME NT YEAR 2012-13 (ITA NO.4290/MUM/2016) DATED 12/04/2017, WHEREIN, THE MATTER WAS REMANDED BACK T O THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH ADJ UDICATION. HOWEVER, INADVERTENTLY, THE SAME COULD NOT BE FOLLO WED IN TRUE SENSE. ON THE OTHER HAND, THE LD. DR, SHRI SATISH CHANDRA RAJORE, DEFENDED THE ORDER OF THE TRIBUNAL. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE ORDER OF THE TRIBUNAL DATED 06/03/2018 FOR READY REFERENCE AND ANALYSIS SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 3 THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 19.01.2015 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI NOT GRANTING DEDUCTION IN ASSESSING THE RECEIPT OF AIR CONDITIONING AND OTHER CHARGES UNDER THE HEAD INCO ME FROM OTHER SOURCES AND ELECTRICITY CHARGES FOR RUN NING THE AIR CONDITIONER WHICH SHOULD HAVE BEEN GRANTED OF MAINTENANCE EXPENSES. 2. DURING HEARING, AT THE OUTSET, THE LD. COUNSEL F OR THE ASSESSEE, SMT. ARATI VISSANJI, CLAIMED THAT THE IMP UGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF (ITA NO.6427/M/2013) FOR ASSESSMENT YEAR 2009-10 AND ANOTHER DECISION DATED 12.04.2017 FOR ASSESSMENT YE AR 2012-13 (ITA NO.4290/M/2016). IT WAS ALSO CLAIMED T HAT THE LD. ASSESSING OFFICER ACCEPTED THE CLAIM OF THE ASSESSEE WHILE GIVING EFFECT TO THE ORDER VIDE ASSE SSMENT ORDER DATED 26.10.2016.THIS FACTUAL MATRIX WAS CONS ENTED TO BE CORRECT BY THE LD. DR. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VI EW OF THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVAN T PORTION FROM THE ORDER OF THE TRIBUNAL FOR ASSESSME NT YEAR 2012-13 (ITA NO.4290/M/2016) DATED 12.04.2017 FOR READY REFERENCE AND ANALYSIS: CHALLENGING THE ORDER DATED 11.04.2016 OF CIT(A)-3 , MUMBAI THE ASSESSEE HAD FILED THE PRESENT APPEAL. ASSESSEE-, COMPANY, D ERIVING INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES FILED ITS ORIGINAL RETURN OF INCOME ON 25.09.2012 DECLARING TOTAL INCOME OF RS.6 .30 LAKHS. INITIALLY RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. LATER ON, THE ASSESSMENT WAS REOPENED AS PER THE PROVISIONS OF SECTION 147 OF THE ACT AND THE ASSESSING OFFICER (A.O) COMPLETED THE ASSESSMENT, U/S.143(3) R.W.S. 147, ON 23.03.2015 DETERMINING INCOME OF THE ASSESSEE AT RS.11.15 LAKH S. 2. FIRST GROUND OF APPEAL IS ABOUT DEDUCTION IN RES PECT OF AIR CONDITIONING AND OTHER CHARGES. DURING THE ASSESSMENT PROCEEDING S, THE AO CALLED UPON THE ASSESSEE TO SUBMIT THE COPY OF BILL IN RESPECT OF EXPENDITURE INCURRED FOR AIR CONDITIONING AND OTHER CHARGES. AFTER CONSIDERI NG THE DETAILS FILED BY THE ASSESSEE IN THAT REGARD THE AO MADE A DISALLOWANCE OF RS.2.94 LAKHS. HE OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED BILLS / VOUCHERS FOR THE EXPENSES CLAIMED. SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 4 2.1. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM, IT WAS ARGUED THAT IT HAD SHIFTED ITS OFFICE, THAT PAPER RELATED WITH THE EXP ENDITURE WERE NOT TRACEABLE, THAT IT WAS TRYING TO LOCATE THE SAME. AS THE ASSES SEE 4290/M/16(12-13) SULAKSHANA SECURITIES LTD. HAD NOT FILED ANY EVIDEN CE OF INCURRING OF EXPENDITURE BEFORE THE FAA, SO, HE UPHELD THE ORDER OF THE AO. 2.2. DURING THE COURSE OF HEARING BEFORE US, THE AU THORISED REPRESENTATIVE (AR) STATED THAT IDENTICAL ISSUE WAS RESTORED BACK TO THE FILE OF THE AO BY THE TRIBUNAL IN AY.S 2006-07 AND 2009-10 (IN ITA/7271/M UM/2011 DT.11.4.14 AND ITA/6427/MUM/2013 DT.27.5.15) WE ARE REPRODUCIN G PARA NO.4-5 AT PAGE-3&4 OF THE ORDER FOR AY 2009-10 (SUPRA) AND IT READS AS UNDER:- '4. BEFORE US, AT THE OUTSET, THE LD. A.R. OF THE A SSESSEE HAS STATED THAT THE ISSUE FOR THE EARLIER ASSESSMENT YEAR 2006 -07 HAD TRAVELLED UP TO THE LEVEL OF TRIBUNAL. WE HAVE PERUSED THE TRIBU NAL'S ORDER FOR THE ASSESSMENT YEAR I.E. A.Y. 2006-07 PASSED IN ITA NO. 7271/M/2011 DATED 11.04.2014. WE FIND THAT THE TRIBUNAL, WHILE ADJUDI CATING THE IDENTICAL ISSUE FOR A.Y. 2006-07, HAS RESTORED THE MATTER TO THE FILE OF THE AO OBSERVING AS UNDER: '7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. INSOFAR AS THE IS SUE, WHETHER RECEIPT FROM AIR CONDITIONING AND OTHER CHARGES ARE TO BE A SSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' OR UNDER THE HEAD 'INCOME FROM H O U S E P R O P E R T Y ' I S C O N CE RN ED , T H E S A ME H A S B E EN SE T T L ED B Y T H E TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASS ESSEE'S OWN CASE, BY HOLDING THAT SUCH RECEIPTS ARE TO BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES', WHICH HAS BEEN ACCEPTED BY THE LEARNED COMMISSIONER (APPEALS) ALSO. HOWEVER, THE LEARNED C OMMISSIONER (APPEALS), WITHOUT ANALYSING THE NATURE OF EXPENDIT URE INCURRED BY THE ASSESSEE IN RELATION TO MAFATLAL CENTRE BUILDING, H AS SIMPLY DIRECTED THE ASSESSING OFFICER TO ALLOW ELECTRICITY CHARGES ONLY. SUCH A DIRECTION IS WHOLLY MISCONCEIVED AS ALL THE NECESSARY EXPENDI TURES WHICH ARE ATTRIBUTABLE TO THE EARNING OF THE RECEIPTS WHICH A RE SHOWN UNDER THE HEAD 'INCOME FROM OTHER SOURCES' HAS TO BE CONSIDER ED UNDER SECTION 57(III). THE TRIBUNAL ALSO GAVE SIMILAR DIRECTIONS TO THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE AFTER EXAMINING TH E SAME UNDER SECTION 57. IN THIS YEAR ALSO, CONSISTENT WITH THE STAND TAKEN BY THE SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 5 TRIBUNAL, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE BACK THE ISSUE T O THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO CONSIDER THE EX PENSES AS SHOWN BY THE ASSESSEE AND TO SEE IT S DEDUCTIBILITY UNDER SE CTION 57 OF THE ACT. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWE D FOR STATISTICAL PURPOSES.' 5. SINCE THE FACTS ARE IDENTICAL AND THE LD. CIT(A) IN THE IMPUGNED ORDER HAD ALSO FOLLOWED THE DECISION OF HIS PREDECE SSOR RELEVANT TO A.Y. 2006-07, HENCE IN VIEW OF THE FACT THAT THE ISSUE H AS BEEN CONSIDERED AND RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO FOR A.Y. 2006-07, WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO IN TERMS OF THE DIR ECTION GIVEN BY THE TRIBUNAL ON IDENTICAL FACTS IN EARLIER ASSESSMENT Y EAR 2006-07 AND DIRECT THE AO TO DECIDE IT ACCORDINGLY.' RESPECTFULLY FOLLOWING THE SAME, ISSUE IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION WHO WILL DECIDE THE ISSUE AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE IN PART. 3. GROUND OF APPEAL NO.2 IS ABOUT DEDUCTION OF EXPE NDITURE INCURRED TOWARDS FEE, LEGAL AND PROFESSIONAL FEE FOR MAINTAINING COR PORATE STATUS AMOUNTING TO RS.1.91 LAKHS. DURING THE ASSESSMENT PROCEEDINGS TH E AO FOUND THAT THE ASSESSEE HAD SHOWN EXPENSES OF RS.1,40,450/- AND RS .50,628/- UNDER THE HEADS AUDIT FEE AND PROFESSIONAL FEE RESPECTIVELY. HE DIRECTED THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID EXPENDITURE SHOULD NOT B E DISALLOWED. 3.1. AFTER CONSIDERING THE SUBMISSION OF THE ASSESS EE THE AO HELD THAT THE MAIN ACTIVITY /SOURCE OF INCOME OF THE ASSESSEE WAS INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES, THAT IT HAD BEEN ALLOWED DEDUCTION IN RESPECT OF HOUSE PROPERTY AS PER THE PROVISIONS OF THE ACT, THAT THE EXPENDITURE CLAIMED BY IT TOWARDS AUDIT AND LEGAL C HARGES COULD NOT BE ALLOWED, AS THE ASSESSEE DID NOT HAVE BUSINESS INCO ME FOR THE YEAR UNDER CONSIDERATION. DURING THE APPELLATE PROCEEDINGS THE FAA UPHELD THE ORDER OF THE AO HOLDING THAT THE ASSESSEE HAD NOT SHOWN ANY BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION. SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 6 3.2.DURING THE COURSE OF HEARING BEFORE US THE AUTH ORISED REPRESENTATIVE (AR) ARGUED THAT EXPENDITURE WAS INCURRED FOR MAINT AINING CORPORATE STATUS AND SAME HAD TO BE ALLOWED U/S.57 OF THE ACT. HE RE FERRED TO THE CASES OF RAMPUR TIMBER AND TURNERY CO. LTD. (129ITR58); PREI MUS INVESTMENTS AND FINANCE LTD. (ITA 4879/MUM/2012, AY 06-07 DT.13.5.1 5); GANGA PROPERTIES LTD.(199ITR094) AND BANARAS ELECTRIC LIGHT AND POWE R CO.LTD(204ITR804); NAKODAR BUS SERVICE (P.)LTD.(179ITR506). THE DEPART MENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 3.3.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE BEFORE US. IN THE CASE OF RAMPUR TIMBER AND TURNERY CO. LTD. (SUPRA), THE HON'BLE HIGH COURT OF ALLAHABAD HAD DEALT WITH THE PROVISIONS OF SECTION 57(III) OF THE ACT.IN THAT MATTER THE COMPANY HAD DISCONTI NUED ITS BUSINESS AND HAD CLAIMED CERTAIN EXPENDITURES UNDER THE HEAD S MISCELLANEOUS EXPENSES, SALARY, LEGAL EXPENSES FOR RETAINING THE STATUS OF COMPANY .THE HON'BLE COURT HELD THAT SUCH EXPENDITURE HAD TO BE ALLOWED AS SAME WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING/EARNING INCOME. RESPECTFULLY FOLLOWING THE ABOVE EXPENDITURE WAS IN CURRED FOR RETAINING THE CORPORATE STATUS OF THE ASSESSEE, HENCE, SAME IS AL LOWABLE. REVERSING THE ORDER OF THE FAA WE DECIDE EFFECTIVE GROUND OF APPE AL IN FAVOUR OF THE ASSESSEE . AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED. IT IS NOTED THAT THE TRIBUNAL IN THE AFORESAID ORDE R 06/03/2018 HAS FOLLOWED THE ORDER OF THE TRIBUNAL F OR ASSESSMENT YEAR 2012-13 (ITA NO.4290/MUM/2016). IN THE AFORESAID ORDER, THE ISSUE WAS RESTORED BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH ADJUDIC ATION WITH A DIRECTION TO PROVIDE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN VIEW OF THIS FACTUAL MA TRIX, THE AFORESAID ORDER OF THE TRIBUNAL IS MODIFIED AND THE SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 7 LD. ASSESSING OFFICER IS DIRECTED TO FOLLOW THE ORD ER OF THE TRIBUNAL DATED 12/04/2017 AND THE DIRECTIONS CONTAINED THEREIN. THUS, THIS ORDER OF THE TRIBUNAL IS MODIFIED TO THIS EXTENT. THE ISSUE IN HAND IS SENT TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH ADJUDIC ATION. TO THIS EXTENT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED. FINALLY, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLOWED TO THE ABOVE EXTENT. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES FROM BOTH S IDES AT THE CONCLUSION OF THE HEARING 28/12/2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER / VICE PRESIDENT ' ( MUMBAI; /! DATED : 28/12 /2018 F{X~{T? P.S/. !. . , $%&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. 012 / THE ASSESSEE 2. 3412 / THE REVENUE 3. 5 5 ' 6% , ( 0 ) / THE CIT, MUMBAI. SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 8 4. 5 5 ' 6% / CIT(A)- , MUMBAI 5. 8&9 3 % !' , 5 0* 0' , ' ( / DR, ITAT, MUMBAI 6. # :( / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI THIS ORDER WAS DIRECTLY DICTATED TO THE SR.PS/PS ON COMPUTER A. APPEAL HEARD ON 06.03.18 1. DRAFT DICTATED ON 06.03.18 SR.PS /PS 2. DRAFT PLACED BEFORE AUTHOR 06.03.18 SR.PS /PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS /PS 6. DATE OF PRONOUNCEMENT/ORDER SR.PS /PS 7. FILE SENT TO THE BENCH CLERK SR.PS /PS 8. DATE ON WHICH FILE GOES TO THE SULAKSHANA SECURITIES LTD M.A. NO.443/MUM/2018 (ARISING OUT OF ITA NO.4325/M/2016) 9 HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER