RANGBAHAR, MUMBAI v. ITO WD 18(3)(3), MUMBAI

ITA 2240/MUM/2009 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 224019914 RSA 2009
Assessee PAN AADFR0490A
Bench Mumbai
Appeal Number ITA 2240/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 21 day(s)
Appellant RANGBAHAR, MUMBAI
Respondent ITO WD 18(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 31-05-2010
Date Of Final Hearing 03-03-2010
Next Hearing Date 03-03-2010
Assessment Year 2005-2006
Appeal Filed On 09-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2240/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S. RANGBAHAR COMMISSIONER OF INCOME TAX - 18 109 SOMESHWAR NIVAS PIRAMAL CHAMBERS IT OFFICE SHIVAJI PARK ROAD NO. 3 VS. PAREL MUMBAI 400013 DADAR MUMBAI 400028 PAN - AADFR 0490 A APPELLANT RESPONDENT APPELLANT BY: SHRI KISHORE B. KARIA RESPONDENT BY: SHRI R.N. JHA O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT-18 MUMBAI UNDER SECTION 263 OF THE I.T. ACT DATED 16.01.2009 FOR A.Y. 2005-06. 2. ASSESSEE HAS CHALLENGED THE VALIDITY OF THE PROCEED INGS INITIATED BY THE CIT UNDER SECTION 263 IN SETTING ASIDE THE ORDER OF THE A.O. UNDER SECTION 143(3) DATED 13.10.2007. THE ASSESSEE HAS RAISED MA NY GROUNDS ON THE ISSUE OF LEGALITY OF THE PROCEEDINGS UNDER SECTION 263. 3. BRIEFLY STATED THE ASSESSEE M/S. RANGBAHAR IS A F IRM COMPRISING THREE PARTNERS NAMELY MR. S.D. UPADHYE MR. Y.S. U PADHYE AND MRS. S.S. UPADHYE ALL FAMILY MEMBERS. MR. S.D. UPDAHYE IS AN ASTROLOGER AND A LITERARY FIGURE IN MARATHI AND HIS WIFE MRS. SANDHY A UPADHYE AND SON WHO IS A COMPUTER ENGINEER AND HAS EXPERT KNOWLEDGE OF COMPUTER OPERATIONS ARE THE PARTNERS OF THE FIRM. THE FIRM CAME INTO EX ISTENCE FROM 01.04.1979 TO UNDERTAKE PRESENTATION OF STAGE PLAYS AND CULTUR AL PROGRAMMES IN MARATHI. IN VIEW OF THE EXPERTISE IN ASTROLOGY AND ITS SCIENTIFIC STUDY OF ZODIAC SIGNS SHRI UPADHYE BEING A PROFESSIONAL WRI TER IN ASTROLOGY WROTE A PLAY AND WAS PERFORMING ALL OVER MAHARASHTRA AND IN THE LAST 12 YEARS MORE THAN 2000 STAGES SHOWS WERE PERFORMED. DURING THE Y EAR UNDER CONSIDERATION 178 STAGE SHOWS WERE PERFORMED WHICH INVOLVED A GROSS ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 2 REVENUE OF RS.40.94 LAKHS. THE ASSESSEE FILED RETUR N OF INCOME AND THE SAME WAS ACCOMPANIED BY AUDIT REPORT IN FORM 3CB AND 3CD DECLARING A TOTAL INCOME OF RS.8 34 100/-. THE CASE WAS SELECTED FOR SCRUTINY AND AFTER OBTAINING VARIOUS INFORMATION AND CLARIFICATIONS TH E A.O. DETERMINED THE TAXABLE INCOME AT RS.9 15 170/- INTER ALIA DISALLOW ING VARIOUS EXPENSES. THE CIT ON EXAMINATION OF THE RECORD HAD ISSUED SHOW CAUSE NOTICE INVOKING PROVISIONS OF SECTION 263 WITH REFERENCE TO CLAIM O F DEPRECIATION ON 2 FLATS BEING USED BY THE ASSESSEE FIRM FOR BUSINESS PURPOS ES ONE AT ANDHERI MUMBAI AND OTHER AT PUNE. IN THE SHOW CAUSE NOTICE THE REASONS GIVEN WERE THAT THE ASSESSEE NEITHER DISCLOSED NOR ASSESSED TH E HOUSE PROPERTY INCOME FROM THE ABOVE 2 PROPERTIES AND THE ASSESSEE HAS NO T FURNISHED ANY DOCUMENTARY EVIDENCE FOR USE OF THE FLATS FOR BUSIN ESS PURPOSE AND THERE WAS WRONG ALLOWANCE OF DEPRECIATION ON THE ABOVE 2 FLATS LOCATED IN THE RESIDENTIAL AREAS. THE ASSESSEE MADE ELABORATE ARGU MENTS INCLUDING THE PROOF ABOUT THE BACKGROUND OF PARTNERS FIRM AND AC TIVITIES HIGHLIGHTS OF RASHICHAKRA PROGRAMMES STAGE SHOWS AND SUBMISSIO NS FOR REQUIREMENT OF OFFICE PREMISES AND REPLIES ON VARIOUS ISSUES RAISE D. DURING THE COURSE OF PROCEEDINGS IN ADDITION TO THE ISSUE OF THE ABOVE 2 FLATS THE CIT ALSO ASKED FOR VARIOUS EVIDENCES ON EXPENDITURE DETAILS AND UL TIMATELY HE CONCLUDED THAT THE ORDER OF THE A.O. WAS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. VIDE PARAS 10 & 11 OF THE ORDER HE CAME TO THE CONCLUSION THAT THE MAIN ACTIVITY OF THE FIRM WAS CONDUCTING STAGE SHOW S FOR WHICH THE ABOVE 2 FLATS WERE NEVER USED AND THUS THE FLATS ARE NOT US ED FOR THE PURPOSE OF BUSINESS HENCE CLAIM OF DEPRECIATION WAS WRONG. IN ADDITION TO THE ABOVE ISSUE THE CIT ALSO EXAMINED THE REMUNERATIONS PAID AND THE EXPENDITURE CLAIMED AND WAS OF THE OPINION THAT THE EXPENDITURE WAS NOT FULLY ALLOWABLE ACCORDINGLY THE ORDER WAS ERRONEOUS. THE CIT ALSO E XAMINED THE ADVERTISEMENT EXPENSES AND VIDE PARA 16 HE HAD COME TO THE CONCLUSION THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE EXPENS ES WHOLLY AND EXCLUSIVELY FOR BUSINESS AND PERSONAL ELEMENT CANNO T BE RULED OUT AND THEREFORE THE EXPENDITURE OF RS.4 18 335/- ON ACCOU NT OF HOTEL DIESEL & PETROL TOLL CHARGES AND OTHER MISCELLANEOUS CHARGE S ARE NOT ALLOWABLE. VIDE PARA 18 OF THE ORDER THE CIT WAS ALSO OF THE OPINIO N THAT THE ASSESSEE HAS NOT PROVIDED THE PLACE OF INSTALLATION OF ASSETS AS PER THE CLAIM OF ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 3 DEPRECIATION CHART AND ACCORDINGLY DEPRECIATION ON ACCOUNT OF FURNITURE AIR CONDITIONERS MOBILE PHONE TELEPHONE SLIDE PROJEC TOR AND COMPUTER WAS NOT ALLOWABLE. CONSIDERING THE ABOVE ISSUES HE HAS COME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS THUS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 4. AFTER FINDING THAT THE ORDER WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE THE CIT ALSO GAVE THE FOLL OWING FINDING IN PARA 19 OF THE ORDER AS UNDER: - 19. ON GOING THROUGH THE ENTIRE MATERIAL ON RECORD IT IS EVIDENT THAT SHRI SHARAD DATTARIYA UPADHYE PUT A VEIL OF THE FIR M ON HIS OWN PERSONAL PROFESSION OF ARRANGING ASTROLOGY SHOWS TO EVADE DUE TAXES PAYABLE BY HIM. HE CLAIMED DEPRECIATION ON JOINTLY OWNED FLAT NO. 206 AS IT WAS BIGGER THAN HIS OWN ADJACENT FLAT NO. 205 . MTNL PUBLICITY AGENCY ETC. DID NOT FIND ANY DISTINCTION IN THE FLA TS AS THEY ADDRESSED THEIR BILLS AS FLAT NO. 205/206 ANDHERI. THE ASSES SEE DID NOT PROVE THAT FLAT NO. 206 WAS PURCHASED OUT OF ITS OWN FUNDS AND NOT BY INDIVIDUAL FUNDS OF MR. UPADHYE HIS WIFE AND SON. THE ASSESSE ES CLAIM OF VISIT BY HUNDREDS OF PEOPLE TO FLAT NO. 205/206 NOT CAUSE AN Y NUISANCE IS APPARENTLY WRONG. THERE IS NO EVIDENCE FOR SEEKING SECOND OPINION OF NOTED LITERARY FIGURES NOTED STAGE ARTISTS DISCUS SION WITH TECHNICIANS OR CONTRACTORS ETC. THE SERVICES OF CONTRACTORS WERE USED AT THE THEATRES AT VARIOUS LOCATIONS TO ARRANGE SHOWS. THE LETTER OF M AYOR OF PUNE IS ADDRESSED AT PUNE WITHOUT MENTIONING THE HOUSE NU MBER OR ADDRESS OF THE LOCALITY AND APPEARS TO BE FABRICATED. MR. UPAD HYE HIS WIFE AND SON USED THE ASSETS FOR THEIR OWN BENEFIT. A PROPER INV ESTIGATION OF THE EVIDENCES WILL UNVEIL THE DISGUISED PLANNING OF THE ASSESSEE TO EVADE TAXES. 5. THE LEARNED COUNSEL REFERRED TO THE PAPER BOOKED FI LED IN THIS REGARD AND SUBMITTED THAT ON ALL THE ISSUES WHICH THE CIT HAS FORMED OPINION THE A.O. ISSUED SHOW CAUSE NOTICE ASSESSEE HAS FURNISH ED DETAILED JUSTIFICATION COMPLETE DETAILS AND THE A.O. AFTER EXAMINING ASSE SSEES VARIOUS CLAIMS HAS ALLOWED THE EXPENDITURE ON DEPRECIATION AS WELL AS VARIOUS OTHER EXPENDITURES. HE REFERRED TO THE COPY OF ANNEXURE T O NOTICE UNDER SECTION 142(1) CALLING FOR DETAILS PLACED IN PAPER BOOK PAG ES 23 TO 26. COPY OF THE REPLIES FILED VIDE LETTER DATED 22.02.2007 IS PLACE D IN PAPER BOOK AT PAGES 23 TO 30 STATEMENT OF PROGRAMME RECEIPTS AND EXPENSES AT PAGES 31 TO 38 LIST OF ADDITIONAL DETAILS CALLED ON 13.08.2007 AT PAGE 39 AND ITS REPLIES DATED 21.08.2007. FURTHER NOTE OF BUSINESS ACTIVITIES SU BMITTED DURING THE ASSESSMENT PROCEEDINGS IN A.Y. 2001-02 IS PLACED IN PAPER BOOK AT PAGES 43 ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 4 AND 44 WHICH WAS ALSO SUBMITTED DURING THE ASSESSM ENT PROCEEDINGS TO THE A.O. FINALLY THE COPY OF LETTER DATED 10.09.07 AND COPY OF TELEPHONE BILLS AND ADVERTISEMENT PLACED BEFORE THE A.O. WERE ALSO REFE RRED TO. ALL THESE DOCUMENTS WERE PLACED IN THE PAPER BOOK WHICH WERE FURNISHED TO THE A.O. DURING THE ASSESSMENT PROCEEDINGS. HE ALSO REFERRED TO THE VARIOUS CLARIFICATIONS GIVEN TO THE CIT DURING THE PROCEEDI NGS UNDER SECTION 263 WHICH WAS ALSO PLACED IN THE PAPER BOOK FROM PAGES 57 TO 111. IT WAS HIS SUBMISSION THAT ALL THE ISSUES HAVE BEEN EXAMINED B Y THE A.O. IN DETAIL IN THE ASSESSMENT PROCEEDINGS AND HE HAS FORMED AN OPI NION AND THE CIT HAS TAKEN DIFFERENT STAND AND INVOKED PROVISIONS OF SEC TION 263 WHICH IS NOT CORRECT UNDER THE PROVISIONS OF SECTION 263. HE REL IED ON THE DECISION IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (BOM ) AND THE DECISION OF THE ITAT IN THE CASE OF BAID CREDITS & PORTFOLIO (P) LT D. 24 SOT 1 (DEL) FOR THE CLAIM OF DEPRECIATION ON RESIDENTIAL PREMISES USED FOR THE PURPOSE OF BUSINESS AND AHALYA TRADING PRIVATE LTD. 22 SOT 68 (MUM) AND UNILEVER PLC 18 SOT 136 (MUM) FOR THE PROPOSITION THAT ORDER OF THE CIT WAS BAD IN LAW AS THE ISSUES WERE DISCUSSED AND DECIDED BY THE A.O. THE LEARNED COUNSEL ALSO PLACED ON RECORD STATEMENT SHOWING ACT UAL POSITION AND OBSERVATIONS MADE BY THE CIT IN THE ORDER UNDER SEC TION 263 EXPLAINING WHY THE CIT HAS ERRED IN CONSIDERING THE EXPENDITURE. 6. THE LEARNED D.R. HOWEVER RELIED ON THE ORDER OF T HE CIT AND SUBMITTED THAT THE ASSESSEE MADE WRONG CLAIM OF DEP RECIATION. 7. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE RECORD AND VARIOUS CASE LAWS ON THIS ISSUE. THE ITAT IN THE CASE OF MR S. KHATIZA S. OOMERBHOY V. ITO (2006) 101 TTJ (MUM.) 1095 ANALYSED IN DETA IL VARIOUS AUTHORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT (2000) 2 43 ITR 83 AS WELL AS HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF C IT V. GABRIEL INDIA LTD. (1993) 203 ITR 108 AND HAS PRONOUNCED THE FOLLOWING BROADER PRINCIPLES TO JUDGE THE ACTION OF CIT TAKEN UNDER SECTION 263: - 'THE FUNDAMENTAL PRINCIPLE WHICH EMERGE FROM THE AB OVE CASE MAY BE SUMMARISED BELOW.' ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 5 I. THE CIT MUST RECORD SATISFACTION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. BOTH THE CONDITIONS MUST BE FULFILLED. II. SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND E VERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. III. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT AP PLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEO US. IV. IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. V. EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE AND IF THE ASSESSING OFFIC ER HAS ADOPTED ONE OF THE COURSE PERMISSIBLE UNDER LAW OR WHERE TW O VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VI EW WITH WHICH THE CIT DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS U NSUSTAINABLE UNDER LAW. VI. IF WHILE MAKING THE ASSESSMENT THE ASSESSING OFFIC ER EXAMINES THE ACCOUNTS MAKES ENQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME THE CIT WHILE EXERCISING HIS POWER UNDER SECTION 263 IS NOT PERMI TTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIM ATED BY THE ASSESSING OFFICER. VII. THE ASSESSING OFFICER EXERCISES QUASI-JUDICIAL POWE R VESTED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH L AW AND ARRIVES AT A CONCLUSION SUCH CONCLUSION CANNOT BE TERMED T O BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. VIII. THE CIT BEFORE EXERCISING HIS JURISDICTION UNDER S ECTION 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION . IX. IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND T HE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITI NG AND THE ASSESSING OFFICER ALLOWS THE CLAIM ON BEING SATISFI ED WITH THE EXPLANATION OF THE ASSESSEE THE DECISION OF THE AS SESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HI S ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD.' 8. IN THE LIGHT OF THE ABOVE WE EXAMINED THE FACTS OF THE PRESENT CASE. AS SEEN FROM THE SHOW CAUSE NOTICE ISSUED BY THE A.O. THE A.O. INDEED ASKED FOR DETAILS OF THE CLAIM OF EXPENDITURE INCLUDING T HE USAGE OF PROPERTY AND THE RENT PAID FOR GODOWN HIRED BY THE ASSESSEE. THE ASSESSEE HAS GIVEN DETAILED EXPLANATIONS HOW FLAT NO. 206 WAS PURCHASE D BY THE ASSESSEE FIRM SOURCE OF FUNDS AND THE ENQUIRY MADE BY THE A.O. IN A.Y. 2001-02 WHILE ALLOWING DEPRECIATION AND ALSO THE NECESSARY EVIDEN CES THAT THE PREMISES IN ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 6 PUNE AND ANDHERI ARE BEING USED FOR BUSINESS PURPOS ES INCLUDING FOR STORAGE OF MATERIAL SCREENS AND STAGE REQUISITES. IT IS ALSO EXPLAINED THAT IN VIEW OF THE HEAVY MACHINERY AND FURNITURE WHICH WER E REQUIRED FOR STAGE SHOW A PREMISES WAS HIRED WHICH IS IN THE GROUND FL OOR FOR WHICH RENTAL AMOUNT WAS PAID. THE ASSESSEE ALSO FURNISHED THE DE TAILS OF STAGE SHOWS DATES OF ADVERTISEMENT EXPENDITURES WHICH WERE INC URRED FOR STAGE SHOWS TELEPHONE AND OTHER EXPENDITURES DETAILS OF WHICH WERE SEEMS TO HAVE BEEN THOROUGHLY EXAMINED. THE ASSESSMENT ORDER DO INDICA TE THAT THE A.O. HAS NOT ONLY EXAMINED THE DETAILS BUT ALSO DISALLOWED E XPENDITURES AFTER VERIFICATION AS CAN BE SEEN FROM PARA 2 OF THE ASSE SSMENT ORDER AND PARA 13 14 & 15 WHICH ARE DISALLOWANCES ON ADHOC BASIS AMOU NTS OUT OF TELEPHONE EXPENSES AND CAR EXPENSES AND FURTHER ROUNDSUM DISA LLOWANCE OF MISCELLANEOUS EXPENSES TOWARDS NON-BUSINESS EXPENSE S. HE ALSO DISALLOWED EXPENSES ON WHICH TDS WAS NOT DEDUCTED WHICH INCLUD ED ADVERTISEMENT EXPENSES INTEREST TO EX-PARTNERS ETC. THE ASSESSM ENT ORDER DO INDICATE THAT THE A.O. CALLED FOR DETAILED EXPLANATIONS AND THEN ONLY HE HAS ALLOWED THE EXPENDITURE BY MAKING CERTAIN DISALLOWANCES. 9. AS SEEN FROM THE SHOW CAUSE NOTICE AS WELL AS THE O RDER THE MAIN OBJECTION OF THE CIT SEEMS TO BE ON THE FACT THAT T HE ASSESSEES PARTNER OWN AN APARTMENT NO. 205 IN THE SAME PLACE AND FLAT NO. 206 WAS USED BY THE FIRM. THE ASSESSEE EXPLAINED THAT FLAT NO. 205 WAS PURCHASED BY THE MAIN PARTNER IN HIS INDIVIDUAL CAPACITY AND FLAT NO. 206 WAS PURCHASED FROM THE FUNDS OF THE FIRM AND WAS BEING USED FOR THE PURPOS E OF BUSINESS. THIS ASPECT OF USAGE FOR BUSINESS WAS EXAMINED BY THE A. O. IN DETAIL IN A.Y. 2001-02 AND ASSESSEE WAS BEING ALLOWED DEPRECIATION ON THE FLAT. THE A.O. IN THE PRESENT ASSESSMENT ORDER ALSO MADE SIMILAR E NQUIRY NOT ONLY ABOUT USE OF FLAT NO. 206 IN ANDHERI BUT ALSO ABOUT THE F LAT IN PUNE AND PAYMENT OF RENT FOR GODOWN BEING HIRED BY THE ASSESSEE. IN ADDITION TO THAT THE A.O. HAS ALSO EXAMINED VARIOUS STAGE SHOWS EXPENDITURE CLAIMS DETAILS OF THE ASSETS PURCHASE OF NEW MOTOR CAR DURING THE YEAR A ND VARIOUS DETAILS OF TELEPHONE AND ADVERTISEMENT EXPENSES AND COMPLETED THE ASSESSMENT AFTER DUE VERIFICATION. IN VIEW OF THESE FACTS AVAILABLE ON RECORD WE ARE NOT IN A POSITION TO UNDERSTAND ON WHAT BASIS THE CIT HAS CO ME TO THE CONCLUSION ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 7 THAT THE ORDER IS ERRONEOUS SO FAR AS IT IS PREJUDI CIAL TO THE INTEREST OF REVENUE. 10. ONE OF THE FINDINGS GIVEN IN PARA 11 IS THAT THE AS SESSEE HAS NOT USED THE FLAT FOR THE PURPOSE OF BUSINESS. TO ARRIVE AT THIS FINDING BY THE CIT THERE IS NO EVIDENCE WITH THE CIT TO CONCLUDE THAT THE SAID FLAT WAS NOT USED FOR THE PURPOSE OF BUSINESS. IT IS ASSESSEES EXPLA NATION THAT THIS FLAT WAS USED FOR BUSINESS PURPOSE MORE SO FOR HOLDING DISCU SSIONS CONDUCTING REHEARSALS DISCUSSION WITH ARTISTS AND FURTHER AT PRESENT FOR THE TV SHOW BEING ORGANISED FOR ETV IN MUMBAI. LIKEWISE THE FLA T IN PUNE HAS ALSO BEEN USED FOR BUSINESS PURPOSES AND PARTICULARLY FOR CON DUCTING STAGE SHOWS IN AND AROUND MAHARASHTRA PERIODICALLY. THERE IS NO E VIDENCE ON RECORD TO DISPROVE ASSESSEES CLAIM AS THE ASSESSEE HAS GIVEN VARIOUS EVIDENCES INCLUDING TELEPHONE BILLS CORRESPONDENCE FROM OTHE R ARTISTS AND LETTER FORM THE MAYOR OF PUNE TO INDICATE THAT THESE PREMISES A RE BEING USED FOR BUSINESS PURPOSES. TWO ASSESSING OFFICERS IN TWO DI FFERENT ASSESSMENT YEARS HAVE EXAMINED THIS ISSUE AND ALLOWED THE USE OF THE SAID PREMISES FOR BUSINESS PURPOSES. WITHOUT ANY EVIDENCE TO THE CONT RARY WE ARE OF THE OPINION THAT THE CIT HAS COME TO THE CONCLUSION THA T THE PREMISES WERE NOT BEING USED FOR BUSINESS PURPOSE JUST BECAUSE THE P REMISES IS ADJACENT TO THE OWN RESIDENTIAL FLAT OF THE MAIN PARTNER. ON TH IS PRETEXT AN OPINION CANNOT BE FORMED AS THERE IS NO EVIDENCE THAT THE S AID PREMISES IS USED FOR PERSONAL PURPOSES. 11. COMING TO THE FINDINGS IN PARA 13 WITH REFERENCE TO EXPENDITURE ON ACCOUNT OF PAYMENT TO ARTISTS TRAVELLING AND INCID ENTAL EXPENSES THESE EXPENSES HAVE BEEN VERIFIED IN DETAIL BY THE A.O. A ND AS SEEN FROM THE ASSESSMENT ORDER THERE WERE DISALLOWANCES IN ADVERT ISEMENT EXPENDITURE ACCOUNTING CHARGES TELEPHONE EXPENSES MOTOR CAR E XPENSES AND MISCELLANEOUS EXPENSES. IN VIEW OF THE CLEAR DISALL OWANCES OF SPECIFIC HEADS THE FINDINGS OF THE CIT(A) IN PARA 13 WHICH ARE IN GENERAL NATURE CANNOT BE ACCEPTED TO COME TO A CONCLUSION THAT THE ORDER IS ERRONEOUS. LIKEWISE HIS FINDING IN PARA 16 WITH REFERENCE TO OTHER EXPENDIT URES ALSO DOES NOT HAVE ANY BASIS. APART FROM THAT THE CIT ALSO TRAVELLED B EYOND THE ISSUE IN THE SHOW CAUSE NOTICE IN HOLDING THAT THE ASSESSEE HAS NOT PROVIDED THE PLACE OF ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 8 INSTALLATION OF ASSETS LIKE FURNITURE AIR CONDITIO NERS MOBILE PHONES TELEPHONE SLIDE PROJECTOR AND COMPUTER WHICH IS N OT ALLOWABLE AS PER HIS OBSERVATIONS IN PARA 18. WE ARE UNABLE TO UNDERSTA ND HOW THE LEARNED CIT COULD ARRIVE AT THIS CONCLUSION. ASSESSEE IS MAINLY INVOLVED IN PERFORMING STAGE SHOWS IN VARIOUS PARTS OF MAHARASHTRA AND THE SE STAGE SHOWS ARE ORGANISED THROUGH OUT THE YEAR IN DIFFERENT PLACES FOR WHICH THEY HAVE THEIR OWN ASSETS LIKE SLIDE PROJECTORS FURNITURE CURTAI NS ETC. EVEN THE CIT SURPRISINGLY INCLUDED THE MOBILE PHONES FOR PLACE O F INSTALLATION. BY VERY NATURE OF MOBILE PHONE THIS CANNOT BE FIXED IN A P ARTICULAR PLACE. FINALLY THE CITS FINDING IN PARA 19 WAS THAT SHRI SHARAD D ATTATRIYA UPADHYE PUT A VEIL OF THE FIRM ON HIS OWN PERSONAL PROFESSION OF ARRANGING ASTROLOGY SHOWS TO EVADE DUE TAXES PAYABLE BY HIM. THIS IS VERY SWE EPING AND PERSONAL OPINION OF THE CIT WITHOUT ANY EVIDENCE. BY THE VER Y NATURE THE STAGE SHOWS BEING ORGANISED BY THE FIRM CANNOT BE PERFORMED ALO NE. IT IS TRUE THAT SHRI SHARAD DATTARIYA UPADHYE IS WELL KNOWN ASTROLOGER A ND A WRITER BUT THE FIRM IS NOT INVOLVED IN THESE TWO PROFESSIONS OF SH RI S.D. UPADHYE. THE FIRM IS ENGAGED IN PERFORMING THE STAGE SHOWS WHICH IS A GROUP ACTIVITY. THE CIT HAS NOT ONLY MISGUIDED BUT ALSO MISDIRECTED HIMSELF IN MIXING THE INDIVIDUAL TALENT OF SHRI S.D. UPADHYE WITH THAT OF THE FIRMS BUSINESS ACTIVITY. EVEN THE BALANCE OF THE FINDINGS IN PARA 19 OF THE ORDER IN OUR VIEW ARE TO BE REJECTED AS THEY HAVE NO BASIS AT ALL FOR THE CONCL USIONS DRAWN. 12. WE ARE OF THE OPINION THAT SINCE THE A.O. HAS EXAMI NED ALL THE ISSUES AT THE TIME OF ASSESSMENT AND SINCE THE A.O. HAS CO ME TO A CONCLUSION IN ALLOWING THE EXPENDITURE ON DEPRECIATION CLAIMED AN D ALSO DISALLOWING AMOUNTS OF EXPENDITURE AFTER DUE VERIFICATION THE CIT CANNOT COME TO A DIFFERENT CONCLUSION ON PRESUMPTIONS IN THE ORDER U NDER SECTION 263. IT IS THE PREROGATIVE OF THE A.O. TO PASS THE ASSESSMENT AND AS SEEN FROM THE ASSESSMENT RECORD HE HAS EXAMINED ALL THE ISSUES WH ICH ARE CONSIDERED BY THE CIT FOR INVOKING THE POWERS U/S 263. THE ASSESS EE HAS FURNISHED THE DETAILED MATERIAL AND EXPLAINED THE ISSUES AND HAS ALSO POINTED OUT THAT THE DEPRECIATION ON THE TWO PROPERTIES WAS EXAMINED AS EARLY AS A.Y. 2001-02 AND DEPRECIATION WAS ALLOWED IN ALL THE YEARS. SINC E THE A.O. MADE ENQUIRIES IN THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELE VANT ISSUES AND THE A.O. ITA NO. 2240/MUM/2009 M/S. RANGBAHAR 9 ALLOWED THE CLAIM ON BEING SATISFIED BY THE EXPLANA TION OF THE ASSESSEE ON THE ISSUE OF DEPRECIATION AND MADE CERTAIN DISALLOW ANCES WITH REFERENCE TO VARIOUS OTHER EXPENSES WE ARE OF THE OPINION THAT THE CIT HAS EXERCISED THE POWERS UNDER SECTION 263 WITHOUT THERE BEING ANY EV IDENCE TO THE CONTRARY. THE PRINCIPLES ESTABLISHED BY THE HON'BLE BOMBAY HI GH COURT IN THE CASE OF CIT VS. GABRIAL INDIA LTD. 203 ITR 108 WILL EQUALL Y APPLY TO THE PRESENT ORDER. SINCE THE CIT HAS NO MATERIAL TO COME TO THE CONCLUSION THAT THE ORDER OF THE A.O. IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF REVENUE THE ORDER CANNOT BE SUSTAINED. EVEN AFTER EXAMINING THE ISSUES IN HIS OWN PERSPECTIVE THE CIT HAS NOT GIVEN ANY CONCLUSIONS ABOUT HIS FINDINGS EXCEPT THAT HIS SO CALLED FINDINGS ARE USED ONLY TO ARRIVE AT A CONCLUSION THAT THE ORDER IS ERRONEOUS AND IS PREJUDICIAL TO THE INTERE ST OF REVENUE. HE SET ASIDE THE ISSUES TO THE A.O. FOR EXAMINATION WITHOUT GIVI NG ANY SPECIFIC DIRECTION. FOR ALL THESE REASONS WE ARE OF THE OPINION THAT T HE CITA HAS NO JURISDICTION IN REVISING THE ORDER UNDER SECTION 263. ACCORDINGL Y THE ASSESSEES GROUNDS ARE ALLOWED. ORDER UNDER SECTION 263 IS SET ASIDE. 13. IN THE RESULT APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY 2010. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 31 ST MAY 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVIII MUMBAI 4. THE CIT XVIII MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.