REGAL BUSINESS CENTRE P. LTD, MUMBAI v. ACIT CIR 5(3), MUMBAI

ITA 2649/MUM/2009 | 2005-2006
Pronouncement Date: 22-02-2010 | Result: Allowed

Appeal Details

RSA Number 264919914 RSA 2009
Bench Mumbai
Appeal Number ITA 2649/MUM/2009
Duration Of Justice 9 month(s) 28 day(s)
Appellant REGAL BUSINESS CENTRE P. LTD, MUMBAI
Respondent ACIT CIR 5(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 22-02-2010
Assessment Year 2005-2006
Appeal Filed On 24-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI A.L.GEHLOT AM & SMT. P.MADHAVI DEVI JM I.T.A.NO.2649/MUM/2009 - A.Y 2005-06 M/S REGAL BUSINESS CENTRE PVT.LTD. 309 TARDEO A.C. MARKET TARDEO MAIN ROAD MUMBAI 400 034 PAN NO.AABCR 1464 M ASST. COMMISSIONER OF I.T. CIRCLE 5(3) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. K.SHIVRAM & SHRI RANGESH BANKA. REVENUE BY : SHRI DURGESH SUMROTT SR.DR O R D E R PER P.MADHAVI DEVI JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST CI T(A)S ORDER DATED 19/02/2009. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL- 1. THE LD. CIT[A] HAS ERRED IN DISALLOWING BUSINESS EXPENDITURE OF RS.553 078/- CLAIMED BY THE APPELLANT. 2. THE LD. CIT[A] HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT HAS ALREADY STARTED BUSINESS ACTIVITI ES AS PER OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION. THE APP ELLANT STATES THAT THE BUSINESS EXPENDITURE WAS INCURRED I N THE NORMAL COURSE OF BUSINESS HENCE THE APPELLANT PRAY S THAT THE SAME MAY PLEASE BE ALLOWED. THE STATUTORY DEDUCTION @ 30% OF RENT RECEIVABLE WAS GRANTED TO THE APPELLANT FOR EXPENSES PERTAINING TO PROPERTY SUCH AS REPAIRS TO BUILDING MAINTENANCE CHARGES ETC. AND THERE WERE EXCLUDED FROM BUSINESS EXPENDITURE CLAIMED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY WHICH FILED ITS RETURN OF INCOME ON 31-10-05 DECLARING AN INCOME OF RS.12 91 849/-. DURING THE ASSESSMENT PROCEEDINGS U /S.143[3] OF THE ACT AO CALLED FOR VARIOUS DETAILS AND ON PERUSAL O F THE SAME OBSERVED 2 THAT THE ASSESSEE DERIVED INCOME BY WAY OF LICENSE FEE AND SERVICE CHARGES IN RESPECT OF PROPERTY GIVEN ON RENT. HE AL SO OBSERVED THAT THE ASSESSEE HAS DECLARED INTEREST INCOME OF RS.1 20 28 3/- ON FIXED DEPOSITS. HE OBSERVED THAT THE OBJECTS OF THE ASSES SEE COMPANY ARE DEVELOPING DEALING AND INVESTMENT IN REAL ESTATE C OVERING CONSTRUCTION OF RESIDENTIAL AND COMMERCIAL COMPLEX BUSINESS CEN TERS ETC. AND ASSESSEE HAS CLAIMED VARIOUS EXPENSES AS BUSINESS E XPENDITURE. AO HELD THAT THE OBJECTS OF THE ASSESSEE ARE ONLY THEO RETICAL AND ASSESSEE IS NOT CARRYING ON ANY BUSINESS OF DEVELOPING AND C ONSTRUCTIONS ETC. AND THE ONLY INCOME RECEIVED BY THE ASSESSEE BY WAY OF LEASE RENT AND SERVICE CHARGES IS TO BE TAXED UNDER THE HEAD INCOM E FROM HOUSE PROPERTY AS OFFERED BY THE ASSESSEE. HE OBSERVED TH AT THE ONLY DISPUTE IS REGARDING THE ALLOWABILITY OF OTHER EXPENSES CLA IMED BY THE ASSESSEE AND AS INCOME IS TAXED UNDER THE HEAD INCOME FROM H OUSE PROPERTY AS OFFERED BY THE ASSESSEE ITSELF ASSESSEE IS ENTITLE D TO GET DEDUCTION ONLY U/S.23 AND 34 OF THE INCOME TAX ACT. HE ACCORDINGLY DISALLOWED THE OTHER EXPENSES AS CLAIMED BY THE ASSESSEE. 4. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE C IT[A] WHO CONFIRMED THE ORDER OF THE AO BY HOLDING THAT WHILE COMPUTING THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY T HE ASSESSEE IS GETTING ADHOC DEDUCTION AT 30% OF THE ANNUAL LETTIN G VALUE AND THEREFORE THE ASSESSEE IS NOT ENTITLED TO SEPARATE DEDUCTION ON ACCOUNT OF EXPENSES INCURRED WHICH ARE RELATED TO GIVING TH ESE TWO PROPERTIES ON RENT. AGGRIEVED ASSESSEE IS IN SECOND APPEAL BE FORE US. 3 5. THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATI NG THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW HAS FILED BEFORE US DETAILS OF EXPENSES OF RS.5 52 987/- DISALLOWED BY THE AO. HE SUBMITTED THAT ALL THE EXPENDITURE IS FOR MAINTAINI NG THE STATUS OF THE ASSESSEE COMPANY AND THEREFORE THEY HAVE TO BE ALLO WED. HE ALSO DREW OUR ATTENTION TO THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY TO DRIVE THE POINT THAT IT IS ENGAGED IN TH E BUSINESS OF DEVELOPING DEALING AND INVESTING IN REAL ESTATE AN D FOR THIS PURPOSE HAD TO INCUR THE SAID EXPENDITURE. HOWEVER HE FAIR LY ADMITTED THAT THE EXPENDITURE FOR INCREASING AUTHORISED CAPITAL OF RS .1 28 600/- WRITTEN OFF IS NOT ALLOWABLE. 6. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THEIR RIVAL CONTENTIONS WE FIND THAT THE ASSESSEE ITSELF HAS O FFERED THE LEASE RENT AND SERVICE CHARGES AS INCOME FROM HOUSE PROPERTY A ND IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NO OTHER BUSINESS OR OTHER SOURCE OF INCOME EXCEPT INTEREST ON FIXED DEPOSITS. THE CONT ENTION OF THE ASSESSEE THAT THE OTHER EXPENDITURE IS FOR MAINTAIN ING THE STATUS OF THE COMPANY HAS NOT BEEN RAISED EITHER BEFORE THE AO OR THE CIT[A] . ON GOING THROUGH THE DETAILS OF THE EXPENSES WE FIND THAT THE ASSESSEE IS CLAIMING EXPENDITURE ON MOTOR CAR AND INSURANCE AND DEPRECIATION ON THE SAME WHICH IN OUR OPINION ARE NOT ALLOWABLE AS THERE IS NO EVIDENCE OF THE CAR BEING OWNED BY THE COMPANY AND BEING PUT TO USE 4 FOR THE PURPOSE OF BUSINESS OF THE COMPANY. ALSO E XPENDITURE FOR INCREASING ANY AUTHORISED CAPITAL WRITTEN OFF IS AL SO NOT ALLOWABLE AS AGREED BY THE LD. COUNSEL FOR THE ASSESSEE. AS REGA RDS THE OTHER EXPENSES GENUINENESS OF THE SAME HAS NOT BEEN VERI FIED BY THE AO. IN VIEW OF THE SAME WE DEEM IT FIT AND PROPER TO REMI T THE ISSUE TO THE FILE OF THE AO TO CONSIDER THE GENUINENESS OF THE E XPENSES CLAIMED BY THE ASSESSEE AND ALLOW THE EXPENSES WHICH ARE NECE SSARY FOR MAINTAINING THE STATUS OF THE ASSESSEE AS A COMPANY . 8. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 22 ND DAY OF FEBRUARY 2010. SD/- SD/- (A.L.GEHLOT) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 22 ND FEBRUARY 2010. P/-* COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY/ ASST.REGISTRAR ITAT MUMBAI.