Shri M.M.Subramania Mudaliar, Vriddhachalam v. ITO, Cuddalore

CO 53/CHNY/2009 | 2000-2001
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 5321723 RSA 2009
Assessee PAN AAVPS9227L
Bench Chennai
Appeal Number CO 53/CHNY/2009
Duration Of Justice 1 year(s) 10 month(s) 24 day(s)
Appellant Shri M.M.Subramania Mudaliar, Vriddhachalam
Respondent ITO, Cuddalore
Appeal Type Cross Objection
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 25-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 2000-2001
Appeal Filed On 01-05-2009
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL:C- BENCH: CHENNAI (BEFORE SHRI HARI OM MARATHA JM & SHRI AB RAHAM P GEORGE AM) ITA NO.206 & 207/MDS/09 & CO NO.53/MDS/09 (ARISING OUT OF ITA NO.206/MDS/09) ASST. YEARS 2000-01 & 2002-03 THE ITO WARD I(3) CUDDALORE VS. SHRI M.M.SUBR AMANIA MUDALIAR 115 JUNCTION RD VIRUDHUNAGAR PAN AAVPS9227L (APPELLANT) (RESPONDENT-CROSS OBJECTOR) APPELLANT BY: SHRI K.E.B.RANGARAJAN JR.STA NDING COUNSEL RESPONDENT-CROSS OBJECTOR BY: N ONE ORDER PER ABRAHAM P.GEORGE ACCOUNTANT MEMBER THE FIRST TWO ARE APPEALS OF THE REVENUE FOR AYRS. 2000-01 AND 2002-03 AGAINST ORDERS DATED 28-10-2008 OF CIT(A)-XII CHENNAI. CR OSS OBJECTION OF THE ASSESSEE IS FOR AY 2000-01 AND SUPPORTS THE ORDER OF LD. CIT(A). 2. GROUNDS TAKEN BY THE REVENUE FOR AY 2000-01 ARE AS UNDER: UNEXPECTED INVESTMENT IN HOUSE BUILDING A) THE ORDER THE LEARNED CIT(A) ERRED IN RESTRICTI NG THE ADDITION MADE IN RESPECT OF INVESTMENT IN HOUSE BUILDING FROM ` 15 37 440/- TO ` .7 00 000/- AND FAILED TO NOTE THE CASE WAS REFERRED TO DEPARTMENTAL VALUATION OFFICER AND THE REASONS GIVEN BY THE ASSESSEE FOR HIS NON-CO-OPERATIVE ATTITUDE AT THE TIME OF INSPEC TION OF THE HOUSE PROPERTY BY THE DVO AND FAILURE OF THE ASSESSEE TO UTILIZE THE NUMBER O F OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER. B) THE LEARNED CIT(A) HAS FAILED TO NOTE THE FAILU RE OF THE ASSESSEE TO PRODUCE THE REGISTERED VALUERS REPORT BEFORE FINALIZING THE AS SESSMENT. ITA NOS.206-7 & CO 53/MDS/09 2 C) THE LEARNED CIT(A) IGNORED THE CIRCUMSTANCES OF ASSESSING OFFICER TO ADOPT THE VALUATION ARRIVED AT BY THE ITI IN ORDER TO FINALIS E THE ASSESSMENT. D) THE ORDER OF THE LEARNED CIT(A) IN RESTRICTING THE ADDITION MADE IN RESPECT OF INVESTMENT IN HOUSE BUILDING FROM ` .15 37 440/- TO ` .7 00 000/- IS UNACCEPTABLE FOR THE FOLLOWING REASONS. 3. GROUNDS TAKEN BY THE REVENUE FOR AY 2002-03 ARE AS UNDER: 1. DISALLOWANCE OF SALARY EXPERNDITURE ( ` 2.95 LAKHS) THE LD.CIT(A) IS ERRED IN DELETING THE ADDITION MA DE ON ACCOUNT OF EXPENDITURE TOWARDS SALARY OF ` 2 95 000/- AND FAILED TO NOTE THAT THE ASSESSEE ACC EPTED IN HIS LETTER DATED 23-3-2007 FILED BEFORE THE AO AND STATED THAT STAMPED RECEIPT AND VOUCHERS FOR SALARY COULD NOT BE TRACED. THE DISALLOWANCE OF 50% OF SALARY PAYMENT IS VERY REASONABLE. UNLESS THE ASSESSEE PRODUCED ANY DOCUME NTARY EVIDENCE TO SUBSTANTIATE THE CLAIM OF EXPENSES THE GENUINENESS OF THE ASSESSEE S CLAIM OF SALARY PAYMENT CANNOT BE VERIFIED. WITHOUT APPRECIATING THE GROUND REALITY T HE ORDER OF THE LD. CIT(A) IS UNACCEPTABLE. II UNEXPLAINED INVESTMENT IN HOUSE BUILDING : A) THE ORDER THE LEARNED CIT(A) ERRED IN RESTRICTI NG THE ADDITION MADE IN RESPECT OF INVESTMENT IN HOUSE BUILDING FROM ` 51 62 660/- TO ` .15 81 606/- AND FAILED TO ADOPT ;THE DEPARTMENTAL VALUATION OFFICER VALUATION. B) THE LEARNED CIT(A) SIMPLY ACCEPT THE ASSESSEES PROPOSAL AND FAILED TO NOTE FACTS AND CIRCUMSTANCES OF THE CASE. C) THE ORDER OF THE LEARNED CIT(A) IN RESTRICTING THE ADDITION MADE IN RESPECT OF INVESTMENT IN HOUSE BUILDING FROM ` .51 62 660/- TO ` .15 81 606/-- IS UNACCEPTABLE FOR THE FOLLOWING REASONS. A) THE REDUCTION IS ALSO ON ESTIMATE BASIS. B) THE LD.CIT(A) HAS NOT ARRIVED THE FIGURE ON ANY REA SONABLE BASIS. 4. THE ISSUE OF UNEXPLAINED INVESTMENT IN HOUSE BUI LDING PERMEATES THROUGH BOTH THE AYRS. IT IS THEREFORE TAKEN UP FIRST FOR DISPO SAL. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED RETURNS FOR BOTH THE IMPUGNED AY RS FROM WHICH IT WAS NOTED BY THE AO THAT HE HAD CONSTRUCTED TWO BUILDINGS DURING THE PERIOD FROM 01-04-1997 TO 31-03- ITA NOS.206-7 & CO 53/MDS/09 3 2002. OF THE TWO BUILDINGS THAT WERE CONSTRUCTED ONE WAS A LODGE AND OTHER WAS A HOUSE. CONSTRUCTION EXPENSES SHOWN BY THE ASSESSEE IN HIS RETURNS FOR VARIOUS YEARS RAN AS UNDER: YEAR ENDED LODGE ADDITIONS ` . CUMULATIVE ` . HOUSE ADDITIONS ` . CUMULATIVE ` . 31.1.1998 9 82 518/- 9 82 518/- 15 200/- 15 200/- 31.3.1999 3 34 729/- 13 17 247/- 1 02 220/- 1 17 42 0/- 31.3.2000 6 21 353/- 19 38 600/- 14 31 930/- 15 49 350/- 31.3.2001 1 75 970/- 21 14 570/- --- 15 49 350/- 31.3.2002 51 970/- 21 66 540/- --- 15 49 350/- AO DEPUTED HIS INSPECTOR TO VERIFY THE COST OF CONS TRUCTION AND THE INSPECTOR QUANTIFIED THE COST OF CONSTRUCTION AS UNDER: YEAR ENDED LODGE ADDITIONS ` . CUMULATIVE ` . HOUSE ADDITIONS ` . CUMULATIVE ` `. 31.3.1999 16 94 280 29 83 510 10 77 670 10 77 670 31.3.2000 18 66 350 48 49 860 20 09 120 30 86 790 31.3.2001 44 49 180 92 99 040 ----- -- 31.3.2002 --- ----- ------ --- 5. SINCE THERE WERE DIFFERENCES BETWEEN THE COST AD MITTED BY ASSESSEE AND AS PER THE REPORT OF THE INSPECTOR AO INITIATED REASSESSM ENT PROCEEDINGS BY ISSUING NOTICE UNDER SEC. 148 OF THE INCOME-TAX ACT 1961 (THE AC T FOR SHORT). AT THIS JUNCTURE IT IS TO BE NOTED THAT ORIGINAL ASSESSMENTS WERE COMPLETED U NDER SEC.143(1) OF THE ACT. ASSESSEE WAS REQUIRED BY AO TO FILE A REGISTERED VA LUERS REPORT FOR BOTH THE PROPERTIES AND IT SEEMS THIS WAS NOT FILED BY THE ASSESSEE. VA LUATION OF BOTH THE PROPERTIES WERE ITA NOS.206-7 & CO 53/MDS/09 4 REFERRED BY THE AO TO VALUATION CELL OF THE DEPARTM ENT RELYING ON SEC. 132A OF THE ACT. VALUATION OFFICER ISSUED NOTICE TO THE ASSESSEE FOR INSPECTION OF THE PROPERTIES. AS PER VALUATION OFFICER ASSESSEE WAS NOT COOPERATIVE. A VALUATION REPORT FOR THE LODGE BUILDING FROM THE VALUATION CELL WAS RECEIVED BY AO ON 18-12-2006 VALUING IT AT ` 73 29 200/-. NEVERTHELESS IT SEEMS THERE WAS NO VAL UATION RECEIVED FOR THE HOUSE SINCE THE AO AT PARA 8.4 OF HIS ORDER SPECIFICALLY SAYS THAT VALUATION REPORT WAS RECEIVED IN RESPECT OF THE LODGE BUILDING ONLY. ACCORDING TO THE VALUATION OFFICER THE HOUSE COULD NOT BE INSPECTED BY HIM DUE TO ASSESSEES NON- COOP ERATION. HENCE FOR QUANTIFYING THE INVESTMENT FOR THE HOUSE CONSTRUCTION AO WENT BY T HE COST OF CONSTRUCTION ARRIVED BY THE INSPECTOR. AS ON 31-03-2000 BEING THE PREVIO US YEAR RELEVANT TO AY 2000-01 THE HOUSE PROPERTY WHICH AS PER THE INSPECTOR HAD A CUM ULATIVE VALUE OF ` 3086790/- WAS COMPARED WITH THE VALUE OF ` 1549350/- SHOWN BY ASSESSEE AND THE DIFFERENCE OF ` 1537440/- WAS TREATED AS UNEXPLAINED INVESTMENT UND ER SEC.69 OF THE ACT. FOR AY 2002-03 AO COMPARED THE COST OF CONSTRUCTION REPORT ED BY THE DVO ` 7329200/- AS ON 31-03-2002 WITH THE ADMITTED COST OF CONSTRUCTION ` 21 66 590/- AND THE DIFFERENCE OF ` 51 62 660/- WAS TREATED AS UNEXPLAINED FOR AY 2002- 03. IT IS TO BE NOTED THAT ADDITION FOR AY 2000-01 PERTAINED TO THE HOUSE CONSTRUCTION WHEREAS THE ADDITION FOR AY 2002- 03 PERTAINED TO THE LODGE BUILDING. 6. ASSESSEE IN HIS APPEALS FOR THE RESPECTIVE YEAR S BEFORE LD. CIT(A) ARGUED THAT VIS--VIS THE HOUSE PROPERTY AO HAD ARBITRARILY WEN T BY THE VALUE ADOPTED BY THE INSPECTOR. LD. CIT(A) REQUIRED A REMAND REPORT FROM THE AO AS TO HOW HE CONSIDERED THE VALUATION DONE BY INSPECTOR TO BE CORRECT FOR P URPOSE OF ASSESSMENT. IT SEEMS AO ITA NOS.206-7 & CO 53/MDS/09 5 JUSTIFIED THE ADDITION MADE BASED ON INSPECTORS RE PORT FOR A REASON THAT ASSESSEE HAD NOT UTILIZED THE OPPORTUNITIES GIVEN TO HIM DURING THE COURSE OF ASSESSMENT NOR FILED A REPORT FROM A REGISTERED VALUER. CONTENTIONS OF THE ASSESSEE BEFORE CIT(A) WAS THAT REGULAR BOOKS OF ACCOUNTS AND VOUCHERS WERE MAINTAI NED AND THERE WAS NO REFUSAL OF ENTRY TO ANY STATUTORY AUTHORITIES TO HIS PREMISES. ACCORDING TO ASSESSEE AO WHILE ACCEPTING THAT THE INSPECTOR WAS NOT A TECHNICAL PE RSON SIMPLY FOLLOWED THE ESTIMATE MADE BY HIM. ASSESSEE ALSO FILED A VALUATION REPORT DATED 12-11-2007 FROM A REGISTERED VALUER ESTIMATED THE BEFORE THE CIT(A) IN RESPECT O F THE HOUSE PROPERTY. THE REGISTERED VALUER ESTIMATED THE COST OF CONSTRUCTION OF ` 17 97 000/- AND PERIOD OF CONSTRUCTION AS BETWEEN APRIL 1998 TO MARCH 2000. ASSESSEE FAIRLY ADMITTED BEFORE LD.CIT(A) THAT ADOPTING A RATE OF ` 1000/- PER S.FT. COST OF CONSTRUCTION WOULD COME T O ` 21 LAKHS AND NOT `15 49 350 /- EARLIER ADMITTED BY HIM. OR IN OTHER WORDS AGAI NST ` 15 49 350/- ADMITTED BY ASSESSEE IN HIS RETURN HE AGREED FOR S UM OF ` 21 LAKHS AS ACTUAL COST OF CONSTRUCTION. THIS OFFER TO LD. CIT(A) WAS MADE IN A ROUNDSUM FIGURE OF ` .7 LAKHS. LD. CIT(A) ACCEPTED THIS AND CONSIDERING THAT THE ESTIM ATE MADE BY AO WAS ONLY BASED ON INSPECTORS REPORT DIRECTED THE AO TO RESTRICT THE ADDITION ON ACCOUNT OF THE HOUSE CONSTRUCTION TO ` 7 LAKHS FOR AY 2000-01. 7. FOR AY 2002-03 AS AFORESAID THE ADDITION WAS B ASED ON THE DVOS REPORT AND COMPARING THE AMOUNT SHOWN BY THE ASSESSEE WITH THE VALUATION OF THE DVO. ARGUMENT OF THE ASSESSEE BEFORE LD.CIT(A) WAS THAT THE AO HA D CONSIDERED THE WHOLE OF THE DIFFERENCE IN COST OF CONSTRUCTION IN THE IMPUGNED A.Y AND THIS WAS NOT A CORRECT APPROACH. ACCORDING TO THE ASSESSEE VALUE ADOPTED B Y THE DVO WAS UNREASONABLE SINCE ITA NOS.206-7 & CO 53/MDS/09 6 IT WAS BASED ON CPWD RATES ESPECIALLY SINCE THE LOD GE BUILDING WAS IN A REMOTE AREA OF VRIDHACHALAM. FURTHER ACCORDING TO THE ASSESSEE HE WAS MAINTAINING BOOKS OF ACCOUNT FOR CONSTRUCTION EXPENSES. LD. CIT(A) SOUGHT A REPO RT FROM THE AO WHO STATED THAT THE ASSESSEE DID NOT FURNISH A VALUATION REPORT OF THE REGISTERED VALUER FOR THE LODGE BUILDING. ACCORDING TO AO SINCE ASSESSEE ALSO DID N OT PRODUCE ANY BOOKS TO SHOW COST OF CONSTRUCTION FOR VARIOUS YEARS AND THEREFORE HE WAS COMPELLED TO ADOPT THE DIFFERENCE FOR ADDITION FULLY FOR THE IMPUGNED AY. FOR ADOPTING STATE PWD RATES ASSESSEE HAD PLACED RELIANCE ON THE DECISION OF HON . RAJASTHAN HIGH COURT IN CIT VS. HOTEL JOSHI (242 ITR 478). ASSESSEE ALSO SUBMITTED THAT IF STATE PWD RATES WERE ADOPTED COST OF CONSTRUCTION WOULD COME TO ` 45 26 528/- AND CIT(A) SHOULD SUSTAIN THE ADDITION ONLY TO THE DIFFERENCE BETWEEN ` 45 26 528/- AND THE DECLARED CONSTRUCTION COST OF ` 2944920/-. LD. CIT(A) WAS OF THE OPINION THAT THE L ODGE BEING IN A REMOTE AREA APPLICATION OF STATE PWD RATE IN THE PLACE OF CPWD RATE WOULD BE FAIR AND IN THIS VIEW OF THE MATTER HE DIRECTED THE AO TO RESTRICT THE ADDITION TO ` 1581606/- BEING THE DIFFERENCE BETWEEN THE COST IF PWD RATES WERE ADOP TED AND THE ADMITTED COST OF CONSTRUCTION. 8. NOW BEFORE US LD. DR ASSAILING THE ORDER OF LD. CIT(A) SUBMITTED THAT ASSESSEE NEVER COOPERATED BEFORE THE AO NOR DVO. ACCORDING T O HIM ASSESSEE DID NOT EVEN GIVE AN OPPORTUNITY TO THE DIFFERENT OFFICERS TO EXAMINE THE CONSTRUCTION AND HENCE AO WAS CONSTRAINED TO ADOPT INSPECTORS REPORT FOR AY 2000 -01 AND VALUATION AS PER VALUATION OFFICER FOR A.Y 2002-03. ACCORDING TO HIM CIT(A) F ELL IN ERROR IN GIVING RELIEF TO THE ITA NOS.206-7 & CO 53/MDS/09 7 ASSESSEE BASED ON THE VALUATION REPORT PRODUCED BY ASSESSEE BEFORE HIM IN RESPECT OF THE HOUSE BUILDING AND BASED ON PWD RATES FOR THE L ODGE BUILDING. 9. NOBODY ENTERED APPEARANCE ON BEHALF OF THE ASSES SEE. 10. WE HAVE CAREFULLY PERUSED THE ORDERS AND HEARD THE CONTENTIONS OF LD. DR. IF WE LOOK AT THE TWO TABLES GIVEN AT PARA-4 ABOVE ASSES SEE HAD ADMITTED COST OF CONSTRUCTION IN HIS RETURNS FOR VARIOUS YEARS. INSO FAR AS AY 2000-01 IS CONCERNED AO MADE THE ADDITION IN RESPECT OF THE HOUSE ONLY AND THERE WAS NO ADDITION FOR THE LODGE BUILDING. IT CAN BE SEEN FROM THE TABLES AT PARA-4 THAT FOR PREVIOUS YEAR ENDING 31-3- 2000 INSPECTOR HAD ESTIMATED COST OF CONSTRUCTION O F LODGE AT ` 1866350/- AGAINST ` 621353/- ADMITTED BY ASSESSEE. NEVERTHELESS AO IGN ORED THIS ASPECT AND PROCEEDED WITH AN ADDITION FOR CONSTRUCTION OF HOUSE ONLY BAS ED ON THE INSPECTORS REPORT. AO HIMSELF HAS ADMITTED THAT THE INSPECTOR WAS NOT HAV ING ANY TECHNICAL QUALIFICATION. IT ALSO REMAINS A FACT THAT THE ASSESSEE HAD FILED BEF ORE LD.CIT(A) A VALUATION REPORT FROM REGISTERED VALUER FOR THE HOUSE. NEVERTHELESS THERE WAS NO VALUATION REPORT WHATSOEVER FROM THE DVO IN RESPECT OF THE HOUSE. ASSESSEE BASE D ON THE VALUATION REPORT OF REGISTERED VALUER HAD OFFERED A FURTHER SUM OF ` 7 LAKHS BEFORE LD. CIT(A) WHO DIRECTED THE ADITION TO BE RESTRICTED TO THAT AMOUNT. THE CO ST OF CONSTRUCTION AS PER REGISTERED VALUER FOR THE HOUSE WAS ` 1797000/- AGAINST WHICH ASSESSEE HIMSELF ACCEPTED ` 21 LAKHS. NO DOUBT ASSESSEE HAD ADMITTED IN HIS RETUR N ONLY ` 1549350/-. BUT CONSIDERING THE FACT THAT ASSESSEE HAD OFFERED A FURTHER SUM OF ` 7 LAKHS DESPITE A COST OF CONSTRUCTION OF ` 17 97 000/- FIXED BY THE REGISTERED VALUER WE ARE O F THE OPINION THAT A ITA NOS.206-7 & CO 53/MDS/09 8 FAIR ESTIMATE WAS MADE BY ASSESSEE. CIT(A) THEREFOR E WAS WELL JUSTIFIED IN DIRECT THE AO TO RESTRICTING THE ADDITION TO AS ON 31-3-2000 T O ` 7 LAKHS. 11. FOR AY 2002-03 ADDITION WAS MADE ONLY FOR LODGE BUILDING. AO ADOPTED VALUATION AS PER DVO WHICH CAME TO ` 7329200/-. CUMULATIVE COST OF CONSTRUCTION AS ON 31 -03- 2002 AS PER RETURN OF THE ASSESSEE WAS `21 66 540 /-. ADMITTEDLY THERE WAS NO VALUATION REPORT FROM ANY REGISTERED VALUER PRODUCE D BY THE ASSESSEE FOR THE LODGE BUILDING. NEVERTHELESS IF WE LOOK AT THE INSPECTOR S REPORT (TABLE AT PARA-4) THERE WAS NO ADDITION FOR THE LODGE BUILDING FOR THE YEAR END ED 31-3-2002. THUS WHEREAS THE INSPECTOR HAS REPORTED NO ADDITION FOR CONSTRUCTION OF THE LODGE DURING THE PREVIOUS YEAR ENDED 31-3-2002 AO SIMPLY WENT BY THE REPORT OF THE DVO AND CONSIDERED WHOLE OF THE DIFFERENCE THAT HE WORKED OUT FOR THE IMPUGN ED AY 2002-03. ADMITTED COST OF CONSTRUCTION FOR THE YEAR ENDED 31-3-2002 FOR THE L ODGE WAS ONLY ` 51 970/-. THUS IT SEEMS THERE WAS ONLY VERY NEGLIGIBLE CONSTRUCTION IF ANY DONE BY ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. IN OUR OPINION AO WAS THERE FORE NOT JUSTIFIED IN CONSIDERING THE WHOLE OF THE DIFFERENCE THAT HE WORKED OUT FOR ASST . YEAR 2002-03. NEVERTHELES ASSESSEE HAD FAIRLY ADMITTED THAT THE VALUATION WAS REQUIRED TO BE DONE AS PER THE STATE PWD RATES AND BASED ON SUCH VALUATION SUO MOTU DONE BY HIM REQUESTED THE CIT(A) TO TREAT THE DIFFERENCE BETWEEN THE RETURNED SUM AND THE VALUE BASED ON STATE PWD RATES TO BE CONSIDERED. THIS DIFFERENCE WORKED OUT TO ` 1581606/- . CIT(A) WAS FAIR ENOUGH IN ACCEPTING THIS AND RESTRICTING THE ADDITI ON TO A LIKE AMOUNT IN RESPECT OF LODGE BUILDING. IN THE CIRCUMSTANCES WE ARE OF TH E OPINION THAT LD. CIT(A) WAS JUSTIFIED ITA NOS.206-7 & CO 53/MDS/09 9 IN RESTRICTING THE ADDITION TO ` 1581606/-. WE DO NOT FIND ANY NECESSITY TO INTERFER E WITH THE ORDER OF LD CIT(A) IN THIS REGARD. 12. ONLY OTHER GROUND LEFT FOR ADJUDICATION IS REGA RDING DISALLOWANCE OF ` 295000/- MADE BY AO FOR AY 2002-03 AGAINST EXPENDITURE CLAIM ED TOWARDS SALARY WHICH ADDITION WAS DELETED BY LD.CIT(A). LD. DR SUBMITTED THAT AO HAD CLEARLY MENTIONED ASSESSEES FAILURE TO PRODUCE BOOKS OF ACCOUNT AND SUPPORTING VOUCHERS AS THE REASON WHICH NECESSITATED SUCH A DISALLOWANCE. 13. WE HAVE PERUSED THE ORDERS AND HEARD THE CONTEN TIONS OF LD.DR. ASSESSEE HAD CLAIMED ` 590000/- AS SALARY PAYMENT FOR HIS LODGING BUSINESS AGAINST ROOM RENT OF ` 1876363/-. AO WAS OF THE OPINION THAT THE CLAIM OF EXPENSE WAS DISPROPORTIONATE TO THE GROSS RECEIPT AND ASSESSEE COULD NOT FURNISH DE TAILS OF THE SALARY CLAIM. HE THEREFORE DISALLOWED 50% THEREOF. BEFORE LD. CIT(A ) ARGUMENT OF THE ASSESSEE WAS THAT THE DISALLOWANCE WAS ON AD-HOC BASIS WITHOUT CONSID ERING THE YEAR-TO-YEAR INCREASE IN THE RECEIPTS FROM LODGING BUSINESS. ACCORDING TO AS SESSEE SALARY HAD ONLY INCREASED BY 10% WHEREAS RECEIPT FROM LODGING BUSINESS HAS INCRE ASED BY MORE THAN 40%. LD. CIT(A) WAS APPRECIATIVE OF THIS CONTENTION. ACCORDI NG TO HIM AO HAD MADE A DISALLOWANCE WITHOUT MAKING A CLEAR ANALYSIS OF THE CLAIM OF ASSESSEE. WE ARE OF THE OPINION THAT DISALLOWANCE WAS UNCALLED FOR SINCE AS SESSEE HAD SHOWN SUBSTANTIAL INCREASE IN LODGING RECEIPTS WHEREAS SALARY PAYMENT HAD GONE UP ONLY NOMINALLY. LD. CIT(A) WAS THEREFORE JUSTIFIED IN DELETING THE DISA LLOWANCE. WE DO NOT FIND ANY REASON TO INTERFERE. ITA NOS.206-7 & CO 53/MDS/09 10 14. IN THE RESULT APPEALS OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. 15. SINCE CROSS-OBJECTION OF THE ASSESSEE FOR A.Y 2 000-1 IS ONLY SUPPORTIVE OF THE ORDER OF LD.CIT(A) AND SINCE WE HAVE DISMISSED APPE AL OF THE REVENUE FOR THE SAID ASST. YEAR SUCH CROSS OBJECTION HAD BECOME INFRUCTUOUS. 16. TO SUMMARISE THE RESULT REVENUES APPEALS AS W ELL AS CROSS OBJECTION OF THE ASSESSSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 25- 03-2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 25TH MARCH 2011. CC: THE ASSESSEE 2)THE ASSESSING OFFICER 3)THE C IT(A) 4) THE CIT 5)THE D.R 6)GUARD FILE. NBR ITA NOS.206-7 & CO 53/MDS/09 11