ASST CIT 17(3), MUMBAI v. VIRAF J. DALAL, MUMBAI

ITA 1663/MUM/2016 | 2012-2013
Pronouncement Date: 27-11-2017 | Result: Dismissed

Appeal Details

RSA Number 166319914 RSA 2016
Assessee PAN AAEPD8494M
Bench Mumbai
Appeal Number ITA 1663/MUM/2016
Duration Of Justice 1 year(s) 8 month(s) 5 day(s)
Appellant ASST CIT 17(3), MUMBAI
Respondent VIRAF J. DALAL, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 27-11-2017
Assessment Year 2012-2013
Appeal Filed On 22-03-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI P K BANSAL VICE PRESIDENT & SHRI AMARJIT SINGH JUDICIAL MEMBER ITA NO.1663/MUM/2016 ASSESSMENT YEAR : 2012-13 ASST CIT 17(3) MUMBAI. VS. SHRI VIRAF J DALAL FLAT NO.18 AMITA FORESHORE ROAD MUMBAI 400 021. PAN AAEPD8494M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI OMI NINGSHAM RESPONDENT BY : SHRI ERAM FAZLANI DATE OF HEARING : 14. 11 .2017 DATE OF PRONOUNCEMENT : 27 . 11 .2017 O R D E R PER P K BANSAL VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) 28 MUMBAI DATED 05.01.2016 FOR A.Y.2012 -13 BY TAKING THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE CASH S YSTEM OF ACCOUNTING WHILE IN TAX AUDIT REPORT OF THE YEAR A DMITTEDLY SHOWS THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING CLUB EXPEN SES OF ` .1 53 793/- WHILE THE ASSESSEE HAD ADMITTEDLY DEBI TED 50% OF THE CLUB EXPENSES IN HIS PROFIT & LOSS ACCOUNT. ITA NO.1663/MUM/2016 SHRI VIRAF J DALAL 2 2. WE HAVE CAREFULLY HEARD THE PARTIES AND CONSIDER ED THEIR SUBMISSIONS ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. AS FAR AS GROUND NO.1 IS CONCERNED WE NOTED THAT THE DISPUTE IS WITH REGARD TO THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE WHETHER THE ASS ESSEE HAS FOLLOWED CASH SYSTEM OF ACCOUNTING OR MERCANTILE SYSTEM OF ACCOUN TING. THE TAR OF THE ASSESSEE FOR THE YEAR ADMITTEDLY SHOWS THAT THE ASS ESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSING OFF ICER THEREFORE TOOK THE VIEW THAT THE ASSESSEE FOLLOWS MERCANTILE SYSTEM WH ILE THE ASSESSEE CLAMS THERE WAS CLERICAL ERROR AND HE HAS FILED COPY OF T AR FOR SUBSEQUENT A.Y. 2013-14 WHICH SHOWS THAT THE ASSESSEE WAS ACTUALLY FOLLOWING CASH SYSTEM OF ACCOUNTING. THEREFORE THE ASSESSEE HAS SHOWN R OYALTY INCOME ON ACTUAL RECEIPT BASIS. WE NOTED THAT THE ASSESSING OFFICE R THEREFORE ADDED A SUM OF ` 43 15 231/- IN THE INCOME OF THE ASSESSEE NOT ACCE PTING THE CONTENTION OF THE ASSESSEE THAT HE WAS FOLLOWING CASH SYSTEM OF A CCOUNTING. WHEN THE MATTER WENT BEFORE THE CIT(A) WE FOUND THAT BEFORE THE CIT(A) THE ASSESSEE HAS FILED RECONCILIATION FOR A.Y. 2011-12 2012-13 AND 2013-14 IN RESPECT OF EACH ENTRY IN 26AS STATEMENT AND PROFIT & LOSS ACCO UNT FOR THE RESPECTIVE YEARS. THE CIT(A) ALSO NOTED THAT IN THE TAR FOR T HE A.Y. 2013-14 THE ASSESSEE HAS CATEGORICALLY MENTIONED ABOUT CASH SYS TEM OF ACCOUNTING. THE CIT(A) HAS DULY REPRODUCED THE RECONCILIATION MADE BY THE ASSESSEE IN RESPECT OF THE TOTAL AMOUNT ALONG WITH THE YEAR OF THE RECEIPT AND ON ITA NO.1663/MUM/2016 SHRI VIRAF J DALAL 3 EXAMINATION OF ALL THREE YEARS HE GAVE A FINDING OF FACT THAT ALL THESE THREE YEARS ALLIED PUBLISHERS CREDITS THE ENTRY OF ROYALT Y TO THE ACCOUNT OF THE ASSESSEE ON 31 ST MARCH EVERY YEAR WHILE THE ACTUAL PAYMENT WAS MADE ON A SUBSEQUENT DATE. THEREFORE HE SPLITS THE INCOME I NTO NEXT FINANCIAL YEAR AND CONSEQUENTLY THE SAME WAS ACCOUNTED FOR IN THE SUB SEQUENT ASSESSMENT YEAR. IT IS NOT A CASE THAT A SUM OF ` 43 15 231/- HAS NEVER BEEN OFFERED FOR TAXATION. THE LEARNED DR EVEN THOUGH VEHEMENTLY RE LIED ON THE ORDER OF THE ASSESSING OFFICER HE COULD NOT CONVINCE US THAT TH E FINDING GIVEN BY THE CIT(A) IS NOT CORRECT. WE THEREFORE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(A). THUS GROUND NO.1 TAKEN B Y THE REVENUE STANDS DISMISSED. 3. GROUND NO.2 RELATES TO ALLOWANCE OF CLUB EXPENS ES OF ` 1 53 793/-. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE CORD. THE CIT(A) NOTED THAT 50% OF THE CLUB EXPENSES HAS ALREADY BEEN DISA LLOWED BY THE ASSESSEE OUT OF THE TOTAL EXPENSES INCURRED AMOUNTING TO ` 3 07 586/-HE FURTHER NOTED THAT THE ASSESSING OFFICER DISALLOWED THESE EXPENSE S JUST MENTIONING THAT THESE EXPENSES HAS NOT BEEN INCURRED FOR THE PURPOS E OF BUSINESS. WE ALSO FIND THAT THE ASSESSING OFFICER SIMPLY DISALLOWED T HESE EXPENSES BY OBSERVING THAT THE EXPENDITURE DOES NOT RELATE TO THE BUSINES S. HE HAS NOT SPECIFICALLY POINTED OUT WHICH OF THE EXPENSES DOES NOT RELATE T O THE BUSINESS. WE DO NOT AGREE WITH THE FINDING GIVEN BY THE CIT(A) THAT THE DISALLOWANCE CANNOT ITA NO.1663/MUM/2016 SHRI VIRAF J DALAL 4 BE MADE IN THE ABSENCE OF ANY FINDING GIVEN BY THE ASSESSING OFFICER WHATSOEVER HOW FAR THE EXPENSES HAS NOT BEEN INCUR RED FOR THE PURPOSE OF BUSINESS. WE THEREFORE DO NOT FIND ANY ILLEGALIT Y OR INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE SAID DISALLOWANCE. THUS G ROUND NO.2 RAISED BY THE REVENUE IS ALSO DISMISSED. 4. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF NOVEMBER 2017. SD/- SD/- (AMARJIT SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 27 TH NOVEMBER 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A) MUMBAI 4. THE CIT 5. DR H BENCH ITAT MUMBAI BY ORDER #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI