DCIT 22(3), NAVI MUMBAI v. SURESH VANKVANI, NAVI MUMBAI

ITA 1753/MUM/2010 | 2006-2007
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 175319914 RSA 2010
Bench Mumbai
Appeal Number ITA 1753/MUM/2010
Duration Of Justice 10 month(s) 25 day(s)
Appellant DCIT 22(3), NAVI MUMBAI
Respondent SURESH VANKVANI, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 28-01-2011
Assessment Year 2006-2007
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY A.M. AND SHRI V. DU RGA RAO J.M. ITA NO. 1753/M/2010 ASSESSMENT YEAR: 2006-07 DY. COMMISSIONER OF INCOME TAX(TDS) APPELLANT 22(3) 3 RD FLOOR TOWER NO. 6 VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI. VS. SURESH VANKVANI RESPONDENT B 204 JANKI CHS PLOT NO. 6 SECTOR 17 NAVI MUMBAI. APPELLANT BY : MR. AMARDEEP RESPONDENT BY : DR. P. DANIEL . ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- 33 MUMBAI PASSED ON 18/12/2009 FOR THE AS SESSMENT YEAR 2006-07. 2. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS . 30 67 441/- OUT OF TOTAL ADDITION OF RS. 39 32 267 OUT OF EXPENSES INC URRED WITHOUT GIVING ANY BASIS. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION AND HE IS OPE RATING 2 PROPERTY CONCERNS NAMELY M/S NEELAM ENTERPRISES AND M/S JAI BHAGWANTI ENTERPRISES. THE ASSESSEE FILED RETURN OF INCOME IN THE YEAR UNDER ITA NO.1753 /M/10 SURESH VANKAVANI 2 CONSIDERATION BY SHOWING TOTAL INCOME OF RS. 15 45 051/-.WHEREIN THE ASSESSEE HAS CLAIMED PAYMENT TO 11 CONTRACTORS AMOU NTING TO RS. 39 32 267/- WHICH IS STATED TO INCLUDE MATERIAL CO MPONENTS AT RS. 1 86 685/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE AO HAD OBSERVED THAT THE PROJECT EXECUTED IN THE CASE OF B HAGWANTI ENTERPRISES WAS COMPLETED DURING THE YEAR AND OCCUP ATION CERTIFICATE WAS OBTAINED ON 15/07/04 I.E. DURING THE FINANCIAL YEAR 2004-05 RELEVANT TO AY 2005-06. HOWEVER EVEN AFTER OCCUPAT ION CERTIFICATE WAS OBTAINED THE ASSESSEE HAD CLAIMED PAYMENTS TO 11 C ONTRACTORS AT RS. 39 32 267/- WHICH IS STATED TO INCLUDE MATERIAL CO MPONENT AT RS. 1 86 685/-.WHEN THE AO ASKED THE ASSESSEE TO JUSTIF Y THE CLAIM OF THE EXPENSES THE ASSESSEE HAS SUBMITTED THAT THE PAYME NTS MADE TO THE CONTRACTORS DURING THE YEAR UNDER CONSIDERATION IN THE PROJECT OF M/S BHAGWANTI ENTERPRISES AND HAD RECEIVED THE OCCUPANC Y CERTIFICATE IN THE LAST YEAR I.E. AY 2005-06. IT WAS FURTHER SUBMI TTED THAT THERE WERE MANY PENDING WORKS NAMELY PAINTING WORK PLUMBING WORK (FITTINGS) IN INDIVIDUAL FLATS WATER PROOFING OF TERRACE AND WATER TANKS GRILL WORK LOBBY FINISHING ELECTRICAL FURNISHING ETC. H OWEVER THE AO HAD NOT ACCEPTED THE EXPLANATION OFFERED BY THE ASSESSE E ON THE GROUND THAT THE OCCUPANCY CERTIFICATE WAS ISSUED ONLY WHEN ALL THE WORK PERTAINING TO THE BUILDING IS COMPLETED AND SHOWN T O THE NMMC AND IT IS DIFFICULT TO ACCEPT THAT PAINTING PLUMBING GRI LL WORK AND LOBBY FINISHING AS CLAIMED BY THE ASSESSEE WOULD BE PENDI NG AT THE TIME OF ISSUE OF OCCUPATION CERTIFICATE. EVEN THE ASSESSEE HAD NOT FILED ANY SPECIFIC DETAILS OF THE WORK DONE BY EACH OF THE EL EVEN CONTRACTORS AND PROVED THAT THE WORK WAS DONE AFTER THE OCCUPATION CERTIFICATE WAS OBTAINED. THE AO WAS OF THE VIEW THAT MERELY BECAUS E TAX HAD DEDUCTED ON THESE PAYMENTS DID NOT ITSELF LEAD TO J USTIFICATION OF THE CAUSE FOR INCURRING OF THESE EXPENSES. AFTER RECORD ING THE ABOVE FINDINGS THE AO REJECTED THE CLAIM OF THE ASSESSEE . ITA NO.1753 /M/10 SURESH VANKAVANI 3 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSE SEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER:- 3.1 THE APPELLANT DURING THE COURSE OF APPELLANT PROCEEDINGS FILED A COPY OF CERTIFICATE ISSUED BY THE ARCHITECTS GIVING THE DETAILS OF WORKS CARRIED OUT AFTER OCCUP ANCY CERTIFICATE RECEIVED BY THE APPELLANT. FROM THE DETAILS FILED IT IS SEEN THAT AN AMOUNT OF RS. 1 30 000/- AND RS. 3 94 000/- WAS SPENT TOWARDS PIPELINE AND WATER TANK RESPECTIVELY. I FIN D THAT THESE WORKS CANNOT BE UNDERTAKEN AFTER THE HANDING OVER T HE POSSESSION OF FLATS TO THE FLAT OWNERS. THE APPELLA NT HAS ALSO NOT BEEN ABLE TO JUSTIFY THIS EXPENSE CLAIMED. THEREFOR E THE SAID EXPENSES CANNOT BE ALLOWED AS DEDUCTION NOW. THE AC TION OF THE AO ON THIS ISSUE IS UPHELD. AS REGARDS THE OTHER WO RKS THE CONTENTION OF THE APPELLANT CANNOT BE REJECTED IN T OTALITY AS THE POSSIBILITY OF UNDERTAKING THOSE WORKS AFTER THE RE CEIPT OF OCCUPATION CERTIFICATE CANNOT BE DENIED. IT IS A WE LLKNOWN FACT THAT THE FINISHING REQUIREMENTS OF A BUILDING PROJE CT CONTINUE WELL AFTER THE HANDING OVER OF POSSESSION. WORK IN LOBBY GRILLS WHITEWASH PAINTING ETC. IS DONE EVEN AFTER THE NOC IS RECEIVED. HENCE DISALLOWING THE TOTAL EXPENDITURE WITHOUT EN QUIRY INTO THE NATURE OF THE EXPENSES IS NOT JUSTIFIED. THEREFORE TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS THE DISALL OWANCE MADE BY THE AO IS RESTRICTED TO 10% OF THE DISALLOWANCE OF RS. 34 08 267/- (RS. 3932267 524000) WHICH WORKS OUT TO RS. 3 40 826/- AND THE BALANCE ADDITION IS DELETED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE THE ITAT. 6. THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE H AS NOT FILED SPECIFIC DETAILS WITH REGARD TO THE WORK DONE BY EA CH CONTRACTOR AND THE AO WAS JUSTIFIED IN DISALLOWING THE CLAIM OF TH E ASSESEE. HE FURTHER SUBMITTED THAT GENERALLY OCCUPANCY CERTIFIC ATE IS ISSUED BY THE COMPETENT AUTHORITY AFTER THE ENTIRE WORK IS COMPLE TED AND TO THAT EFFECT THE ASSESEE HAS TO SUBMIT THE APPLICATION BE FORE THE COMPETENT AUTHORITY AND THEREAFTER THE OCCUPANCY CERTIFICATE WILL BE ISSUED TO THE ASSESSEE. IN THE PRESENT CASE AFTER ISSUING THE OC CUPANCY CERTIFICATE THE ASSESSEE HAS CLAIMED HUGE EXPENSES AND THE SAME ARE NOT ALLOWABLE. THEREFORE THE LEARNED DR HAS CONTENDED THAT THE CIT(A) HAS NOT CALLED FOR ANY REMAND REPORT FROM THE AO. H E PLEADED THAT THE ITA NO.1753 /M/10 SURESH VANKAVANI 4 MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO T O RE-DECIDE THE ISSUE. 7. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE HAS SUBMITTED THAT ALL THE BILLS AND VOUCHERS RELATING TO EXPENDITURE CLAIMED BY THE ASSESSEE WAS SUBMITTED BEFORE THE AO AND ALL THE PAYMENTS MADE THROUGH BANK CHANNEL. HE FURTHER SUBM ITTED THAT THE AO HAS NOT MADE ANY INVESTIGATION WITH REGARD TO TH E EXPENSES INCURRED BY THE ASSESSEE. HE FURTHER SUBMITTED THAT THE AO WITHOUT INVESTIGATING INTO THE DETAILS SUBMITTED BY THE ASS ESSEE SIMPLY DISALLOWED THE CLAIM OF THE ASSESSEE. THE LEARNED C OUNSEL FOR THE ASSESSEE HAS FILED A CERTIFICATE DATED 24 TH AUGUST 2009 ISSUED BY THE ARCHITECTS AND INTERIOR DESIGNERS CONTAINING ALL TH E DETAILS IN RESPECT OF THE EXPENDITURE CLAIMED BY THE ASSESSEE. THE LEA RNED COUNSEL FOR THE ASSESSEE HAS FAIRLY ADMITTED THAT THIS PAPER WA S NOT FILED BEFORE THE BUT IT WAS FILED ONLY BEFORE THE CIT(A) 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. THE ONLY DISPUTE IN THIS APPEAL IS WHETHER THE AO IS JUSTIFIED IN REJECTING THE EXPENDITURE INCURRED/ CLAIMED BY THE ASSESSEE AFTER OBTAINING THE OCCUPANCY CERTIFICATE. WE FIND THAT THE AO IN HIS ORDER SPECIFICALLY MENTIONED THAT THE ASS ESSEE HAS NOT FILED SPECIFIC DETAILS WITH REGARD TO WORK DONE BY THE 11 CONTRACTORS AND THE WORK WAS DONE AFTER OBTAINING THE OCCUPANCY CER TIFICATE. BEFORE THE CIT(A) THE ASSESSEE HAS SUBMITTED A CERTIFICATE ISSUED BY THE ARCHITECT DATED 24 TH AUGUST 2009 AND EVEN THE SAME CERTIFICATE WAS PRODUCED BEFORE US. WE FIND THAT THE CIT(A) HAS NOT CALLED FOR ANY REMAND REPORT FROM THE AO. THE REQUEST MADE BY THE LEARNED DR THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE AO IS JUSTIABLE IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT FILED SP ECIFIC DETAILS WITH REGARD TO THE WORK DONE BY THE 11 CONTRACTORS TO EX AMINE WHETHER THE EXPENDITURE INCURRED IS GENUINE OR NOT. UNDER THESE CIRCUMSTANCES WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE ITA NO.1753 /M/10 SURESH VANKAVANI 5 THE ISSUE AFTER EXAMINING ALL THE DETAILS AND IN AC CORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JANUARY 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 28 TH JANUARY 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE G BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV