M/S. LITOLIER INTERIORS PVT. LTD, MUMBAI v. THE ITO WD 5(2)(3), MUMBAI

ITA 2222/MUM/2008 | 2003-2004
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 222219914 RSA 2008
Assessee PAN AAACL6987E
Bench Mumbai
Appeal Number ITA 2222/MUM/2008
Duration Of Justice 2 year(s) 27 day(s)
Appellant M/S. LITOLIER INTERIORS PVT. LTD, MUMBAI
Respondent THE ITO WD 5(2)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-04-2010
Date Of Final Hearing 20-04-2010
Next Hearing Date 20-04-2010
Assessment Year 2003-2004
Appeal Filed On 02-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI R V EASWAR SENIOR VICE PRESIDENT AND SHRI J SUDHAKAR REDDY ACCOUNTANT MEMBER I T A NO: 2795/MUM/2007 (ASSESSMENT YEAR: 2003-2004) INCOME TAX OFFICER 5(2)(3) MUMBAI APPELLANT VS M/S LITOLIER INTERIOR PVT. LTD. MUMBAI RESPONDE NT (PAN: AAACL6987E) CROSS OBJECTION NO: 86/MUM/2010 (ARISING OUT OF I T A NO: 2795/MUM/2007) (ASSESSMENT YEAR: 2003-2004) M/S LITOLIER INTERIOR PVT. LTD. MUMBAI CROSS OB JECTOR VS INCOME TAX OFFICER 5(2)(3) MUMBAI RESPONDENT I T A NOS: 2222/MUM/2008 AND 1055/MUM/2008 (ASSESSMENT YEARS: 2003-2004 AND 2004-2005) M/S LITOLIER INTERIOR PVT. LTD. MUMBAI APPELLAN T VS INCOME TAX OFFICER 5(2)(3) MUMBAI RESPONDENT ASSESSEE BY: SHRI PANKAJ TOPRANI REVENUE BY: SHRI VIKRAM GAUR O R D E R R V EASWAR SENIOR VICE PRESIDENT: ALL THE APPEALS RELATE TO THE SAME ASSESSEE AND IN VOLVE CERTAIN COMMON ISSUES AND SINCE THEY WERE ALSO HEARD TOGETH ER THEY ARE DISPOSED OFF BY A SINGLE ORDER. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE MAINTENANCE OF A PROPERTY OWNED BY M/S LITOLIER PRO PERTIES PVT. LTD. THE PROPERTY IS THE BUILDING CALLED LITOLIER CHAMBE RS SITUATED AT ANDHERI KURLA ROAD ANDHERI EAST MUMBAI TOGETHER WITH THE LAND 2 SURROUNDING THE BUILDING PARTLY USED FOR PARKING P ARTLY AS GARDEN AND PARTLY AS OPEN SPACE. THE ASSESSEE COMPANY UNDERTO OK THE ACTIVITY OF MAINTAINING THE AFORESAID PROPERTY AND THE ARRANGEM ENT IS EVIDENCED BY CERTAIN AGREEMENTS CALLED AMENITIES AND SERVICE AGREEMENTS. THE PROPERTY IS OCCUPIED BY TWO COMPANIES ONLY NAMELY M/S JET AIRWAYS INDIA PVT. LTD. AND M/S STAR INDIA PVT. LTD. 3. WE MAY TAKE UP THE APPEAL OF THE DEPARTMENT IN I TA NO: 2795/MUM/2007 RELATING TO THE ASSESSMENT YEAR 2003- 04 FIRST. THE GROUND OF THE DEPARTMENT IS THAT THE CIT(A) ERRED I N DIRECTING THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF 50% OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEADS REPAIRS AN D MAINTENANCE TELEPHONE EXPENSES AND BUSINESS PROMOTION EXPENS ES. WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF T HE INCOME TAX ACT 1961 BY ORDER DATED 24 TH MARCH 2006 THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED RS.19 72 785/ - AS REPAIRS AND MAINTENANCE. HE CALLED UPON THE ASSESSEE TO FURNIS H THE RELEVANT DETAILS BUT THEY WERE NOT FORTHCOMING. HE NOTICED THAT THE ASSESSEE WAS NEITHER THE OWNER OF THE PROPERTY IN RELATION T O WHICH THE EXPENDITURE SO CLAIMED NOR WAS THE TENANT. HE THE REFORE HELD THAT THE CLAIM OF REPAIRS AND MAINTENANCE EXPENDITURE WA S NOT ADMISSIBLE. HE ALSO NOTED THAT THE OWNER OF THE BUILDING NAMEL Y LITOLIER PROPERTIES PVT. LTD. WAS CLAIMING STANDARD DEDUCTION OF 30% AG AINST THE RENTAL INCOME FROM THE PROPERTY. HE ACCORDINGLY HELD THAT THE ASSESSEE OR ANY OTHER PERSON CANNOT BE ALLOWED ANY DEDUCTION FO R REPAIRS AND MAINTENANCE INCURRED IN CONNECTION WITH THE PROPERT Y. HOWEVER 3 KEEPING IN MIND THAT MINOR REPAIRS TO FURNITURE AND FIXTURES AND ELECTRICAL FITTINGS MUST HAVE BEEN UNDERTAKEN BY TH E ASSESSEE IN TERMS OF THE AMENITIES AND SERVICE AGREEMENTS WITH M/S ST AR INDIA PVT. LTD. AND M/S JET AIRWAYS INDIA PVT. LTD. HE ALLOWED 50% OF THE CLAIM AND DISALLOWED THE BALANCE 50% WHICH CAME TO RS.9 86 39 3/-. AS REGARDS THE TELEPHONE AND BUSINESS PROMOTION EXPENSES HE D ISALLOWED 10% OF THE SAME FOR LACK OF DETAILS. 4. ON APPEAL IT WAS SUBMITTED BY THE ASSESSEE THAT THE EXPENDITURE WAS ALLOWABLE AGAINST THE BUSINESS INCO ME UNDER SECTION 37(1) OF THE ACT AND IT WAS CLARIFIED THAT NEITHER THE INCOME NOR THE EXPENDITURE WAS TO BE CONSIDERED UNDER THE HEAD IN COME FROM HOUSE PROPERTY. IT WAS FURTHER SUBMITTED THAT DUE TO TH E FLOODS IN MUMBAI IN JULY 2005 ALL THE RECORDS WERE WASHED AWAY AND TH EREFORE THERE COULD BE NO COMPLIANCE WITH THE ASSESSING OFFICERS DIRECTIONS IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT WAS CONTE NDED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IN TERMS OF TH E AMENITIES AND SERVICE AGREEMENTS WAS ALLOWABLE AS A DEDUCTION IN FULL. 5. THE CIT(A) FOUND MERIT IN THE ASSESSEES ARGUMEN TS. HE FOUND THAT THE ASSESSEES CLAIM REGARDING LOSS OF RECORDS DUE TO FLOODS WAS SUPPORTED BY A FIR LODGED WITH THE POLICE. THE INC URRING OF THE EXPENSES TO EARN THE INCOME BY WAY OF MAINTENANCE C HARGES FROM THE TWO TENANTS OF THE BUILDING WAS FOUND TO BE A LEGIT IMATE CLAIM SUPPORTED BY THE AMENITIES AND SERVICE AGREEMENTS W ITH THE TWO TENANTS. THE CIT(A) THUS FOUND THAT THE CLAIM WAS ALLOWABLE UNDER SECTION 37(1) OF THE ACT. SINCE THE ASSESSING OFFI CER HAD HIMSELF 4 ALLOWED 50% OF THE CLAIM THE CIT(A) HELD THAT THER E WAS NO DOUBT REGARDING THE GENUINENESS OF THE EXPENDITURE. HE F OUND THAT THE ADHOC DISALLOWANCE WAS NOT JUSTIFIED AND ACCORDINGL Y DELETED THE SAME. THE SAME DECISION WAS TAKEN ALSO IN RESPECT OF THE DISALLOWANCE OF 10% OF THE TELEPHONE AND BUSINESS P ROMOTION EXPENSES. 6. THE REVENUE IS IN FURTHER APPEAL BEFORE THE TRIB UNAL CONTENDING THAT THE ASSESSEE DID NOT FURNISH ANY DETAILS REGAR DING THE NATURE OF THE REPAIRS AND MAINTENANCE EXPENSES. IT WAS ALSO ARGUED THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE EXPENDITURE AND IT WOULD AMOUNT TO DOUBLE DEDUCTION ANOTHER DEDUCTION HAVIN G BEEN ALLOWED IN THE HANDS OF THE OWNER OF THE BUILDING WHILE COMPUT ING THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WA S ALSO POINTED OUT THAT THE 10% DISALLOWANCE MADE BY THE ASSESSING OFF ICER WAS ACCEPTED BY THE ASSESSEE IN THE ASSESSMENT YEAR 200 2-03. 7. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE POINTED OUT THAT THE OWNER OF THE LITOLIER BUILDING WAS IN RECEIPT OF RENT FROM THE PROPERTY UNDER LEAVE AND LICENSE AGREEMENT S WHICH IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY WHEREAS THE ASSESSEE WAS ASSESSABLE ON THE MAINTENANCE CHARGES RECEIVED FROM THE TWO TENANTS OF THE BUILDING AS BUSINESS RECEIPT S SINCE IT HAS UNDERTAKEN THE ACTIVITY OF MAINTAINING THE LITOLIER BUILDING. THUS THE NATURE OF THE INCOME RECEIVED BY THE ASSESSEE AND T HE OWNER OF THE BUILDING IS DISTINCT AND SO IS THE NATURE OF THE CL AIM FOR EXPENDITURE. IT WAS SUBMITTED BY HIM THAT THE EXPENDITURE WAS ALLOW ABLE AS BUSINESS 5 EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSEES BUSINESS. ATTENTION WAS ALSO DRAWN TO T HE AMENITIES AND SERVICE AGREEMENTS COMPILED IN THE PAPER BOOK WHIC H CLEARLY IMPOSED AN OBLIGATION ON THE ASSESSEE TO RENDER SER VICES IN CONNECTION WITH THE MAINTENANCE OF THE BUILDING AND PARTICULAR ATTENTION IN THIS CONNECTION WAS DRAWN TO CLAUSE 4 OF THE AGREEMENT DATED 5 TH SEPTEMBER 2000 WHERE THE SERVICES TO BE PROVIDED BY THE ASSESSEE WERE LISTED. OUR ATTENTION WAS DRAWN TO T HE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN GODAVARI SUGAR MILLS L TD. VS. CIT (1985) 155 ITR 306 (BOM) AND THE ORDERS OF THE DELH I AND BANGALORE BENCHES OF THE TRIBUNAL IN OIL & NATURAL GAS COMMIS SION VS. ADDITIONAL CIT (1999) 69 ITD 69 (DEL) AND DCIT VS. MRS IRENE DSOUZA (2006) 6 SOT 86 (BANG) RESPECTIVELY. 8. ON A CAREFUL CONSIDERATION OF THE RIVAL SUBMISSI ONS WE ARE OF THE VIEW THAT THE DECISION OF THE CIT(A) REQUIRES T O BE UPHELD. THERE IS NO MERIT IN THE ARGUMENT OF THE REVENUE THAT THE CL AIM IF ALLOWED WOULD AMOUNT TO DOUBLE DEDUCTION BECAUSE THE OWNER OF THE BUILDING NAMELY M/S LITOLIER PROPERTIES PVT. LTD. WAS BEING ALLOWED A STANDARD DEDUCTION OF 30% OF THE ANNUAL VALUE OF THE BUILDIN G UNDER SECTION 24(A) OF THE ACT. IT MUST BE REMEMBERED THAT IN TH E CASE OF THE OWNER OF LITOLIER BUILDING THE ANNUAL VALUE OF THE PROPE RTY IS CHARGEABLE TO TAX UNDER SECTION 22 OF THE ACT AS INCOME FROM HOUSE P ROPERTY. HE IS THEREFORE ENTITLED TO CLAIM ALL DEDUCTIONS AVAILABL E UNDER SECTION 24 OF THE ACT. THE NATURE OF THE INCOME IN THE HANDS OF THE ASSESSEE IS COMPLETELY DIFFERENT. THE ASSESSEE IS IN THE BUSIN ESS OF RENDERING 6 MAINTENANCE SERVICES TO BUILDINGS. FOR RENDERING T HESE SERVICES IT IS NOT NECESSARY THAT THE ASSESSEE SHOULD BE THE OWNER OF THE BUILDING. THE ASSESSEE HAS BEEN RENDERING MAINTENANCE SERVICE S TO LITOLIER BUILDING AND ITS TWO TENANTS IN THE PAST ALSO AND T HERE HAS BEEN A SYSTEMATIC AND ORGANIZED COURSE OF ACTIVITY AMOUNTI NG TO BUSINESS. THE RECEIPTS FROM THE TWO TENANTS ARE SHOWN IN THE ASSESSEES PROFIT AND LOSS ACCOUNT AS SERVICE CHARGES ON WHICH TAX IS ALSO DEDUCTED AT SOURCE. THE ASSESSEE IS MAINTAINING A REGULAR ESTA BLISHMENT TO CARRY ON THE BUSINESS AS IS SEEN FROM THE EXPENDITURE SID E OF THE PROFIT AND LOSS ACCOUNT COPY OF WHICH PLACED AT PAGE 3 OF THE PAPER BOOK. IT HAS MAINTAINED AN ESTABLISHMENT PAYING SALARY; AUDI T FEES; PRINTING & STATIONERY; RENT RATES & TAXES; TELEPHONE EXPENSES TRAVELLING AND MOTOR CAR EXPENSES; ELECTRICITY AND CONVEYANCE EXPE NSES AND SO ON. THE RECEIPT BY WAY OF SERVICE CHARGES IS THEREFORE ASSESSABLE AS THE BUSINESS INCOME OF THE ASSESSEE. IN FACT THE ASSES SING OFFICER HAS NOT DISPUTED THAT THE SERVICES CHARGES ARE ASSESSAB LE AS THE BUSINESS INCOME. THE CLAIM OF REPAIRS AND MAINTENANCE EXPEN SES FALLS UNDER SECTION 37(1) OF THE ACT AS EXPENDITURE INCURRED WH OLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSEES BUSINESS. IN CLA USE 4 OF THE AMENITIES AND SERVICE AGREEMENT DATED 5 TH SEPTEMBER 2000 THE FOLLOWING SERVICES HAVE BEEN LISTED OUT TO BE PROV IDED BY THE ASSESSEE: - 4. SERVICES TO BE PROVIDED BY LIPL LIPL AGREES TO PROVIDE NTVI THE FOLLOWING SERVICES AMONGST OTHER SERVICES: 7 4.1 MAINTENANCE OF INFRASTRUCTURE AND AMENITIES AT LITOLIER BUILDING ESPECIALLY 4 TH 5 TH AND 6 TH FLOORS IN OCCUPATION OF NTVI. 4.2 MAINTENANCE OF AMENITIES PROVIDED IN THE PREMIS ES OF LITOLIER BUILDING INCLUDING GARDEN MAINTENANCE CLEANLINESS. 4.3 PERIOD PROMPT MAINTENANCE OF ELECTRIC SUPPLY L IGHTS IN THE COMPOUND OF LITOLIER BUILDING. 4.4 PROVIDE ELECTRICITY THROUGH GENERATOR WHENEVER THERE IS A FAILURE OF ELECTRICITY BY BSES. 4.5 PERIODIC MAINTENANCE OF LITOLIER BUILDING WHERE VER AND WHENEVER REQUIRED. 4.6 PAYMENT OF SOCIETY CHARGES IF ANY TO BE BORNE BY LIPL. 4.7 PROVIDE SECURITY IN THE LITOLIER BUILDING. 4.8 PROVIDE NECESSARY NAME BOARDS OF NTV1 AT RECEPT ION. 4.9 PROVIDE COMMON RECEPTION COUNTER AT THE ENTRANC E OF THE BUILDING. 4.10 ENSURE THAT THE CARS PARKING SPACE FOR USE OF NTVI IS NOT OCCUPIED BY ANY OTHER PERSON. 4.11 PROVIDE SECURITY FOR THE NTV1 CARS PARKED WITH IN THE LITOLIER BUILDING. THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED AS HELD BY THE CIT(A) IN HOLDING THAT THE ALLOWANCE OF THE EXPEND ITURE ON REPAIRS AND MAINTENANCE WOULD AMOUNT TO DOUBLE DEDUCTION. AS R EGARDS THE MERITS OF THE DISALLOWANCE OF THE EXPENSES IT IS S EEN THAT THE ASSESSEES CLAIM THAT ALL ITS RECORDS WERE WASHED O UT IN THE FLOODS IN MUMBAI IN JULY 2005 IS SUPPORTED BY A FIR LODGED WI TH THE POLICE AND APPARENTLY THIS WAS THE REASON WHY THE ASSESSEE COU LD NOT FURNISH ANY DETAILS BEFORE THE ASSESSING OFFICER. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT SHOWS THAT THE EXPENSES ON REPAIRS AND MAIN TENANCE HAS FALLEN FROM RS.32 60 631/- FOR THE YEAR ENDED 31.03 .2002 TO RS.19 72 785/-. IN FACT THE TOTAL EXPENDITURE DEBI TED TO THE PROFIT AND LOSS ACCOUNT HAS FALLEN FROM RS.1 13 23 211/- FOR T HE YEAR ENDED 31.03.2002 TO RS.97 15 508/- FOR THE YEAR UNDER APP EAL EVEN THOUGH THE SERVICE CHARGES RECEIVED HAVE REMAINED ALMOST T HE SAME 8 RS.1 09 20 000/- FOR THE YEAR ENDED 31.03.2002 AND RS.1 07 96 250/- FOR THE YEAR UNDER APPEAL. THEREFORE THERE IS NO REASON TO DOUBT THE GENUINENESS OF THE CLAIM AND IN FACT BY ALLOWING 50 % OF THE CLAIM THE ASSESSING OFFICER HAS HIMSELF IMPLIEDLY ACCEPTED TH E GENUINENESS THEREOF. THE DISALLOWANCE OF 50% APPEARS TO US ALS O TO BE ONLY ADHOC WITHOUT ANY PARTICULAR REASON. WE THEREFORE AGREE WITH THE CIT(A) THAT THERE WAS NO JUSTIFICATION FOR DISALLOWING ANY PART OF THE REPAIRS AND MAINTENANCE EXPENSES. 9. OUR DECISION WOULD ALSO HOLD GOOD FOR THE DISALL OWANCE OF THE TELEPHONE EXPENSES AND BUSINESS PROMOTION EXPENSES WHERE ALSO THE CIT(A) HAS FOUND THAT THERE IS NO REASON GIVEN FOR MAKING AN ADHOC DISALLOWANCE OF 10%. FURTHER THE ASSESSEE COULD N OT PRODUCE THE RECORDS BECAUSE OF THE LOSS OF THE RECORDS IN THE F LOODS WHICH CLAIM IS SUPPORTED BY A FIR. THEREFORE ON THIS ASPECT ALSO WE AGREE WITH THE CIT(A). 10. IN THE RESULT WE CONFIRM THE DECISION OF THE C IT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 11. WE NOW TAKE UP CROSS OBJECTION NO. 86/MUM/2010 FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04. THERE IS A DELAY OF ALMOST 32 MONTHS IN THE FILING OF THE CROSS OBJECTION. IN SUPPORT OF THE APPLICATION FOR CONDONATION OF THE DELAY AN AFFIDA VIT FROM VIKRAM MITTAL DIRECTOR OF THE ASSESSEE HAS BEEN FILED. IT IS ST ATED THEREIN THAT THE WORK RELATING TO THE FILING OF THE CROSS OBJECTION WAS GIVEN TO ONE SANTOSH BHOIR AS SOON AS THE GROUNDS OF APPEAL FILE D BY THE DEPARTMENT WERE RECEIVED ON 4 TH AUGUST 2007 BUT HE FAILED TO INTER-ACT 9 WITH THE CHARTERED ACCOUNTANTS IN THE MATTER OF FIL ING THE CROSS OBJECTIONS. HE HAS ALSO LEFT THE COMPANY AND IT WA S ONLY WHEN THE ASSESSEES ADVOCATE ADVISED THE ASSESSEE TO FILE TH E CROSS OBJECTIONS THAT THEY WERE FILED ON 12 TH APRIL 2010 WHICH HAS ENTAILED A DELAY OF 31 MONTHS AND 12 DAYS. IT IS PRAYED THAT THE DELAY IS DUE TO NEGLIGENCE ON THE PART OF THE ASSESSEES EMPLOYEE AND IT WAS N OT DELIBERATE AND HENCE SHOULD BE CONDONED. THE DECISIONS OF THE SUP REME COURT IN THE CASE OF COLLECTOR LAND ACQUISITION VS. MST KATI JI & ORS (1987)167 ITR 471 (SC) AND VEDABAI ALIAS VAIJAYANATABAI BABUR AO PATIL VS. SHANTARAM BABURAO PATIL & ORS (2002) 253 ITR 798 (S C) ARE RELIED UPON. 12. WE HAVE CAREFULLY CONSIDERED THE AFFIDAVIT AND HEARD THE RIVAL SUBMISSIONS. IT APPEARS TO US THAT THERE IS NO REA SONABLE OR SUFFICIENT CAUSE FOR THE DELAY WHICH IS NOT SMALL. IT IS NOT CLEAR FROM THE AFFIDAVIT NOR WAS ANY LIGHT THROWN BEFORE US AS TO WHEN THE EMPLOYEE WHO WAS ENTRUSTED WITH THE FILING OF THE CROSS OBJECTION LE FT THE SERVICES OF THE ASSESSEE COMPANY. ONE WOULD EXPECT THAT WHEN AN EM PLOYEE LEAVES THE COMPANY HE WOULD HAND OVER WHATEVER WORK THAT IS PENDING WITH HIM TO THE EMPLOYER SO THAT ARRANGEMENTS CAN BE MAD E BY THE EMPLOYER TO HAVE THE UNFINISHED WORK ENTRUSTED TO S OME OTHER EMPLOYEE. ON THIS QUESTION THERE IS NO LIGHT THROW N. WE ARE THEREFORE NOT SATISFIED THAT THE ASSESSEE HAD TAKEN ALL DILIG ENT STEPS TO FOLLOW UP THE FILING OF THE CROSS OBJECTIONS. THE EXPLANATIO N OF THE ASSESSEE AND THE REASON GIVEN FOR THE DELAY APPEARS TO US TO BE VAGUE NON SPECIFIC AND NOT SUPPORTED BY ANY RECORD. FURTHER THE ASSES SEE DOES NOT 10 APPEAR TO HAVE BEEN DILIGENT IN THE MATTER OF FILIN G THE CROSS OBJECTION. ACCORDINGLY WE REFUSE TO CONDONE THE DELAY. THE C ROSS OBJECTION IS DISMISSED IN LIMINE. 13. ITA NO: 2222/MUM/2008 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY OF RS.5 24 363/- IMPOSED ON IT UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 FOR THE ASSE SSMENT YEAR 2003- 04. THE PENALTY HAS BEEN IMPOSED CONSEQUENT TO THE DISALLOWANCE OF THE EXPENSES OF RS.5 11 469/- BEING OPERATIVE EXPEN SES OF THE BOAT AND THE CLAIM OF DEPRECIATION OF RS.9 15 369/- ON T HE BOAT. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OF FICER CONSIDERED THAT THE ASSESSEES BUSINESS DID NOT CALL FOR OWNIN G AND OPERATING A BOAT. HE THEREFORE REQUIRED THE ASSESSEE TO FURNIS H THE RELEVANT DETAILS REGARDING THE BOAT SUCH AS THE PURCHASE DAT E OF THE BOAT NATURE OF SERVICES RENDERED BY THE ASSESSEE WHICH R EQUIRE USE OF THE BOAT THE FEES IF ANY RECEIVED FOR THE SERVICES OF THE BOAT ETC. THESE DETAILS WERE NOT FILED BY THE ASSESSEE. HOWEVER I N THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMED IN ITS LETTER DATED 30 TH NOVEMBER 2005 THAT THE BOAT WAS USED FOR THE ENTER TAINMENT OF THE VVIP GUESTS AND TOP EXECUTIVES OF JET AIRWAYS INDIA PVT. LTD. WHICH WAS ONE OF THE TENANTS OF LITOLIER BUILDING WHOSE MAINTENANCE WAS PUT IN CHARGE OF THE ASSESSEE COMPANY. IT WAS FURTHER STATED THAT THE BOAT WAS USED FOR THE EXECUTIVES OF JET AIRWAYS INDIA PV T. LTD. AT THE REQUEST OF THAT COMPANY. IN ORDER TO VERIFY THE AS SESSEES CLAIM THE ASSESSING OFFICER EXAMINED THE AMENITIES AND SERVIC E AGREEMENT UNDER WHICH THE ASSESSEE RENDERED MAINTENANCE SERVI CES WITH RESPECT 11 OF LITOLIER BUILDING BUT DID NOT FIND ANY CLAUSE T HEREIN WHICH OBLIGED THE ASSESSEE COMPANY TO PROVIDE THE BOAT FOR THE ENTERT AINMENT OR OTHER PURPOSES TO JET AIRWAYS INDIA PVT. LTD. THE AGREEM ENT WITH STAR INDIA PVT. LTD. WAS ALSO PERUSED BY THE ASSESSING OFFICER BUT AGAIN HE FOUND NO STIPULATION THEREIN TO THE EFFECT THAT THE ASSES SEE WAS BOUND TO PROVIDE THE BOAT TO THAT COMPANY. THE ASSESSING OF FICER FURTHER FOUND THAT THE ASSESSEE WAS IN RECEIPT OF ONLY RS.22 57 5 00/- AS SERVICE CHARGES FROM JET AIRWAYS INDIA PVT. LTD. AND THAT N O PRUDENT MAN WOULD INCUR AN EXPENDITURE INCLUDING DEPRECIATION OF AROUND RS.15.00 LAKHS FOR ENTERTAINING THE VVIP GUESTS. HE ALSO FO UND THAT NO EXPENDITURE ON BOAT WAS CLAIMED AGAINST THE INCOME OF RS.88.20 LAKHS RECEIVED FROM STAR INDIA PVT. LTD. HE ACCORDINGLY DISALLOWED THE EXPENDITURE AS WELL AS DEPRECIATION AGAINST WHICH T HE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) UPHELD THE FINDING OF THE ASSESSING OFFICER IN THE FOLLOWING WORDS: - 3.2 I HAVE PERUSED THE FACTS OF THE CASE. I DO NOT FIND ANY RATIONALE IN THE ARGUMENT THAT RUNNING OF THE B OAT HAD ANYTHING TO DO WITH THE BUSINESS ACTIVITY OF THE AP PELLANT. THE APPELLANT IS SIMPLY PROVIDING SERVICES IN THE B UILDING OCCUPIED BY THE TWO COMPANIES. THESE SERVICES ARE PROVIDED IN AND AROUND THE BUILDING. THE RUNNING A ND MAINTENANCE OF THE BOAT NEITHER ADDS TO THESE SERVI CES WHICH APPELLANT IS PROVIDING NOR ARGUMENTS THESE SE RVICES AND ARE TOTALLY INDEPENDENT AND EXTRANEOUS TO THE B USINESS OF THE APPELLANT. THE CLAIM OF ENTERTAINING VIPS O FFICERS AND OFFICIALS OF THE COMPANIES IS ON THE ONE HAND NOT SUBSTANTIATED BY ANY RECORDS OR EVIDENCE AND ON TH E OTHER HAND HAS NOTHING TO DO WITH THE BUSINESS OF PROVIDI NG SERVICES WHICH THE APPELLANT IS UNDERTAKING PRESENT LY. THEREFORE THE RUNNING AND MAINTENANCE OF THE BOAT CANNOT BE CONSIDERED AS FOR THE BUSINESS OF THE APPELLANT. ACCORDINGLY NEITHER EXPENDITURE NOR DEPRECIATION I S ALLOWABLE. THE ACTION OF THE AO IS UPHELD AND GROU ND OF APPEAL IS REJECTED . 12 THE ASSESSEE DID NOT FILE ANY FURTHER APPEAL TO THE TRIBUNAL BUT WHEN THE DEPARTMENT FILED ITA NO: 2795/MUM/2007 THE ASS ESSEE FILED A BELATED CROSS OBJECTION NO: 86/MUM/2010 WHICH HAS BEEN DISMISSED BY US ON GROUNDS OF DELAY (SUPRA). 14. CONSEQUENT TO THE DISALLOWANCE OF THE EXPENDITU RE AND DEPRECIATION ON THE BOAT THE ASSESSING OFFICER CAL LED UPON THE ASSESSEE TO SHOW CAUSE WHY PENALTY FOR CONCEALMENT OF INCOME CANNOT BE IMPOSED. THE ASSESSEE MERELY STATED THAT THE PENALTY PROCEEDINGS MAY BE ADJOURNED FOR FILING A COPY OF T HE GROUNDS OF APPEAL FILED BEFORE THE CIT(A) BUT EVEN THEREAFTER NO EXPLANATION WAS GIVEN TO THE PENALTY NOTICE. THE ASSESSING OFFICER THEREFORE HELD THAT IT WAS EVIDENTLY CLEAR THAT THE ASSESSEE COMPANY HA S CONCEALED THE INCOME OF RS.14 26 838/- (BEING THE AGGREGATE OF TH E BOAT OPERATING EXPENSES AND DEPRECIATION ON THE BOAT). HE THEREF ORE IMPOSED A MINIMUM PENALTY OF RS.5 24 363/-. THE PENALTY HAVI NG BEEN CONFIRMED BY THE CIT(A) THE ASSESSEE IS IN FURTHER APPEAL BE FORE THE TRIBUNAL. 15. IN SUPPORT OF THE APPEAL THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THIS IS ONLY A CASE OF A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER ON THE QUESTION OF ALLOWANCE OF A CLAIM AND MERELY BECAUSE THE ASSESSING OFFICER DID NOT AGREE WITH THE ASSESSEES CLAIM IT DOES NOT FOLLOW THAT THE ASSES SEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS THER EOF. IT IS SUBMITTED THAT THE CLAIM WAS MADE BY THE ASSESSEE IN AN OPEN AND BONA FIDE MANNER AND IT WAS ALSO SHOWN SEPARATELY IN THE PROF IT AND LOSS ACCOUNT AS BOAT OPERATING EXPENSES AND EVEN THE DEP RECIATION ON THE 13 BOAT WAS SEPARATELY SHOWN IN THE FIXED ASSETS SCHED ULE AND THUS THERE WAS NO INTENTION TO KEEP AWAY FROM THE ASSESS ING OFFICER THE NATURE OF THE EXPENSES. IT WAS CONTENDED THAT THE BOAT WAS MAINTAINED IN THE INTEREST OF CORDIAL RELATIONS WIT H THE EXECUTIVES OF JET AIRWAYS INDIA PVT. LTD. WHO WERE USING THE LITOLIE R BUILDING THE MAINTENANCE OF WHICH WAS UNDERTAKEN BY THE ASSESSEE COMPANY. THE ASSESSEE DID IT FREE OF COST AND DID NOT CHARGE ANY THING FROM JET AIRWAYS INDIA PVT. LTD. FOR THE USE OF THE BOAT BUT THAT WAS ONLY IN THE INTEREST OF THE BUSINESS SO THAT THE ASSESSEE CONTI NUED TO HAVE THE PATRONAGE OF JET AIRWAYS INDIA PVT. LTD. IT WAS SU BMITTED THAT THE PILOTS CABIN CREW AND OTHER SENIOR EXECUTIVES OF J ET AIRWAYS INDIA PVT. LTD. SOMETIMES USED THE BOAT FOR THEIR ENTERTAINMEN T PURPOSES AND THE ASSESSEE ALLOWED THEM TO DO SO WITHOUT ANY CONSIDER ATION AND THAT WAS ONLY IN THE INTEREST OF CORDIAL RELATIONS AND B USINESS EXPEDIENCY. IT WAS ARGUED THAT IN ANY CASE THE QUESTION WHETHER SU CH EXPENDITURE WAS ALLOWABLE OR NOT WAS A BORDER LINE QUESTION AND MERELY BECAUSE THE ASSESSING OFFICER DISALLOWED THE ASSESSEES CLA IM IT DOES NOT FOLLOW AUTOMATICALLY THAT THE ASSESSEE HAS CONCEALE D ITS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. IN SUPPO RT OF HIS SUBMISSIONS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE RECENT JUDGMENT OF THE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC). 16. ON THE OTHER HAND THE LEARNED SENIOR DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT THE EXPENDITURE WAS N OT RELATED TO THE ASSESSEES BUSINESS AND THAT IT CANNOT EVEN BE ARGU ED THAT THERE WAS 14 SOME NEXUS BETWEEN THE ASSESSEES BUSINESS AND THE EXPENDITURE / DEPRECIATION AND THUS WHEN THE CLAIM WAS NOT AT ALL ALLOWABLE ABOUT WHICH THERE CAN BE NO TWO OPINIONS THE CLAIM MUST BE TAKEN TO HAVE BEEN MADE ONLY TO REDUCE THE TAXABLE INCOME FOR WHI CH THE LEVY OF PENALTY WAS FULLY JUSTIFIED. IT WAS SUBMITTED THAT THE RATIO OF THE JUDGMENT OF THE SUPREME COURT IN RELIANCE PETROPROD UCTS PVT. LTD. (SUPRA) DID NOT APPLY TO THE FACTS OF THE PRESENT C ASE. 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND IN OUR VIEW THE PENALTY LEVIED DOES NOT APPEAR TO BE JUSTI FIED. THE ASSESSEE DID NOT KEEP ANY PARTICULARS RELATING TO THE EXPEND ITURE AWAY FROM THE DEPARTMENT NOR DID IT FURNISH ANY INACCURATE PARTIC ULARS WITH REGARD TO THE EXPENDITURE AND THE DEPRECIATION. AS RIGHTLY P OINTED OUT ON BEHALF OF THE ASSESSEE THE BOAT OPERATING EXPENSES OF RS. 5 11 469/- WERE CLAIMED IN THE PROFIT AND LOSS ACCOUNT ITSELF. WE FIND THAT A SIMILAR CLAIM WAS ALSO MADE FOR THE YEAR ENDED 31.03.2002 W HERE SUCH EXPENSES AMOUNTED TO RS.2 51 132/-. THE SCHEDULE 3 TO THE ACCOUNTS WHICH IS THE FIXED ASSETS SCHEDULE (PAGE 5 OF THE PAPER BOOK) SHOWS THAT DEPRECIATION OF RS.9 15 369/- WAS CLAIMED WITH REFERENCE TO THE BOAT AND THIS FIGURE IS INCLUDED I N THE TOTAL DEPRECIATION OF RS.11 60 538/- DEBITED TO THE PROFIT AND LOSS AC COUNT. THE CLAIM RECEIVED THE ATTENTION OF THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAD FURNISHED THE AMENITIES AND SERVICE AGREEMENT WITH BOTH STAR INDIA PVT. LTD . AND JET AIRWAYS INDIA PVT. LTD. FOR THE PERUSAL OF THE ASSESSING OF FICER WHICH DID NOT CONTAIN ANY PROVISION TO THE EFFECT THAT THE ASSESS EE WAS TO PROVIDE THE 15 BOAT FREE OF COST FOR THE USE OF THESE TWO COMPANIE S. BY CLAIMING THE EXPENSES AND THE DEPRECIATION IN THE PROFIT AND LOS S ACCOUNT AND BY FILING THE AGREEMENTS FOR THE PERUSAL OF THE ASSESS ING OFFICER THE ASSESSEE ACTED BONA FIDE AND DID NOT INTEND TO KEEP AWAY ANY PARTICULARS FROM THE ASSESSING OFFICER. HOWEVER T HE ASSESSEE RAISED AN ARGUMENT WHICH IT WAS ENTITLED TO DO BEFORE TH E ASSESSING OFFICER THAT THE BOAT WAS USED FOR THE ENTERTAINMENT OF THE VVIP GUESTS AND TOP EXECUTIVES OF JET AIRWAYS INDIA PVT. LTD. AT I TS REQUEST AND THUS THE EXPENDITURE WAS ALLOWABLE AS BUSINESS EXPENDITU RE INCURRED IN THE INTEREST OF THE BUSINESS AND TO MAINTAIN CORDIAL RE LATIONS WITH JET AIRWAYS INDIA PVT. LTD. THE CLAIM WAS NOT ACCEPTAB LE TO THE ASSESSING OFFICER AND HE WAS ENTITLED TO TAKE A DIFFERENT VIE W REGARDING THE ADMISSIBILITY OF THE CLAIM. BUT IN OUR HUMBLE OPIN ION IT CANNOT BE SAID THAT THE CLAIM WAS FRIVOLOUS OR WAS SO OUTRAGEOUS T HAT IT CAN NEVER BE SAID THAT THERE WAS A NEXUS BETWEEN THE EXPENDITURE AND THE BUSINESS OF THE ASSESSEE. IT SEEMS TO US THAT AS RIGHTLY P OINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE IT IS A CASE WHER E THE ASSESSEES CLAIM HAS NOT FOUND FAVOUR WITH THE ASSESSING OFFIC ER AND IT IS ONLY A QUESTION OF A BONA FIDE DIFFERENCE OF OPINION BETWE EN THE TWO. IN ADDITION TO THE JUDGMENT OF THE DELHI HIGH COURT IN ADDITIONAL CIT VS. DELHI CLOTH & GENERAL MILLS CO. LTD. (1984) 157 ITR 822 (DEL); MADRAS HIGH COURT IN CIT VS. LATE G D NAIDU (1987) 165 ITR 63 (MAD); AND CALCUTTA HIGH COURT IN BURMAH SHELL OIL STORAGE & D ISTRIBUTING COMPANY OF INDIA LTD. (1987) 163 ITR 496 (CAL) WHE RE IT HAS BEEN HELD THAT BY MERELY MAKING A CLAIM FOR EXPENDITURE THE ASSESSEE 16 CANNOT BE HELD TO HAVE CONCEALED ITS INCOME OR FURN ISHED INACCURATE PARTICULARS RECENTLY THE SUPREME COURT HAS TAKEN T HE VIEW IN CIT VS. RELIANCE PETROPRODUCTS PVT LTD. CITED SUPRA THAT THE MAKING OF AN INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF I NCOME OR FURNISHING INACCURATE PARTICULARS THEREOF IF THE IN FORMATION GIVEN IN THE RETURN IS NOT FOUND TO BE INCORRECT AND IN OUR HUM BLE OPINION THE PRESENT CASE FALLS WITHIN THE RATIO LAID DOWN IN AL L THESE JUDGMENTS. AS IN THE CASE BEFORE THE SUPREME COURT IN THE PRESEN T CASE ALSO THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE E IN CONNECTION WITH THE BOAT OPERATING EXPENSES AND DEPRECIATION ON THE BOAT WERE INCORRECT OR ERRONEOUS OR FALSE. IT HAS BEEN OBSER VED BY THE SUPREME COURT IN THE AFORESAID JUDGMENT THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUN T TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME AND THA T SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PART ICULARS. THE PRESENT CASE IT MAY BE ADDED ALSO FALLS WITHIN TH E RATIO OF THE EARLIER JUDGMENT OF THE SUPREME COURT IN CEMENT MARKETING C O. OF INDIA LTD. VS. ASSISTANT COMMISSIONER OF SALES TAX & ORS (1980 ) 124 ITR 15 (SC). 18. FOR THE ABOVE REASONS WE HOLD THAT THE DEPARTME NTAL AUTHORITIES WERE NOT JUSTIFIED IN IMPOSING THE PENA LTY WHICH IS HEREBY CANCELLED AND THE APPEAL OF THE ASSESSEE IS ALLOWED . 19. THE LAST APPEAL IS ITA NO: 1055/MUM/2008. THIS APPEAL IS BY THE ASSESSEE AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 17 20. THE FIRST TWO GROUNDS RELATE TO THE BOAT OPERAT ING EXPENSES OF RS.4 82 898/- AND BOAT DEPRECIATION OF RS.7 32 295 /-. THE ARGUMENTS OF THE ASSESSEE TO JUSTIFY THE ALLOWANCE OF THE ABO VE ARE THE SAME IN THIS YEAR AS IN THE EARLIER YEAR. IN THE EARLIER Y EAR WE HAVE REFUSED TO ADMIT THE ASSESSEES CROSS OBJECTION ON THE GROUND OF DELAY. HOWEVER WE HAVE NOTED THE ASSESSEES JUSTIFICATION FOR CLAIMING THE EXPENSES AND DEPRECIATION RELATING TO THE BOAT WHIL E DECIDING THE ASSESSEES APPEAL AGAINST THE PENALTY IMPOSED UNDER SECTION 271(1)(C) IN RESPECT OF THE ASSESSMENT YEAR 2003-04 . WE DO NOT SEE HOW THE EXPENSES CAN BE HELD ALLOWABLE AGAINST THE INCOME RECEIVED BY THE ASSESSEE BY WAY OF SERVICE CHARGES FROM THE TENANTS OCCUPYING LITOLIER BUILDING. THE ASSESSEES BUSINESS IS TO M AINTAIN THE BUILDING AND WE HAVE EARLIER LISTED OUT THE ASSESSEES DUTIE S IN THIS REGARD FOR WHICH THE SERVICE CHARGES ARE RECEIVED. THE EXPENS ES ON OPERATING THE BOAT AND THE DEPRECIATION THEREON IN OUR HUMBL E OPINION CANNOT BE CONSIDERED AS EXPENDITURE INCURRED WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF THE AFORESAID BUSINESS OF THE ASSESSEE. IT HAS BEEN STATED BEFORE US THAT THE EXPENDITURE WAS INCURRED VOLUNTA RILY ON GROUNDS OF COMMERCIAL EXPEDIENCY AND WAS THEREFORE ALLOWABLE A S PER THE RATIO OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF SA SSOON J DAVID & CO. P. LTD. VS. CIT (1979) 118 ITR 261 (SC). HAVIN G GIVEN CAREFUL CONSIDERATION TO THE ARGUMENT WE FIND THAT IT IS N OT ACCEPTABLE. THE ASSESSEE IS NOT THE OWNER OF THE BUILDING DERIVING RENTAL INCOME FROM THE TENANTS IN WHICH CASE IT WAS PERHAPS POSSIBLE T O SAY THAT THE ASSESSEE WAS REQUIRED TO MAINTAIN CLOSE OR CORDIAL RELATIONS WITH THE 18 TENANTS SO AS TO AVOID ANY LITIGATION WITH THEM. O UR ASSESSEE IS ENGAGED ONLY IN THE MAINTENANCE OF THE BUILDING AND EVEN THOUGH IT IS STILL OPEN TO SAY THAT EVEN IN SUCH A BUSINESS IT W AS NECESSARY TO MAINTAIN CORDIAL RELATIONS WITH THE TENANTS IT WOU LD BE SOMEWHAT FAR FETCHED OR REMOTE TO SAY THAT THOSE TENANTS NEEDED TO BE ENTERTAINED BY THE ASSESSEE BY LETTING THEM USE THE BOAT OWNED BY THE ASSESSEE FOR ENTERTAINMENT PURPOSES. IT IS TRUE THAT IT IS NONE OF OUR BUSINESS TO DICTATE AS TO HOW THE ASSESSEES BUSINESS SHOULD BE CONDUCTED AND WHOM HE SHOULD ENTERTAIN OR NOT BUT STILL THE IMPU GNED EXPENDITURE DOES NOT SEEM TO US TO BE DICTATED EVEN BY COMMERCI AL EXPEDIENCY. AS FOUND BY THE ASSESSING OFFICER IT IS NOT PART OF THE ASSESSEES OBLIGATIONS TO PERMIT THE TENANTS TO USE THE BOAT F REE OF CHARGES. IN THESE CIRCUMSTANCES WE ARE UNABLE TO HOLD THAT THE DEPARTMENTAL AUTHORITIES WERE NOT CORRECT IN DISALLOWING THE CLA IM. WE CONFIRM THEIR ORDER AND DISMISS THE GROUNDS. 21. GROUND NOS 6 AND 8 WHICH ARE DIRECTED AGAINST THE DISALLOWANCE OF THE TRAVELLING EXPENSES AND DONATIO N ARE DISMISSED AS NOT PRESSED. 22. AS REGARDS GROUND NO.5 WHICH IS DIRECTED AGAIN ST THE DISALLOWANCE OF MOTOR CAR EXPENSES OF RS.2 01 789/- AND DEPRECIATION OF RS.95 159/- ON MOTOR CARS IT HAS BEEN HELD BY T HE GUJARAT HIGH COURT IN SAYAJI IRON & ENGG. CO. VS. CIT (2002) 253 ITR 749 (GUJ) THAT THERE CAN BE NO PERSONAL USER OF THE MOTOR CARS BY A COMPANY SINCE IT IS ONLY A JURISTIC ENTITY. FOLLOWING WITH RESPECT THE AFORESAID JUDGMENT WE DELETE THE DISALLOWANCE. WE ALSO FIND THAT FULL DETAILS OF THE 19 EXPENSES ARE GIVEN AT PAGE 32 OF THE PAPER BOOK. T HE GROUND IS THUS ALLOWED. 23. AS REGARDS GROUND NO.7 WHICH IS AGAINST THE DI SALLOWANCE OF THE STAFF WELFARE EXPENSES OF RS.1 06 845/- IT IS SEEN THAT MOST OF THE EXPENSES ARE INCURRED ON MEDICAL TREATMENT OF PERSO NS WHO ARE NOT EMPLOYEES OF THE ASSESSEE. IT IS NOT CLEAR HOW SUC H PERSONS ARE RELATED TO THE ASSESSEES BUSINESS. IN THIS VIEW O F THE MATTER AND HAVING REGARD TO THE POSSIBILITY OF SOME PERSONS BE ING EMPLOYED BY THE ASSESSEE WE RESTRICT THE DISALLOWANCE TO RS.50 000/-. THE GROUND IS PARTLY ALLOWED. 24. GROUND NO.3 IS DIRECTED AGAINST THE DISALLOWANC E OF THE LABOUR CHARGES OF RS.1 65 338/-. FROM THE DETAILS OF THE LABOUR CHARGES FILED BY THE ASSESSEE BEFORE THE TAX AUTHORITIES IT IS S EEN THAT MOST OF THESE CHARGES WERE INCURRED TOWARDS REPAIRING OF WA LLS COMPOUND WALLS BATHROOMS AND FIXING OF TILES. THE OBJECTIO N IS THAT THE ASSESSEE WAS NOT THE OWNER OF THE PREMISES. IN OUR HUMBLE O PINION THIS IS NOT A RELEVANT CONSIDERATION AND WHAT IS REQUIRED TO BE S EEN IS WHETHER THE EXPENDITURE IS COVERED BY THE AGREEMENTS ENTERED IN TO BETWEEN THE ASSESSEE ON THE ONE HAND; AND STAR INDIA PVT. LTD. & JET AIRWAYS INDIA PVT. LTD. ON THE OTHER HAND. WE HAVE ALREADY NOTIC ED THE ASSESSEES OBLIGATIONS UNDER THE AMENITIES AND SERVICE AGREEME NTS. THE AGREEMENTS CLEARLY PROVIDE FOR THE MAINTENANCE AND REPAIRS OF THE BUILDING CALLED LITOLIER BUILDING THE AMENITIES PR OVIDED IN THE BUILDING ETC. THE LABOUR CHARGES INCURRED BY THE ASSESSEE A PPEAR TO BE COVERED BY THE ASSESSEES OBLIGATIONS UNDER THE AGR EEMENTS. THE 20 DISALLOWANCE OF 50% OF THE LABOUR CHARGES THUS APPE ARS TO BE NOT JUSTIFIED. THE SAME IS DELETED AND THE GROUND IS A LLOWED. 25. AS REGARDS GROUND NO.4 WHICH IS DIRECTED AGAIN ST THE DISALLOWANCE OF REPAIRS AND MAINTENANCE EXPENSES OF RS.2 68 317/- THE FACTS ARE THE SAME AS IN ITA NO: 2795/MUM/2007. IN LINE WITH THE VIEW TAKEN BY US THEREIN WE DIRECT THE ASSESSING O FFICER TO ALLOW THE ENTIRE REPAIRS AND MAINTENANCE EXPENSES. THE GROUN D IS THUS ALLOWED. 26. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. 27. TO SUM UP: - ITA NO: 2795/MUM/2007 IS DISMISSED ; CO NO: 86/MUM/2010 IS DISMISSED IN LIMINE; ITA NO: 2222/MU M/2008 IS ALLOWED; AND ITA NO: 1055/MUM/2008 IS PARTLY ALLOWE D. ORDER PRONOUNCED ON 30 TH APRIL 2010. SD/- SD/- (J SUDHAKAR REDDY) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESI DENT MUMBAI DATED 30 TH APRIL 2010 SALDANHA COPY TO: 1. M/S LITOLIER INTERIOR PVT. LTD. 101 DOCTOR CENTRE 135 AUGUST KRANTI MARG KEMPS CORNER MUMBAI 400 036 2. ITO 5(2)(3) 3. CIT-V 4. CIT(A)-V 5. DR A BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI