KEKI M. IRANI, MUMBAI v. DCIT CEN CIR 20, MUMBAI

ITA 3176/MUM/2013 | 2010-2011
Pronouncement Date: 17-10-2016 | Result: Allowed

Appeal Details

RSA Number 317619914 RSA 2013
Assessee PAN AAAPI1910R
Bench Mumbai
Appeal Number ITA 3176/MUM/2013
Duration Of Justice 3 year(s) 5 month(s) 22 day(s)
Appellant KEKI M. IRANI, MUMBAI
Respondent DCIT CEN CIR 20, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 17-10-2016
Date Of Final Hearing 06-10-2016
Next Hearing Date 06-10-2016
Assessment Year 2010-2011
Appeal Filed On 25-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE SRI MAHAVIR SINGH J M AND SRI RAMIT KOCHAR AM ITA NO . 3176/MUM/2013 (A.Y: 2010 - 11 ) MR. KEKI M. IRANI 1 LANE NEW PERSIAN BAKERY OFF. S. V. ROAD ANDHERI (W) MUMBAI 400 058 PAN:AAAPI 1910R VS. THE DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 20 ROOM NO.402 4 TH FLOOR AAYAKAR BHAVAN M. K. ROAD MUMBAI 400 020. APPELLANT .. RESPONDENT APPELLANT BY .. SHRI HARIDAS BHAT AR RESPONDENT BY .. SHRI A. K. DHONDIAL DR DATE OF HEARING .. 1 7 - 10 - 2016 DATE OF PRONOUNCEMENT .. 17 - 10 - 2016 O R D E R PER MAHAVIR SINGH JM : THIS APPEAL BY THE ASSESSEE IS ARISING OU T OF THE ORDER OF THE CIT (A) - 39 MUMBAI IN APPEAL NO. CIT (A) - 39 / IT - 1 49(3)(1)/2012 - 13 DATE D 31 - 03 - 2013 . ASSESSMENT WAS FRAMED B Y THE DC I T CENTRAL CIRCLE - 20 MUMBAI FOR THE ASSESSMENT YEAR 2010 - 11 VIDE HIS ORDER DATED 07 - 08 - 2012 U/ S 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER THE ACT) . 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE CIT (A) CO NFIRMING THE DISALLOWANCE OF CLAIM OF ELECTRICITY EXPENSES AND WATER CHARGES AGAINST THE RECEIPT COMPENSATION RECEIVED ON USE OF FACTORY PREMISES INCLUDING MACHINERY AND OTHER FACILITIES. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED COMPENSATION CHARGES OF RS.6 60 000/ - FROM M/S. MERWAN CONFECTIONERS & BAKERS AND CLAIMED ELECTRICITY CHARGES AND WATER CHARGES AT RS.4 61 501/ - . THE FACTS ARE THAT M/S. NEW PERSIAN BAKERY WHOSE PROPRIETOR SHRI KEKI M. IRANI THE ASSESSEE IS THE OWNER OF THE PROPRIETARY CONCERN AT FIRST LANE AT S. V. ROAD ANDHER I (WEST) MUMBAI. AS PER THE ITA NO. 3176 /MUM/20 1 3 2 AGREEMENT DATED 01 - 04 - 2009 ENTERED BETWEEN M/S . MERWAN CONFECTIONERS & BAKERS AND M/S. NEW PERSIAN BAKERY M/S. NEW PERSIAN BAKERY AGREED ON THE TERMS & CONDITIONS THAT M/S. MERWAN CONFECTIONERS & BAKERS WILL USE THE ENTIRE FACILITIES INCLUDING MACHINERY INFRASTRUCTURE AND FACTORY BUILDING FOR ITS OW N U SE FOR ANNUAL COMPENSATION OF RS.6 60 000/ - . THE ASSESSEE PAID ELECTRICITY CHARGES OF RS.4 19 960/ - AND WATER CHARGES OF THE SAME PREMISE AT RS.41 541/ - AND CLAIMED THE SAME AS DEDUCTION FROM T HE COMPENSATION RECEIVED. THE A O ASSESSED THE SAME AS BUSINE SS INCOME BUT DISALLOWED THE CLAIM OF ELECTRICITY AND WATER CHARGES. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ACTION OF THE AO BY OBSERVING IN PARA OF HIS ORDER AS UNDER: - 5. THE APPELLANT HAS BEEN HEARD IN THE MATTER . THE APPELLANT HAS PLACED ON RECORD COPY OF AGREEMENT BETWEEN M/S. NEW PERSIAN BAKERY AND M/S. MERWAN CONFECTIONERS & BAKERS. AS PER CLAUSE 1 OF THE SAID AGREEMENT THE OWNER HAD IN ITS POSSESSION ITEMS OF MACHINERY FOR MANUFACTURING BAKERY PRODUCTS WITH R EQUISITE POWER CONNECTION AND WATER CONNECTION WHICH FACILITIES HAD BEEN PERMITTED TO BE USED BY M/S. PERSIAN BAKERY IN RETURN FOR COMPENSATION CHARGES. THERE IS NOTHING TO SUGGEST IN THE AGREEMENT THAT M/S. PERSIAN BAKERY WOULD BE LIABLE FOR EXPENDITURE TOWARDS WATER AND ELECTRICITY. HENCE I DECLINE TO INTERFERE WITH THE ACTION OF THE A.O. AGGRIEVED THE ASSESSEE PREFERRED SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE . WE FIND THAT M/S. NEW PERSIAN BAKERY PROPRIETORSHIP OF THE ASSESSEE HAD GIVEN THE FACTORY PREMISES INCLUDING ALL FACILITIES EQUIPMENT AND MACHINERY TO M/S. MERWAN CONFECTIONERS & BAKERS ON MONTHLY COMPENSATION BASIS AND ALSO ON TERM S OF PROVIDING WATE R AND ELECTRICITY. AS PER THE COMPENSATION AGREEMENT M/S. NEW PERSIAN BAKERY IS TO PROVIDE BOTH THE ABOVE FACILITIES AND ACCORDINGLY M/S. NEW PERSIAN BAKERY PAID WATER AND ELECTRICITY CHARGES. WE FIND FROM THE TERMS OF AGREEMENT THAT THE COMPENSATION AGRE EMENT IS VERY CLEAR REGARDING INCLUSION OF ELECTRICITY AND WATER CHARGES INTO COMPENSATION RECEIVED AND HENCE M/S. NEW PERSIAN BAKERY HAS RIGHTLY CLAIMED THE SAID EXPENSES AGAINST THE COMPENSATION RECEIPT. THE RELEVANT CLAUSE OF THE AGREEMENT READS AS UND ER: - 1: THE OWNER HAS IN ITS POSSESSION PREMISES AT 1 ST LANE OFF S. V. ROAD ANDHEERI (WEST) MUMBAI 400 058 EQUIPPED WITH ITA NO. 3176 /MUM/20 1 3 3 CERTAIN ITEMS OF MACHINERIES FOR MANUFACTURING BAKERY PRODUCTS WITH THE REQUISITE POWER CONNECTION WATER CONNECTION TELEPHONE F ACILITY STAFF FOR DAY - TO - DAY MAINTENANCE AND UP - KEEP. FURTHER THE PROPRIETOR I.E. THE ASSESSEE HAS PROVIDED ALL MANAGERIAL AND SUPERVISORY SERVICES IN THE FIELD OF MANUFACTURING OF ALL KINDS AND VARIETIES OF CONFECTIONERY AND BAKERY PRODUCTS TO M/S. ME RWAN CONFECTIONERS & BAKERS. EVEN OTHERWISE THE AO HAS ASSESSED THESE RECEIPTS AS BUSINESS INCOME AND HENCE THIS IS TREATED AS BUSINESS INCOME AND CONSEQUENTIAL / INCIDENTAL EXPENSES I.E. ELECTRICITY CHARGES AND WATER CHARGES PAID IN LIEU OF COMPENSATION RE CEIPTS IS TO BE ALLOWED. ACCORDINGLY WE ALLOW THE CLAIM OF THE ASSESSEE AND THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 - 10 - 2016 . BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI SD/ - (RAMIT KOCHAR ) ACCONTANT MEMBER MUMBAI DATED: 17 - 10 - 2016 LAKSHMIKANTA DEKA/SR.PS SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER COPY OF THE OR DER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY// ITA NO. 3176 /MUM/20 1 3 4 SR. NO. PARTICULARS DATE INITIA LS MEMBER CONCERNED 1 DICTATION GIVEN ON 19 / 1 0/16 LK DEKA JM 2 DRAFT PLACED BEFORE AUTHOR 20 /10/16 / 25/10/16 3 DRAFT PROPOSED/PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR.PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER