CREATION, MUMBAI v. ITO 12(3)(4), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.3206/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S. CREATION 4 PAREKH VORA CHAMBERS 66 NAGINDAS MASTER ROAD FORT MUMBAI -400 001 ASSESSEE VS ITO-12(3)(4) MUMBAI .... REVENUE PAN: AAAFC 0639 D ASSESSEE BY: SHRI VIJAY MEHTA REVENUE BY: SHRI SATBIR SINGH O R D E R IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-XXIII MUMBAI DATED 19.1.2010 FOR TH E A.Y. 2006-07 BY TAKING THE FOLLOWING EFFECTIVE GROUND:- THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER O F THE ASSESSING OFFICER DISALLOWING ELECTRICITY EXPENSE AMOUNTING T O ` 1 49 558/- PAID FOR THE OFFICES USED BY THE FIRM FOR CARRY ON ITS BUSINESS ACTIVITIES. 2. THE RELEVANT FACTS PERTAINING TO THE ISSUE WHICH REVEALED FROM THE RECORDS ARE AS UNDER. THE ASSESSEE-FIRM IS IN THE BUSINESS OF OUTDOOR ITA 3206/M/2010 M/S. CREATION 2 ADVERTISING. THE RETURN OF INCOME FILED BY THE ASS ESSEE DECLARING THE TOTAL INCOME OF ` 2 16 244/- FOR THE A.Y. 2006-07 WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3). THE ASSESSEE HAS CLAIMED ` 2 05 579/- THROUGH ITS PROFIT AND LOSS ACCOUNT UND ER THE HEAD OFFICE ELECTRICITY EXPENSES. THE A.O. SOUGHT THE DETAILS IN RESPECT OF THE SAID EXPENDITURE. ON THE BASIS OF THE DETAIL FILED BY THE ASSESSEE AS WELL AS COPIES OF THE CERTAIN BILLS IT WAS NOTICED BY T HE A.O. THAT THE ELECTRICITY EXPENDITURE IS IN RESPECT OF THE FOLLOW ING PREMISES:- I) FLAT NO.4 1ST FLOOR - ` 56 021/- II) SHOP NO.7 1ST FLOOR - ` 1 07 202/- III) ROOM NO.14 2ND FLOOR - ` 44 478/- 3. THE A.O. HAS NOTED THAT THE ASSESSEE IS CARRYING ON THE BUSINESS ACTIVITY FROM ITS OFFICE AT PAREKH VORA CHAMBERS A ND NOT FROM THE OTHER TWO OFFICE PREMISES I.E. SHOP NO.7 ON THE 1ST FLOOR ROOM NO.14 ON THE 2ND FLOOR SITUATED AT PAREKH VORA CHAMBERS. THE AS SESSEE CONTENDED THAT ALL THE PREMISES WERE USED FOR THE ASSESSEES BUSINESS. THE A.O. HAS NOTED THAT SO FAR AS TWO PREMISES WERE CONCERNE D I.E. SHOP NO.7 AND ROOM NO.14 ELECTRICITY METERS WERE IN THE NAME OF T.D. VORA. THE A.O. THEREFORE MADE THE DISALLOWANCE IN RESPECT OF THE PAYMENTS RELATING TO THE ELECTRICITY METERS OF SHOP NO.7 AND ROOM NO.14 WHICH WAS OF ` 1 49 558/- OUT OF THE TOTAL ELECTRICITY EXPENDITURE CLAIMED BY THE ASSESSEE AND ELECTRICITY EXPENDITURE OF THE OFFICE NO.4 WAS ALLOWED. AS THE ORDER OF THE A.O. WAS CONFIRMED BY THE LD. CIT(A) HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 4. I HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBMI TTED THAT IN THE IMMEDIATE PRECEDING YEAR I.E. A.Y. 2005-06 THE IDE NTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL AND THE ISSUE WAS REMITT ED BACK TO THE FILE OF ITA 3206/M/2010 M/S. CREATION 3 THE A.O. THE LD. COUNSEL ALSO FILED THE COPY OF TH E TRIBUNAL ORDER. WE HAVE ALSO HEARD THE LD. D.R. 5. IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR I.E. A.Y. 2005-06 THE IDENTICAL DISALLOWANCE WAS MADE AND THE TRIBUNAL RE STORED THE MATTER TO THE FILE OF THE A.O. THE OPERATIVE PART OF THE FIN DINGS ARE AS UNDER:- 6. I HAVE HERD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. I FIND THAT FACTS POINTED OUT BY THE LEARNED AR IS SUBJECT TO VERIFICATION. IT IS TRUE THAT THE BURDE N IS ON THE ASSESSEE TO ESTABLISH THAT THE EXPENSES CLAIMED WERE INCURRE D WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. SINCE THE FACTS ARE SUBJECT TO VERIFICATION I REMIT THIS MATTER BACK TO THE FI LE OF THE A.O. WITH A DIRECTION TO CONSIDER THE FACTS POINTED OUT BY THE LEARNED AR AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTE R PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THIS YEAR ALSO I CONSIDER IT FIT TO RESTORE T HE MATTER BACK TO THE FILE OF THE A.O. FOLLOWING THE DIRECTIONS OF THE TR IBUNAL IN THE A.Y. 2005- 06. NEEDLESS TO SAY THE A.O. IS DIRECTED TO GIVE RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE PRINCIPLES OF NATURAL JUSTICE. 7. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5TH FEBRUARY 2011. SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 15TH FEBRUARY 2011 ITA 3206/M/2010 M/S. CREATION 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 23 MUMBAI. 4) THE CIT XII MUMBAI. 5) THE D.R. SMC BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 3206/M/2010 M/S. CREATION 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 07.02.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 07.02.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER