ABU ENTERPRISES, THANE v. ITO 17(3)(1), MUMBAI

ITA 3391/MUM/2009 | 2004-2005
Pronouncement Date: 05-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 339119914 RSA 2009
Assessee PAN AAGFA6587N
Bench Mumbai
Appeal Number ITA 3391/MUM/2009
Duration Of Justice 9 month(s) 13 day(s)
Appellant ABU ENTERPRISES, THANE
Respondent ITO 17(3)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 05-03-2010
Date Of Final Hearing 04-03-2010
Next Hearing Date 04-03-2010
Assessment Year 2004-2005
Appeal Filed On 22-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI BEFORE SHRI R.S.SYAL ACCOUNTANT MEMBER ITA NO.3391/MUM/2009 : ASST.YEAR 2004-2005 M/S.ABU ENTERPRISES C/O.R.D.KHONA CA 104 ANANT LAXMI CHAMBERS SHIVAJI NAGAR THANE 400 602 PA NO.AAGFA6587N. VS. THE INCOME TAX OFFICER WARD 17(3)(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.D.KHONA RESPONDENT BY : SHRI S.M.KESHKAMAT O R D E R THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 4.3.2009 IN RELATION TO THE ASSESSMENT YEAR 2004-2005. 2. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF GROSS PROFIT ADDITION OF RS.1 00 525. BRIEFLY STATED THE FACTS OF THIS GROUN D ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER. I T SHOWED INCOME ON THE BASIS OF CONSTRUCTION WORK COMPLETED AS PER CONSULTATION WIT H THE ARCHITECT. FROM THE DETAILS FILED BY THE ASSESSEE THE A.O. NOTED THAT T HE ASSESSEE WAS IN RECEIPT OF A SUM OF RS.6 47 000 (94 28 382 87 81 382) IN THIS YEAR TOWARDS SALE OF FLATS. SINCE THE PROJECT WAS COMPLETED IN THIS YEAR THE AO HELD THE SAME TO BE INCOME OF THE ASSESSEE FOR THE CURRENT YEAR. AS THE ASSESS EE HAD SHOWN GROSS PROFIT OF RS.5 46 475 THE DIFFERENTIAL AMOUNT OF RS.1 00 525 (6 47 000 5 46 475) WAS ADDED. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSEE RECEIVED A SUM OF RS.6 47 000 IN THE INSTANT ITA NO.3391/MUM/2009 M/S.ABU ENTERPRISES. 2 YEAR. IT IS A MATTER OF RECORD THAT THE PROJECT WAS COMPLETED BUT ONLY THE PROJECT COMPLETION AND OCCUPATION CERTIFICATES WERE PENDING WITH BMC. IN SUCH A SITUATION THE SAID AMOUNT OF RS.6 47 000 WAS REQUIR ED TO BE ADDED TO THE TOTAL INCOME. I THEREFORE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE IN MAKING ADDITION OF RS.1 00 525. THIS GROUND FAILS. 4. GROUND NO.2 IS AGAINST THE CONFIRMATION OF ADDIT ION OF RS.1 00 000 IN RESPECT OF PARTNER CAPITAL. THE FACTS OF THIS GROUND ARE TH AT SHRI EBRAHIM A.MOMIN PARTNER OF THE ASSESSEE-FIRM INTRODUCED A CAPITAL OF RS.12. 57 LAKHS. FROM THE DETAILS FILED AND THE SAVING BANK ACCOUNT THE A.O. OBSERVED THAT ONLY RS.11.57 LAKHS WAS INTRODUCED BY THE SAID PARTNER. ON THE PERUSAL OF T HE COPY OF BANK ACCOUNT THE A.O. NOTED THAT IN THE SUM OF RS.1 00 00 WAS WITHDRAWN W HICH WAS DEPOSITED BUT A SUM OF RS.2 00 000 WAS CREDITED TO THE SAID PARTNERS C APITAL ACCOUNT. RESULTANTLY THE ADDITION OF RS.1 LAKH WAS MADE BY THE A.O. IN THE F IRST APPEAL IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT IN FACT TWO AMOUNTS OF RS.1 LAKH EACH WERE RECEIVED BY THE ASSESSEE FIRM FROM TWO PARTNERS VIZ. SHRI EBRAH IM A.MOMIN AND SHRI BILAL A.MOMIN BUT INADVERTENTLY A SUM OF RS.1 LAKH PERTAI NING TO SHRI BILAL A.MOMIN WAS ALSO CREDITED TO THE CAPITAL OF SHRI EBRAHIM A. MOMIN. IT WAS ALSO CONTENDED THAT THE PASS BOOK OF OTHER PARTNER VIZ. SHRI BILAL A.MOMIN WAS ALSO PRODUCED BEFORE THE A.O. WHO HAD NOT COMMENTED UPON THAT. TH E LEARNED CIT(A) UPHELD THE ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT THOUGH THE SAID SUM OF RS .2 LAKHS WAS CREDITED TO THE CAPITAL ACCOUNT OF SHRI EBRAHIM A.MOMIN THE EQUIVA LENT TWO AMOUNTS OF RS.1 LAKH EACH WERE WITHDRAWN BY BOTH THE PARTNERS VIZ. SHRI EBRAHIM A.MOMIN AND SHRI BILAL A.MOMIN FROM THEIR RESPECTIVE SAVING BAN K ACCOUNTS. COPIES OF THE PASS BOOKS INDICATING WITHDRAWAL OF SAID AMOUNTS ARE AVA ILABLE IN THE PAPER BOOK. SIMPLY BECAUSE THERE WAS INADVERTENT RECORDING OF R S.1 LAKH IN THE ACCOUNT OF SHRI ITA NO.3391/MUM/2009 M/S.ABU ENTERPRISES. 3 EBRAHIM A.MOMIN INSTEAD OF SHRI BILAL A.MOMIN IN M Y CONSIDERED OPINION THE ADDITION WAS NOT LIABLE TO MADE U/S 68. I THEREFO RE OVERTURN THE IMPUGNED ORDER ON THIS ISSUE AND ORDER FOR THE DELETION OF THIS AD DITION. THIS GROUND IS ALLOWED. 6. GROUND NO.3 IS AGAINST THE CONFIRMATION OF ADHOC ADDITION OF RS.50 000 IN RESPECT OF VEHICLE EXPENSES. THE ASSESSEE CLAIMED V EHICLE EXPENSES OF RS.1 50 022. IN THE ABSENCE OF ANY LOG BOOK THE A.O. DISALLOWED RS.50 000 BY TREATING IT TOWARDS PERSONAL USE OF VEHICLE BY THE PARTNERS. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ASSESSEE HAD NOT MAI NTAINED LOG BOOK FOR THE MOVEMENT OF VEHICLE. IN SUCH A SITUATION THE PERSON AL USE OF VEHICLE CANNOT BE RULED OUT. CONSIDERING THE CIRCUMSTANCES PREVAILING IN THIS CASE I AM OF THE CONSIDERED OPINION THAT IT WILL BE JUST AND FAIR IF THE ADDITION IS REDUCED TO 20% ON ACCOUNT OF PERSONAL USE INSTEAD OF 1/3 RD SUSTAINED IN THE FIRST APPEAL. ACCORDINGLY THE ADDITION IS SUSTAINED AT RS.30 000 THEREBY GIVI NG RELIEF OF RS.20 000. 8. THE LAST GROUND IS AGAINST NOT ALLOWING INCREASE IN THE REMUNERATION OF WORKING PARTNERS FROM RS.1 03 145 TO RS.2 06 474. T HE ASSESSEE CLAIMED REMUNERATION OF WORKING PARTNERS AT RS.1 03 145 WHI CH WAS ALLOWED BY THE ASSESSING OFFICER. THE CLAIM OF THE ASSESSEE IS THA T PURSUANT TO THE ADDITIONS MADE BY THE ASSESSING OFFICER THE PROPORTIONATE PART O F REMUNERATION TO PARTNERS SHOULD ALSO BE INCREASED. I AM NOT CONVINCED WITH THIS SUB MISSION FOR THE REASON THAT THE REMUNERATION IS TO BE ALLOWED TO PARTNERS IN ACCORD ANCE WITH THE BOOK PROFIT WHICH HAS BEEN DEFINED IN EXPLANATION (3) TO SECTION 40(B) TO MEAN THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVA NT PREVIOUS YEAR COMPUTED IN THE MANNER LAID DOWN IN CHAPTER IV-D AS INCREASED BY TH E AGGREGATE AMOUNT OF REMUNERATION PAID OR PAYABLE TO ALL THE PARTNERS OF THE FIRM IF SUCH AMOUNT HAS BEEN ITA NO.3391/MUM/2009 M/S.ABU ENTERPRISES. 4 DEDUCTED WHILE COMPUTING THE NET PROFIT. FROM A BA RE PERUSAL OF THIS PROVISION IT IS SEEN THAT THE BOOK PROFIT REFERS TO THE NET PROF IT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT AS COMPUTED UNDER CHAPTER IV-D AND NOT THE BUSINESS INCOME AS FINALLY ASSESSED BY THE A.O. IN SUCH A SITUATION I DO NOT F IND ANY LOGIC IN ACCEPTING THE CONTENTION OF THE LD. AR FOR SIMULTANEOUS INCREASE IN THE REMUNERATION TO PARTNERS IN ACCORDANCE WITH THE ADDITIONS MADE BY THE A.O. I N THE ASSESSMENT ORDER. THIS GROUND IS NOT ALLOWED. 9. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 5 TH DAY OF MARCH 2010. SD/- ( R.S.SYAL ) ACCOUNTANT MEMBER MUMBAI : 5 TH MARCH 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XXIV MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.