OXFORD MOULDINGS, MUMBAI v. ACIT CIR 20(2), MUMBAI

ITA 5569/MUM/2009 | 2005-2006
Pronouncement Date: 05-01-2011 | Result: Dismissed

Appeal Details

RSA Number 556919914 RSA 2009
Assessee PAN AAAFO0987E
Bench Mumbai
Appeal Number ITA 5569/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 23 day(s)
Appellant OXFORD MOULDINGS, MUMBAI
Respondent ACIT CIR 20(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 05-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 05-01-2011
Date Of Final Hearing 22-12-2010
Next Hearing Date 22-12-2010
Assessment Year 2005-2006
Appeal Filed On 12-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 5569/MUM/2009 (ASSESSMENT YEAR: 2005-06) M/S. OXFORD MOULDINGS ACIT CIRCLE 20(2) 104-105 KAILASH TOWER MUMBAI ISIDER STC COLONY ANDHERI (E) VS. MUMBAI 400069 PAN - AAAFO 0987 E APPELLANT RESPONDENT APPELLANT BY: SHRI RAKESH JOSHI RESPONDENT BY: SHRI D. SONGATE O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-XX MUMBAI DATED 08.07.2009 IN WHICH THE ASSESSEE HAS R AISED THE FOLLOWING TWO GROUNDS: - 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER IN TREATING THE RENTAL INCOME OF RS.3 60 00 0/- AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME WITH OUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F ASSESSING OFFICER IN DISALLOWING THE CLAIM OF EXPENSES OF RS. 14 06 926/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COUNSEL HAS NOT PRESSED GROUND NO. 1 OF TREATING THE INCOME OF ` 3 60 000/- AS INCOME FROM HOUSE PROPERTY. ACCORDING LY THE GROUND IS DISMISSED AS NOT PRESSED. 3. GROUND NO. 2 PERTAINS TO DISALLOWANCE OF EXPENDITUR E OF ` 14 06 926/- BY THE A.O. HAVING TREATED THE INCOME UNDER THE HEA D HOUSE PROPERTY CLAIMED BY THE ASSESSEE IN THE P & L ACCOUNT. THE A .O. VIDE PAGE 3 OF THE ORDER DISALLOWED THE EXPENSES CLAIMED IN THE P & L ACCOUNT PERTAINING TO ITA NO. 5569/MUM/2009 M/S. OXFORD MOULDINGS 2 UNIT 1 AS THE ENTIRE UNIT WAS CLOSED DOWN IN F.Y. 2 003-04 AND THE EXCISE CERTIFICATE WAS ALSO SURRENDERED ON 03.03.2004. THE A.O. ASKED FOR EXPLANATION WHY THE INCOME SHOULD NOT BE ASSESSED U NDER THE HEAD HOUSE PROPERTY AS IT WAS NOTICED THAT THE UNIT HAS BEEN G IVEN ON RENT TO M/S. SIGMA EXTRUSION AND ELECTRICITY BILLS ARE ALSO IN T HE NAME OF M/S. SIGMA EXTRUSION. THEREFORE HE CAME TO THE CONCLUSION THAT UNIT 1 HAD BEEN PERMANENTLY CLOSED BY THE ASSESSEE AND LEASED OUT T O M/S. SIGMA EXTRUSION. HAVING TREATED THE INCOME RECEIVED OF ` 3 60 000/- AS INCOME FROM HOUSE PROPERTY THE EXPENSES DEBITED IN THE P & L ACCOUNT OF ` 14 06 926/- HAS BEEN DISALLOWED. HOWEVER THE STATU TORY DEDUCTION UNDER SECTION 24 WAS ALLOWED TO THE ASSESSEE. ASSESSEE HA S CONTESTED THE DISALLOWANCE OF EXPENDITURE AS THE ASSESSEE HAS OTH ER INCOMES FROM THE UNIT II AND INCOMES ARE ASSESSED UNDER THE HEAD BUSINESS INCLUDING ALLOWANCE OF DEDUCTION UNDER SECTION 80IB. THE LEARNED CIT(A) EX AMINED THE CONTENTIONS AND GAVE A FINDING AS UNDER WHILE REJECTING THE CLA IM OF EXPENDITURE: - 3.3 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE NOTED SUBMISSIONS AND ARGUMENTS OF THE AO. AS DISCUSSED A BOVE THE MAJOR PORTION OF THE EXPENDITURE CLAIMED BY THE APPELLANT IS FOUND TO BE ON ACCOUNT OF DEPRECIATION AND OUT OF THE TOTAL DEPREC IATION OF ` 13 66 332/- CLAIMED BY THE APPELLANT A SUM OF ` 2 51 282/- PERTAINS TO THE FACTORY BUILDING ` 9.09 308/- PERTAINS TO PLANT AND MACHINERY RS.63 6 27/- PERTAINS TO FURNITURE AND FIXTURES ` 3 768/- PERTAINS TO OFFICE EQUIPMENT RS.41 419/- (WRONGLY STATED AS ` 4 14 780/-) PERTAINS TO COMPUTERS AND ` 36 926/- PERTAINS TO MOTOR VEHICLE. ON PERUSAL OF T HE SAID CLAIM OF THE APPELLANT IT IS MORE THAN CLEAR THAT THE APPELLANT HAS CLAIMED WRONG DEDUCTION ON ACCOUNT OF VARIOUS ASSETS WHICH WAS NE VER PUT TO USE BY THE APPELLANT FOR THE RELEVANT ASSESSMENT YEAR. THE AR HAS FAIRLY ADMITTED THAT THE DEPRECIATION ON ACCOUNT OF PLANT AND MACHINERY AND OTHER ASSETS AS CLAIMED BY THE APPELLANT ARE OTHERW ISE NOT ALLOWABLE EVEN IF THE SAID INCOME IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS SINCE THESE ASSETS WERE NEVER PUT TO USE BY THE APPELLANT DURING THE PREVIOUS YEAR RELEVANT TO THE CURRENT AS SESSMENT YEAR. FURTHER IN VIEW OF THE ABOVE AND SINCE THE FIRST GR OUND OF THE APPEAL IS ALREADY DISMISSED I FIND THAT THE AO IS FULLY JUST IFIED IN MAKING THE ENTIRE DISALLOWANCE OF RS.15 06 926/- AND ACCORDING LY THE SAME IS CONFIRMED. THEREFORE THIS GROUND OF APPEAL IS DISMISSED . 4. BEFORE US THE LEARNED COUNSEL WHILE WITHDRAWING GR OUND NO. 1 HAS SUBMITTED THAT THE ASSESSEE HAS CLAIMED VARIOUS EXP ENDITURES AND SINCE THE ASSETS HAVE BEEN COMMON PART OF THE BLOCK OF ASSETS DEPRECIATION IS TO BE ITA NO. 5569/MUM/2009 M/S. OXFORD MOULDINGS 3 ALLOWED AUTOMATICALLY AND ACCORDINGLY THE CLAIM OF DEPRECIATION ON THE SAID MACHINERY HAS TO BE ALLOWED TO THE ASSESSEE. HOWEVE R HE DID NOT FILE ANY OF THE DETAILS WHETHER THE ASSETS ARE PART OF THE BLOC K OF ASSETS AND HOW THERE ARE SEPARATE P & L ACCOUNTS AS STATED IN THE ASSESS MENT ORDER BY THE A.O. 5. THE LEARNED D.R. HOWEVER SUBMITTED THAT THE ASSES SEE WAS MAINTAINING SEPARATE P & L ACCOUNTS OF UNIT I AND U NIT II AND UNIT I HAS BEEN CLOSED DOWN PERMANENTLY THE INCOME OF WHICH W AS ACCEPTED AS HOUSE PROPERTY INCOME AND ACCORDINGLY THE EXPENDITURE CAN NOT BE ALLOWED TO THE ASSESSEE. IT IS ALSO FURTHER SUBMITTED THAT THE FAC T THAT THE UNIT II HAS CLAIMED DEDUCTION UNDER SECTION 80IB PROVES THE FAC T THAT THERE ARE SEPARATE P & L ACCOUNTS AND THE ASSETS SHOULD NOT HAVE BEEN FORMED PART OF THE SAME BLOCK OF ASSETS. 6. WE HAVE CONSIDERED THE ISSUE. THE TOTAL DISALLOWANC E MADE BY THE A.O. OUT OF THE P & L ACCOUNT PERTAINING TO UNIT I WAS ` 14 06 926/- OUT OF WHICH AN AMOUNT OF ` 13 66 332/- WAS DEPRECIATION ALONE. THE BALANCE OF ` 40 000/- WAS OTHER EXPENDITURE THE DETAILS OF WHIC H ARE NOT PLACED ON RECORD. WITH REFERENCE TO DEPRECIATION ALSO THE CIT (A) HAS GIVEN A FINDING THAT THE A.R. HAS FAIRLY ADMITTED THAT DEPRECIATION ON ACCOUNT OF PLANT AND MACHINERY AND OTHER ASSETS AS CLAIMED BY THE ASSESS EE ARE OTHERWISE NOT ALLOWABLE EVEN IF THE SAID INCOME IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS SINCE THESE ASSETS WERE NEVER PUT TO USE DURING THE PREVIOUS YEAR RELEVANT TO THE CURRENT ASSESSMENT YEAR. IN VI EW OF THE CATEGORICAL FINDING OF THE CIT(A) AND ALSO FURTHER THE FACT THA T THE A.R. FAIRLY ADMITTED BEFORE THE CIT(A) WHICH WAS NOT CONTROVERTED BEFOR E US EXCEPT RAISING LEGAL ARGUMENT OF BLOCK OF ASSETS WE ARE UNABLE TO CONSI DER THE CLAIM OF THE ASSESSEE. AS SEPARATE P & L ACCOUNTS WERE MAINTAINE D FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80IB WE ARE OF TH E OPINION THAT THE ASSETS ARE SHOWN SEPARATELY AND HAS NOT BECOME PART OF ONE BLOCK OF ASSETS EVEN TO CONSIDER LEARNED COUNSELS ARGUMENT THAT DEPRECI ATION IS ALLOWABLE ONCE IT BECOME PART OF BLOCK OF ASSETS WHETHER THE ASSETS A RE USED OR NOT USED. IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY THE FI NDINGS OF THE CIT(A) ON THE ISSUE COULD NOT BE BRUSHED ASIDE. THIS CLAIM WAS AL SO NOT ALLOWABLE WAS ITA NO. 5569/MUM/2009 M/S. OXFORD MOULDINGS 4 ACCEPTED BY THE COUNSEL BEFORE THE CIT(A). THEREFOR E THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JANUARY 2011. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED: 5 TH JANUARY 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XX MUMBAI 4. THE CIT XX MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.