MAKHARIA INDUSTRIAL GASES PVT.LTD., MUMBAI v. ITO 9 (2)(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI T.R. SOOD AM AND SHRI R.S. PADVEKAR J M I.T.A. NO.6568/MUM/2008 ASSESSMENT YEAR : 2004-05 M/S. MAKHARIA INDUSTRIAL GASES PVT. LTD. C-213 SYNTHOFINE ESTATE OPP. VIRWANI INDL. ESTATE OFF AAREY ROAD GOREGAON (E) MUMBAI-400 093 PAN NO : AAACM6876F INCOME TAX OFFICER 9(2)(3) MUMBAI (APPELLANT) VS. (RESPONDENT) ORDER PER T.R. SOOD (AM) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER DATED 19.09.2008 OF COMMISSIONER OF INCOME TAX (APP EALS)- IX MUMBAI AND RELATES TO THE ASSESSMENT YEAR 2004-05. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED TWO GROU NDS OUT OF WHICH GROUND ONE WAS NOT PRESSED AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. THE OTHER GROUND IS AS UNDER:- 2) THE LEARNED CIT(A) ALSO ERRED IN NOT ALLOWING THE EXPENSES OF RS.206325/- WHOLLY AND EXCLUSIVELY LAID OUT TO E ARN THE RENTAL INCOME ON ASSETS OF THE APPELLANT COMPANY WHICH ALS O PLEASE BE ALLOWED. APPELLANT BY : SHRI V. G. GINDE RESPONDENT BY : SHRI NARESH KUMAR BALODIA 2 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DU RING THE ASSESSMENT IT WAS NOTICED THAT ASSESSEE IS LETTING OUT MACHINE RY ALONG WITH FACTORY. THE INCOME WAS ASSESSED UNDER THE HEAD INCOME FROM OTH ER SOURCES AND DEPRECIATION ON MACHINERY WAS ALLOWED. HOWEVER THE OTHER EXPENSES WHICH MAINLY CONSIST OF STATUTORY EXPENSES WERE NOT ALLOW ED. 4. ON APPEAL THE ACTION OF THE AO WAS CONFIRMED BY THE LEARNED CIT (APPEALS). 5. BEFORE US THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT OTHER EXPENSES LIKE AUDIT FEE BANK CHARGES FILING FEE AND SALARY ETC. WERE REQUIRED FOR MAINTAINING THE STATUS OF COMPANY AND OTHER ADMINISTRATIVE MATTERS. THEREFORE SUCH EXPENSES SHOULD HAVE BEEN ALLOWED WHICH WERE MAINLY INCURRED FOR EARNING THE INCOME. HE FURTHER SUBMITTED THAT IN ASSESSEES CASE IN IDENTICAL CIRCUMSTANCES SUCH EXP ENSES WERE HELD TO BE ALLOWABLE FOR ASSESSMENT YEAR 2003-04 BY THE TRIBUN AL IN ITA NO.2434/M/2007. 6. ON THE OTHER HAND LEARNED DR STRONGLY RELIED O N THE ORDER OF LEARNED CIT (APPEALS). 7. AFTER CONSIDERING THE RIVAL SUBMISSION WE FIND IDENTICAL CASE CAME BEFORE THE TRIBUNAL FOR ASSESSMENT YEAR 2003-0 4 IN ITA NO.2434/M/2007 AND THE EXPENSES WERE HELD TO BE ALL OWABLE VIDE PARA 3 OF THE ORDER WHICH IS AS UNDER :- 3. I HAVE CONSIDERED THE RIVAL SUBMISSION AND HAV E PERUSED THE DETAILS OF EXPENSES AMOUNTING TO RS.2.70 LAKHS CLAIMED BY THE ASSESSEE OUT OF ITS RENTAL INCOME OF THE PROPERTIES . I FIND THAT THE EXPENSES ARE OF ALLOWABLE NATURE AS PER PROVISIONS OF SEC.57(III) 3 OF THE ACT AS THESE ARE EXPENSES INCURRED WHOLLY AN D EXCLUSIVELY FOR EARNING THE RENTAL INCOME ASSESSED BY THE DEPAR TMENT. THE ASSESSEE IS AN ARTIFICIAL JURIDICAL PERSON AND HAD TO INCUR CERTAIN EXPENSES TO KEEP THE ESTABLISHMENT RUNNING AND IN O RDER TO EARN THE INCOME DECLARED BY IT AND THE RATIO OF THE DECI SION OF DELHI TRIBUNAL CITED SUPRA IS APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. ACCORDINGLY THE ISSUE IS DECIDED IN FAVO UR OF THE ASSESSEE AND THE GROUND OF APPEAL NO.2 OF THE ASSES SEE IS ALLOWED. 8 FOLLOWING THE ABOVE ORDER WE ARE OF THE VIEW THA T EXPENSES CLAIMED BY THE ASSESSEE ARE ALLOWABLE AND ACCORDIN GLY WE SET ASIDE THE ORDER OF LEARNED CIT (APPEALS) AND DIRECT TO ALLOW THE EX PENSES. 9. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 29 TH DAY OF DECEMBER 2010. SD/- SD/- (R. S. PADVEKAR) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DT: 29/12/2010 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. THE DR B- BENCH ITAT MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ROSHANI