SATYAM BUILDERS, MUMBAI v. ITO 17(2)(2), MUMBAI

ITA 6761/MUM/2012 | 2009-2010
Pronouncement Date: 26-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 676119914 RSA 2012
Assessee PAN AAEPK7029H
Bench Mumbai
Appeal Number ITA 6761/MUM/2012
Duration Of Justice 3 year(s) 11 month(s) 21 day(s)
Appellant SATYAM BUILDERS, MUMBAI
Respondent ITO 17(2)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 28-07-2016
Date Of Final Hearing 30-07-2015
Next Hearing Date 30-07-2015
Assessment Year 2009-2010
Appeal Filed On 05-11-2012
Judgment Text
INCOME - TAX APPELLATE TRIBUNAL - E BENCH MUMBAI . . BEFORE S/SHRI RAJENDRA ACCOUNTANT MEMBER AND C.N. PR ASAD JUDICIAL MEMBER / ITA NO. 3617 /MUM/20 1 3 : / ASSESSMENT YEAR - 20 0 8 - 09 SHRI SANDEEP BHALCHANDRA KERKAR 5/5A RAM SHYAM SITALA DEVI TEMPLE ROAD MAHIM MUMBAI - 16 PAN : AAEPK 7029 H VS. ACIT WARD - 18(3) MUMBAI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI MIHIR NANI WADEKAR DR ASSESSEE BY : SHRI SANJEEV KASHYAP SR. AR / DATE OF HEARING: 28 / 0 7/ 2016 / DATE OF PRONOUNCEMENT : 26/10 / 2016 1961 254(1) ORDER U/S.254(1)OF THE INCOME - TAX ACT 1961(ACT) / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 25/02/2013 O F THE CIT (A) - 16 MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 16/10/2008 DECLARING TOTAL INCOME AT RS. 14.37 LAKHS .THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S.143 (3) OF THE ACT ON 31/12/2010 DETERMINING HIS INCOME AT RS. 27.08 LAKHS. DURING THE COURSE OF HEARIN G BEFORE US THE AUTHORISED REPRESENTATIVE (AR)STATED THAT THE ASSESSEE WAS NOT INTERESTED IN P URSUING LAST GROUND. HENCE THIRD GROUND OF APPEAL STANDS DISMISSED AS NOT PRESSED. 2. FIRST GROUND OF APPEAL IS ABOUT UPHOLDING THE DISALLOWANCE OF RS.10.29 LAKHS ON ACCOUNT OF DEPRECIATION.DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAD CLAIMED DEPRECIATION OF RS. 14.36 LAKHS ON VARIOUS ASSETS. IN ORDER TO VERIFY THE GENUINENESS OF THE CLAIM OF DEPRECIATION A SPECIFIC QUESTIONNAIRE WAS SERVED ON HIM REGARDING ACQUISITION OF THE ASSETS. IN RESPONSE TO IT THE ASSESSEE FURNISHED A COPY OF PU RCHASE AGREEMENT OF A FLAT AT WADALA(EAST) MUMBAI - 37 VALUED AT RS. 1.02 CRORES. HE FOUND THAT ASSESSEE HAD CLAIMED DEPRECIATION AT THE RATE OF 10% ABOUT THE SAID FLAT THAT HE ALSO FILED A COPY OF BILL FOR ADDITION OF CAR TO PLANT AND MACHINERY BLOCK.WIT H RESPECT TO OTHER ADDITIONS AMOUNTING TO RS. 1.08 LAKHS THE ASSESSEE STATED THAT COPIES OF BILLS WERE NOT READILY AVAILABLE.A REQUEST WAS MADE TO THE AO TO EXCUSE THE ASSESSEE FOR NOT PROVIDING THE BILLS FOR PURCHASE OF MISCELLANEOUS ASSETS WORTH RS.1.08 LAKHS. THE AO MADE ENQUIRIES ABOUT THE FLAT AND FOUND THAT SAME WAS LOCATED ON THE THIRD FLOOR OF A PURE RESIDENTIAL COMPLEX. HE DEPUTED IS INSPECTOR TO VERIFY THE GENUINENESS OF THE CLAIM MADE BY THE ASSESSEE. ON 27/12/2010 A SHOW CAUSE LETTER WAS ISSUED ITA NO. 3617 /MUM /2013 (A.Y. 2008 - 09) 2 T O THE ASSESSEE GIVING HIM FINAL OPPORTUNITY OF BEING HEARD WITH A DIRECTION TO FURNISH THE DOCUMENTARY EVIDENCE IN FORM OF PERMISSION LETTER OF THE SOCIETY TO CONDUCT BUSINESS ACTIVITIES FROM THER E AND THE ELECTRICITY BILL OF THE PREMISES FOR THE PE RIOD AP RIL 2007 TO MARCH 2008.THE ASSESSEE VIDE HIS LETTER DATED 29/ 12/ 2010 STATED THAT CLAIM FOR DEPRECIATION FOR A PERIOD OF SIX MONTHS COULD BE DISALLOWED THAT HE WOULD SUBMIT THE VAT AND SALES TAX RELATED PAPERS TO PROVE THE BASIS THAT IT WAS USED FOR BUSI NESS PURPOSES. AS THE PRIMARY ONUS OF PROVING THE USE OF ASSETS WAS NOT DISCHARGED THE AO DISALLOWED THE CLAIM OF DEPRECIATION MADE BY THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (F AA). BEFORE HIM IT WAS ARGUED THAT RESIDENTIAL PREMISES WAS PURCHASED AND USED FOR PROFESSIONAL USE ONLY THAT ASSET HAD ENTERED BLOCK OF ASSETS AND APPEARED IN THE BLOCK OF FIXED ASSETS THAT HE WAS RESIDING AT MAHIM ALONG WITH HIS FAMILY MEMBERS.HE RELIE D UPON SEVERAL CASES AND REFERRED TO THE EXPLANATION 5 TO SECTION 32(1) AND CONTENDED THAT HE WAS ENTITLED TO CLAIM DEPRECIATION.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT ENTITLEMENT FOR DEPRECIATION HENCE OUT ON A BASIC FACT OF ASSET HAVING BEEN PUT TO USE FOR BUSINESS PURPOSES OR FOR THE PURPOSE OF PROFESSION DURING THE RELEVANT PREVIOUS YEAR THAT MERE PURCHASE AND TAKING MORE POSSESSION OF A FLAT DID NOT ITSELF INDICATES THAT ASSET WAS PUT TO USE FOR PU RPOSE OF BUSINESS/PROFESSION THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH BY MEANS OF ANY EVIDENCE THAT HE ACTUALLY PUT THE ASSET TO USE THAT HE HAD NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT HE ACTUALLY USE THE FLAT FOR HIS BUSINESS THAT ALLOWIN G DEPRECIATION IN THE SUBSEQUENT YEARS WOULD NOT PROVE THAT ASSESSEE WAS ENTITLED TO CLAIM DEPRECIATION FOR THE YEAR UNDER CONSIDERATION ALSO.FINALLY THE FAA UPHELD THE ORDER OF THE AO. 4.BEFORE US THE AR CONTENDED THAT THE FLAT WAS PART OF BLOCK THAT REP ORT OF THE INSPECTOR ABOUT NOT USING THE FLAT FOR BUSINESS PURPOSES COULD NOT BE RELIED UPON. THE DR SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD CLAIMED DEPRECIATION ON A RESIDENTIAL UNIT FOR THE YEAR UNDER CONSIDERATION THAT HE WAS DIRECTED BY THE AO TO PRODUCE THE EVIDENCE OF USING THE FLAT FOR BUSINESS/PROFESSION PURPOSES THAT HE DID NOT PRODUCE ANY EVIDENCE BEFORE THE AO OR THE FAA THAT HE STATED BEFORE THE AO TH AT THE DEPRECIATION FOR A PERIOD OF SIX MONTHS COULD BE DISALLOWED.DEPRECIATION OF AN ASSET IS ALLOWED FOR ITS WEAR AND TEAR THAT THE PRECONDITION OF CLAIMING DEPRECIATION IS TO PROVE THE OWNERSHIP OF THE ASSET AND USED BY THE ASSESSEE FOR A PARTICULAR YEA RS. ASSETS READY TO USE FOR THE BUSINESS/PROFESSION ARE ALSO ENTITLED TO CLAIM ITA NO. 3617 /MUM /2013 (A.Y. 2008 - 09) 3 DEPRECIATION. IN THE CASE BEFORE US THE ASSESSEE HAD NOT FILED ANY EVIDENCE BEFORE ANY OF THE REVENUE AUTHORITIES TO PROVE THAT FLAT PURCHASED BY IT WAS USED FOR HIS BUSINESS/PR OFESSION FOR THE YEAR UNDER APPEAL. HIS RESIDING ALONG WITH HIS FAMILY MEMBERS IN A DIFFERENT LOCALITY COULD NOT MEAN THAT THE FLAT PURCHASED BY HIM WAS USED FOR BUSINESS. WHENEVER AN ASSESSEE MAKES A CLAIM RESULTING IN REDUCING THE TAX ABILITY HE HAS TO PRODUCE THE EVIDENCE IN SUPPORT OF THE CLAIM.IT IS NOT THE JOB OF THE ASSESSING OFFICER TO PROVE THE NEGATIVE. BOTH THE REVENUE AUTHORITIES HAD GIVEN HIM AMPLE OPPORTUNITIES TO PROVE THE CLAIM. AS THE ASSESSEE HAD FAILED TO LEAD ANY PRIMARY OR SECONDARY DO CUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM SO IN OUR OPINION THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE FAA.UPHOLDING HIS ORDER WE DECIDE THE FIRST GROUND OF APPEAL AGAINST THE ASSESSEE. 6. SECOND GROUND OF APPEAL PERTAINS TO DISALLOWANCE OF 20% F ROM MOTORCAR DEPRECIATION 20% OF MOTORCAR INSURANCE INTEREST AND REPAIRS 20% FROM MOBILE AND TELEPHONE CHARGES. DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED FROM THE DETAILS FILED BY THE ASSESSEE THAT HE HAD CLAIMED CERTAIN EXPENSES AGAINST IS INCO ME FROM BUSINESS. CONSIDERING THE POSSIBILITY OF INCLUSION OF PERSONAL ELEMENT IN THOSE EXPENSES HE DISALLOWED 20% OF THE EXPENDITURE. AS PER THE AO THE ASSESSEE DID NOT SUBMIT ANY WRITTEN REPLY IN THAT REGARD THOUGH A SHOW CAUSE NOTICE WAS ISSUED. AS A RESULT THE AO DISALLOWED RS. 2.09 LAKHS (20% OF RS. 10.49 LAKHS) AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE FOR WANT OF PROPER BILLS/VOUCHERS FOR VERIFICATION AND POSSIBLE INCLUSION OF PERSONAL ELEMENT. 7 .DURING THE APPELLATE PROCEEDINGS THE ASSE SSEE ARGUED THAT DISALLOWANCE OF FLAT 20% OF THE EXPENSES WAS NOT JUSTIFIABLE UNDER ANY CIRCUMSTANCES THAT DISALLOWANCE OF 20% WAS MUCH ON HIGHER SIDE AND SHOULD BE RESTRICTED TO 10% ONLY THAT EXPENDITURE ON REPAIRS OF CAR AND MOTORCAR INSURANCE WAS AGAI NST THE PROVISIONS OF THE ACT. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT THE AO HAD MADE THE DISALLOWANCE NOT ONLY FOR THE REASON OF THERE BEING PERSONAL ELEMENT INVOLVED IN THE EXPENSES BUT ALSO FOR WANT OF PROPER B ILLS/VOUCHERS FOR VERIFICATION THAT THE ASSESSEE HAD FAILED TO FURNISH ANY JUSTIFICATION OR EVIDENCE BEFORE THE AO WHEN ASKED TO DO SO ON THE PROPOSED DISALLOWANCE THAT EVEN DURING THE APPELLATE PROCEEDINGS NO SUPPORTING EVIDENCE HAD BEEN FILE D THAT IN ABSENCE OF SUPPORTING DOCUMENTS TO PROVE VERACITY OF THE CLAIMS FOR EXPENSES IS ALSO FOR PERSONAL ELEMENT INVOLVED IN THE EXPENSES DISALLOWANCE OF 20% WAS REASONABLE. 8. BEFORE US THE AR STATED THAT DISALLOWANCE WAS ON HIGHER SIDE.THE DR SUPPORTE D THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE FAA HAD UPHELD THE DISALLOWANCE OF 20% OF THE VARIOUS EXPENSES THAT THE ASSESSEE HAD ITA NO. 3617 /MUM /2013 (A.Y. 2008 - 09) 4 HIMSELF ADMITTED THAT DISALLOWANCE WAS ON HIGHER SIDE. CO NSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT TO MEET THE END OF JUSTICE DISALLOWANCE SHOULD BE RESTRICTED TO 10%. SECOND GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE IN PART. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER 2016. 26 2016 S SD/ SD/ - D/ - SD/ - SD/ - ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : .2016. V R / - / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 4. THE CONCERNED CIT / 5. DR A BENCH ITAT MUMBAI / . . . 6. GUARD FILE/ / BY ORDER //TRUE COPY// / DY./ASST. REGISTRAR / ITAT MUMBAI.