Asstt.Commissioner of Income Tax -10(1), Room No.455, 4th Floor, Aayakar Bhavan,M.K.Road, Mumbai-400020 Vs. M/s Automotive Manufacturers Pvt Ltd, 08,Automotive House, Bazar Ward, Kurla(W), Mumbai-400070
June, 30th 2015
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI
BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM)
.. , .. ,
( / Assessment Year : 2008-09)
Asstt.Commissioner of Income / M/s Automotive Manufacturers
Tax -10(1), Vs. Pvt Ltd,
Room No.455, 4 Floor, 108,Automotive House,
Aayakar Bhavan,M.K.Road, Bazar Ward, Kurla(W),
( /Appellant) .. ( / Respondent)
. / . /PAN/GIR No. : AAACA3428K
/: Appellant by: Shri Asghar Zain
/Respondent by: Shri Dilip Thakkar
/ Date of Hearing :29.6.2015
/Date of Pronouncement : 29.6.2015
/ O R D E R
Per B.R.BASKARAN, Accountant Member:
The Revenue has filed this appeal challenging the order dated
11.8.2011 passed by the ld.CIT(A)-21, Mumbai and it relates to
assessment year 2008-09.
2. The Revenue is aggrieved by the decision of ld.CIT(A) in granting
relief in respect of following two additions:
a) Determination of Annual Letting Value at Rs.40,73,809/- and
b) Disallowance of expenses towards pre-operative expenses
amounting to Rs.15,35,59,355/-
3. We heard parties and perused the record. The assessee is a dealer
in automobiles and also trading of fast moving consumer goods. The
assessee had declared rental income of Rs.8760/- in aggregate in respect
of three properties located at Secunderabad. The AO asked the assessee
to furnish all the details in relation to let out properties in order to examine
the correctness of Annual Letting Value disclosed by the assessee.
However, the assessee did not file any reply. Hence, AO determined the
ALV of all the three properties at Rs.40.82 lakhs and assessed the
difference as income of the assessee. The AO also noticed that the
assessee has started two new businesses, viz., dealing in Earth Moving
Equipments and running Super Markets. The AO noticed that the assessee
has not declared any expenditure relating to setting up of two new line of
businesses i.e. no preoperative expenses was shown by the assessee.
Though the AO called for explanation in this regard, yet the assessee failed
to furnish any details and hence, the AO estimated the pre-operative
expenses @ 0.5% of the aggregate expenses claimed by the assessee in
its Profit and Loss account. The same worked out to Rs.15,35,59,355/-
and the AO disallowed the above said amount as relating to Pre-operative
expenses in setting up two new lines of business.
4. In the appellate proceedings, the ld.CIT(A) deleted both the
disallowances and hence the revenue has filed this appeal before this
5. On perusal of the order passed by the ld.CIT(A), we notice that the
assessee has furnished additional evidences before the ld.CIT(A) in respect
of rental income and the same has been considered by the ld.CIT(A) for
granting the relief to the assessee. However, we notice that the ld.
CIT(A) has not confronted these additional evidences with the AO. This
action of Ld CIT(A) clearly violates the provisions of Rule 46A of The
Income Tax Rules, 1962. Under these set of facts and circumstances, we
are of the view that the additional evidences filed by the assessee before
the ld. CIT(A) should be examined by the AO and hence, this issue
requires fresh consideration at the end of the AO. Accordingly, we set
aside the order of ld.CIT(A) on this issue and restore the same to the file
of the AO with a direction to examine this issue afresh by considering the
relevant evidences that were/that may be filed by the assessee. After
affording necessary opportunity of being heard to the assessee, the AO
may take proper decision on this issue in accordance with law.
6. The next issue relates to determination of disallowance of
preoperative expenses. We notice that the AO was constrained to
estimate pre-operative expenses @ 0.5% of the aggregate expenses
claimed by the assessee, since the assessee failed to furnish the details
that were called for by the AO. We further notice that the ld.CIT(A) has
deleted this addition without examining the necessary details. Before us,
the Ld A.R submitted that the dealing in Earth moving equipments is only
extension of the existing line of business and the Super markets were
opened in the premises of Petrol pump already run by the assessee.
Accordingly he submitted that the assessee did not incur any pre-operative
expenses as presumed by the AO. However, we have noticed that the AO
was constrained to estimate the pre-operative expenses, since the
assessee failed to furnish the details/explanation.
7. Under this set of facts, we are of the view that this issue also
requires fresh examination at the end of the AO. Accordingly, we set aside
the order of the ld.CIT(A) on this issue and restore the same to the file of
the AO with a direction to examine this issue afresh and take proper
decision in accordance with law. The assessee is also directed to furnish
all the details that may be called for by the AO and co-operate with the AO
to arrive at a proper conclusion on this matter.
8. In the result, the appeal of the revenue is treated as allowed for
The above order was pronounced in the open court on 29th June, 2015.
29th June, 2015
(.. /I.P. BANSAL) (.. / B.R. BASKARAN)
/ Judicial Member /Accountant Member
Mumbai: 29th June, 2015.
. ../ SRL , Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. () / The CIT(A)- concerned
4. / CIT concerned
5. , , /
DR, ITAT, Mumbai concerned
/ Guard file.
/ BY ORDER,
, /ITAT, Mumbai