IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `B', NEW DELHI
BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER
AND
MS. SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No.5080/Del/2016
Assessment Year: 2007-08
Dynamic Universal Ltd. DCIT
2/10, Shanti Niketan Vs Circle 10 (1)
New Delhi 110021 New Delhi
PAN No.AAACD3043K
(APPELLANT) (RESPONDENT)
Appellant by Sh. Puneet Thukral, CA
Respondent by Ms. Ashima Neb, Sr. DR
Date of hearing: 29/08/2019
Date of Pronouncement: 04/09/2019
ORDER
PER R.K. PANDA, AM:
This appeal filed by the assessee is directed against the
order dated 09.06.2016 of the CIT(A)-3, New Delhi relating to
A. Y. 2007-08.
2. The assessee in its only effective ground of appeal has
challenged the order of the CIT(A) in confirming the
disallowances of expenses of Rs.74,76,907/- made by the
Assessing Officer.
3. Facts of the case, in brief, are that the assessee is a
company and filed its return of income on 30.10.2007 declaring
total income of Rs.66,99,830/-. Subsequently the case was
reopened by recording reasons u/s. 147 and notice u/s 148 of
the Act was issued to the assessee. The assessee in its reply
submitted that the original return filed earlier may be treated as
return filed in response to notice u/s. 148.
3.1 During the course of assessment proceedings the
Assessing Officer made addition of Rs.74,76,907/-which is the
subject matter of appeal by observing as under :-
"The perusal of records revealed that during the year under consideration, the assessee has earned income
of Rs. 15445471/- on the leasing of the property and parking charges received, from different
persons. The property on which this income was earned was held by the assessee
as stock in trade. Besides the above income, the assessee was not doing any business during the
year and claimed Rs 7476907/- as business expenditure Though the rental Income has been
offered for taxation by the assessee, under the head House Property, the corresponding
expenses have been claimed as business expenses. Since, these expenses were incurred with
regard to the Rental Income of the assessee, the same are not allowable as business
expense Since, the expense are not related to the income taxable under the head "Business &
Profession' the same expenses amounting to Rs 74,76,907/- are disallowed and added back to the
income of the assessee Penalty proceedings u/s 271(1 }(c} are being initiated separately for
concealing true income or furnishing inaccurate particulars of such income."
4. In appeal the Ld. CIT(A) sustained the addition so made by
the Assessing Officer by observing as under :-
"6. In the instant case, the appellant is having the steady income under the
head "Income from the House Property" and resorted to the colourable device
to show artificial loss under the head "business income" from the
consultancy. The counsel of the appellant was asked vide order sheet entry
dated 22.03.2016 to submit the complete details of the business conducted.
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Various opportunities were given to file the documentary evidence to establish
the existence of business run by the company. Vide order sheet entry dated
02.05.2016, the counsel was unable to file any evidence regarding the
existence of genuine business activity. Nothing was brought on the record to
establish that the appellant is having the "business apperatus". The single
receipt of Rs. 1,80,000 has been shown which has been claimed as the
business receipt to indicate that the business is being carried out. No other
business activity has been shown. The same pattern is followed in the
preceding and subsequent years as evident from the chart given in the earlier
paras. The counsel drew my attention to the appellate order of my
predecessor passed for the A.Y.2008-09 on the similar issue. I have
considered the appellate order of my predecessor passed in the preceding
year and conclude that the factual issue of the existence of business
apparatus and necessary where withal to run the business activity has not
been examined in that year. Moreover, the counsel could not establish the
existence of business activity during the year under consideration. In view of
the discussion, it is held that the loss has been created by resorting to the
colourable devices which cannot be part of the tax planning. It is held that the
appellant has not carrying out any business activity and business loss is
created to reduce the income under the head "House Property". The order of
assessment made by the Assessing Officer is, therefore, sustained on this
issue.
7. The ground no.5, 6 and 7 have been raised regarding the following additions:-
Interest Rs.27,27,127/-
Legal expenses Rs. 40,0007-
Repair and maintenance Rs.1,32,357/-
7.1 These expenses form part of the business expenses of Rs.74,76,907/- and it
has been held in the earlier para's that the appellant is not having any business -
activity and the business loss has not been allowed to be adjusted against the
"House property". The separate addition made by the Assessing Officer amounts
to double addition which is accordingly deleted."
5. Aggrieved with such order of the CIT(A), the assessee is in
appeal before the Tribunal.
6. The Ld. Counsel for the assessee at the outset submitted
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that identical issue had come up before the Tribunal in
assessee's own case for A. Y. 2008-09 and the Tribunal vide ITA
No.3573/Del/2012 order dated 17.11.2016 had dismissed the
appeal filed by the revenue. Therefore, this being a covered
matter in favour of the assessee, the ground raised by the
assessee should be allowed.
7. The ld. DR on the other hand submitted that although the
Ld. CIT(A) for A.Y. 2008-09 has decided the issue in favour of
the assessee, however, the Ld. CIT(A) in the impugned
assessment year has not followed the decision of his
predecessor and has distinguished the same. The decision of
the Tribunal was rendered subsequent to passing of the order
by the CIT(A). She submitted that the assessee has credited the
rental income in the profit and loss account copy of which is
placed on page No.42 of the paper book. The assessee has
debited all the expenses in the profit and loss account.
Simultaneously the assessee has also claimed deduction u/s.
24 of the IT Act. Thus the assessee is claiming double deduction
i.e. one under section 24 and again by debiting various
expenses in the P & L account which the assessee cannot do.
She accordingly submitted that she has no objection if the
matter is restored to the file of the CIT(A) with a direction o
decide the issue afresh in the light of the decision of the
Tribunal in assessee' s own case for A.Y.2008-09.
8. The Ld. Counsel for the assessee in his rejoinder submitted
that the Assessing Officer himself has treated the rental income
as income from house property. However, he agreed that he has
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no objection if the matter is restored to the file of the CIT(A) with
a direction to decide the issue afresh in the light of the decision
of the Tribunal in assesee's own case for A.Y.2008-09.
9. We have considered the rival arguments made by both the
sides and perused the material available on record. We find the
Assessing Officer in the instant case has made addition of
Rs.74,76,907/- being the various expenses claimed by the
assessee against the lease income of the property and parking
charges received from different persons. Although the Ld.
CIT(A) in assesee's own case for A.Y.2008-09 had decided the
issue in favour of the assessee, however, the Ld. CIT(A) in the
impugned order has distinguished the order of his predecessor
and sustained the addition made by the Assessing Officer the
reasons of which have already been reproduced in the preceding
paragraph. It is the submission of the Ld. Counsel for the
assessee that the Tribunal in assessee's own case for
A.Y.2008-09 has decided the issue in favour of the assessee and
the appeal filed by the revenue has been dismissed. However, a
perusal of the order of the CIT(A) for the impugned assessment
year shows that he had no benefit of the decision of the
Tribunal in assessee's own case for A. Y. 2008-09 which was
passed on 17.11.2016 which is subsequent to passing of the
order by him which is on 09.06.2016. Under these
circumstances we deem it proper to restore the issue to the file
of the CIT(A) with the direction to decide the issue afresh in the
light of the decision of the Tribunal in assesee's own case for
A.Y.2008-09 and as per fact and law. Needless to say the Ld.
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CIT(A) shall give due opportunity of being heard to the assessee.
We hold and direct accordingly. The grounds raised by the
assessee are accordingly allowed for statistical purpose.
10. In the result, the appeal filed by the assessee is allowed for
statistical purpose.
Order pronounced in the open court on 04.09.2019.
Sd/- Sd/-
(SUCHITRA KAMBLE) (R.K PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*Neha*
Date:-04 .09.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation 29.08.2019
Date on which the typed draft is placed before the dictating 30.08.2019
Member
Date on which the approved draft comes to the Sr.PS/PS
Date on which the fair order is placed before the Dictating
Member for Pronouncement
Date on which the fair order comes back to the Sr. PS/ PS
Date on which the final order is uploaded on the website of 04.09.2019
ITAT
Date on which the file goes to the Bench Clerk
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant Registrar for
signature on the order
Date of dispatch of the Order
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