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Income Tax Appellate Tribunal, “F” BENCH MUMBAI
PER KAVITHA RAJAGOPAL: This appeal has been filed by the assessee as against the order of learned CIT(A)-17, Mumbai [hereinafter referred to as “CIT(A)”] passed under section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) pertaining to assessment year 2009-10. As there was no representation for the assessee and we observe that this matter was recalled on 30.08.2021 vide MA P a g e | 2 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA order No.622/MUM/2019 dated 30.08.2021. Subsequently, the case was fixed for hearing on 20.06.2022 and there was no representation on behalf of the assessee inspite of several opportunities given and notices duly served through RPAD. Hence, we proceeded to decide the appeal on the basis of the submissions of the learned DR and on the materials available on record.
The brief facts are that the assessee filed its return of income dated 13.11.2009 declaring total income of Rs.8,62,822/- which comprise of salary Rs.10,99,108/-, loss of Rs.1,50,000/- under the head ‘Income from House Property’ and ‘Income from Other Sources’ of Rs.18,078/- and net loss of Rs.4,364/- under the head ‘Business Income’. The assessee had also claimed exemption of Agriculture Income of Rs.18,75,400/-. The assessee’s case was selected for scrutiny and assessment order dated 25.11.2011 was passed under section 143 (3) of the Act determining total income of Rs.33,56,840/- where, the Assessing Officer (AO) made several additions/disallowances. The assessee was in appeal before the learned CIT(A) as against the impugned P a g e | 3 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA additions/disallowances. The learned CIT(A) confirmed the order of the learned AO.
The assessee is in appeal before us as against the order of the learned CIT(A) challenging the order on various grounds.
Ground No. 1 The assessee has challenged the addition of Rs.2,00,000/- under the following heads of expenses alleged to be for business purposes.
Motorcar expenses 2. Depreciation on motorcar 3. Interest paid on car loan to HDFC Bank 4. Other expenses 4. Briefly stated, it is observed that the assessee has debited expenditure amounting to Rs.3,81,045/- for the above mentioned expenses specifically Rs.1,54,911/- as interest on car loan paid to HDFC Bank, Rs.2,00,793/- as depreciation on motorcar, car expenses of Rs.22,494/- bank charges of Rs.346/-. The learned AO added the impugned amount to the total income of the assessee on P a g e | 4 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA the ground that the assessee has failed to prove that the said expenses were incurred for business purpose and the learned CIT(A) confirmed the said addition on the ground that even before him the assessee had failed to furnish any information or evidence to prove that the impugned expenses were incurred for the purpose of doing business and had restricted the disallowance to Rs.2,00,000/- taking into consideration the previous years’ records of the assessee pertaining to similar expenses.
In appeal before us, the assessee has failed to furnish any additional evidences to substantiate his claim that the impugned expenses were incurred for the running of the business of the assessee. We have observed that the learned CIT(A) has considered the assessee’s submission at length and has dealt with the provisions of section 30 to 36 pertaining to allowability of deductions while computing income referred to in section 28 and has also dealt with the provisions of section 37 being residuary section which extends the allowance of expenditures which are not covered by section 30 to 36. The learned CIT(A) has also relied on the decision of the P a g e | 5 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA Hon’ble Apex Court in the case of Indian Molasses Co. (P) Ltd. Vs. CIT (1959) 37 ITR 66 (SC) which has elaborated upon the term ‘expenditure’ and ‘expense’ and has also differentiated the liability which is contingent and liability which arises upon a contingency.
Upon considering the above facts we are of the considered opinion that the assessee had failed to substantiate his claim that the impugned expenses pertains to the running of the business. We find no infirmity in the order of the lower authorities and accordingly, confirm the order of the learned CIT(A) who has restricted the disallowance to Rs.2,00,000/- by considering the previous years’ transactions of the assessee. In the result, this ground of appeal
filed by the assessee is dismissed. Ground No. 2
7. The assessee has challenged the addition of Rs.18,75,400/- received as Agricultural Income alleged to be undisclosed income under section 68 of the Act. The AO has rejected the assessee’s claim as exemption of Agricultural Income amounting to Rs.18,75,400/- under Section 10 (1) of the Act on the ground that the assessee P a g e | 6 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA has failed to furnish evidence with regard to the Agricultural Income claimed as exemption for the impugned year. The learned CIT(A) has confirmed the said addition made by the AO for the reason that the assessee has failed to prove the nature of receipts deposited in the assessee’s bank account which the assessee has claimed to be Agricultural Income. It is observed that the assessee owns six separate pieces of agricultural land admeasuring 19.78 acres at Nandgaon, Taluka Karjat, District Raigad wherein, the lower authorities has held that only 0.9 acre was cultivated with rice crops and remaining land were classified as barren land. It is further observed that the agricultural land at Kudal was purchased by the assessee for Rs.31,30,000/- and the said land was yielding huge Revenue within a year to the extent of 60% of its capital value does not inspire confidence. The assessee has also not proved the fact that day to day activities of the farm was managed by one Mr. Ashutosh Shukla who was said to be remitting the impugned amount to the bank after deducting the expenditure. It was also observed that 7/12 extract for the Kudal agricultural land was not filed P a g e | 7 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA by the assessee and for Nandgoan land 7/12 extract was not filed for FY 2008-09. Further to this the certificate issued by the Tehsildar for Kudal land is only for financial year 2010-11 and not for the impugned year. The learned CIT(A) has considered all these facts and confirmed the addition made by the AO treating the deposits made in the bank account of the assessee as income from other sources under section 68 of the Act.
From the above observations, it is evident that the assessee has not cultivated the entire agricultural land admeasuring 19.78 acres and even otherwise the assessee has failed to prove the source of such huge amount deposited in the bank alleged to be agricultural income. The assessee has not filed any additional evidence before us either to substantiate his claim. On this note, we hold that there is no infirmity in the order of the learned CIT(A) in treating the deposits as income from other sources under section 68 of the Act. In the result, this ground of appeal filed by the assessee is dismissed.
P a g e | 8 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA Ground No.3 9. The assessee has challenged the addition of Rs.2,44,270/- as Income from House Property which was lying vacant. The AO observed that the assessee owns property of Dhiraj Valley and Royal Sons which were vacant and the AO calculated the net annual value of the property by computing the fair market value at 7% of the investment as per the decision of Hon’ble Allahabad High Court in Radha Devi Dalmiya Vs. CIT (1980) 125 ITR 134. The learned CIT(A) has held that the AO has taken 15% of the investment while computing gross annual rateable value and directed the AO to compute Annual Letting Value in accordance with the decision of the Hon’ble Delhi High Court in CIT Vs. Moni Kumar Subba (2011) 240 CTR (Del.) (FB) 97, wherein, it was held that the provisions of fixation of Annual Rent under the Delhi Municipal Corporation Act, are pari materia with section 23 of the Act, the annual value was fixed by the Municipal Authorities can be a rational yardstick provided the same should be subject to the condition that the annual value fixed should be in close proximity with the impugned assessment year for which P a g e | 9 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA assessment was to be made. If there is a huge difference in the value fixed by the Municipal Authorities for previous years when compared to the impugned year then, the AO can ignore the Municipal valuation for determining annual letting value if there are other materials on record for determining ‘fair rent’. On this basis the learned CIT(A) has directed the AO to compute the annual letting value in accordance with the above proposition of law cited in the said judgment.
It is observed that the assessee has not furnished any evidence to controvert the view taken by the learned CIT(A). We therefore uphold the order of the learned CIT(A) and dismiss this ground of appeal
filed by the assessee. Ground No. 4
11. The assessee has challenged the disallowance under section 14A r.w.r. 8D amounting to Rs.1,70,995/-. Briefly stated the assessee has received dividend of Rs. 3,290/- on investment in shares and had claimed exempt under section 10 (34) for which the assessee has not allocated expenditure for earning the exempt income and hence, the AO invoked the provisions of Rule 8D.
P a g e | 10 ITA NO. (A.Y.2009-10) MR. UMESH A. MISHRA The AO relied on the decision of the Hon’ble jurisdictional High Court in the case of Godrej and Boyces Mfg. Co. Ltd. Vs. Dy. CIT. The assessee contended that the assessee received Rs.1,03,392/- as dividend income and not Rs.25,99,566/- as alleged by the AO and interest of Rs.1,54,911/- was towards loan availed for purchase of motorcar which pertains to business income only. The AO and the learned CIT(A) has held that the assessee has not made any disallowances and that no expenditure has been incurred by the assessee for earning the dividend income, enables the authorities to invoke the provision of section 14A and disallowance of expenditure computed as per provisions of Rule 8D. As the assessee has failed to controvert the said fact, we confirm the order of the learned CIT(A) and dismiss this ground of appeal filed by the assessee.
Ground No. 5 12. This is a consequential ground and therefore, it needs no adjudication.