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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI S. RIFAUR RAHMAN
ORDER PER S. RIFAUR RAHMAN, A.M. The present appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-7, Mumbai [in short ‘CIT(A)’] for the assessment year 2012-13 dated 01.11.2017 and arises out of assessment completed u/s 143(3) of the Income Tax Act, 1961 (in short the Act).
Before us, the assessee filed following grounds of appeal :
1. On the facts and circumstances of the case, the Ld. CIT(A) was erred in disallowing Membership fees & Subscription expenses of Rs.13,070/- (10% of Rs.1,30,700/-) as personal expenses on the ground that in such expenses personal element cannot be ruled out without appreciating and examining in details the actual expenses incurred by the assessee.
Dr. Rustom Phiroze Soonawala 2 ITA No. 227/M/2018
2. On the facts and circumstances of the case, the Ld. CIT(A) was erred in disallowing Travelling expenses of Rs.9,268/- (10% of Rs.92,676/-) as personal expenses on the ground that in such expenses personal element cannot be ruled out without appreciating and examining in details the actual fact that Travelling expenses of Rs.2,92,604/- of personal nature has not been claimed as expenses at all and same has been debited to his capital account.
On the facts and circumstances of the case, the Ld. CIT(A) was erred in directing AO to compute House property income at Annual Municipal ratable value of 8% of acquisition cost without appreciating and examining in details the actual fact that no deemed notional income needs to be worked out since property in question was being used for the purpose of profession by the Assessee. 3. In the above grounds of appeal, the assessee is challenging in ground No. 1 & 2 on the ad-hoc disallowance of 10% sustained by the Ld. CIT(A) on membership fees and subscription expenses and travelling expenses. The relevant facts relating to above grounds are, the Assessing Officer disallowed 20% of the above said expenses as it relates to personal in nature.
The Ld. CIT(A) on appeal before him, sustained the above addition restricting the same at 10%.
Aggrieved, the assessee is in appeal before us. On considering the submissions of both the counsels and we observe that the assessee has filed copy of the capital account as on 31.03.2012 to the balance sheet. As per the submissions and careful evaluation, we noticed that the travelling expenses were debited to the capital account that means, it is not charged to the profit and loss. It will not have any impact on the profit determined for tax purpose. Therefore, once again disallowing on ad-hoc basis will amount to double
Dr. Rustom Phiroze Soonawala 3 ITA No. 227/M/2018 taxation. Therefore, we are inclined to direct the Assessing Officer to allow the travelling expenses claimed by the assessee. With regard to membership fees and subscription expenses, on examination of ledger account submitted by the assessee, we noticed that the assessee has attended several conferences and paid membership fees. The conferences are relevant for the profession carried on by the assessee. Therefore, we reject the contention of the AO that there is involvement of personal benefit except improvement in professional knowledge. It will certainly improve the dispensation of the profession. Therefore, we direct the Assessing Officer to allow the expenditure claimed by the assessee. With regard to ground No. 3, relevant facts are, during assessment proceedings, the Assessing Officer observed that the assessee owned flats of Pushpa Milan Co-op Housing Society and he noticed that the assessee has not offered any income from this property. Accordingly, when the assessee was asked to explain. In response, the assessee submitted that the above said flat is used for residence by one of the senior Doctor Ms. Guloo C. Nagarwala who is attached to the assessee and working for the assessee. Therefore, the same is used for the purpose of assessee’s profession. It was submitted that it should not be considered as deemed let out and charge of notional gross rent is not warranted.
After considering the submissions of the assessee, the Assessing Officer rejected the contention of the assessee. It observed that with the above observation that the property is given without rent to one of colleague is not proper and he determined the notional rent from the property based on the norms laid out by Hon’ble High Court i.e. 8% of the cost of the flat. Accordingly,
Dr. Rustom Phiroze Soonawala 4 ITA No. 227/M/2018 he determined the annul value of property at Rs.81,340/- allowed 30% deduction u/s 24 of the Act and brought to tax amount of Rs.56,398/-.
Aggrieved with the above order, the assessee preferred an appeal before Ld. CIT(A) and Ld. CIT(A) sustained the addition made by the Assessing Officer.
Aggrieved, the assessee is in appeal before us. It is submitted before us that the property under consideration was used by the assessee for its profession purposes and the Ld. CIT(A) decided the issue in favour of the assessee in assessment year 2011-12. In the present assessment year under consideration, the Ld. CIT(A) rejected the contentions of the assessee and sustained the addition made by the AO i.e. to compute house property income @ 8% of the value of acquisition.
After careful consideration and submissions made by both the parties, in our considered view the assessee has used the property for residence of one of senior Doctor Ms. Guloo C. Nagarwala attached to him. It is not clear from the record whether the senior Doctor Ms. Guloo C. Nagarwala to whom the flats was allowed to be used for the purpose of residence i.e. Doctor Ms. Guloo C. Nagarwala working full time in the assessee’s hospital. We deem it fit and proper to remit this issue to the file of AO to find out whether Doctor Ms. Guloo C. Nagarwala is in full time employment with the assessee and it is found that she is in full time employment with the assessee then the flat allocated to her for residential used may be treated as used for the purpose of profession otherwise the method adopted by the revenue authorities may be sustained. We direct the Assessing Officer to follow the above direction and give an opportunity to being heard of the assessee.
Dr. Rustom Phiroze Soonawala 5 ITA No. 227/M/2018