M/S.SNT ASSOCIATES,MUMBAI vs. ACIT 17(3), MUMBAI

सुनवाईकीतारीख / Date of Hearing: 03/12/2019 घोषणाकीतारीख /Date of Pronouncement: 29/01/2020 आदेश / O R D E R

PER AMARJIT SINGH, JM:

1. The CIT(A)-28, Mumbai (hereinafter „the CIT(A)‟ erred in confirming the disallowance of office rent aggregating to Rs.9,26,397/- (i.e. Rs.7,46,397 + 180,000) made by the AO holding the same as personal expenses not allowable u/s 37 of the Act. The appellant submits that the office rent expense is incurred wholly and exclusively for the purpose of business of the appellant and same shall be allowed as deductible revenue expense u/s 37(1) of the Act. 2, The CIT(A) erred in issuing direction to the AO u/s 150(1) of the Act to investigate the issue of payment of security charges and to reopen the assessment after forming reason to believe.

3. The CIT(A) erred in issuing direction u/s 150(1) of the Act to AO to investigate the claim of rent and security charges in prior and subsequent years return of income.

2 A.Y.2013-14 Your appellant craves leave to add, to alter or to amend the aforesaid grounds of appeal

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3. The brief facts of the case are that the assessee filed its return of income on 28.09.2012 declaring total income to the tune of Rs.1,32,27,680/- for the A.Y. 2013-

14. The return was processed u/s 143(1) of the I. T. Act, 1961. The case was selected for scrutiny under CASS. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee was engaged in the business of Management Consultancy Service and also earned interest income. During the course of assessment, it was noticed that the assessee has debited rent on office Premises amounting to Rs.19,75,897/-. It was noticed that the assessee made payment to Anish Bindra & Tamanna Bindra amounting to Rs.7,46,397/- for rent of the premise being Flat No.B-101, Pearls Gateway Tower, Sector-44, Noida. The said flat was for the residential purpose. According to the Licence Agreement clause-9, it was also noticed that the assessee paid the rent expenses of the premises E-19, Jangpura Extn., New Delhi-110014 amounting to Rs.1,80,000/-. The said amount was paid as rent of residential premises of the assessee firm. Since both the premises were used for the residential purpose of the assessee’s partnership, therefore, the same was treated as personal expenses which was not liable to be allowed u/s 37 of the Act, therefore, the rent was disallowed and added to the income of the assessee. The security charges of the said flats were also in sum of Rs.1,39,250/- which was also disallowed and added to the income of the assessee. The assessee filed an appeal before the CIT(A) who confirmed the addition, therefore, the assessee has filed the present appeal before us.

5. We have heard arguments advanced by the Ld. Representative of the parties and perused the record. The assessee has challenged the disallowance of the lease rent in connection with the flats bearing no.Flat No. B-101, Pearls Gateway Tower, Sector- 44, Noida and bearing no.E-19, Jangpura Extn., New Delhi-110014 in sum of Rs.9,26,397/-. The copy of lease agreement in connection with the Noida Property is on the file in which the assessee company has taken flat on lease from Mr. Anish Bindra s/o Maj Gen s. Bindra and Mrs. Tamanna Bindra w/o Mr. Anish Bindra. The monthly license fees was settled @ 82933/- excluding maintenance. Both lease agreements have been executed by assessee firm M/s. SNT Associate. The contention