R.M. INVESTMENT & TRADING P. LTD,KOLKATTA vs. DCIT CEN CIR -1(2), MUMBAI

माननीय माननीय ौी संद�प गोसांई, �याियक सदःय एवं माननीय माननीय एवं एवं एवं माननीय माननीय ौी मनोज कुमार अमवाल ,लेखा सदःय के सम�। माननीय माननीय BEFORE HON’BLE SHRI SANDEEP GOSAIN, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ (िनधा�रणवष� िनधा�रणवष� / Assessment Year: 2009-10) िनधा�रणवष� िनधा�रणवष� & आयकरअपील सं./ (िनधा�रण वष� िनधा�रण वष� िनधा�रण वष� / Assessment Year: 2010-11) िनधा�रण वष� R.M. Investment & Trading Pvt. Ltd. DCIT- Central Circle-1(2) बनाम नाम/ Room No.906, 9th Floor नाम नाम 9, Rowdon Street, Udyanchal Building Flat No. 20, 5th Floor Old CGO Complex, MK Road Vs. Kokatta-700 017 Mumbai-400 020. ःथायीलेखासं./जीआइआरसं./PAN/GIR No. AABCR-6026-P (अपीलाथ�/Appellant) (ू�यथ� / Respondent) : Assessee by : Shri Chetan Karia- Ld.AR Revenue by : Shri D.G. Pansari- Ld. DR सुनवाईक�तार�ख/ : 22/04/2019 Date of Hearing घोषणाक�तार�ख / : 25/04/2019 Date of Pronouncement आदेश / O R D E R Per Manoj Kumar Aggarwal (Accountant Member): -

. Since common issues are involved, the appeals are being disposed-off by way of this common order for the sake of convenience & brevity. AY: 2009-10 2.1 The appeal contests the order of Ld. Commissioner of Income-Tax (Appeals)-47, Mumbai, [CIT(A)], Appeal No. CIT(A)-47/AP.12888/16-17 dated 25/09/2107 on following grounds of appeal: -

1. Learned Commissioner of Income Tax (Appeals) erred in confirming the assessment order passed u/s. 143(3) r.w.s 254 of Income Tax Act, 1961 determining total income at Rs. 18,41,901/-.

2. The Learned Commissioner of Income Tax (Appeals) erred in not discussing the Ground No. 1 containing grounds from Item No. 1.1 to 1.4.

3. The Learned Commissioner of Income Tax (Appeals) erred in confirming disallowance of the following business expenditure. Sr.No Nature of Business Expenditure Amount (Rs.) .

1. Rent of office premises 2,400 2. Salaries to staff 93,200 3. Miscellaneous expenditure 10,973 4. Audit Fees 2,840 74,080 5. Depreciation (as per IT Act) 1,83,493 Total

4. The Learned Commissioner of Income Tax (Appeals) erred in enhancing the disallowance of Rs.74,080/-

5. The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.15,99,886/- made on account of cession of outstanding liabilities Appellant prays that, 6. a. Modify the assessment order passed u/s. 143(3) r.w.s 254. b. Delete the addition made of Rs.1,83,493/- on account of disallowance of expenditure incurred. c. Delete the addition made of Rs.15,99,886/- on account of cession of outstanding liabilities. d. Demand of disputed demand may be stayed till the hearing and disposal of appeal on merit. e. Any other relief your honour may deem fit.

2.2 The assessment for impugned AY was framed u/s 143(3) on 14/12/2011 at Rs.18.41 Lacs after certain additions which was contested up to the level of this Tribunal. However, the matter of addition was remitted back by Tribunal to the file of Ld. AO for fresh adjudication vide order dated 09/09/2015. However, it is noted that the assessment has again been reframed at Rs.18.41 Lacs after making similar additions. The following additions as confirmed by Ld. first appellate authority are under challenge before us: - Sr.No. Nature of Additions Amount (Rs.) 1. Disallowance of expenditure 1,22,015/- 2. Enhancement by Ld. CIT(A) by way of 74,080/- depreciation disallowance 3. Cessation of Liability 15,99,886/- We have carefully perused the rival submissions and perused relevant material on record including documents placed in the paper-book. Our ground wise adjudication follows in succeeding paragraphs. 3.1 During assessment proceedings, it transpired that the assessee debited expenditure of Rs.1,22,015/- as rent, salaries to staff & misc. expenses. However, in support of the same, the assessee only produced self-made vouchers and could not provide the source of payment thereof since all expenses were incurred in cash. Resultantly, these expenditures were disallowed. The Ld. first appellate authority, while confirming the same, enhanced the same by disallowing depreciation of Rs.74,080/- in view of the fact that no business activity was being carried out by the assessee during impugned AY. 3.2 Upon perusal of page no.24 of the paper-book, we find that these expenditures are in the nature of audit fees, bank charges, salaries to two employees and rent paid by the assessee. These expenses, in our opinion, were necessary routine expenditure so as to maintain the corporate personality of the assessee. So far as the source of the same is concerned, it is found that books of accounts were duly audited and the assessee was having closing cash balance of Rs.22,894/-. Therefore, there could be no justifiable reason to disallow the same. Similarly, the disallowance of depreciation was not justified since the business had not closed down and the block of asset continue to exist in the books. Therefore, by deleting both these additions, we allow ground nos. 3 & 4. 4.1 The last addition of Rs.15,99,886/- represent addition of Sundry Creditors, being reflected in the assessee’s financial statements. The same has been disallowed for want of proper explanation. The stand of Ld.AO, upon confirmation by first appellate authority, is under challenge before us. 4.2 Upon perusal, we find that the break-up of these liabilities is as follows: - Amount (Rs.) Sr.No. Head 28,280/- 1. New Liabilities incurred during the year 13,21,606/- 2. Kashinath Tapuriah

2,50,000/- 3. Raghav Corporation Total 15,99,886/- Upon perusal of the details, we find that new liabilities incurred during the year represent audit fees payable to auditors, outstanding staff salary & professional tax. These are current liabilities and nothing on record suggest that these liabilities have ceased to exist. The stand of lower authorities, therefore, could not be sustained to that extent. The amount of Rs.13,21,606/- represent amount due towards one of the directors of assessee company. The assessee had already filed confirmation of the concerned director. It is noted that the assessee has received further sum of Rs.1.20 Lacs from the said director during the year which was added to the income of the assessee. However, the same has already been deleted by Ld. first appellate authority upon finding that the assessee fulfilled the onus of providing identity, genuineness and creditworthiness of the said director. Nothing on record suggest that the liability of the assessee company has ceased to exist and therefore, no addition would be warranted on this account. The amount of Rs.2.50 Lacs shown to be due against M/s Raghav Corporation has been confirmed by the said party as evident from page no 88 of the paper-book. Therefore, the addition to that extent could also not be sustained. 4.3 In nutshell, ground no. 5 as well as assessee’s appeal stands allowed.