MAHAVIR SHETH,MUMBAI vs. ITO 16(1)(2), MUMBAI

During hearing, the ld. counsel for the assessee, Shri K. Gopal along with Ms. Neha Paranjape, did not press this ground, being general in nature, therefore, this ground is dismissed as not pressed.

The next ground contested by the assessee pertains to upholding the disallowance of Rs.20 lakhs being compensation incurred in connection with transfer of the premises without appreciating the fact and the circumstances of the case. The Ld. counsel for the assessee invited our attention to para -7 (page-3) and para-8 of the assessment order. It was contended that only computation part is in dispute. Our attention was further invited to para-11 (page-16 of the assessment order). On the other hand, Shri Suman Kumar, Ld. DR strongly contested the claim of the assessee by defending the impugned order and the finding recorded therein. At this stage, the Ld. counsel for the assessee, contended that he has no objection to send the matter back to the file of the Ld. Assessing Officer, so that the factual matrix may be examined afresh as the assessee is in a position to substantiate his claim.

3.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee claim to have made as compensation of Rs.20 lakhs paid to M/s Electromark Devices Pvt. Ltd. by claiming that the assessee allowed the above company to use, to occupy and carry out business activities at 307, Lotus House, since May 2000 onwards and when the said premises was being sold, an amount of Rs.20 lakhs was allegedly paid to it to obtain peaceful possession of the premises and claimed the payment as deductible expenditure. However, the Ld. Assessing Officer was not satisfied with the explanation of the assessee by observing that not only the parties were brothers but he was Managing Director of the said company and they were also share holders of the company holding almost entire share capital. The Ld. Assessing Officer further observed that except statement, there was not article in the agreement that the company was using and occupying the said premises and no documentary evidence was furnished for the said claim. The Ld. Assessing Officer further observed that no tenancy agreement or any other agreement/document was produced in support of rights of the company over the said premises. The stand of the Ld. DR as well as of the Ld. Assessing Officer was that it was observed that the claim of compensation is merely an afterthought, therefore, the addition was rightly made. The assessee has also filed a telephone bill, issued by MTNL, Electricity Bill and statement of accounts along with a confirmation from Riddhi Enterprises in support of his claim. Considering the totality of facts, we direct the Ld. Assessing Officer to examine the factual matrix afresh and the assessee is directed to produce the necessary evidence to substantiate its claim. The assessee is also directed to produce the Chartered Accountant before the Assessing Officer, so that he can also be examined by the Ld. Assessing Officer. The Ld. Assessing Officer is directed to satisfy himself and thereafter decide in accordance with law. Thus, this ground of the assessee is allowed for statistical purposes only.