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Income Tax Appellate Tribunal, B/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-16, Chennai dated 01.06.2017 pertaining to assessment year 2013-14.
The assessee raised the following grounds for adjudication.
1. The order of the Appellate Commissioner rejecting the claim of the appellant is erroneous and unsustainable on the facts of the case.
2. The Appellate Commissioner erred in rejecting the claim of the assessee for the actual expenses incurred against the service charges paid by the Tenant and the payments were only for meeting such expenses.
3. The Appellate Commissioner failed to appreciate the fact that the appellant is entitled to claim expenses as the income collected are only to maintain and upkeep the property and for providing certain facilities.
4. The Appellate Commissioner is also failed to appreciate the fact that, it is the duty of the tenant to maintain and upkeep the leased property.
5. The Appellate Commissioner is also failed to take into account that the Appellant is maintaining proper records for his income and expenses and his sincerity and regularity as much as in filing his return of income and discharging tax liability within the time limit.
6. The Appellate Commissioner is also failed to appreciate the fact that the appellant is genuinely computing his income and paying the taxes.
7. The Appellate Commissioner is failed to take into account that the interest income is disclosed on receipt basis and failed to verify the subsequent year’s record as the income offered in the subsequent year.
8. The Appellate Commissioner failed to consider the submissions made by the Appellant and without any reason, simply rejected the appeal.
9. In view of the above submissions and the other submissions which may be adduced at the time of hearing, it is prayed that the Order dated 08- 03/20 16 passed by the Ld. Income Tax Officer, International Taxation — 2(1), Chennai, for the ÀY 2013-14 may kindly be set aside and the additions made may also be deleted.
2.1 The crux of the above ground is with regard to disallowance of `6,32,856/- claimed as (i) expenditure to earn service charges collected from his tenant and disallowance of `93,009/- claimed as (ii) interest income on receipt basis.
With regard to first issue, the assessee claimed following expenses out of service charges received by the assessee from tenant. The assessee had claimed expenses u/s.57 of the Act as detailed below:-
Particulars ` Sevants salary 3,90,000 Gas supply 78,395 Equipments maintenance 62,817 Gen. expenses 70,130 Depreciation @ 15% on 2,10,095/- 31,514 Total 6,32,856 The assessee has not furnished any proof of the above expenditure either before the ld. Assessing Officer or before the Ld.CIT(A). Hence same was disallowed by the Revenue. Against the order of Ld.CIT(A), now the assessee is in appeal before us.
Before us, ld.A.R submitted that the maintenance charges collected from tenants by the agent of the assessee as the assessee was non-resident, and the said Representative of assessee incurred the above expenditure and that representative produced the statement of expenses to the assessee. The same was claimed as expenditure out of the income of service charges received from various tenants. Since the assessee was in abroad, it was not possible to keep all the evidences/receipts of the expenditure with him.
On the other hand, ld.D.R submitted that the assessee has not produced any evidence to claim above expenditure. Therefore, the same was disallowed.
I have heard both the parties and perused the material on record. Admittedly, the assessee claimed the expenditure totaling to `6,32,856/-. As discussed earlier, the assessee had not produced any evidence in support of the claim and the plea of the ld.A.R is that the agent was produced the statement of expenditure and assessee is not having any proof for the same. It was stated by the ld.A.R that there was no evidence placed before the lower authorities other than the statement produced by the person, who has collected the maintenance charges from various tenants. In my opinion, whenever the assessee claimed any expenditure, it is the duty of the assessee to substantiate the same by producing the bills, vouchers, receipts etc. to claim such expenditure. In the absence of the same, I am not in a position to appreciate the argument of the ld.A.R and accordingly I am inclined to remit the issue in dispute to the file of ld. Assessing Officer for fresh consideration. The assessee is directed to produce the necessary evidence before the A.O.
Relating to the second issue, the ld.A.R submitted that the assessee offered the interest income on cash system method and a sum of `93,009/- was offered to tax in the next assessment year and also was not claimed any TDS credit in the assessment year under consideration.
Ld.D.R submitted that the issue may be examined by the AO afresh.
I have heard both the parties and perused the material on record. In my opinion, if the assessee offering the interest income under cash system, the accrued interest of `93,009/- cannot be taxed in the assessment year under consideration and it is to be taxed when it actually received by the assessee. It is also stated by the ld.A.R that it was offered taxation on the subsequent assessment year. Being so, it is appropriate to remit the issue to the file of ld.