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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
O R D E R
Per Manoj Kumar Aggarwal (Accountant Member ) 1. The captioned appeal by Legal Heir of the assessee for Assessment Year [AY] 2010-11 assails the order of the Commissioner of Income Tax (Appeals)-24 [CIT(A)], Mumbai dated 07/07/2014 on the following four effective grounds:-
Late Suresh Parekh through LH Assessment Year 2010-11 “1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax, Appeals-24, Mumbai, hereinafter referred to as the Ld. CIT(A) has erred in law in upholding the disallowance of Rs.16892/- being 10% of Travelling, Telephone Expenses and Sundry Expense as personal element. The said additions are ad hoc addition. We request your Honor to kindly delete such ad hoc additions.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law in upholding the disallowance of Rs.1,27,261/- being Loan Processing Charges as prepaid. The said disallowance is not proper and is not in accordance with the provisions of the Act. Your honor is requested to kindly delete the said addition.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law in not giving benefit u/s 54F. The said Benefit may please be granted to the Appellant.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in confirming the addition of Rs.45 lakhs being the entire amount of gross sale consideration. The said addition may please be deleted or consequently benefits of deduction u/s. 54 may please be granted to the Appellant.”
None appeared on behalf of the assessee despite being provided with several opportunities and RPAD notices. Therefore, it seems that the assessee is not serious in pursuing its appeal. Therefore, we proceed to decide the appeal on merits on the basis of the materials available on record and after hearing the arguments of the Revenue.
3. Facts qua the dispute are that the assessee was a resident individual engaged in trading of steel & chemical who filed its return of income for AY 2010-11 declaring a total income of Rs.12,67,840/-. The same was picked up for scrutiny assessment u/s 143(3) wherein total income was determined at Rs.60,80,030/- vide order dated 25/03/2013 after making certain adjustments and disallowances. The assessee claimed business expenses of Rs.1,68,921/- towards travelling, telephone and sundry expenses. The AO made adhoc addition of 10% against these expenses to account for personal element. Similarly, assessee incurred certain amount as Loan processing charges towards annual renewal of credit facilities. The AO proportioned the same on accrual basis and disallowed prepaid portion of these expenditure which came to Rs.1,27,261/-. Further, the assessee sold gold ornaments, diamonds and tenancy rights in one godown property situated at Narshi Natha Street, Mumbai and derived Late Suresh Parekh through LH Assessment Year 2010-11 Long Term Capital Gains (LTCG) from them. The LTCG on sale of Gold ornaments and Diamonds came to Rs.3,49,030/- on which capital gain was paid @20%. The tenancy rights were sold for Rs.45 Lacs which were not reported in the return of income. The assessee attributed the same to mistake on the part of the assessee and further contended that the assessee has made investment in two residential properties at ‘Chembur’ out of sale proceeds of tenancy rights and hence eligible for benefit of Section 54 / 54F not only on sale of tenancy rights but even on sale of Gold ornaments / diamonds. The assessee requested the AO to grant the benefit of Sections 54/54F against LTCG but the same was rejected on the ground that new / additional claims can be made only by way of filing revised return of income and not by way of filing of revised computation of income during assessment proceedings. Thereupon, AO completed the assessment after adding Rs.45 Lacs as LTCG on sale of tenancy rights to the income of the assessee. These issues were agitated unsuccessfully before CIT(A) vide order dated 07/07/2014. Qua major addition of LTCG, CIT(A) concluded that 54F applies to the case of assessee but after noticing the dates of sale / purchase of assets and conditions of Section 54F, further concluded that assessee failed to fulfill conditions of Section 54F and hence not eligible for benefit thereof. Aggrieved, the assessee is in appeal before us. The Ld. DR placed reliance on the reasoning of CIT(A).
We have heard the contentions and perused material available on record. As far as Ground Nos. 1 & 2 are concerned, we find that no serious contentions has been raised by the assessee in the paper book and therefore, we find that additions on these two accounts made by lower authorities are reasoned one and require no interference on our part. Hence, these two grounds are dismissed.
By Ground No.4, the assessee has requested for grant of benefit u/s 54. We find that benefit of Section 54 is available only in situation of ‘Sale of Property used for residence’ which is not the case here. Hence, this ground of appeal is also dismissed.
Late Suresh Parekh through LH Assessment Year 2010-11 6. Ground No. 3 is related with Section 54F benefit. We find that AO has rejected the same on the ground that the same could be available to the assessee only by way of filing of revised return and not otherwise. Therefore, he had no occasion to consider the claim of assessee on merits and therefore, we deem it fit to restore the matter back to the file of AO for limited purpose of entertaining Section 54F claim of the assessee with respect to LTCG arising out of Sale of Gold Ornaments, Diamonds and Tenancy rights. The assessee is directed to substantiate his claim in this regard forthwith before AO failing which the AO shall be at liberty to decide the same on merits on the basis of material available on record. Needless to reiterate here is that jurisdictional Honb’le Bombay High Court in M/s Pruthvi Brokers & Shareholders of 2010 order dated 21/06/2012, after perusing various pronouncements of Apex Court / appellate authorities has clearly held that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have discretion whether or not to permit such additional claims to be raised. The exercise of discretion is entirely different from existence of jurisdiction. Hence, this ground of assessee’s appeal is allowed for statistical purposes.
In nutshell, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 16th November, 2016 Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) न्मायमक सदस्म / Judicial Member रेखा सदस्म / Accountant Member भुंफई Mumbai; ददनांक Dated : 16.11.2016 Laxmikant Deka, Sr. PS Late Suresh Parekh through LH Assessment Year 2010-11 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent 2. आमकय आमुति(अऩीर) / The CIT(A) 3. आमकय आमुति / CIT – concerned 4. ववबागीम प्रयियनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai 5. गार्ड पाईर / Guard File 6. आदेशाि सार/ BY ORDER,
उप/सहायक पुंजीकार (Dy./Asst. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai Sr. No. Details Date Initials Designation 1 Draft dictation sheets are attached 16.11.16 Sr.PS/PS 2 Draft dictated on 16.11.16 Sr.PS/PS 3 Draft Placed before author 16.11.16 Sr.PS/PS 4 Draft proposed & placed before the JM/AM Second Member 5 Draft discussed/approved by Second JM/AM Member 6 Approved Draft comes to the 17.11.16 Sr.PS/PS Sr.PS/PS 7 Order pronouncement on 16.11.16 Sr.PS/PS 8 File sent to the Bench Clerk 18.11.16 Sr.PS/PS 9 Date on which the file goes to the Head clerk 10 Date on which file goes to the AR 11 Date of Dispatch of order