M/S ACHUTHAN PILLAI AND COMPANY,KOCHI vs. ACIT , CIRCLE 1, MATTANCHERY

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ITA 277/COCH/2023Status: DisposedITAT Cochin27 September 2024AY 2008-09Bench: Shri Waseem Ahmed (Accountant Member), Shri Soundararajan K (Judicial Member)6 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s orders and remitted the issues back to the CIT(A) for a fresh decision on merits. This was done to grant the assessee an opportunity to present their case with documentary evidence and receive a personal hearing.

What were the facts?

The assessee's appeals were dismissed ex parte by the CIT(A) for non-appearance. The Assessing Officer had disallowed plot rent paid to Cochin Port Trust as a business expenditure. The assessee sought to condone the non-appearance due to unavoidable circumstances and argued for the deduction of plot rent.

What were the issues?

Whether the CIT(A)'s ex parte order should be upheld without considering the merits of the case, and whether plot rent paid to Cochin Port Trust is eligible for deduction as business expenditure.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri Waseem Ahmed & Shri Soundararajan K

Hearing: 24.09.2024Pronounced: 27.09.2024

Heard together (3 matters)

ITA No.275/Coch/2023
ITA No.276/Coch/2023
ITA No.277/Coch/2023

Read from the judgment's own cause title. This page is filed under one of them.

:Asst.Year 2008-2009 M/s.Achuthan Pillai & Company The Assistant Commissioner Divya, G-140, Panampilly Nagar of Income-tax, Circle-1 v. Mattanchery. Kochi -682 036. PAN :AADFA7301D. (Appellant) (Respondent) Appellant by :---- None --- Respondent by :Smt.Girly Albert, Sr.DR Date of Pronouncement : 27.09.2024 Date of Hearing : 24.09.2024 O R D E R Per Bench : This is set of three appeals filed by the assessee challenging the orders of the CIT(A)/NFAC, Delhi, all dated 16.02.2023, in respect of the assessment years 2003-2004, 2007-2008 and 2008-2009.

2. Brief facts of the case are that the Assessing Officer made the assessment by disallowing the plot rent paid to Cochin Port Trust as not eligible for deduction as business expenditure. Even though the assessee had filed an appeal before the ld.CIT(A), none appeared on behalf of the assessee before the ld.CIT(A), and therefore, the ld.CIT(A) had dismissed the appeal ex parte. As against the order of the -277/Coch/2023. Achuthan Pillai & Co. ld.CIT(A), the present appeal has been filed by the assessee challenging the ex parte order of the ld.CIT(A). The common grounds of appeal raised in all these assessment years are as follows :-

“1. The Appellant could not represent the matter before the CIT(A). NFAC due to unavoidable contingent situations when the matter was called for hearing. The reasons as stated above were beyond the control of the Appellant and hence is pleaded to be condoned.

2.

The order of the assessing officer is bad in law and opposed to facts and circumstances of the case.

3. The assessing officer has gone wrong in disallowing the plot rent paid to Cochin Port Trust in the computation of income from property. The Commissioner of Income Tax (Appeals) has placed reliance on the decisions of Honorable ITAT, Cochin in and 374/Coch/2012 [order dated 11:10.2013] in Appellant's own case.In the above referred Order, the Honorable ITAT, Cochin Bench has clearly distinguished that Cochin Port Trust is not a party to the rental agreements, the rental agreements did not bifurcate the rent into building rent and plot rent and further more it was also observed that the payment of plot rent was irrespective of receipt of rental income from building.Therefore, it is submitted that, the above findings of the Honorable ITAT Cochin Bench entails the deduction of Plot Rent paid as a business expenditure, if not as deduction from income from property.

4. For these and other grounds that may be permitted to be adduced at the time of hearing of the case, it is prayed that the assessment may be ordered to be modified suitably.”

3.

For assessment years 2007-2008 and 2008-2009, in addition to the above grounds, the assessee has raised following grounds:-

“4. The issue on storage charges which is the major disallowance in the assessment has not been covered in the above-mentioned decisions of the Honorable ITAT, Cochin in ITANos.373 and 374/Coch/2012 [order dated 11.10.2013] in Appellant's own case. The storage charges were consistently -277/Coch/2023. Achuthan Pillai & Co. treated as house property income by the Assessing Officer. The charges are paid on monthly basis and has no nexus with the quantity of goods stored. The Appellant is not providing any services to the lessees and the premises is in the custody and use of lessees. The storage charges are received by the Appellant for captive use of godown space let out to various lessees: Hence, it is pleaded that the treatment of Storage Charges be treated as Income from Property and not as Business Income.

5.

The assessing officer has gone wrong in disallowing Rs.17,75,745/- invoking the provisions of Section 40 (a) (ia). The provisions of Chapter XVII B are not applicable to majority of the payments included under the transport and delivery charges. An opportunity was not granted to the Appellant to explain the nature of expenses. The details of those expenses grouped under Transport and Delivery expenses are attached in Annexure P1.”

4.

At the time of hearing before us, none appeared for the assessee, therefore, we proceed to dispose of this appeal ex parte qua the assessee, after hearing the learned DR.

5. The learned DR relied on the orders of the lower authorities and prayed that the appeal may be dismissed.

6.

We have heard the arguments of the ld.DR and perused the material available on record. As seen from the appeal order, the ld.CIT(A) had issued notices on the following dates:-

Sr. Date of notice Date for compliance No. 1. 28.10.2019 05.11.2019 2. 07.01.2021 22.01.2021 3. 29.12.2021 13.01.2022 4. 01.12.2022 12.12.2022 5. 09.01.2023 20.01.2023 6. 24.01.2023 02.02.2023 4 ITA No.275-277/Coch/2023. Achuthan Pillai & Co.

7.

But for none of the hearing notices, the assessee neither appeared before the ld.CIT(A) nor filed any adjournment petition, and therefore, the ld.CIT(A) had no occasion to consider the issue on merits, and therefore, the CIT(A) had dismissed the appeal for non-prosecuting the same. No doubt, the assessee had not appeared before the ld.CIT(A), but on that ground we cannot confirm the assessment order passed by the AO without deciding the same on merits. Since the assessee in their grounds of appeal had submitted that the order of the Cochin Bench of the Tribunal in & 374/Coch/2012 dated 11.10.2023 has clearly distinguished that the Cochin Port Trust is not a party to the rental agreement and the rental agreement also did not bifurcate the rent into building rent and plot rent and therefore the assessee claimed that it is a business expenditure. The ld.CIT(A) had no occasion to pursue the documents / records and also does not have any opportunity to interpret the order of the Tribunal since the assessee was not appeared before him. We, therefore, in the interest of justice, inclined to grant one more opportunity to the assessee to explain the facts before the ld.CIT(A) with documentary evidences. We, therefore, set aside the orders of the ld.CIT(A) and remit the issue to his file to decide the issue afresh by taking note of the documents to be furnished by the assessee at the time of hearing and also after granting personal hearing to the assessee and decide the same on merits in accordance with law.

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