BALAJI TIMBER AND PLYWOOD,ZIRAKPUR vs. ACIT CIRCLE-1(1), CHANDIGARH

आदेश/ORDER

PER KRINWANT SAHAY, ACCOUNTANT MEMBER:

The appeal in this case has been filed by the

assessee against the order dated 11.12.2023 passed by

the ld. Addl./JCIT(A)-5, Kolkata. The grounds of appeal

are as under:

ITA 114/CHD/2024 A.Y.2016-17 2 “1. That the ld. JCIT(A)-5, Kolkata has erred in law and facts in confirming the disallowance of rent expenses of Rs.12,95,400/- made by the AO. 2. That the ld. JCIT(A)-5, Kolkata has erred in law and on facts in confirming the additions of Rs.12,95,400/- without adherence to principles of natural justice. 3. That the appellant craves leave to add, alter, amend or to substitute the above grounds of appeal either before or at the time of hearing of case.”

CIT(A) is that the assessee is a firm deriving the income from

business of retail and wholesale trade of timber. The

assessee company filed its return of income for Assessment

Year: 2016-17 on 12.09.2016, the case was selected for

scrutiny notice for the same was issued and it was duly

served upon the assessee. The Assessing Officer passed the

order u/s 143(3) on 08.12.2018 making an addition of

Rs.15,95,400/- on account of disallowance of rent expenses

paid by the assessee as rent of payment as different

godowns. The ld. Addl. CIT(A) has given his findings on this

issue in the appeal order as under:

“The fact of this ground is AO had disallowed the rent expenses on account of the fact that the appellant had failed to provide supporting documents such as rent agreement proof of ownership of property and deals of TDS deducted.

The appellant has based his argument on that the business that appellant engaged to needs rented godowns, rent

ITA 114/CHD/2024 A.Y.2016-17 3 expense regularly incurred over the years, and Form 16A issued. These arguments put forth by appellant are not correct an expense regularly booked does not accord itself genuineness. The business that appellant engaged in may not need rented godowns. The form 16A issued does not automatically give genuineness to a transaction, The appellant needs to submit the documentary evidence of detail rent agreement, the ownership of premises taken on rent and the factual evidence that premises are actually used for keeping goods. Further, AO has never mentioned about survey or its findings in the body of assessment order, as appellant claimed.”

assessee has filed all relevant documents regarding payment

of rent for godowns at different places along with the paper

books regarding ownership of such premises by the owners of

such godowns. The ld. counsel also argued that in the trade

of manufacturing of timber and it’s timber and plywood

requires much storage spaces for storing cut plywood and for

that purpose the assessee needs godowns as well as

counters. It was also brought on record by the counsel of the

assessee that the rental expenses relating to majority of such

godowns and outlets were fully allowed in earlier years. The

assessee has also brought on record that such expenses

incurred by the assessee have been fully allowed in

subsequent years also. Counsel of the assessee has pointed

ITA 114/CHD/2024 A.Y.2016-17 4 out that it is only in the year of consideration that such rent

payments have been disallowed despite the fact that they

were never disallowed in earlier years nor have been

disallowed in the subsequent years.

and the ld. Addl. CIT(A).

assessment order as well as the ld. Addl. CIT(A) in his

appeal. We have also considered the arguments and

documents related to rental payments for godowns filed by

the counsel of the assessee (which were filed before

authorities below also) and we have also considered the

arguments made by the ld. DR during the proceedings before

us.

assessee requires godowns for storing plywood and timber

and the assessee also requires show-rooms in order to sale

them. It is seen from the record that the rental payment of

such godowns and show-rooms have been accepted by the

department in earlier years and the same rental payments

have been accepted by the department in subsequent years

ITA 114/CHD/2024 A.Y.2016-17 5 also. The facts mentioned by the AO as well as by the ld.

Addl. CIT(A) in the year under consideration are not different

from the facts of the same trade and in assessee’s own case

in earlier as well as subsequent years. Therefore, we don’t

find any reasons to disallow of such rental payments in one

particular year when both the AO as well as the ld. Addl.

CIT(A) have accepted that the business of the assessee in the

year under consideration was running as usual as in earlier

years. So, the use of godowns and show-rooms by the

assessee cannot be denied in the year under consideration

also. Once, it is accepted of this payment of rent for such

godowns and show-rooms, in earlier and subsequent years, it

cannot be denied to the assessee in just one year.

Accordingly, the assessee’s appeal on this ground is allowed.

allowed.

Order pronounced as on 22.10.2024.

Sd/- Sd/- (A. D. JAIN) (KRINWANT SAHAY) VICE PRESIDENT ACCOUNTANT MEMBER “GP-Sr. PS” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. .��यथ�/ The Respondent

ITA 114/CHD/2024 A.Y.2016-17 6 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar