Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI N.K. BILLAIYA, AM & SHRI PAWAN SINGH, JM
आदेश / O R D E R Per PAWAN SINGH ,A. M.: 1. The present Appeal is filed by the Revenue against the order dated 16.12.2013 passed by CIT(A)-7 (Mumbai) on the following grounds. 1.“Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.17,02,655/- made under the head ‘Income From House Property’ without appreciating the fact that the addition was made in respect of the portion of House Property not used by the assessee for the purpose of its business and rightly brought into tax by the AO as per the provisions of the Act.”
2.“Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance of Rs. 21,25,008/- being depreciation on 50% of the property without appreciating the fact that the disallowance was made in respect of the portion of House Property not used by the assessee for the purpose of its business and was rightly taxed by the AO as per the provisions of the Act.” 3. “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance of Rs.10,01,886/-, being 50% of electricity and repairs and maintenance expenses without appreciating the fact that the disallowance was made in respect of the portion of House Property not used by the Assessee for the purpose of its business and was rightly taxed by the AO as per the provisions of the Act.”
The brief facts of the case are that the assessee filed his return of income for A.Y. 2010-11 declaring loss of Rs.66,81,218/- on 14-10-2010. The return of income has been selected for scrutiny , statutory notice was served upon the assessee and after giving the opportunity of hearing, the AO made the addition of Rs.17,02,655/- as income from House Property as notional rent in respect of office premises at D- 396/2,TTC Industrial Area, Turbhe Navi Mumbai, added the sum of Rs2,91,663/- on account of un-reconciled AIR(ITS details), further disallowed the sum of Rs.1,32,148/- on account of Sundry written off, a sum of Rs. 42,49,335/- on account of depreciation and further a sum of Rs.10,01,886/- on account of electricity charges and maintenance of machinery and initiated the penalty proceedings u/s 271(1)(c) of the IT Act in its order dated 04.02.13 3. Against the order of the AO, the assessee filed appeal before CIT(A)-7. The ld. CIT(A) while disposing of the appeal deleted the addition of Rs. 17,02,655/- made on account of notional Rent , disallowance of Rs.1,32,149/- in respect of sundry balances and the expenses of electricity, repairs and maintenance of machinery , confirmed the 10% of the disallowance of depreciation made by AO, and remanded the claim of addition of Rs.2,91,663/- made on account of un-reconciled AIR(ITS details) to the file of AO in its order dated 19.03.13 against which the present appeal is filed before us. 3. We have heard the ld. DR for the revenue and the ld. AR for assessee and perused the material on record. The first ground raised
before us that CIT(A) is not justified and deletion of addition of Rs.17,02,655/- made under the head of income from House Property.
4. The AO while making the addition of Notional rent consider that the value of the office premises has been shown at Rs 5,72,32,111/- and the assessee is having an associate concern viz., M/s. Ceenik Exports India Ltd., from which it has been showing job-work receipts, during the assessment year the assessee has received a deposit of Rs.50,00,000/- from M/s. Ceenik Exports India Ltd for use of its office. However the assessee contended before the AO that the said amount of Rs. 50,00,000/- was not received on account of rent but the same was received as an interest free deposit. The contention of assessee was not accepted by the AO, the AO observed that being the owner of the premises, the said premises was given to the associate entity for storing its material and instead of charging rent from the said entity for use of its office premises, the assessee has only demand interest free deposit and that taking the interest free loan is nothing but the income from the House Property.
4. The ld. CIT(A) while dealing with the ground of notional interest observed that the associate company had obtained the permission from Government of India, Ministry of Company Affairs, Officer of the Regional Director, Western Region for getting garments manufactured on job work contract to the tune of Rs.10 crores. Further as to execute the contract, M/s. Ceenik Exports India Ltd., gave interest free deposit of Rs. 50,00,000/- to store fabrics whose value at any point of time and that the assessee had to ensure that the stock of fabric of M/s. Ceenik Exports India Ltd., is maintained separately and stored in good conditions. The CIT further observed that the assessee and the associate company were in the business of manufacturing and export of garments during the year under consideration. The orders of the ld. CIT(A) further reveals that observation of AO is wrong in claiming that the assessee company has not charged rent due to interest free deposit and that AO failed to consider the nature of work undertaking by the assessee company and the associate company is engaged in the business of the manufacture and exports and also having approval from regional director Minsitry Of Company Affairs , Government of India, and deleted the addition of Rs. 17,02,655/-. The AR of the assessee further argued that the assessee has shown in his P/L Account( page 4of paper book) the income from job work ,details of which has further been shown in Annexure –P ,attached to P/L account. Further, the ld. CIT(A) while dealing with this ground, has already considered that the assessee company and the associate company were in the business of manufacturing and exporting garments during the year and approval u/s 297(1) of the Companies Act was granted by Regional Director, Ministry of Company Affairs, Government of India garments manufactured on job work contract to the tune of Rs.10 crores of the there was no evidence before the AO to treat the interest free deposit as a advance rent and the said amount was in fact paid on account of interest free deposit.
We have carefully considered the contention of the ld. AR of the assessee and find that there was no material/evidence that the AO to treat the deposit of Rs. 50,00,000/- as rental income of the house property. Hence, we do not find any infirmity or illegality in the finding of CIT(A).
The next ground for our consideration is ,whether the ld. CIT(A) was justified in deleting the Rs.21,25,008/- being depreciation of 50% of the property disallowance and further of Rs.10,01,886/- being 50% of electricity and repairs and maintenance expenses. Since the ground No. 1 has been held against the revenue and half part of the building of the assessee company has occupied by the said entity so the other grounds does not require any findings at our end.
In the result, the appeal filed by the revenue is dismissed.
Order pronounced in the open court on December 11, 2015