Income Tax Appellate Tribunal - Mumbai
Anjani Kumar Company P. Ltd, Mumbai vs Acit 2(1)(1), Mumbai on 22 April, 2019
1 आयकर अपीलीय अिधकरण "ए" ायपीठ मुंबई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI माननीय ी सी. एन. साद, ाियक सद एवं माननीय ी मनोज कुमार अ वाल ,ले खा सद के सम ।
BEFORE HON'BLE SHRI C.N. PRASAD, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T.A. No.2289/Mum/2018 (िनधा रण वष / Assessment Year: 2013-14) Anjani Kumar Company Pvt. Ltd. ACI T-2( 1)(1) 306, Raj Chamber, बनाम/ Room No.561, 5 t h Floor Manubhai Road Vs. Aaykar Bhavan Malad ( E), Mumbai-400 097. Mumbai-400 020.
थायीले खासं ./जीआइआरसं ./PAN/GIR No. AABCA-1474-E (अ पीलाथ#/Appellant) : ( $थ# / Respondent) Assessee by : None Revenue by : Shri Rajesh Kumar Yadav - Ld.DR सुनवाई की तारीख/ : 22/04/2019 Date of Hearing घोषणा की तारीख / : 22/04/2019 Date of Pronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeal by assessee for Assessment Year [AY] 2013-14 contest the order of Ld. Commissioner of Income-Tax (Appeals)-4, Mumbai, [CIT(A)], Appeal No. CIT(A)-4/IT-96/ITO-2(1)(3)/2016-17 dated 28/02/2018 qua confirmation of certain additions. None has appeared for assessee and no valid adjournment application is on record. Left with no option, we proceed to dispose-off the same on the basis of material on record and after hearing Ld. Departmental Representative, who relied upon the orders of lower authorities.
22.1 Facts, in brief, are that the assessee being resident corporate assessee stated to be engaged in development and construction, was assessed for impugned AY u/s 143(3) on 18/03/2016. During assessment proceedings, it transpired that the assessee had shown work-in-progress [WIP] and transferred project related expenses directly to WIP Account. The total expenses incurred during impugned AY were Rs.197.34 Lacs out of which Rs.149.01 Lacs was transferred to two projects as WIP whereas the balance of Rs.48.32 Lacs was claimed in the profit & loss Account as revenue expenditure. However, not satisfied with assessee's working, Ld. AO proceeded to allocate the claimed expenditure of Rs.48.32 Lacs in the ratio of WIP to Total Assets and came to a conclusion that an amount of Rs.19.56 Lacs out of Rs.48.32 Lacs was to be capitalized as WIP. Accordingly, the income was enhanced by corresponding amount.
2.2 Another addition of Rs.72,359/- represent interest income reflected in assessee's Form 26AS but which has not been reflected by the assessee in the return of income.
3.1 Before Ld. first appellate authority, the assessee provided the details of head-wise expenditure and submitted that expenditure related to specific projects was already transferred to WIP account and claimed expenditures were sort of fixed costs which were to be incurred under all circumstances and not related with any specific projects. The attention was drawn to Accounting Standard-7 & Guidance Notes on accounting for real estate transactions to support the accounting methodology. However, Ld. CIT(A) observed that the only revenue earned by the assessee during the year was TDR Sales receipts, interest / dividend and other non-operating income which would mean that the assessee 3 had absolutely no business income during the year and therefore, had no justification to claim these expenditure particularly keeping in view the fact that the said expenditure would go on the reduce the taxable income earned from sale of TDR / non-operating income. 3.2 In the above background, Ld. CIT(A) proceeded to examine the allowability of each expenditure which would be necessary to comply with statutory requirements. Finally, after examining each and every expenditure, Ld. AO was directed to capitalize the following expenditure:-
No. Head of Expenditure Amount (Rs.)
1. Security Service Charges 2,43,274/-
2. Finance Cost 19,14,398/-
3. Business promotion 1,59,300/-
4. Water Expenses 2,25,379/-
Total 25,42,351/-
In other words, the action of Ld. first appellate authority resulted into enhancement of capitalization from Rs.19.56 Lacs to Rs.25.42 Lacs. The stand of Ld. AO in making another addition of Rs.0.72 Lacs was also confirmed. Aggrieved, the assessee is in further appeal before us.
4. After careful consideration, we find fallacy in the observation of Ld. first appellate authority that the assessee would not be entitled to claim otherwise allowable expenditure, if he had no business income during impugned AY since deduction of legitimate business expenditure would not be subject to actual earning of business income. Another noteworthy point is that the assessee has only one head of income i.e. business income during the impugned AY which is evident from the quantum assessment order. This would mean that whatever amount was credited by the assessee in the Profit & Loss account either as TDR sale or as non-operating income, the same was assessed as business income only 4 and therefore, there could be no reason to deny the legitimate business expenditure. With these observations, we deem it fit to restore the matter back to the file of Ld. CIT(A) for re-adjudication after appreciating the factual matrix in the correct perspective with a direction to the assessee to substantiate his stand.
5. The second addition of Rs.0.72 Lacs represent certain income reflected in assessee's Form 26AS but which has not been offered to tax by the assessee. The prime argument advanced by the assessee before lower authorities seems to be the fact that no money was received from the payers and the assessee, ultimately, had to write-off these balances in subsequent years. However, this argument weakens by the fact that payers had deducted as well as deposited due TDS against these payments. Further, nothing on record substantiate the assessee's submissions. Therefore, this matter also stands remitted back to the file of Ld. CIT(A) for re-adjudication with a direction to the assessee to substantiate his stand, in this regard.
6. Resultantly, the appeal stands allowed for statistical purposes in terms of our above order.
Order pronounced in the open court on 22nd April, 2019.
Sd/- Sd/-
(C.N. Prasad) (Manoj Kumar Aggarwal)
ाियक सद / Judicial Member लेखा सद / Accountant Member मुंबई Mumbai; िदनां क Dated : 22/04/2019 Sr.PS, Jaisy Varghese 5 आदे शकी ितिलिपअ!ेिषत/Copy of the Order forwarded to :
1. अपीलाथ#/ The Appellant
2. $थ#/ The Respondent
3. आयकरआयु+(अपील) / The CIT(A)
4. आयकरआयु+/ CIT- concerned
5. िवभागीय ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai
6. गाड0 फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.