Income Tax Appellate Tribunal - Pune
Riaz Alimohamad Padamsee,, Pune vs Income-Tax Officer,, Pune on 15 May, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "SMC", PUNE
BEFORE SHRI R.S. SYAL, VICE PRESIDENT
आयकर अपील सं. / ITA No.941/PUN/2017
िनधा रण वष / Assessment Year : 2012-13
Riaz Alimohamad Padamsee, Vs. ITO, Ward-11(2),
A-19, Padmavilas Enclave, Pune
Near Shinde Chatri,
Wanowari, Pune - 411 040
PAN : AJEPP6882G
(Appellant) (Respondent)
Appellant by Shri M.K. Kulkarni
Respondent by Shri Rajesh Gawali
Date of hearing 14-05-2019
Date of pronouncement 15-05-2019
आदेश / ORDER
PER R.S.SYAL, VP :
This appeal by the assessee arises out of the order passed by the CIT(A)-1, Pune on 25-10-2016 in relation to the assessment year 2012-13.
2. There is a delay of 157 days in presenting this appeal before the Tribunal. The assessee has filed an affidavit in support of the reasons which led to the filing of the instant appeal belatedly. I am satisfied with the reasons. As such, the 2 ITA No.941/PUN/2017 Riaz Alimohamad Padamsee delay is condoned and the appeal is admitted for disposal on merits.
3. The first issue raised in this appeal is against the confirmation of disallowance of Rs.8.00 lakh by invoking the provisions of section 40A(2)(b) of the Income-tax Act, 1961 (hereinafter also called 'the Act').
4. Briefly stated, the facts of the case are that the assessee is an Engineer engaged in rendering Administration, Management and Marketing services. There are two other persons specified u/s.40A(2) of the Act, relevant for the purpose, namely, Mr. Scherize Padamsee and Mr. S.M. Padamsee. Each of the assessee and these two persons received a sum of Rs.21.55 lakh from M/s Eagle Home Appliances Pvt. Ltd. The assessee claimed deduction of Rs.8.00 lakh, being, a sum of Rs.4.00 lakh paid to each of them. The Assessing Officer (AO) held that the provisions of section 40A(2) were attracted as there was no rationale in making payments to these two persons who were already earning similar income from the same company. The ld. CIT(A) sustained the disallowance. 3 ITA No.941/PUN/2017
Riaz Alimohamad Padamsee
5. I have heard both the sides and gone through the relevant material on record. It is an undisputed fact that the assessee along with the other two related persons received a sum of Rs.21.55 lakh each from M/s Eagle Home Appliances Pvt. Ltd. Thus, it becomes overt that the two persons referred to in section 40A(2)(b) were also rendering similar services. The case of the assessee is that these persons assisted him in rendering the services for which he paid a sum of Rs.4.00 lakh to each of them. It is relevant to note that these persons were also subjected to tax at the highest tax rate and the amounts shown to have been received by them from the assessee were included in their total income. As the assessee's contention of having received services from these persons for rendering of further services to his customers has not been refuted by the AO, in my considered opinion, there cannot be any disallowance u/s.40A(2) in the peculiar circumstances as are instantly prevailing. I, therefore, order to delete the addition of Rs.8.00 lakh.
4ITA No.941/PUN/2017
Riaz Alimohamad Padamsee
6. The only other ground which survives in this appeal is against the confirmation of disallowance of administrative expenses claimed at Rs.5,79,022/-.
7. The facts apropos this ground are that the assessee claimed administrative expenses. The AO has spelt out details of such expenses in the assessment order. On perusal of the details, it was observed that the assessee claimed some expenses in respect of the alleged office maintained in Lonavala and such expenses were in the nature of monthly payments to driver and servants. Since the assessee did not have any office in Lonavala, rather it was his residence, the AO did not allow deduction for such expenses except bank charges and telephone charges. The ld. CIT(A) sustained the addition.
8. After considering the rival submissions and perusing the relevant material on record, it is found as an admitted position that the assessee did not have any office in Lonavala at the material time. All the expenses claimed were shown in respect of monthly salary to driver and servants etc. for deployment in Lonavala office. Rather the assessee was living there with his family. Under such circumstances, there cannot be any question 5 ITA No.941/PUN/2017 Riaz Alimohamad Padamsee of allowing personal expenses against the business income. I, therefore, approve the view taken by the ld. CIT(A) on this score.
9. In the result, the appeal is partly allowed.
Order pronounced in the Open Court on 15th May, 2019.
Sd/-
(R.S.SYAL) उपा य / उपा य VICE PRESIDENT पुणे Pune; दनांक Dated : 15th May, 2019 सतीश आदेश क ितिलिप अ ेिषत / Copy of the Order is forwarded to :
1. अपीलाथ / The Appellant;
2. यथ / The Respondent;
3. आयकर आयु (अपील) / The CIT (Appeals)-1, Pune
4. The Pr. CIT-1, Pune
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे "SMC" / DR 'SMC', ITAT, Pune;
6. गाड फाईल / Guard file.
// True copy // आदेशानुसार/ ार BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पु णे / ITAT, Pune 6 ITA No.941/PUN/2017 Riaz Alimohamad Padamsee Date
1. Draft dictated on 14-05-2019 Sr.PS
2. Draft placed before author 14-05-2019 Sr.PS
3. Draft proposed & placed JM before the second member
4. Draft discussed/approved JM by Second Member.
5. Approved Draft comes to Sr.PS the Sr.PS/PS
6. Kept for pronouncement on Sr.PS
7. Date of uploading order Sr.PS
8. File sent to the Bench Clerk Sr.PS
9. Date on which file goes to the Head Clerk
10. Date on which file goes to the A.R.
11. Date of dispatch of Order.
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