Income Tax Appellate Tribunal - Mumbai
N Vensimal Securities Ltd, Mumbai vs Assessee on 26 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH "B", MUMBAI
BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No.941/Mum/2012
Assessment Year: 2004-05
M/s. N. Vensimal Securities Ltd., ITO Ward 4(3)(3),
37/41, Shahviri Building, Picket Room No. 637, 6th Floor,
Road, Mumbai-400002 Vs. Aayakar Bhavan,
Mumbai-400020
PAN: AAACN3305Q
(Appellant) (Respondent)
ITA No.584/Mum/2012
Assessment Year: 2004-05
ITO Ward 4(3)(3), M/s. N. Vensimal Securities Ltd.,
Aayakar Bhavan, Vs.
Mumbai-400002.
Mumbai-400020.
(Appellant) (Respondent)
Assessee by : Shri Jayant Bhatt
Revenue by : Shri Prakash L. Pathade(DR)
Date of hearing : 08.02.2016
Date of Pronouncement : 26.02.2016
ORDER
PER PAWAN SINGH, JM:
1. These two cross appeal are filed by the assessee and the revenue in respect of Assessment Year (AY) 2004-05. Since both the appeal pertaining to the same AYs and filed on different grounds were heard together.
ITA No. 941/Mum/20122. The assessee has raised the ground of appeal about the disallowance of Director's remuneration of Rs.19,59,000/-, repair and maintenance Rs.7,35,929/-, Travelling expenses Rs. 50,000/-, vehicle maintenance Rs. 58,221/-, business promotion expenses Rs. 97,703/- and BMC taxes Rs. 2,47,687/-.
2 ITA Nos. 941 & 584/M/2012 M/s N. Vensimal Securities Ltd.
3. The brief fact of the case are that the assessee-company is engaged in manufacturing leather(sic) and its exports, share trading, Investment in shares, Real Estate and Renting out property filed its return of income on 30.10.2004 declaring total income of Rs. 32,28,990/- along with P&L Account, Balance-sheet & Auditor's Report. The case was selected for scrutiny and statutory notice and questionnaire were issued to the assessee and while making the assessment, the Assessing Officer (AO) observed that assessee derives income from House Property of Rs. 1,33,15,000/-, other income of Rs. 90,993/-, interest and I.T. refund of Rs. 3,98,908/- and there was no revenue earned from manufacturing of leather, its export, the total income investment made during the year were Rs. 39,075/-. There is no share trading activity and no investment in share being only business activity carried out by assessee was leasing out of its own property and concluded that the expenses incurred in earning the lease rent are allowable to the extent of limits laid down u/s. 23 & 24.
4. The AO further observed that the leather unit of assessee is closed down since 2002 and has not been operating since then and after examining the P&L A/c (Annexure-H) beside the other disallowance made the following disallowance.
(a) Director's remuneration of Rs. 19,59,000/- by observing that no service is being offered to the company as there is no business and if all services have been offered in respect of house property which is covered u/s 23/24 of the Act.
(b) Repair & Maintenance of Rs. 7,65,929/- by observing that it was noticed that there is certain items which were as of capital nature being enduring in nature and further depreciation was allowed as property renovated appears to have been leased out and only expenses allowable u/s 23/24 of the Act.
(c) Travelling Expenses of Rs. 1,05,485/- by observing that these consist chiefly air tickets to Hyderabad and Madras and expenses incurred on boarding and lodging in Hyderabad and Madras are not allowable as per section 14A as there was no business activity travelling would have been undertaken only in respect of pursuing insurance claim and Secunderabad Business.
(d) Vehicle maintenance of Rs. 1,16,442/- by observing that no justification has been given, and allowed a sum of Rs.16,442/- only by concluding that no justification was given.
(e) The assessee claim is of Business Promotion of Rs. 97,703/- and the same was disallowed by observing that Rs. 74,140/- was paid to the "The Oberoi" towards Hotel Bill of Mr. Hiro Harjani which is payment on account of SPA for Body 3 ITA Nos. 941 & 584/M/2012 M/s N. Vensimal Securities Ltd.
Massages and treatment and the other payments relate the club bills raised by CCI and NSCI, hence total disallowance was Rs. 97,703/- was made.
(f) BMC tax of Rs. 2,47,687/- was disallowed on the pretext that this amount was allegedly paid to M/s Vijay Synthetics P. Ltd. who is owner as per municipal record in support of which a ledger account was produced and the same was disallowed as no payment proof has been furnished and the same was not accepted only on the basis of ledger account.
5. Against all the disallowance, the assessee preferred an appeal before the CIT(A) and the CIT(A) dismissed the appeal and confirmed the disallowance in its order dated 11.11.2011 against which the present appeal is filed before us.
6. We have already observed the contention of AO about the grounds of various disallowance/addition by AO, now we shall take up the disallowance confirmed by the CIT(A).
7. The CIT(A) while confirming the Director's remuneration concluded that there was no business and no income under the head "Income from Business & Profession" in the relevant AY, the assessee has not disputed that its Chennai factory was destroyed in a major fire and the assessee has no business during the relevant AY and the remuneration of Director's is not justifiable and the same was confirmed.
8. We have seen the order of AO as well as CIT(A), the AR of the assessee has argued that the remuneration was paid in terms of the contract with the Directors. The assessee has shown to us that it has taken steps to revive the factory so that it can be held that the assessee was constrained to close the factory on temporary basis. Under these set of facts we are of the view that the disallowance made by the AO was rightly confirmed by the CIT(A), hence, we do not find any merit to interfere in the finding of the CIT(A).
9. The next disallowance is on account of Repair & Maintenance, the CIT(A) observing that all expenses were made for removing cement sheet from roof and fixing new sheet painting of main angle and civil construction work.
10. We have perused the order of AO and CIT(A), the AO while dealing with this addition/disallowance has observed that such expenses are only expenses which are allowable u/s 23 & 24 of the Act. The finding of AO is well reasoned and supported with the legal provision wherein the assessee is entitled for 30% of deduction which is already claimed by the assessee, hence, the addition does not require any interference.
11. The further ground for our consideration is travelling expenses of Rs. 50,000/-, the CIT(A) while dealing with this ground has observed that a sum of Rs. 1,05,485/- was added by the AO by invoking the provision of section 14A.The CIT(A) concluded that 4 ITA Nos. 941 & 584/M/2012 M/s N. Vensimal Securities Ltd.
Rule 8D is not applicable for AY-2004-05 and only a reasonable expenditure to be allowed u/s. 14A of the Act and thus granted the relief of Rs. 55,445/- out of total claim of Rs. 1,05,485/-.
12. We have perused the order of AO and the CIT(A) and find that the Ld. CIT(A) has confirmed the disallowance to the extent of Rs.5,000/- u/s. 14A of the Act. Hence, we do not find any reason to interfere with his order on this issue.
13. Further ground of our consideration is Vehicle Maintenance of Rs. 58,221/-. The assessee claimed Vehicle Maintenance of Rs. 1,16,442/- out of which AO allowed only Rs. 16,442/- and the CIT(A) further allowed 50% of the Vehicle Maintenance Expenses by concluding that there is no supporting voucher and thus the assessee has already availed the relief of Rs. 41,779/- and Rs. 16,442/- and only a sum of Rs. 58,221/- was confirmed by the CIT(A).
Keeping in view the entire circumstances of the case, we deem it appropriate to delete the remaining addition.
14. Next ground for our consideration is Business Promotion Expenses of Rs. 97,073/-. The CIT(A) while confirming this addition has concluded that all these expenses were incurred in the name of Mr. Hiro Harjani on account of use of SPA for body massage and treatment at Hotel Oberoi which was not considered wholly and exclusively for business purpose, the AR of the assessee could not substantiate as to expenses incurred of Body Massage in a Hotel is for business purpose, hence we do not find any illegality or infirmity in the addition/disallowance made by AO and confirmed by CIT(A).
15. The next ground for our consideration is disallowance of BMC taxes of Rs. 2,43,687/-, the CIT(A) while dealing with this addition has concluded that the assessee allegedly paid such amount to M/s Vijay Synthetics P. Ltd. as the property was in the name of M/s Vijay Synthetics P. Ltd. and concluded that assessee failed to furnish proof for payment of taxes. The AR of the assessee has argued that assessee has placed on record the possession letter of the property bearing Unit No. 201 and 301 together with seven car parking space in the property bearing Building No. B1 in Mehra Industrial Estate, Village-Mohili, Andheri(E), Mumbai.
16. We have perused the order of AO as discussed in the earlier paragraph and the order of CIT(A) and find that neither payment receipt of BMC charges is placed on record nor any other cogent evidence to prove the payment made to the BMC except the statement that municipal tax bill was received in the name of M/s Vijay Synthetics P. Ltd. and proportionate tax bill was paid to M/s Vijay Synthetics P. Ltd. even the payment receipt from M/s Vijay Synthetics P. Ltd. is also not placed on record in absence of any 5 ITA Nos. 941 & 584/M/2012 M/s N. Vensimal Securities Ltd.
documentary evidence, we are not inclined to interfere in the finding of CIT(A) and the same is hereby confirmed, hence, appeal of the assessee is dismissed.
ITA No. 584/Mum/201217. This appeal has been filed by the revenue against the deletion of disallowance of Rs.
14,52,410/- on account of bad-debts u/s 36[1](vii) of the I.T. Act, 1961. Since the present appeal is not maintainable in view of the latest Circular prescribed by the Central Board of Director Taxes(CBDT), vide its Circular No.21/2015(F.No.142/2007-ITJ (Pt.) dated 10th December, 2015. By virtue of this the revenue is precluded for maintaining/filing the appeal in which the tax effect is less than Rs. 10,00,000/-, admittedly the disallowance deleted is of Rs. 14,52,410/-, hence the present appeal is not maintainable and the same is dismissed.
18. In the result, appeal filed by the assessee as well as that by Revenue is dismissed Order pronounced in the open court on this 26th February, 2016.
Sd/- Sd/-
(B.R.BASKARAN) (PAWAN SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
मुंबई Mumbai; दनांक Dated : 26/02/2016
S.K.PS/jv, sps
आदेशक ितिलिपअ
ेिषत /Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2.
यथ / The Respondent.
3. आयकरआयु (अपील) / The CIT(A), Mumbai.
4. आयकरआयु / CIT
5. िवभागीय
ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT,
Mumbai
आदेशानुसार/BY ORDER,
6. गाड फाईल / Guard file.
स यािपत
ित //True Copy/
उप/सहायकपंजीकार
(Asstt.Registrar)
आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.