Income Tax Appellate Tribunal - Mumbai
Litolier Interiors Pvt. Ltd , Mumbai vs Assessee on 24 March, 2006
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES, 'A', MUMBAI
BEFORE SHRI R V EASWAR, SENIOR VICE PRESIDENT AND
SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER
I T A No: 2795/Mum/2007
(Assessment Year: 2003-2004)
Income Tax officer 5(2)(3), Mumbai ... Appellant
Vs
M/s Litolier Interior Pvt. Ltd., Mumbai ... Respondent
(PAN: AAACL6987E)
Cross Objection No: 86/Mum/2010
(Arising out of I T A No: 2795/Mum/2007)
(Assessment Year: 2003-2004)
M/s Litolier Interior Pvt. Ltd., Mumbai ... Cross Objector
Vs
Income Tax Officer 5(2)(3), Mumbai ... Respondent
I T A Nos: 2222/Mum/2008 and 1055/Mum/2008
(Assessment Years: 2003-2004 and 2004-2005)
M/s Litolier Interior Pvt. Ltd., Mumbai ... Appellant
Vs
Income Tax officer 5(2)(3), Mumbai ... Respondent
Assessee by: Shri Pankaj Toprani
Revenue by: Shri Vikram Gaur
ORDER
R V EASWAR, SENIOR VICE PRESIDENT:
All the appeals relate to the same assessee and involve certain common issues and since they were also heard together, they are disposed off by a single order.
2. The assessee is a Private Limited Company engaged in the maintenance of a property owned by M/s Litolier Properties Pvt. Ltd. The property is the building called Litolier Chambers situated at Andheri Kurla Road, Andheri East, Mumbai, together with the land 2 surrounding the building partly used for parking, partly as garden and partly as open space. The assessee company undertook the activity of maintaining the aforesaid property and the arrangement is evidenced by certain agreements called Amenities and Service Agreements. The property is occupied by two companies only, namely, M/s Jet Airways India Pvt. Ltd. and M/s Star India Pvt. Ltd.
3. We may take up the appeal of the Department in ITA No:
2795/Mum/2007 relating to the assessment year 2003-04 first. The ground of the Department is that the CIT(A) erred in directing the Assessing Officer to delete the disallowance of 50% of the expenses claimed by the assessee under the heads "Repairs and maintenance", "Telephone expenses" and "Business promotion expenses". While completing the assessment under section 143(3) of the Income Tax Act, 1961, by order dated 24th March 2006, the Assessing Officer noticed that the assessee had claimed Rs.19,72,785/- as repairs and maintenance. He called upon the assessee to furnish the relevant details but they were not forthcoming. He noticed that the assessee was neither the owner of the property in relation to which the expenditure so claimed nor was the tenant. He, therefore, held that the claim of repairs and maintenance expenditure was not admissible. He also noted that the owner of the building, namely, Litolier Properties Pvt. Ltd. was claiming standard deduction of 30% against the rental income from the property. He accordingly held that the assessee or any other person cannot be allowed any deduction for repairs and maintenance incurred in connection with the property. However, 3 keeping in mind that minor repairs to furniture and fixtures and electrical fittings must have been undertaken by the assessee in terms of the amenities and service agreements with M/s Star India Pvt. Ltd. and M/s Jet Airways India Pvt. Ltd., he allowed 50% of the claim and disallowed the balance 50% which came to Rs.9,86,393/-. As regards the telephone and business promotion expenses, he disallowed 10% of the same for lack of details.
4. On appeal, it was submitted by the assessee that the expenditure was allowable against the business income under section 37(1) of the Act and it was clarified that neither the income nor the expenditure was to be considered under the head "Income from house property". It was further submitted that due to the floods in Mumbai in July 2005, all the records were washed away and, therefore, there could be no compliance with the Assessing Officer's directions in the course of the assessment proceedings. It was contended that the expenditure incurred by the assessee in terms of the amenities and service agreements was allowable as a deduction in full.
5. The CIT(A) found merit in the assessee's arguments. He found that the assessee's claim regarding loss of records due to floods was supported by a FIR lodged with the Police. The incurring of the expenses to earn the income by way of maintenance charges from the two tenants of the building was found to be a legitimate claim, supported by the amenities and service agreements with the two tenants. The CIT(A) thus found that the claim was allowable under section 37(1) of the Act. Since the Assessing Officer had himself 4 allowed 50% of the claim, the CIT(A) held that there was no doubt regarding the genuineness of the expenditure. He found that the adhoc disallowance was not justified and accordingly deleted the same. The same decision was taken also in respect of the disallowance of 10% of the telephone and business promotion expenses.
6. The Revenue is in further appeal before the Tribunal contending that the assessee did not furnish any details regarding the nature of the repairs and maintenance expenses. It was also argued that the assessee was not entitled to claim the expenditure and it would amount to double deduction, another deduction having been allowed in the hands of the owner of the building while computing the income under the head "Income from house property". It was also pointed out that the 10% disallowance made by the Assessing Officer was accepted by the assessee in the assessment year 2002-03.
7. On the other hand, the learned counsel for the assessee pointed out that the owner of the Litolier building was in receipt of rent from the property under leave and license agreements which is assessable under the head "Income from house property", whereas the assessee was assessable on the maintenance charges received from the two tenants of the building as business receipts since it has undertaken the activity of maintaining the Litolier building. Thus, the nature of the income received by the assessee and the owner of the building is distinct and so is the nature of the claim for expenditure. It was submitted by him that the expenditure was allowable as business 5 expenditure incurred wholly and exclusively for the purpose of the assessee's business. Attention was also drawn to the amenities and service agreements compiled in the Paper Book, which clearly imposed an obligation on the assessee to render services in connection with the maintenance of the building and particular attention in this connection was drawn to clause 4 of the agreement dated 5th September 2000, where the services to be provided by the assessee were listed. Our attention was drawn to the judgment of the Hon'ble Bombay High Court in Godavari Sugar Mills Ltd. vs. CIT (1985) 155 ITR 306 (Bom) and the orders of the Delhi and Bangalore Benches of the Tribunal in Oil & Natural Gas Commission vs. Additional CIT (1999) 69 ITD 69 (Del) and DCIT vs. Mrs Irene D'Souza (2006) 6 SOT 86 (Bang) respectively.
8. On a careful consideration of the rival submissions, we are of the view that the decision of the CIT(A) requires to be upheld. There is no merit in the argument of the Revenue that the claim, if allowed, would amount to double deduction because the owner of the building, namely, M/s Litolier Properties Pvt. Ltd. was being allowed a standard deduction of 30% of the annual value of the building under section 24(a) of the Act. It must be remembered that in the case of the owner of Litolier building, the annual value of the property is chargeable to tax under section 22 of the Act as "Income from house property". He is therefore entitled to claim all deductions available under section 24 of the Act. The nature of the income in the hands of the assessee is completely different. The assessee is in the business of rendering 6 maintenance services to buildings. For rendering these services it is not necessary that the assessee should be the owner of the building. The assessee has been rendering maintenance services to Litolier building and its two tenants in the past also and there has been a systematic and organized course of activity amounting to business. The receipts from the two tenants are shown in the assessee's Profit and Loss Account as service charges on which tax is also deducted at source. The assessee is maintaining a regular establishment to carry on the business as is seen from the expenditure side of the Profit and Loss Account, copy of which placed at page 3 of the Paper Book. It has maintained an establishment paying salary; audit fees; printing & stationery; rent, rates & taxes; telephone expenses, travelling and motor car expenses; electricity and conveyance expenses and so on. The receipt by way of service charges is therefore assessable as the business income of the assessee. In fact the Assessing Officer has not disputed that the services charges are assessable as the business income. The claim of repairs and maintenance expenses falls under section 37(1) of the Act as expenditure incurred wholly and exclusively for the purpose of the assessee's business. In clause 4 of the Amenities and Service Agreement dated 5th September 2000, the following services have been listed out to be provided by the assessee: -
"4. Services to be provided by LIPL LIPL agrees to provide NTVI the following Services amongst other services:7
4.1 Maintenance of infrastructure and amenities at Litolier Building, especially 4th, 5th and 6th floors in occupation of NTVI.
4.2 Maintenance of amenities provided in the premises of Litolier Building including garden maintenance, cleanliness.
4.3 Period prompt maintenance of electric supply, lights in the compound of Litolier Building. 4.4 Provide electricity through generator, whenever there is a failure of electricity by BSES.
4.5 Periodic maintenance of Litolier Building wherever and whenever required.
4.6 Payment of Society charges, if any, to be borne by LIPL. 4.7 Provide security in the Litolier Building. 4.8 Provide necessary Name Boards of NTV1 at reception. 4.9 Provide common reception counter at the entrance of the building.
4.10 Ensure that the cars parking space for use of NTVI is not occupied by any other person.
4.11 Provide security for the NTV1 cars parked within the Litolier Building".
Therefore, the Assessing Officer was not justified, as held by the CIT(A), in holding that the allowance of the expenditure on repairs and maintenance would amount to double deduction. As regards the merits of the disallowance of the expenses, it is seen that the assessee's claim that all its records were washed out in the floods in Mumbai in July 2005 is supported by a FIR lodged with the Police and apparently this was the reason why the assessee could not furnish any details before the Assessing Officer. A perusal of the Profit and Loss Account shows that the expenses on repairs and maintenance has fallen from Rs.32,60,631/- for the year ended 31.03.2002 to Rs.19,72,785/-. In fact the total expenditure debited to the Profit and Loss Account has fallen from Rs.1,13,23,211/- for the year ended 31.03.2002 to Rs.97,15,508/- for the year under appeal, even though the service charges received have remained almost the same - 8 Rs.1,09,20,000/- for the year ended 31.03.2002 and Rs.1,07,96,250/- for the year under appeal. Therefore, there is no reason to doubt the genuineness of the claim and in fact by allowing 50% of the claim the Assessing Officer has himself impliedly accepted the genuineness thereof. The disallowance of 50% appears to us also to be only adhoc without any particular reason. We therefore agree with the CIT(A) that there was no justification for disallowing any part of the repairs and maintenance expenses.
9. Our decision would also hold good for the disallowance of the telephone expenses and business promotion expenses where also the CIT(A) has found that there is no reason given for making an adhoc disallowance of 10%. Further, the assessee could not produce the records because of the loss of the records in the floods, which claim is supported by a FIR. Therefore, on this aspect also we agree with the CIT(A).
10. In the result, we confirm the decision of the CIT(A) and dismiss the appeal filed by the Revenue.
11. We now take up Cross Objection No. 86/Mum/2010 filed by the assessee for the assessment year 2003-04. There is a delay of almost 32 months in the filing of the cross objection. In support of the application for condonation of the delay, an affidavit from Vikram Mittal, Director of the assessee, has been filed. It is stated therein that the work relating to the filing of the cross objection was given to one Santosh Bhoir as soon as the grounds of appeal filed by the Department were received on 4th August 2007, but he failed to inter-act 9 with the Chartered Accountants in the matter of filing the Cross Objections. He has also left the company and it was only when the assessee's Advocate advised the assessee to file the cross objections, that they were filed on 12th April 2010, which has entailed a delay of 31 months and 12 days. It is prayed that the delay is due to negligence on the part of the assessee's employee and it was not deliberate and hence should be condoned. The decisions of the Supreme Court in the case of Collector Land Acquisition vs. Mst Katiji & Ors (1987)167 ITR 471 (SC) and Vedabai Alias Vaijayanatabai Baburao Patil vs. Shantaram Baburao Patil & Ors (2002) 253 ITR 798 (SC) are relied upon.
12. We have carefully considered the affidavit and heard the rival submissions. It appears to us that there is no reasonable or sufficient cause for the delay which is not small. It is not clear from the affidavit, nor was any light thrown before us, as to when the employee who was entrusted with the filing of the cross objection left the services of the assessee company. One would expect that when an employee leaves the company, he would hand over whatever work that is pending with him to the employer so that arrangements can be made by the employer to have the unfinished work entrusted to some other employee. On this question there is no light thrown. We are therefore not satisfied that the assessee had taken all diligent steps to follow up the filing of the cross objections. The explanation of the assessee and the reason given for the delay appears to us to be vague, non specific and not supported by any record. Further the assessee does not 10 appear to have been diligent in the matter of filing the cross objection. Accordingly, we refuse to condone the delay. The Cross Objection is dismissed in limine.
13. ITA No: 2222/Mum/2008 is an appeal filed by the assessee against the penalty of Rs.5,24,363/- imposed on it under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2003-
04. The penalty has been imposed consequent to the disallowance of the expenses of Rs.5,11,469/- being operative expenses of the boat and the claim of depreciation of Rs.9,15,369/- on the boat. A perusal of the assessment order shows that the Assessing Officer considered that the assessee's business did not call for owning and operating a boat. He therefore required the assessee to furnish the relevant details regarding the boat such as the purchase date of the boat, nature of services rendered by the assessee which require use of the boat, the fees if any received for the services of the boat, etc. These details were not filed by the assessee. However, in the course of the assessment proceedings the assessee claimed in its letter dated 30th November 2005, that the boat was used for the entertainment of the VVIP guests and top executives of Jet Airways India Pvt. Ltd., which was one of the tenants of Litolier building, whose maintenance was put in charge of the assessee company. It was further stated that the boat was used for the executives of Jet Airways India Pvt. Ltd. at the request of that company. In order to verify the assessee's claim, the Assessing Officer examined the amenities and service agreement under which the assessee rendered maintenance services with respect 11 of Litolier building, but did not find any clause therein which obliged the assessee company to provide the boat for the entertainment or other purposes to Jet Airways India Pvt. Ltd. The agreement with Star India Pvt. Ltd. was also perused by the Assessing Officer but again he found no stipulation therein to the effect that the assessee was bound to provide the boat to that company. The Assessing Officer further found that the assessee was in receipt of only Rs.22,57,500/- as service charges from Jet Airways India Pvt. Ltd. and that no prudent man would incur an expenditure, including depreciation, of around Rs.15.00 lakhs for entertaining the VVIP guests. He also found that no expenditure on boat was claimed against the income of Rs.88.20 lakhs received from Star India Pvt. Ltd. He accordingly disallowed the expenditure as well as depreciation against which the assessee went in appeal before the CIT(A). The CIT(A) upheld the finding of the Assessing Officer in the following words: -
"3.2 I have perused the facts of the case. I do not find any rationale in the argument that running of the boat had anything to do with the business activity of the appellant. The appellant is simply providing services in the building occupied by the two companies. These services are provided in and around the building. The running and maintenance of the boat neither adds to these services which appellant is providing nor arguments these services and are totally independent and extraneous to the business of the appellant. The claim of entertaining VIP's Officers and Officials of the companies is, on the one hand not substantiated by any records or evidence and, on the other hand has nothing to do with the business of providing services which the appellant is undertaking presently. Therefore, the running and maintenance of the boat cannot be considered as for the business of the appellant. Accordingly, neither expenditure nor depreciation is allowable. The action of the AO is upheld and ground of appeal is rejected".12
The assessee did not file any further appeal to the Tribunal but when the Department filed ITA No: 2795/Mum/2007, the assessee filed a belated Cross Objection No: 86/Mum/2010, which has been dismissed by us on grounds of delay (supra).
14. Consequent to the disallowance of the expenditure and depreciation on the boat, the Assessing Officer called upon the assessee to show cause why penalty for concealment of income cannot be imposed. The assessee merely stated that the penalty proceedings may be adjourned for filing a copy of the grounds of appeal filed before the CIT(A), but even thereafter no explanation was given to the penalty notice. The Assessing Officer, therefore, held that it was evidently clear that the assessee company has concealed the income of Rs.14,26,838/- (being the aggregate of the boat operating expenses and depreciation on the boat). He, therefore, imposed a minimum penalty of Rs.5,24,363/-. The penalty having been confirmed by the CIT(A), the assessee is in further appeal before the Tribunal.
15. In support of the appeal, the learned counsel for the assessee submitted that this is only a case of a difference of opinion between the assessee and the Assessing Officer on the question of allowance of a claim and merely because the Assessing Officer did not agree with the assessee's claim, it does not follow that the assessee had concealed its income or furnished inaccurate particulars thereof. It is submitted that the claim was made by the assessee in an open and bona fide manner and it was also shown separately in the Profit and Loss Account as boat operating expenses and even the depreciation on the 13 boat was separately shown in the Fixed Assets Schedule and thus there was no intention to keep away from the Assessing Officer the nature of the expenses. It was contended that the boat was maintained in the interest of cordial relations with the executives of Jet Airways India Pvt. Ltd., who were using the Litolier building, the maintenance of which was undertaken by the assessee company. The assessee did it free of cost and did not charge anything from Jet Airways India Pvt. Ltd. for the use of the boat but that was only in the interest of the business so that the assessee continued to have the patronage of Jet Airways India Pvt. Ltd. It was submitted that the pilots, cabin crew and other senior executives of Jet Airways India Pvt. Ltd. sometimes used the boat for their entertainment purposes and the assessee allowed them to do so without any consideration and that was only in the interest of cordial relations and business expediency. It was argued that in any case the question whether such expenditure was allowable or not was a border line question and merely because the Assessing Officer disallowed the assessee's claim it does not follow automatically that the assessee has concealed its income or furnished inaccurate particulars thereof. In support of his submissions, the learned counsel for the assessee relied on the recent judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC).
16. On the other hand, the learned Senior Departmental Representative submitted that the expenditure was not related to the assessee's business and that it cannot even be argued that there was 14 some nexus between the assessee's business and the expenditure / depreciation and thus when the claim was not at all allowable, about which there can be no two opinions, the claim must be taken to have been made only to reduce the taxable income for which the levy of penalty was fully justified. It was submitted that the ratio of the judgment of the Supreme Court in Reliance Petroproducts Pvt. Ltd. (supra) did not apply to the facts of the present case.
17. We have carefully considered the rival submissions and in our view the penalty levied does not appear to be justified. The assessee did not keep any particulars relating to the expenditure away from the Department nor did it furnish any inaccurate particulars with regard to the expenditure and the depreciation. As rightly pointed out on behalf of the assessee, the boat operating expenses of Rs.5,11,469/- were claimed in the Profit and Loss Account itself. We find that a similar claim was also made for the year ended 31.03.2002 where such expenses amounted to Rs.2,51,132/-. The Schedule 3 to the Accounts, which is the Fixed Assets Schedule (page 5 of the Paper Book) shows that depreciation of Rs.9,15,369/- was claimed with reference to the boat and this figure is included in the total depreciation of Rs.11,60,538/- debited to the Profit and Loss Account. The claim received the attention of the Assessing Officer in the course of the assessment proceedings. The assessee had furnished the amenities and service agreement with both Star India Pvt. Ltd. and Jet Airways India Pvt. Ltd. for the perusal of the Assessing Officer, which did not contain any provision to the effect that the assessee was to provide the 15 boat free of cost for the use of these two companies. By claiming the expenses and the depreciation in the Profit and Loss Account and by filing the agreements for the perusal of the Assessing Officer, the assessee acted bona fide and did not intend to keep away any particulars from the Assessing Officer. However, the assessee raised an argument, which it was entitled to do, before the Assessing Officer that the boat was used for the entertainment of the VVIP guests and top executives of Jet Airways India Pvt. Ltd., at its request, and thus the expenditure was allowable as business expenditure incurred in the interest of the business and to maintain cordial relations with Jet Airways India Pvt. Ltd. The claim was not acceptable to the Assessing Officer and he was entitled to take a different view regarding the admissibility of the claim. But in our humble opinion, it cannot be said that the claim was frivolous or was so outrageous that it can never be said that there was a nexus between the expenditure and the business of the assessee. It seems to us that, as rightly pointed out by the learned counsel for the assessee, it is a case where the assessee's claim has not found favour with the Assessing Officer and it is only a question of a bona fide difference of opinion between the two. In addition to the judgment of the Delhi High Court in Additional CIT vs. Delhi Cloth & General Mills Co. Ltd. (1984) 157 ITR 822 (Del); Madras High Court in CIT vs. Late G D Naidu (1987) 165 ITR 63 (Mad); and Calcutta High Court in Burmah Shell Oil Storage & Distributing Company of India Ltd. (1987) 163 ITR 496 (Cal), where it has been held that by merely making a claim for expenditure the assessee 16 cannot be held to have concealed its income or furnished inaccurate particulars, recently the Supreme Court has taken the view in CIT vs. Reliance Petroproducts Pvt Ltd., cited supra, that the making of an incorrect claim does not amount to concealment of income or furnishing inaccurate particulars thereof if the information given in the return is not found to be incorrect, and in our humble opinion the present case falls within the ratio laid down in all these judgments. As in the case before the Supreme Court, in the present case also there is no finding that any details supplied by the assessee in connection with the boat operating expenses and depreciation on the boat were incorrect or erroneous or false. It has been observed by the Supreme Court in the aforesaid judgment that a mere making of the claim which is not sustainable in law, by itself will not amount to furnishing of inaccurate particulars regarding the income and that such a claim made in the return cannot amount to inaccurate particulars. The present case, it may be added, also falls within the ratio of the earlier judgment of the Supreme Court in Cement Marketing Co. of India Ltd. vs. Assistant Commissioner of Sales Tax & Ors (1980) 124 ITR 15 (SC).
18. For the above reasons we hold that the Departmental authorities were not justified in imposing the penalty, which is hereby cancelled and the appeal of the assessee is allowed.
19. The last appeal is ITA No: 1055/Mum/2008. This appeal is by the assessee and it relates to the assessment year 2004-05. 17
20. The first two grounds relate to the boat operating expenses of Rs.4,82,,898/- and boat depreciation of Rs.7,32,295/-. The arguments of the assessee to justify the allowance of the above are the same in this year as in the earlier year. In the earlier year we have refused to admit the assessee's cross objection on the ground of delay. However, we have noted the assessee's justification for claiming the expenses and depreciation relating to the boat while deciding the assessee's appeal against the penalty imposed under section 271(1)(c) in respect of the assessment year 2003-04. We do not see how the expenses can be held allowable against the income received by the assessee by way of service charges from the tenants occupying Litolier building. The assessee's business is to maintain the building and we have earlier listed out the assessee's duties in this regard for which the service charges are received. The expenses on operating the boat and the depreciation thereon, in our humble opinion, cannot be considered as expenditure incurred wholly and exclusively for the purpose of the aforesaid business of the assessee. It has been stated before us that the expenditure was incurred voluntarily on grounds of commercial expediency and was therefore allowable as per the ratio of the judgment of the Supreme Court in the case of Sassoon J David & Co. P. Ltd. vs. CIT (1979) 118 ITR 261 (SC). Having given careful consideration to the argument, we find that it is not acceptable. The assessee is not the owner of the building deriving rental income from the tenants in which case it was perhaps possible to say that the assessee was required to maintain close or cordial relations with the 18 tenants so as to avoid any litigation with them. Our assessee is engaged only in the maintenance of the building and even though it is still open to say that even in such a business it was necessary to maintain cordial relations with the tenants, it would be somewhat far fetched or remote to say that those tenants needed to be entertained by the assessee by letting them use the boat owned by the assessee for entertainment purposes. It is true that it is none of our business to dictate as to how the assessee's business should be conducted and whom he should entertain or not, but still the impugned expenditure does not seem to us to be dictated even by commercial expediency. As found by the Assessing Officer it is not part of the assessee's obligations to permit the tenants to use the boat free of charges. In these circumstances we are unable to hold that the Departmental authorities were not correct in disallowing the claim. We confirm their order and dismiss the grounds.
21. Ground Nos 6 and 8, which are directed against the disallowance of the travelling expenses and donation, are dismissed as not pressed.
22. As regards Ground No.5, which is directed against the disallowance of motor car expenses of Rs.2,01,789/- and depreciation of Rs.95,159/- on motor cars, it has been held by the Gujarat High Court in Sayaji Iron & Engg. Co. vs. CIT (2002) 253 ITR 749 (Guj) that there can be no personal user of the motor cars by a company since it is only a juristic entity. Following with respect the aforesaid judgment, we delete the disallowance. We also find that full details of the 19 expenses are given at page 32 of the Paper Book. The ground is thus allowed.
23. As regards Ground No.7, which is against the disallowance of the staff welfare expenses of Rs.1,06,845/-, it is seen that most of the expenses are incurred on medical treatment of persons who are not employees of the assessee. It is not clear how such persons are related to the assessee's business. In this view of the matter and having regard to the possibility of some persons being employed by the assessee, we restrict the disallowance to Rs.50,000/-. The ground is partly allowed.
24. Ground No.3 is directed against the disallowance of the labour charges of Rs.1,65,338/-. From the details of the labour charges filed by the assessee before the Tax authorities, it is seen that most of these charges were incurred towards repairing of walls, compound walls, bathrooms and fixing of tiles. The objection is that the assessee was not the owner of the premises. In our humble opinion, this is not a relevant consideration and what is required to be seen is whether the expenditure is covered by the agreements entered into between the assessee on the one hand; and Star India Pvt. Ltd. & Jet Airways India Pvt. Ltd. on the other hand. We have already noticed the assessee's obligations under the amenities and service agreements. The agreements clearly provide for the maintenance and repairs of the building called Litolier building, the amenities provided in the building, etc. The labour charges incurred by the assessee appear to be covered by the assessee's obligations under the agreements. The 20 disallowance of 50% of the labour charges thus appears to be not justified. The same is deleted and the ground is allowed.
25. As regards Ground No.4, which is directed against the disallowance of repairs and maintenance expenses of Rs.2,68,317/-, the facts are the same as in ITA No: 2795/Mum/2007. In line with the view taken by us therein, we direct the Assessing Officer to allow the entire repairs and maintenance expenses. The ground is thus allowed.
26. In the result, the appeal is partly allowed.
27. To sum up: - ITA No: 2795/Mum/2007 is dismissed; CO No:
86/Mum/2010 is dismissed in limine; ITA No: 2222/Mum/2008 is allowed; and ITA No: 1055/Mum/2008 is partly allowed.
Order pronounced on 30th April 2010.
Sd/- Sd/-
(J Sudhakar Reddy) (R V Easwar)
Accountant Member Senior Vice President
Mumbai, Dated 30th April 2010
saldanha
copy to:
1. M/s Litolier Interior Pvt. Ltd.
101, Doctor Centre, 135, August Kranti Marg
Kemps Corner, Mumbai 400 036
2. ITO 5(2)(3)
3. CIT-V
4. CIT(A)-V
5. DR "A" Bench
TRUE COPY BY ORDER
ASSTT. REGISTRAR, ITAT, MUMBAI