Tribunal Partly Allows Appeal: Land Registration Charges as Revenue Expenditure, Disallowance Issue Remanded for Review.

The ITAT, Chennai, partly allowed the appeal for statistical purposes. It disagreed with the AO's disallowance of land registration charges, ruling them as revenue expenditure. The Tribunal remanded the issue of disallowance under section 14A back to the CIT(A) for fresh consideration, instructing the assessee to substantiate their claim. The CIT(A) was directed to verify the service tax payment claim, with the AO to allow it if proper. The Tribunal's decision resulted in a mix of relief and remand for further proceedings.

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Issues Involved:
The judgment involves issues related to assessment proceedings, disallowances made by the Assessing Officer, appeal before the Commissioner of Income-Tax (Appeals), and subsequent appeal before the Income-Tax Appellate Tribunal, Chennai.

Assessment Proceedings:
The assessee, engaged in direct multi-level marketing, faced assessment for AY 2008-09 after a survey under section 133A. Despite multiple notices, the assessee failed to file the return of income promptly. The initial assessment under section 143(3) resulted in certain additions/disallowances. Subsequently, the assessment was reopened, leading to further additions. The CIT(A) granted relief on one ground but upheld others. The matter was remitted to the AO by the ITAT for de-novo consideration.

Disallowances by Assessing Officer:
The AO disallowed certain amounts, including land registration charges, service tax, and disallowance under section 14A. The CIT(A) partly allowed the appeal, leading to the present appeal before the Tribunal.

Land Registration Charges Disallowance:
The AO disallowed land registration charges as capital expenditure, but the Tribunal disagreed. It held that such charges, incurred in taking business premises on rent, are revenue expenditure since a lease is not a permanent transfer of property. The Tribunal decided in favor of the assessee on this issue.

Service Tax Payment Disallowance:
The CIT(A) directed the AO to verify the claim of service tax payment and allow if found proper, which the AO was instructed to comply with.

Disallowance under Section 14A:
The CIT(A) confirmed the disallowance under section 14A due to the assessee's non-participation in the proceedings. The Tribunal set aside this order and remanded the issue back to the CIT(A) for fresh consideration, emphasizing the need for the assessee to substantiate their claim.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, setting aside the CIT(A)'s order on the disallowance under section 14A and remanding the issue for reconsideration. The assessee was directed to substantiate their claim before the CIT(A) in this regard.

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