TaxTMI 
TaxTMI 
2013 (9) TMI 635
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..../ Chd/2012 are as under "1. Disallowance of interest-Rs. 5,14,802/- (a) The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance under section 24(b) without appreciating that the purchase of flats were made jointly, loan was sanctioned by UTI Bank in joint names and interest certificate was issued in joint name ; therefore, the disallowance (at 50 per cent.) under section 24(b) in the hands of the appellant is unjustified and the claim may be allowed. (b) Without prejudice to the above, the repayment of principal and interest had been made from the joint accounts and the loans had been sanctioned on both flats ; therefore, the appellant had rightly claimed 50 per cent. of interest under section 24(b) which should be allowed. 2. Disallowance of expenses-Rs. 35,27,500/- The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance without appreciating that the very expenses are exclusively business related on which vouchers and books were produced ; therefore, the disallowance on surmises is not justified and the same may be deleted. 3. Ad hoc disallowance of expenses-Rs. 10,00,000/- The learned Commissione....
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....flats side by side in the same society. One flat was purchased in the name of the assessee and second in the name of her husband. The learned authorised representative for the assessee fairly conceded that the total interest paid on the borrowed capital was Rs. 10,29,604. The learned authorised representative for the assessee drew our attention to the capital account of the assessee placed at page 5 of the paper book under which the interest on housing loan was shown to be totalling Rs. 5,14,802. The assessee pointed out that the flat purchase agreement was placed at pages 50 to 106 of the paper book and the flat No. 2801/B, Oberoi Sky Heights, Oshiwara, Andheri Mumbai, was purchased in the name of the assessee as is evident from the recital of the purchase agreement with special reference at pages 51 and 56 of the paper book. It was further pointed out by the learned authorised representative for the assessee that flat No. 2802 was purchased by the husband of the assessee as is apparent from the purchase agreement placed in the paper book of Shri Gurdas Mann at page 47 onwards of the paper book under which he had purchased flat No. 2802 in the said building. Our attention was furt....
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....5 to March 31, 2006, EMIs payable on the said loan totalled to Rs. 16,43,148 and the break-up of the said amount into principal and interest was as under : Principal component Rs. 6,13,544 Interest component Rs. 10,29,604 The perusal of the computation of income filed by Shri Gurdas Mann placed in his paper book at pages 1 and 2 reflect that the assessee had shown income from house property and claimed interest paid on housing loan at Rs. 10,39,604. The Assessing Officer while completing the assessment, computed the income from house property, i.e., flat No. 2802 in Oberoi Sky Heights, Oshiwara, Andheri Mumbai after taking rental income at Rs. 3,60,000, deduction of interest on borrowed capital was allowed at Rs. 5,14,802. Admittedly, the total interest paid by the assessee along with her husband on the borrowed loans during the year under consideration was Rs. 10,39,604 out of which deduction of Rs. 5,14,802 has been allowed in the hands of Shri Gurdas Mann. No deduction of the balance amount has been allowed in the hands of the assessee or Shri Gurdas Mann. In the entirety of the facts and circumstances where the rental income from the individual flats owned by ....
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....lbums. It was further observed by the Commissioner of Income-tax (Appeals) that in respect of the old films, no expenditure was allowable. The Commissioner of Income tax (Appeals) also noted the assessee to have maintained separate profit and loss account for herself to meet her day-to-day expenses and hence the disallowance of expenditure was upheld by the Commissioner of Income-tax (Appeals). The learned authorised representative for the assessee brought to our notice details of the said expenditure placed at page 19 of the paper book and pointed out that no disallowance out of the said expenditure was made either in the earlier years or in the subsequent years. The said expenses were claimed to be common expenses for running the business. The learned Departmental representative for the Revenue placed reliance on the order of the Commissioner of Income-tax (Appeals). We have heard the rival contentions and perused the record. The perusal of the profit and loss account placed at page 9 of the paper book reflects the assessee to have followed project completion method, i.e., it has shown the receipts and corresponding expenditure in respect of each of its venture separately a....
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....ng non verifiable, resulting in addition of Rs. 12,44,843. The Commissioner of Income-tax (Appeals) had restricted the addition to Rs. 10 lakhs. The addition made by the Assessing Officer is ad hoc addition as the assessee had furnished partial vouchers and bills raised by parties, were not maintained. The Commissioner of Income-tax (Appeals) has also upheld the ad hoc disallowance in the hands of the assessee. In the interest of justice and to plug the leakage of revenue we deem it fit to restrict the disallowance at one per cent of the total expenditure of Rs. 4.14 crores. The disallowance is restricted to Rs.4,14,947. Ground No. 3 raised by the assessee is thus partly allowed. The issue in ground No. 4 is against disallowance of depreciation on office premises. The authorities below had disallowed the said depreciation in the hands of the assessee as the office was not being utilised for business purpose, as the same was given for re-development. The claim of the assessee before us was that re-development agreement was signed on January 18, 2010 and re-development had started in the assessment year 2009-10. The assessee claims to have utilised the office during the year und....
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....en such amount is to be disallowed in the hands of the assessee. The Assessing Officer vide paragraph 2 had noted the assessee to have made various cash payments totalling Rs. 1,66,732 to various parties for purchases on various dates and the same were disallowed in view of the provisions of section 40A(3) of the Act. The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. The learned authorised representative for the assessee though stressed that no payment was made in cash over and above Rs. 20,000 but was unable to meet the observation of the Assessing Officer in this regard. In the entirety of the facts and circumstances of the case we confirm disallowance of Rs. 1,66,732. Ground No. 1 raised by the assessee is thus dismissed. Ground No. 2 raised by the assessee is in respect of disallowance of various expenses totalling Rs. 1,35,825. The Assessing Officer had disallowed 20 per cent of the expenses, i.e., conveyance, various vehicles related expenses, lodging and boarding, travelling, staff welfare, telephone, business promotion and publicity totalling Rs. 13,58,254. The Commissioner of Income-tax (Appeals) had restricted the disallowance to ....
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....ssioner of Income-tax (Appeals) erred in confirming the loss without appreciating that the appellant had duly complied with the norms of section 24(b) ; so the resultant loss declared is genuine and no disallowance thereof is called for. 4. Disallowance of depreciation-Rs. 80,555 and Rs. 2,40,630 The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance without appreciating that the appellant had very much used the office premises during the relevant year ; therefore, no disallowance is called for as the assets were put to use during the year. 5. Ad hoc disallowance ((5)10 per cent.) of various expenses Rs.3,01,141 The learned Commissioner of Income-tax (Appeals) erred in giving partial relief on ad hoc basis without appreciating that the appellant being an actor had to carry out extensive travel and on the face of high personal withdrawals, no ad hoc disallowance of expenses is further called for. The issue in ground No. 1 is against the addition of Rs. 3,08,425. The Assessing Officer noted from the details of amount received from Indian shows, the assessee had shown sum of Rs. 16,575 as received from M/s. Cable Televideos (I) P. Ltd., wh....
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....nnot be ruled out of the said expenses. We uphold the order of the Commissioner of Income-tax (Appeals) in disallowing one tenth of the said expenses for personal use. Ground Nos. 5 and 6 are thus dismissed. I. T. A. No. 301/Chd/2012 : 2007-08 : Shri Gurdas Mann: The grounds of appeal raised by the assessee in I. T. A. No. 301/Chd/2012 are as under: 1. On facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) Chandigarh, (CIT) erred in confirming the addition of Rs. 4,37,430 made by the Assessing Officer disallowance under section 40(a)(ia) of the Act. 2. The Commissioner of Income-tax failed to appreciate that: (a) The said expenses are towards the rent covered under section 194J and the individual payments have not crossed the threshold limits for tax deduction. (b) The said expenses are not covered under section 194C 3. The appellant prays that the disallowance of Rs. 4,37,430 made be deleted. Ground II 1. On facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals), Chandigarh, (CIT) erred in confirming the addition of Rs. 4,37,158 made by the Assessing Officer disallowance considering th....
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....vidence is placed on record to justify the disallowance by the Assessing Officer and additions are made based on surmises and conjecture. 3. The appellant prays that the ad hoc disallowance of Rs. 2,99,558 made be deleted. The issue in ground No. 1 is against the disallowance of expenses under section 40(a)(ia) of the Act. The assessee had not deducted tax at source out of certain payments totalling Rs. 4,37,430, which were disallowed in view of section 40(a)(ia) of the Act. The Commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer. The learned authorised representative for the assessee fairly pointed out that the issue is squarely covered by the decision of the Special Bench of Vishakhapatnam reported in Merilyn Shipping and Transports v. Addl. CIT [2012] 16 ITR (Trib) 1 (Vishakhapatnam) [SB] wherein it was held as under : "where the amounts have been paid during the year under consideration itself and nothing is payable at the close of the year, no disallowance was warranted under section 40(a)(ia) of the Act for non-deduction of tax at source out of such amount paid during the year." Following the abovesaid parity of reasoning, we direct....
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....o merit in the claim of the assessee that it was a case of mere replacement and not the case of coming into existence of new fixed asset. The expenditure incurred on purchase of new furniture cannot be held to be replacement and the same being in the nature of capital expenditure, is not to be allowed as a deduction while computing the income of the assessee. Further, the assessee had failed to bring on record any evidence to establish its claim of having replaced the electric installation or the nature of the electric installation so replaced. In the absence of the evidence and because of the examination by the Assessing Officer of the requisite bills and documents in respect thereof, we find no merit in the claim of the assessee. Upholding the order of the Commissioner of Income-tax (Appeals) we dismiss ground No. 2 raised by the assessee. Ground No. 3 raised by the assessee against disallowance under section 40A(3) of the Act is identical to ground No. 1 raised in I. T. A. No. 304Chd/ 2012. The claim of the assessee is that no single payment in cash was made above Rs. 20,000. However, the assessee has failed to bring on record any evidence to establish the same. Following o....
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....tion of Rs. 13,68,392 made by the Assessing Officer disallowance out of expenses. 2. The Commissioner of Income-tax failed to appreciate that: (d) The assessee is a performing artist and the expenses are necessary for his profession. (e) The assessee had sufficient drawings and expenses claimed as drawing to cover all the personal expenses. (f) No evidence is placed on record to justify the disallowance by the Assessing Officer and additions are made based on surmises and conjecture. 3. The appellant prays that the ad hoc disallowance of Rs. 13,68,392 made be deleted. Ground IV 1. On facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) Chandigarh, (CIT) erred in confirming the ad hoc addition of Rs. 50,000 made by the Assessing Officer disallowance out of expenses. 2. The Commissioner of Income-tax failed to appreciate that : (g) The assessee's books were audited, and the supporting vouchers were presented before the Assessing Officer. (h) No evidence is placed on record to justify the disallowance by the Assessing Officer and additions are made based on surmises and conjecture. 3. The appellant prays that the ad ....
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....loans raised by it. The Assessing Officer in view of the ratio laid down by the hon'ble jurisdictional High Court in CIT v. Abhishek Industries Ltd. [2006] 286 ITR 1 (P&H) computed part disallowance out of the interest paid amounting to Rs. 12,44,250. The Commissioner of Income-tax (Appeals) confirmed the same. The plea of the learned authorised representative for the assessee before us was that the perusal of the list of secured loans raised by the assessee at page 46 of the paper book reflects that the major part of the loans, on which interest was paid, were raised for financing the various vehicles owned by the assessee and interest was also paid on the housing loan raised by the assessee. The learned authorised representative for the assessee fairly admitted that the said aspect was not looked into by the Assessing Officer while making the disallowance under section 36(1)(iii) of the Act. In the interest of justice, we deem it fit to restore the issue back to the file of the Assessing Officer to give fact finding of the nature of the secured loans raised by the assessee and if the same are relatable to a specific purpose and are not part of the general pool of funds avail....