TaxTMI 
TaxTMI 
2022 (4) TMI 969
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....the lease rent under the head 'other sources' and determined the total income at Rs. 6,40,810/- disallowing the admissible expenses as deduction either u/s 37 or u/s 57(ii) of the Act. On appeal, the Ld. CIT(A) allowed the appeal of the assessee by holding that all the expenses incurred by the assessee are for business purposes and therefore they are allowable expenses u/s. 37 of the Act. Aggrieved by the order of the Ld. CIT (A), the revenue went on appeal before the ITAT. ITAT, Visakhapatnam Bench, vide ITA No. 490/Viz/2009, had partly allowed the Revenue's appeal by holding that apart from depreciation and insurance expenses allowed by the AO, the other expenses viz., the poultry equipment repairs, salary and wages, staff welfare, repair and maintenance, printing and stationery, miscellaneous expenses, tax presentation fees, audit fees, filing fees and other bank charges are also to be allowed, since the assessee is a private limited company and the minimum expenditures are to be incurred to keep the assessee company alive and accordingly, the Ld. AO was directed to estimate the expenses reasonably and decide the issue. Thereafter, the Ld. AO giving effect to the Tribunal's orde....
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..... 6. The learned Commissioner of Income Tax (Appeals) is not justified in holding that above poultry expenses are in the nature of current repairs and hence not allowable in the hands of the appellant as lessor. 7. Any other ground that may be urged at the time of appeal hearing. 5. Ground No.1 and 7 are general in nature, which does not require specific adjudication. 6. Ground No.2 is related to disallowance of management salaries of Rs. 72,000/-. The Ld.AR submitted that the AO held that management salaries do not qualify for any deduction as it is not essential expenditure to keep the company alive. The Ld.CIT(A), relying on the decision of Coordinate Bench of ITAT held that "on perusal of the ITAT order, it shows that this head is not included in the directions of the ITAT to be considered by the AO. Salaries and wages come under different heads and are considered separately". Accordingly, the Ld.CIT(A) upheld the order passed by the AO. 7. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal and submitted that the Ld.CIT(A) is not justified in upholding the addition of Rs. 72,000/- made by the AO towards disal....
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....atch and ward supervision. The Ld.AR submitted that the AO allowed only a sum of Rs. 7,800/- as against the entire expenditure of Rs. 83,558/- claimed towards staff salaries and the same was upheld by the Ld.CIT(A) which is unjustified. The Ld.AR pleaded for allowing the same. 13. On the other hand, the Ld.DR relied on the order of the Ld.CIT(A) and requested to uphold the same. 14. We have heard both the parties and perused the material available on record. It is evident that the assessee leased out entire poultry complex. The assessee could not justify as to why an expenditure of around Rs. 80,000/- per month is incurred to maintain one bore well at the cost which is less than Rs. 50,000/- only. We are of the view that when the entire poultry complex has been leased out, there is no justification to pay salaries to six employees. We find no infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, this ground raised by the assessee is dismissed. 15. Ground No.4 is related to disallowance of expenditure towards vehicle repairs and vehicle maintenance. The assessee agreed before the AO that the expenditure incurred for vehicle repairs and vehicle mai....
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....as to be borne by the lessor i.e. the assessee. When the lease income of the assessee company is treated as income from other sources, then no capital expenditure can be allowed. 21. With regard to poultry maintenance of Rs. 14,870/-, the expenditure pertained to maintenance of one bore well used by the lessees as agreed in the lease deed. The AO observed that when the entire poultry is leased out, it is not explained why the lessor (assessee) had agreed to maintain one bore well. The AO further observed as per the information available on record that the assessee company has agricultural activity and it is also maintaining a guest house in the poultry complex premises and the water drawn by the bore wells is shared by the assessee. Accordingly the AO has not considered the expenditure under poultry maintenance for deduction u/s 57(iii) of the Act and disallowed the same. 22. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A). The Ld.CIT(A) upheld the order of the AO, observing that as per clause 6 of the lease agreement, the lessee should bear all the repairs, claims etc, arising out of their maintenance in the lease period....