9911796707
TMI Blog2015 (2) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the Ld. CIT(A) was not right in taking cognizance of the facts which were not available to the AO during the course of assessment proceedings and it was during the appellate proceedings only that assessee has been found to have resumed business. 3. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 3. The grounds raised in the Assessés Appeal No. 3884/Del/2011 (A.Y. 2005-06) read as under:- "1. That the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming the action of the assessing officer in assessing service charges of Rs. 19,610 and interest income of Rs. 1,52,970 under the head 'Income from other sources' instead of 'Profits and Gains from Business and Profession', as declared by the appellant. 2. That the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming the disallowance of the following expenditure holding the same to be personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession', as declared by the appellant. 2. That the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming the disallowance of the following expenditure holding the same to be personal expenditure of the directors of the appellant: i) Electricity and water charges : Rs.1,85,113; and ii) Watch and ward expenses : RS. 1,47,420 2.1 That the Commissioner of Income Tax (Appeals) erred on facts and in law in not appreciating that the above expenditure were incurred in respect of the registered office of the appellant. 2.2 That the Commissioner of Income Tax (Appeals) further failed to appreciate that these cannot be disallowance of any expenditure in case of a corporate assessee on account of personal expenses. 3. That the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming the disallowance of the travelling expenditure to the extent of Rs. 4,48,227 holding the same to be perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Ieave and license fees of Rs. 41,11,890/- and income from other sources as interest income of Rs. 1,52,970/- and service charges of Rs. 19,610/-. Against this income, the assessee company has claimed expenses of Rs. 27,04,339/- and 30% statutory deduction against house property of Rs. 12,33,567/-. The AO asked to furnish justification regarding allowability of business expenses and depreciations as no business activities appear to have conducted during the year and immediate preceding year. The assessee company filed details in respect of house property including leave & lease agreement but could not offer any justification for claiming of expenses against no business income. The AO asked the assessee to furnish the explanation for not submitting any justification for claim of huge expenses against no business income and show cause as to why the entire expenses including depreciation of Rs. 27.04 lacs should not be disallowed as company has not carried out any' business activities not only during year but since 1999-2000. The assessee vide letter dated 14.12.2007 submitted that "the assessee company has been carrying on the business of travel related activities for the last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act vide his order dated 24.12.2007. 7. Aggrieved with the assessment order dated 24.12.2007, assessee filed an appeal before the Ld. First Appellate Authority who vide impugned order dated 31.5.2011 partly allowed the appeal filed by the assessee and restricted the disallowance of Rs. 8,68,705/- by allowing the relief of Rs. 18,35,634/- out of the total disallowance made by the AO amounting to Rs. 27,04,339/- on account of expenses and depreciation. 8. Revenue has filed the Appeal against the relief given by the Ld. First Appellate Authority amounting to Rs. 18,35,634/- and the assessee has filed the Cross Appeal against the disallowance of expenditure amounting to Rs. 8,68,705/-mentioned in the impugned order and as per prayer made. 9. At the time of hearing Sh. Robin Rawal, Ld. Sr. DR appeared for the Revenue and stated that the assessee company has not carried out its business activities since past 7-8 years but also not carried out any business activities in future 2-3 years. He further submitted that the assessee company is entitled only for the expenses incurred u/s 57 of the Act against income from other sources earned u/s 56 and 30% deduction under sub-section (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's business has not functional for the past 7-8 years and for the 2-3 subsequent years. Whereas infact these expenses are very much necessary for maintaining the assessee's office, retaining the staff and other related expenditure to keep the assessee company alive. Therefore, the impugned order passed by the Ld. CIT(A) may be cancelled and the Appeal filed by the assessee may be allowed. 11. We have heard both the parties and perused the relevant records, especially the order passed by the Revenue Authroity alongwith the case laws cited by the Ld. Counsel of the assessee as well as other documentary evidence filed by the assessee's counsel in the shape of paper book. We are of the considered view that the assessee has claimed the expenses of Rs. 27,04,339/- for which the details of the same are as under:- To Salaries 642,432.00 To Rent 50,388.00 To Electricity AND Water 146,740.00 To Office Maintenance 44,420.00 To Printing Stationery 6,224.00 To Postage, Telegrams AND Couriers 3,380.00 To Repairs and Maintenance 113,247.00 To Telephone AND Trunk Calls 124,403.00 To Travelling AND Conveyance 449,418.00 To Car Maintenance 198,855.00 To Bank Charges AND Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,23,970) (b) Watch & Ward (Rs. 1,08,000) (c) Travelling Exp. (Rs. 2,96,735) (d) Directors Remunerati on (Rs. 2,40,000/-) Totaling Rs. 8,68,705/- 11.2 After considering the aforesaid finding of the AO as well as by the Ld. CIT(A), we are of the considered view that it is an admitted fact that the assessee is a company and its business is travelling related activities. During the assessment year in dispute assessee has shown its income from house property of Rs. 41,11,89/- and income from other sources Rs. 1,52,970/- and service charges of Rs. 19,610/-. Against this income assessee has claimed expenses of Rs. 27,40,339/- and the AO has disallowed the total expenses on the ground that assessee company not carry out any business since 7-8 years and but also not carried out any business activities in future 2-3 years and only expenses incurred u/s 57 & u/s. 24 of the I.T. Act are allowable. Ld. CIT(A) treated services charges as income from other sources, but according to the assessee that the assessee is entitled for all business expenses even during lull period in the business as covered under section 30 to 37 of the I.T. Act. All expenses are to be allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions given as aforesaid. 12. As regards the Assessee's Cross Appeal NO. 3884/Del/2011 (A.Y. 2005-06) in which assessee has raised four grounds of appeal and challenged the impugned order passed by the Ld. CIT(A), 12.1 As regard No. 1 raised in the assessee's appeal is concerned, we find that the assessee has assailed the findings of the Ld. CIT(A) in holding that services charges of Rs. 19,610/- and interest income of Rs. 1,52,970/- both have to be assessed under the head "income from other sources", instead of profit and gains from business and profession. As far as the issue regarding the interest income on FDR is concerned, the same is not mere res integra and we concur with the finding of the Ld. CIT(A) recorded in para 4.6 of his order. As far as the issue regarding the taxability of service charges under the head "income from other sources" vis-a-vis profits and gains on business or profession is concerned, we find that the services charges were merely received. The same has been received from M/s Span Excursion Pvt. Ltd. on account of "referral" of some passengers to other travel agents. Ld. CIT(A) in para 4.8 of his order has observed that the service charges had been rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h income has been disclosed under the head "profit and gains from business and profession" and, therefore, this accepted view of the department should not be disturbed, has no merit because as can be seen from the details given below, there was not enough reason to do so in earlier years because in those years, the appellant company was receiving income from secretarial and other support services, which activity actually fell under the head "business". A.Y. Amount in (Rs.) 2001-02 3,60,000 2002-03 3,60,000 2003-04 6,30,000 2004-05 5,40,000 (iv) Further the "principle of consistency" would not apply in a case where there is a material change in the factual position. This has been so held in a 3-Member judgment of the same Apex Court reported in BSNL vs. Union of India 282 ITR 273 (SC) wherein the Lordships have held as under: "The decision cited above uniformly held that res judicata does not apply in matters pertaining to tax for different assessment years because course of action for each assessment year is differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be mentioned that the Hon'ble Supreme Court itself mentioned in Radhasoami Satsang vs. CIT 193 ITR 321 (SC) that their findings should not be followed in every case. We may add that if a manifestly wrong decision is taken by the AO in one year or in a number of years, it will not bind the AO in the assessment of a subsequent year because there cannot be any estoppel against the law" 4.10. Hence, the assessee's contention to treat "service charges" as "income from business" cannot be accepted. Accordingly, as in the case of interest on FDs as well as interest on income tax refund, the service charges of Rs. 19,610/- is also to be treated as income from other sources. Accordingly, Ground No.2 stands dismissed." 12.2 Keeping in view of the facts noted by the Ld. CIT(A) we are in agreement with his findings that there was no business income earned during the year and the amounts received in the form of credit notes were primarily casual in nature. Thus, they were rightly assessed under the head "income from other sources". 12.3 As regards the disallowances assailed by the Assessee vide Ground Nos. 2 to 4, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s run its business as pointed out to the revenue authority as stated above. He requested that the issue involved in the present asstt. year required re-examination at the level of the AO and he requested that the issue in dispute may be set aside to the AO to allow the admissible expenses under section 30 to 37 of the Act. 6.1 Ld. DR has not raised any objection to the request of the assessee's counsel. 17. We have heard both the parties and perused the relevant records available with us, we are of the considered view that no doubt the issue in dispute in the present cross appeals are identical, but in the present appeal, with regard to ground no. 1, we find that Ld. CIT(A) has followed the findings of asstt. year 2005-06 and thus assailed that the service income is to be income under the head "income from other sources". In this regard, we find that in the year under consideration the business has revived and therefore, the matter needs to be considered afresh by the AO in order to find out the source from which the service income has been earned. Accordingly, Ground NO. 1 is set aside to the file of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
