TMI Blog2016 (7) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... upied for three months. The ld CIT has also mentioned the size of the land and has also suggested that there are parking problems and locational disadvantages to the assessee and therefore, the big parties cannot adjust in these premises. In our view the order of the ld CIT(A) upholding the addition was without any basis as the very basis of making the addition i.e. the Inspector’s report was in respect of built up air conditioned area and the land appurtenant thereto cannot be relied upon f. Therefore, no clear cut conclusion was required to be placed on record as to the rent which was recovered by the assessee by letting it out for functions and Garba festivals. In our view the estimation made by the ld CIT(A) is a higher side and required to be modified in the light of what is stated hereinabove. We, therefore, reduce it to ₹ 5.00 lacs - Decided partly in favour of assessee Disallowances of foreign tour expenses being personal in nature - Held that:- It is not reliable to the business of the assessee and there is no commercial expediency. It is not the case of the assessee that the foreign travelers are coming to the premises of the assessee for the purposes eating and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividual and his main source of income is rental income and he is also engaged in running restaurant under the name and style M/s mango Masala. The assessee filed his return for the year under consideration on 26/2/2011 declaring total income of ₹ 19,62,030/-. The case was selected for scrutiny assessment and thereafter notices were served on the assessee. In response to the notice, the ld AR of the assessee was appeared and submitted the record. The 1st ground of the assessee s appeal is against confirming the addition of ₹ 79,444.00 for disallowances out of power expenses. The ld Assessing Officer observed that the assessee has claimed power expenses of ₹ 6,81,341/- and after crediting the amount recovered from the tenant to the extent of ₹ 4,16,525/-. A net expenses of ₹ 2,64,814/- was claimed as power expenses by the assessee. It is the case of the assessee that the electricity connections were in the name of Smt. Sudha Goyal (Mother of the assessee) and the assessee himself. The ld Assessing Officer had made disallowances to the extent of 30% on the total expenses claimed by the assessee. The reasoning of the ld Assessing Officer is as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that sub-meters were installed in the premises and based on the reading recorded in the Sub-meters, the cost of electricity was recovered from tenants. It was also admitted that the ld Assessing Officer has accepted the rental income of ₹ 24,39,000/- in the books of account of the assessee . However, had wrongly disallowed the ad hoc disallowance to the extent of 30%, therefore, he prayed to delete the addition confirm by the ld CIT(A). 5. At the outset, the ld Sr.DR has supported the orders passed by the authorities below. 6. We have heard the rival contentions of both the parties and perused the material available on the record. In our view, once the Assessing Officer is accepting the rental income of the properties in the accounts of the assessee, the electricity consumed in such rental properties cannot be attributable to the assessee and if the assessee has paid any expenses in relation to the rental properties, the same are required to be allowed. In view thereof, the disallowances made by the ld Assessing Officer and confirmed by the ld CIT(A) are directed to be deleted and the assessee is held to be entitled to the deduction for the electricity charges. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 306; इंडिया मोटर सर्कित स्थित समारोह स्थल चित्रकूट व पंचवटी के आसपास के लोगो से एवं वहाँ पर आयोजित उत्सव के दौरान पूछताछ की। पूछताछ के दौरान यह मालूम हुआ कि समारोह स्थल चित्रकूट एवं पंचवटी दोनों शादी , ब्याह, जन ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1;तुत है। 7.2 The ld Assessing Officer on the basis of this report has concluded the assessment proceedings on 25/3/2013 without affording any opportunity and without appreciating the report of the Inspector. The conclusion mentioned by the ld Assessing Officer in the report as under:- It is heard from the market that Chitrakoot land is located in a prime place of the city. Being famous place people like to hire said plot for marriage parties, birthdays, engagements etc. Inspector of this office was asked to make enquiry regarding charges and booking of plot. Vide report dated 18.03.2013 he has reported that there are two plots, in the premises, namely Chitrakoot and Panchwati and both the plots are used / booked for marriage parties, birthdays, Garba Programmes and also given Plots for exhibition of business product's of the companies. He has also reported that there are three big halls/ rooms appurtenant to Chitrakoot Plot and one big hall appurtenant to Panchwati Plot which are given on rent along with both the party plots. He has also reported that enquiry revealed that rent in the range of ₹ 40,000/- to ₹ 50,000/- is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h should be verifiable. In the copy of account submitted during appeal, assessee has merely mentioned the lump sum amount of cash receipts on monthly basis. From the same it cannot be verified whether it represents the actual receipts accruing to the assessee from various functions organized at these places. As regarding non supply of the inspector s report to the appellant, it may he mentioned that the same has been obtained by the assessee after the assessment was completed. However, even at appellate stage, only earlier contentions have been reiterated and no other claim or evidence in support of the actual receipts from different clients have been submitted. In view of above discussion, it is reasonable that only option left in such case is to estimate the income of the assessee from above party plots. In this regard, the AO has held that both the party plots have been occupied for three months i.e. quarter of the year which appears to be on the higher side. In this context, assessee has pointed out that land area is 2000 sq. yards approximately and there are parking problems and other locational disadvantages. So big parties cannot held at this place and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments found or detected by A.O. (g) Further the A.O. has also taken plea that on receipts as issued for land rent no proper address or identify of party is there. It was intimated to A.O. that there is no such provision in law since the money is received in advance thus we do not require any identify, address of said party, on due date on production of counterpart the place can be utilized. (h) The inspector s report dated 18.03.2013. on which the A.O. has relied for his estimation. No copy during assessment proceedings provided nor any confrontation made simply on own assumptions additions made. The copy of said report was received only after the order u/sec. 143(3) was received assessee asked the copy. Copies of request letters dated 28.03.13/10.04.13/22.04.13 are enclosed along with denial letter of A.O. The Inspector s report is of 4 lines which simply says that ON QUERY MADE, no specific name from whom enquiry made, what is there relevancy to enquiry, how they are connected with assessee what was the authenticity with them e.g. some receipts, whether they have opted some function there paid money other necessary evidences to hold a report authentic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well furnished. The whole case before us, which was decided by the ld Assessing Officer as well as the ld CIT(A) was to find out the rate of rent on which the plots were given by the assessee on rent basis. In fact the Inspector has given rate of rent in respect of plots as well as for the party halls/ air conditioned rooms. Thus, in our view, the report can not to be relied upon for any purposes. The ld Assessing Officer has relied upon the report and has concluded that both the plots have been occupied for three months. The ld CIT has also mentioned the size of the land and has also suggested that there are parking problems and locational disadvantages to the assessee and therefore, the big parties cannot adjust in these premises. In our view the order of the ld CIT(A) upholding the addition of ₹ 22,01,740/- was without any basis as the very basis of making the addition i.e. the Inspector s report was in respect of built up air conditioned area and the land appurtenant thereto cannot be relied upon f. Therefore, no clear cut conclusion was required to be placed on record as to the rent which was recovered by the assessee by letting it out for functions and Garba festi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (1979) 118 ITR 261 (SC) He further submitted that the Ld. CIT(A) has also reiterated the same view of A.O. that whether such foreign expenses were incidental to the business of assessee since no details of place visited and business procured filed hence disallowed the expenses. Whereas the ledger copy bills voucher itself justify the place visited. There is not necessity that to claim on expenditure in business expediency; immediate returns / business should have been received. The purpose of expenditure must be to keep the trade going and making it pay for which he relied on the decision in the case of Haji Aziz Abdul Shakor Bros. V/s CIT(1961) 41 ITR 350 (SC). Further it has also been held that the purpose of expenditure need not to increase profits or to directly benefit the business so long as it helps indirectly also for garnering revenue. Therefore, he prayed to delete the addition. 15. At the outset, the ld Sr.DR has vehemently supported the order of the ld CIT(A). 16. We have heard the rival contentions of both the parties and perused the material available on the record. It is not reliable to the business of the assessee and there is no commercial expedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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