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2016 (7) TMI 397 - ITAT JAIPUR

2016 (7) TMI 397 - ITAT JAIPUR - TMI - Deduction for the electricity charges paid for the renting premises - Held that:- 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 Off .....

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poses. 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 was without any basis as the very basis of making the addition i.e. the Inspector’s repor .....

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essee - 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 staying. The assessee has not placed on record any documents to show the marketing was done by him overseas on account of foreign travellings, therefore, all these foreign travels expense .....

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er by the revenue arise against the order dated 28/02/2014 passed by the ld CIT(A), Ajmer for the A.Y. 2010-11, wherein the effective grounds of assessee as well as revenue s appeals are reproduced as under:- Grounds of assessee s appeal:- That under the facts and the circumstances of the case the ld CIT(A), Ajmer has erred in confirming the: 1 Addition of ₹ 79,444.00 for disallowances out of power expenses. (Para 6 of page 5 of CIT(A) s order). 2 Addition of ₹ 22,01,740.00 (Being 50 .....

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- made by the AO on a/c of income from Chitrakoot & Panchwati, without appreciating the facts of the case; 2. Deleting the addition of ₹ 1,30,412/- made by the AO on a/c of purchases, without appreciating the facts of the case; 3. Deleting the addition of ₹ 27,000/- made by the AO on a/c of interest on advances, without appreciating the facts of the case; 4. Deleting the addition of ₹ 2,43,800/- made by the AO on a/c of Capital introduction, without appreciating the facts o .....

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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 asse .....

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ongst the associate concerns. It is mentioned that burden of onus to prove the claims made in final accounts and return of income lies on the assessee. He has also not disclosed the names of associate concerns and their assessment details. In view of this, 30% of expenses of ₹ 2,64,814/- claimed are disallowed in absence of specific details called in respect of these expenses. Expenses of ₹ 79,444/- are disallowed and added back to the total income. 3. Being aggrieved by the order of .....

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essee and balance amount of ₹ 2,64,814 has been claimed against the receipts of the restaurant M/s Mango Masala. The assessee has explained that the power bills are in name of Smt. Sudha Goel, mother and that of assessee. The assessee s claim that only a sum of ₹ 4.16,525 was recovered from the various properties let out by the assessee based on submeter reading in these premises, is not supported by the any evidence. However, no such evidence in support of the recovery made by the a .....

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where the electric meters were installed and the power was consumed belonged to the family of the assessee and their names are appearing in the bills. It was also the case of the assessee 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 .....

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erties 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. Accordingly, ground No. 1 of the assessee s appeal is allowed. 7. Ground No. 2 of the assessee s appeal is against confirming .....

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e assessee as per the Assessing Officer not provided complete information, the ld Assessing Officer has concluded as under:- From the above, someone can infer that assessee is not interested to furnish details regarding Chitrakoot Land. The assessee has failed to submit the following details:- i. Separate Profit & Loss Account of Chitarkoot Land. ii. Details, Name and addresses of the parties, of current year as well as for earlier two years, to whom land was given for marriages, other funct .....

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after activities of Chitrakoot Land and take orders from the customers or other persons and book the orders. 7.1 The ld Assessing Officer on the basis of local inputs, at the back of the assessee, has deputed the Inspector to furnish a report. The Inspector has furnished report on 18/3/2013 to the following effect:- श्रीमान् मैंने आपके निर्देशा .....

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; पंचवटी के आसपास के लोगो से एवं वहाँ पर आयोजित उत्सव के दौरान पूछताछ की। पूछताछ के दौरì .....

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366;र्यक्रम एवं अन्य व्यापारिक कार्य जैसे सेल प्रदर्शनी आदि कि लिए किराये पर दिये जाते ì .....

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367;नका एक दिन का किराया करीबन चालीस-पचास हजार है तथा पंचवटी समारोह स्थल जिसमें एक बड़ा हा .....

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359; में करीबन पाँच छः महीने बुक रहते हैं। रिर्पोट प्रस्तुत 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 .....

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ly 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 ch .....

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rtly allowed the appeal by observing as under:- 8.3 I have considered the contentions of the appellant as well as assessment order. It is seen that the assessee has shown total receipts of ₹ 90,100 from the Chitrakoot plot in the return of income as against which municipal taxes of ₹ 53,579 have been claimed, thereby offering the net income of ₹ 36,521. However, the assessee has not been able to give the details of persons from whom the said amount has been received on account .....

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big hall. These are located at the prime place and assessee has not mentioned anything regarding constructed area and Panchawati plot before the information was gathered by the Circle Inspector. During appeal, the assessee has merely pointed out that income from Panchawati party plot is also included in the income offered for tax of ₹ 36,521. It is also noted that the assessee has claimed ₹ 53,579 as municipal taxes against the cash receipts of ₹ 90,100 which shows that the re .....

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s 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 diffe .....

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ig parties cannot held at this place and further marriage season is only for limited days in a year. Further, no claim of expenses for day to day maintenance, cleaning etc. of the said party plots has been given. The report of the Circle Inspector does not mention the basis of information gathered regarding the number of days of booking in a year and rate of booking. In view of overall facts and circumstances of the case, it is considered reasonable to restrict the addition on account of income .....

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are two open areas adjoining to restaurant business of assessee & these lands were also inherited by assessee. Along with constructed area thereon. (c) That to promote the restaurant business, these lands are given on rent for petty parties & functions. For this the receipt is separately issued & total gross receipts for the year is ₹ 90,100.00 as per records & receipts. The municipal taxes as paid ₹ 53,579.00 are not for one year but of many years as can be verified .....

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fication, but A.O. to avoid the facts & truth has avoided this procedure & has made his own assumptions and presumptions. (e) Even in past the AO s have accepted the accounting method & books & records of assessee u/sec. 143(3) of Income Tax Act, 1961 & no deviation in method of accounting noticed by A.O. (Refer order for assessment year 2009-10). (f) The A.O. is also not in position to justify his claim of income since no parallel assets / investments found or detected by A. .....

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ceedings 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 assess .....

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desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it. He relied on the following case laws:- (1) C. Vasantlal & Co. V/s CIT (1962) 45ITR 206 (SC) (2) Dhakeshwari Cotton Mills Ltd. V/s CIT (1955) 27ITR 126 (SC) Thus in case if A.O. believes that proper area of land not granted, facilities available not provided etc & thus he had reason to believe his own best judgment but before making his own as .....

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ons of both the parties and perused the material available on the record. In our view, the sole basis of making addition by the ld Assessing Officer for the amount of ₹ 44.40 lacs was on account of report of Inspector dated 18/3/2013. Before directing the Inspector to conduct the inspection, no notice has been given to the assessee and the entire report was only on the basis of hearsay inquiry conducted by the Inspector. Neither the name nor the addresses, nor the allocation nor any such e .....

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for Panchwati Plot and a big hall for a day. Rooms are air conditioned and 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 .....

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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. Accordingly, this ground of the assessee .....

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d added back to the total income of the assessee. 13. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had confirmed the addition by observing that the assessee has not shown that above expenses incurred on the foreign were incidental to the business of the assessee. No details and evidences and details of places visited and business procured have been submitted. Therefore he upheld the order of the ld Assessing Officer. 14. Now .....

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f business and is of revenue nature and not for personal purposes. The nature of business of assessee 'RESTAURENT is such that if the new innovation and presentations not introduced the business cannot be promoted and thus it is necessary to attend various places including various foreign trips to innovate the ideas new developments and presentation to keep phase in the business and thus all such expenses as incurred are in BUSINESS EXPEDIENCY . He relied on the following decision:- (i) CIT .....

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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 .....

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