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ITO Ward 12 (2) , Kolkata Versus Sudhir Satnaniwala

2017 (12) TMI 305 - ITAT KOLKATA

Disallowance on account of demand for outstanding municipal taxes - Held that:- The assessee has established on the basis of the relevant lease agreement that the property was occupied by the assessee as lessee from 1st April, 2002 and he was liable to pay all the property taxes out-goings and other burdens whatsoever payable to local or other authority upon the demised premises. He has also established on the basis of the demand notice issued by the municipal authority that the amount in questi .....

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t sustainable and the CIT(A) is fully justified in deleting the same. In that view of the matter, we uphold the impugned order of the Ld. CIT(A) giving relief to the assessee on this issue and dismiss ground no 1 of the revenue’s appeal. - Disallowance on account of business promotion expenses - Held that:- After having considered the nature of business of the assessee which warrants the incurring of expenditure on business promotion, the Ld. CIT(A) allowed the claim of the assessee for busi .....

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re the Ld. CIT(A). Having regard to all the facts and circumstances of the case, we are of the view that it would be fair and reasonable to allow the expenses claimed by the assessee on business promotion to the extent of 75% and disallow the balance 25%. We accordingly modify the impugned order of the Ld. CIT(A) on this issue and sustain the disallowance made by the A.O. on account of business promotion expenditure to the extent of 25%. Ground no 2 of the revenue’s appeal is thus partly allowed .....

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ricted the same to ₹ 1,09,861/- purportedly on the basis of some working filed by the assessee. At the time of hearing before us, the said working is not furnished by the assessee. Even the assessee has not able to explain the basis on which the disallowance of ₹ 2,29,022/- is restricted by the Ld. CIT(A) to ₹ 1,09,861/-. We, therefore, confirm the disallowance made by the A.O. under section 14A r.w.r. 8D to the extent of ₹ 2,29,022/- and allow partly ground no 3 of the r .....

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on account of demand for outstanding municipal taxes. 3. The assessee in the present case is an individual who inter alia is engaged in the business of running guest house in the name of his proprietary concern, M/s. Check-in Check-out. The return of income for the year under consideration was filed by him on 23.09.2009 declaring a total income of ₹ 32,18,292/-. In the profit and loss filed along with the said return, a sum of ₹ 19,20,000/- was credited by the assessee on account of .....

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ace, the rental income received from the same was declared by him as his business income. According to the A.O., the said income however constituted income of the assessee from other sources. In the profit and loss account, a sum of ₹ 25,74,066/- was debited by the assessee on account of municipal taxes and penalties in respect of the said office space letout to M/s. Japan Power Service Pvt. Ltd. From the relevant municipal demand, the Assessing Officer noted that the municipal taxes were .....

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ssessee from M/s. Japan Power Service Pvt. Ltd. and in the absence of any agreement or understanding furnished by the assessee to prove that he was liable to pay the said arrears, the expenditure of ₹ 25,74,066/- claimed by the assessee on account of municipal tax demand for the earlier years was disallowed by the A.O. holding that it was not qualified for the deduction under section 57(iii) of the Act. 4. The disallowance made by the A.O. on account of municipal tax arrears was challenged .....

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dering the entire material available on record, the Ld. CIT(A) held that the rental income received by the assessee from sub-letting of the office space constituted his business income and the assesses was entitled for deduction in respect of municipal tax arrears amounting to ₹ 25,74,066/- He accordingly deleted the disallowance made by the A.O. on this issue after recording his findings/observations in paragraph no 5.1.7 of his impugned order which read as under: I have carefully conside .....

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ubletting from the assessment year 200506 and it was also always shown as business income and being assessed to tax as business income except in the assessment year 2007-08. The appellant has given a reasonable explanation for not contesting the assessment to A.Y. 2007-08. The appellant has also filed copies of assessment order for earlier years and as well as for subsequent year i.e. for assessment year 2010-11 in support of the contention that the appellant had taken many flats on rent at 14/1 .....

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income received by lessee from transaction of sub-letting would not be assessable as income from house property, but was assessable in the circumstances of the case as business income. Considering the facts of the case, I did not find any justification from departing from the past and subsequent action in assessing the income from sub-letting of the flat as the appellant s income from profits and gains of business or profession. For this reasons, I am of the view, that the appellant is entitled .....

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revenue s case on this issue. He contended that the demand for property tax pertaining to the earlier years was not raised in the name of the assessee and there was nothing to show that the same was actually payable by the assessee. He contended that the Ld. CIT(A) however allowed the claim of the assessee for deduction on account of payment of municipal tax arrears mainly on the ground that the rental income received by the assessee from the sub-letting of the property was chargeable to tax as .....

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erty taxes including arrears as per the lease agreement. He invited our attention to the copy of the lease agreement placed at page 1 to 3 of his Paper Book to show that the assessee as per the said lease agreement effective from 1st April, 2002 was liable to pay, inter alia, property tax and other outgoings and burdens whatsoever payable to local or other authority upon the demised premises. He also invited our attention to the demand notice issued by the concerned municipal authority (copy pla .....

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of the Act. 7. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the deduction claimed by the assessee on payment of municipal tax arrears was disallowed by the A.O. on the ground that the said expenditure pertained to the earlier years and the assessee was not liable to pay the same. Since the corresponding rental income received by the assessee from sub-letting of the property was held by the A.O. as chargeable to tax in th .....

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earned by the assessee from the sub-letting of the property was chargeable to tax as his business income. In the ground raised on this issue, the revenue has not challenged the said treatment given by the Ld. CIT(A) and the relief given by the Ld. CIT(A) on this issue, is challenged only on the ground that the assessee was not liable to pay the demand raised by the Municipal Corporations on account of tax arrears. In this regard, the learned counsel for the assessee has established on the basis .....

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eto. Moreover, the said payment, as pointed out by the learned counsel for the assessee, was made on 13.12.2008 i.e. during the year under consideration and the assessee, therefore, was entitled to claim deduction for the same on payment basis as per section 43B of the Act. Having regard to all these facts of the case, we are of the view that the disallowance made by the A.O. on account of municipal tax arrears paid by the assessee was not sustainable and the Ld. CIT(A) is fully justified in del .....

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essee on account of business promotion expenditure. Since the said expenditure basically comprised of credit card payments and club expenses and the assessee could not produce any evidence to show that the same was incurred for the purpose of his business, the A.O. disallowed entirely the claim of the assessee for deduction on account of business promotion expenditure. 10. The disallowance made by the A.O. on account of business promotion expenditure was challenged by the assessee in the appeal .....

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ssing Officer has not made any effort to ascertain the veracity of the payments before making 100% disallowance. The appellant is in the hospitality business and in order to attract customers, it is obliged to incur expenses for development of business. The mere fact that vouchers are not kept for such expenditure itself will not render whole of the expenditure as disallowable. However, the appellant being an individual entity, the possibility of incurrence of expenses for personal use cannot be .....

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it card payments and club expenses was disallowed by the A.O. for the failure of the assessee to establish on evidence, the business expediency of the said expenditure. Although the fact that there was no evidence maintained by the assessee to support and substantiate his claim for business promotion expenditure was accepted by the Ld. CIT(A), he held that this fact itself would not render whole of the expenditure as disallowance. After having considered the nature of business of the assessee wh .....

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out by the A.O. showing the involvement of personal and unverifiable element, which has remained uncontroverted even before the Ld. CIT(A). Having regard to all the facts and circumstances of the case, we are of the view that it would be fair and reasonable to allow the expenses claimed by the assessee on business promotion to the extent of 75% and disallow the balance 25%. We accordingly modify the impugned order of the Ld. CIT(A) on this issue and sustain the disallowance made by the A.O. on .....

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enditure incurred in relation to the said exempt income however was offered by the assessee as required by the provisions of section 14A. The A.O., therefore, worked out such expenditure at ₹ 4,23,745/- by applying Rule 8D and made a disallowance to that extent under section 14A of the Act. On appeal, the Ld. CIT(A) restricted the said disallowance to ₹ 1,09,861/- for the following reasons given in paragraph no 5.8.3 of his impugned order: I have considered the facts, the finding of .....

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