9911796707
TMI Blog2022 (7) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... that any expenses have been incurred for rental income, the issue has been settled in earlier years and there was no change of facts during the year under consideration. 2. For that the Ld. CIT(A) erred in disregarding the principles of consistency, when on similar facts the expenses were allowed as business expense, there is no denial of the fact that the assessee was carrying on business as is proved from the facts of the case and duly admitted by the AO himself. 3. For that the Ld. CIT(A) erred in confirming the action made by AO disallowing Rs. 13,82,342/- in u/s. 14A when no expenses was incurred for earning dividend income and even otherwise only those investments should have been taken in the formula prescribed in Rule 8D on which exempted dividend income had been earned." 3. Ground No. 1 & 2 relate to disallowance of expenses claimed by the assessee as business expenses and Ground No. 3 relates to disallowance u/s. 14A r.w.r. 8D(2)(iii). 4. Before us, Shri S.M. Surana, Advocate, appeared on behalf of the assessee and Smt. Ranu Biswas, Sr. DR represented the Department. 5. Brief facts of the case as culled out from records are that the assessee is engaged in the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as incidental to the earning of income from house property. Ld. AO also held that since 30% deduction has already been claimed by the assessee u/s. 24 of the Act under the head "income from house property", no other expense was allowable under the said head of income. Accordingly, he disallowed a sum of Rs. 45,58,001/- and added it back to the business income of the assessee. 5.3. On similar lines, ld. AO made a proportionate disallowance in respect of expenses towards municipal taxes paid by the assessee. Since the let out area covers 98.7% of the total area, total municipal taxes paid of Rs. 13,11,757/- was claimed as deduction, which was restricted to 98.7% and balance of Rs. 17,053/- was disallowed as not being incidental to the let out portion of the house property. 5.4. Further, ld. AO noted that assessee had earned dividend income of Rs. 34,15,496/- claimed as exempt u/s. 10(13) of the Act. He also noted that during the course of assessment, assessee did not submit any evidence or books of accounts to justify the nexus between the expenditure incurred and exempt dividend income earned. Ld. Further noted that assessee vide its letter dated 13.11.2018 submitted that it had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper book, we note that the income from operations is reported at Rs. 3,83,94,806/- and sales at Rs. 76,85,313/-. Details of income from operations placed in note no. 14 at page 9 of the paper book reveals that there is rental income of Rs. 3,21,31,099/-, dividend income of Rs. 34,15,496/-, profit on sale of investment - long term of Rs. 11,02,347/- and short term of Rs. 17,00,000/-, interest received is Rs. 3,649/- and there are miscellaneous receipts of Rs. 42,215/-. On the factual observations made by the ld. AO, in his assessment order at para 2.2, about the non-submission of any details of expenses incidental to the income from house property and business income, a specific query was raised by the Bench to the ld. Counsel for the assessee on which nothing was brought on record to controvert it except for placing reliance on the decisions of the appellate authorities in preceding assessment years, viz. 2009-10, 2010-11, 2011-12 and 2012-13. 10. We perused various orders for the aforesaid assessment years placed in the paper book and found that in the appellate order by Co-ordinate bench of ITAT Kolkata in the assessee's own case for AY 2009-10 in ITA No. 327/Kol/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' or as 'business income'. It was stated by the assessee that it is also in the business of granting loans and advances and therefore, the interest income has to be treated as 'business income' and not as 'income from other sources'. It was held that "When the fact remains that the assessee is into the business of granting of loans and advances, certainly the interest income of the assessee would be business income and the Ld. DR was unable to controvert the said fact before us. Therefore, we do not find any infirmity in the order of the Ld. CIT(A) and we dismiss this ground of appeal of the revenue." 10.1. In the appellate order by the ld. CIT(A) for AY 2010-11, similar issue on treatment of loss as business loss or short term capital loss was adjudicated upon in the light of the appellate order of CIT(A) dated 19.11.2013 for AY 2009-10. This order of CIT(A) for AY 2009-10 was the subject matter of appeal by the Revenue before the Co-ordinate bench of ITAT Kolkata for AY 2009-10 (supra). In this order of CIT(A) for AY 2010-11, ld. CIT(A) noted in para 3 (placed at page 30 of the paper book) that "Appellant has also relied on Circular No. 6 of 2016 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. 10.3. There is an appellate order by ld. CIT(A)-4, Kolkata for AY 2012-13, dtd. 18.07.2019 placed at page 45 of the paper book wherein the trading under business of shares includes purchases amounting to Rs. 11,72,92,977/- and sales amounting to Rs. 11,09,36,391/-. In this case, ld. AO disallowed 100% of the expenses of Rs. 1,49,17,406/- claimed as business expenses on the ground that the assessee had no business. Ld. CIT(A) allowed the appeal of the assessee by following the decision of the Co-ordinate Bench of ITAT, Kolkata in the assessee's own case for AY 2009-10 & 2011-12 by holding that matter is squarely covered in favor of the assessee. While adjudicating on the ground no. 7 relating to disallowance u/s. 14A, ld. CIT(A) noted that there is no exempt income earned by the assessee and thus by placing reliance on the decision of Hon'ble Supreme Court in the case of CIT v. Chettinad Logistics Pvt. Ltd. [2018] 95 taxmann.com 250 (SC) held that when there is no exempt income earned by the assessee, no disallowance u/s. 14A can be made. However, from the perusal of the assessment order placed at page 49 of the paper book, we note on page 50 from the tabulation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which would relate only to the business. Ld. CIT(A) also noted that a standard deduction @ 30% has already been claimed by the assessee and allowed under the head income from house property. This standard deduction of 30% from the rental receipts is allowed under the Act on account of repairs and maintenance expenses which has been otherwise claimed by the assessee as business expenses by debiting them in the profit and loss account for which no details and supporting documents were furnished. 12.1. Thus, in the present facts and circumstances of the case, where assessee did not furnish relevant supporting documents, the ld. CIT(A) proceeded to uphold the disallowance @ 50% made by the ld. AO out of the business expenditure, which according to us does not call for any interference. We hold so, more particularly when there was a specific query from the Bench on this aspect and the ld. Counsel for the assessee without controverting it by bringing any material on record, chose only to place strong reliance on the orders of the ld. appellate authorities for the preceding years, which are distinguishable on facts as elaborated above, year on year basis. 13. During the course of hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the appellate orders of the preceding years and the financial statements for the year under consideration, more particularly when in the preceding years, the issue was centered towards treatment of loss and shares as business loss or capital loss and stock-in-trade v. investment, respectively. 14. To our mind, both, ld. CIT(A) and the ld. AO have taken a rational approach by making a disallowance to an extent of 50% of the expenses claimed as business expenses, more particularly in a given situation where the issue of non-submission of details of expenses along with supporting documents has not been controverted by the assessee except for embarking upon the appellate orders of preceding years without bringing on record, similarities in the facts and issues dealt therein and when 98.7% of the total area of the building has been let-out for earning rental income and only 1.3% is available otherwise. Accordingly, ground of appeal no. 1 and 2 of the appeal by the assessee are dismissed. 15. Ground No. 3 relates to disallowance of Rs. 13,82,342/- made u/s. 14A r.w.r. 8D(2)(iii). Ld. Counsel for the assessee submitted that no expenditure was incurred to earn exempt dividend incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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