Commissioner Of Income Tax v. M/S Vasant Holiday Homes (P) Ltd

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 61 OF 2014 COMMISSIONER OF INCOME TAX Versus M/S VASANT HOLIDAY HOMES (P) LTD., ... Appellant... Respondent Ms. Asha A. Desai, Advocate for the Appellant.Mr. J. E. Coelho Pereira, Senior Advocate with Mr. V. Braganza,Advocate for the Respondent. ORAL ORDER Heard Ms. Asha Desai, learned Counsel appearing for the Appellant and Shri J. E. Coelho Pereira, learned Senior Advocateappearing for the Respondent. 2. The above Appeal challenges the Order passed by the Tax Appellate Tribunal dated 20.03.2014 whereby the Appeal preferredby the Respondents was allowed and the expenditure claimed to havebeen spent by the Respondents to the tune of Rs.1,99,50,000/- wasaccepted for the purpose of computing the capital gains in respect ofa transaction wherein a hotel premises were sold by the Respondents. 3. Ms. Asha Desai, learned Counsel appearing for the Appellants, has pointed out that there is no evidence on record to substantiate theclaim of the Respondents that a sum of Rs.1,99,50,000/- was in factspent by the Respondents. Learned Counsel further pointed out thatthere were no vouchers or any material produced by the Respondentsto substantiate such expenditure. Learned Counsel further submitsthat the Assessing Officer refused to accept such expenditure but,however, the Respondents preferred an Appeal before theCommissioner wherein some documents were allegedly produced insupport of such contention. Learned Counsel further submitted thatthe Commissioner of Income Tax sought for a remand report fromthe Assessing Officer wherein the Assessing Officer after examiningthe property in question came to the conclusion that the expenditureincurred could be restricted to Rs.1.05 Crores only. Learned Counselfurther submits that the Commission of Income Tax, thereafter, onperusal of the records, has accepted the expenditure for a sum ofRs.1,80,00,000/- approximately. Learned Counsel further pointed outthat the Respondents thereafter challenged the Order of theCommissioner whereby the total expenditure of Ra.1,99,50,000/- wasaccepted by the Income Tax Appellate Tribunal. Learned Counselfurther pointed out that the findings arrived at by the Tribunal areperverse, as according to the learned Counsel, there was no materialon record to substantiate such claim and, as such, the Tribunal wasnot justified to allow the total expenditure allegedly incurred by theRespondents. Learned Counsel further pointed out that the remandreport itself suggests that the documents in respect of such expenditure were lost in the floods and, as such, the Tribunal was notjustified to allow such claim. Learned Counsel has taken us throughthe Orders passed by the Income Tax Appellate Tribunal to point outthat the material which was not before the Commissioner wasexamined by the Tribunal without giving any opportunity to theAppellants to rebut or meet such documents. Learned Counsel assuch pointed out that the Appeal deserves to be admitted on thesubstantial question of law as framed in the Appeal Memo. expenditure were lost in the floods and, as such, the Tribunal was notjustified to allow such claim. Learned Counsel has taken us throughthe Orders passed by the Income Tax Appellate Tribunal to point outthat the material which was not before the Commissioner wasexamined by the Tribunal without giving any opportunity to theAppellants to rebut or meet such documents. Learned Counsel assuch pointed out that the Appeal deserves to be admitted on thesubstantial question of law as framed in the Appeal Memo. 4. On the other hand, Shri J. E. Coelho Pereira, learned SeniorAdvocate appearing for the Respondents, has pointed out that as perthe Memorandum of Understanding executed way back in January,2005, there is a specific condition that a sum of Rs.1,99,00,000/- wasto be spent for the purpose of re-construction and repairs of the hotelpremises which were in a dilapidated condition. Learned SeniorAdvocate further pointed out that such amount was fixed based onreport from an Architect and approved designs. Learned SeniorAdvocate further pointed out that such expenditure was incurred forthe assessing year 2005-06 as well as 2006-07 and that as far as theexpenditure for 2005-06 is concerned, the assessment was complete accepting the expenditure incurred by the Respondents. LearnedSenior Advocate further pointed out that the Income Tax AppellateTribunal has rightly appreciated the evidence on record and acceptedthe expenditure for the assessment year 2005-06 and as such thequestion of refusing the veracity of the amount claimed by the Respondents could not be justified. Learned Senior Advocate hasthereafter taken us through the proposed substantial question of lawand pointed out that no documents were produced before the IncomeTax Appellate Tribunal but, however, the documents were producedalong with the Appeal Memo and were before the authorities whilstdeciding the Appeal preferred by the Respondents. Learned SeniorAdvocate further pointed out that the documents were also examinedduring the course of the remand report and, as such, the contention ofthe learned Counsel appearing for the Appellant that no documentswere produced before the Income Tax Appellate Tribunal arecontrary to the records before the Authorities. Learned SeniorAdvocate further pointed out that there are no substantial questions oflaw which arise in the present Appeal for consideration and, as such,the Appeal be rejected. 5. We have given our thoughtful consideration to the contentionsadvanced by the learned Counsel appearing for the parties and withtheir assistance, we have also gone through the records. 6. The only substantial question of law proposed by the Appellantreads thus: (i) Whether the Income Tax Appellate Tribunal was justified tolook into fresh material during the course of the hearing the Appealpreferred by the Respondents without giving an opportunity to the Appellants to meet such document ? 7. On perusal of the records as well as the Order passed by theTribunal, we find that there were no new documents produced beforethe Income Tax Appellate Tribunal. In fact, in the affidavit filed bythe Respondents, it reveals that in fact the documents, if any, wereproduced along with the Appeal Memo filed before the Income TaxAppellate Tribunal. These documents and other material wereexamined by the Commissioner of Income Tax whilst disposing ofthe Appeal preferred by the Respondents. Apart from that, theIncome Tax Appellate Tribunal whilst examining the Appealpreferred by the Appellant has taken not of the fact that in theMemorandum of Understanding executed between the parties inJanuary, 2005, Clause (1) therein clearly stipulates that a sum ofRs.1,99,50,000/- was fixed as the amount of total cost forrepairs/renovation and updations of the property in question. Theauthenticity and/or the veracity of the said documents were notdisputed by the Appellants. In such circumstances, there was nomaterial produced by the Appellants to disapprove the terms of thesaid Agreement. 8. The Tribunal has also taken note of the fact that as theMemorandum of Understanding was executed in 2005, theexpenditure incurred by the Respondents in the Assessment year2005-06 was accepted by the Revenue Authorities and, the assessment for such year was already finalised. These aspects weretaken note of by the Income Tax Appellate Tribunal to come to theconclusion that the Appellants were entitled to claim suchexpenditure. The findings of the Tribunal are on the basis ofappreciating the evidence on record and we find no perversity in suchfinding based on evidence. In fact, considering that for theassessment year 2005-06 the expenditure was already partlyaccepted, it was not open to the Authorities to dispute suchexpenditure. Besides that, the fact that such renovation and repairswere carried out to the premises by the Respondents, has not beendisputed by the Revenue Authorities. 9. In such circumstances, we find that the findings of the Tribunalwhilst disposing of the Appeal preferred by the Respondents cannotbe said to be perverse or by misreading any material produced onrecord. Hence, we find no merit in the above Appeal which standsaccordingly rejected. arp/* K. L. WADANE, J. F. M. REIS, J.