Ita/71/2010 Of Sri Suresh Jain v. The Asst. Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU| ON THE 29 DAY OF NOVEMBER, 2018 BEFORE THE HON BLE MR. JUSTICE RAVI MALIMATH| AND| THE HON BLE MR. JUSTICE K. NATARAJAN. INCOME TAX APPEAL NO./1L OF JZO BEI|WEE SRI SURESH JAINNO.26, REST HOUSE ROAD,BENGALURU. — APPELLANT (BY SRI A. SHANKAR, SENIOR ADVOCATE,ALONG WITH SRI M. LAVA, ADVOCATE) ANI THE ASST. COMMISSIONER OF INCOME-TAX.CENTRAL CIRCLE-1(4),C.R. BUILDING, |QUEENS ROAD,BENGALURU. ~., RESPONDENT (BY SRI JEEVAN J.NEERALGI, ADVOCATE) 7K OK THIS INCOME TAX APPEAL [IS FILED UNDERSECTION 260A OF INCOME TAX ACT, 1961, PRAYING|TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW|AS STATED THEREIN AND ANSWER THE SAME IN.FAVOUR OF THE APPELLANT AND TO ALLOW THE)APPEAL AND SET ASIDE THE FINDINGS TO THE.EXTENT AGAINST THE APPELLANT IN THE ORDER|PASSEDBY|THETRIBUNALIN|NO.1382/BANG/2008, DATED 25-9-2009. 1.7.A. THIS INCOME TAX APPEAL COMING ON FORHEARING THIS DAY, RAVI MALIMATH, J., DELIVERED|THE FOLLOWING: JUDGMENT The appellant is an individual, who is into tnebusiness of real estate, property dealings, etc. He|filed the return of income for the Assessment Year.2003-04andadeclarectnetotal incomeofRs.4,15,203/-. The return being selected for scrutiny,tne Assessing Officer completed the assessment under|Section 143(3) of the Income Tax Act, 1961, (for short,‘tne Act’)andcomputedtnetotalincomeat.Rs.7,09,100/-. A sum of Rs.3,04,345/- was disallowed.Aggrieved by the same, an appeal was preferred before the Commissioner of Income Tax (Appeals), which wasdismissed. Thereafter, an appeal was preferred before|the Tribunal, which was also dismissed. Hence, this)appeal. 2. By the order dated 12-4-2010, the appeal wasadmitted to consider tne following substantial questionsof law: — /.“Whetner the authorities below|justified in law in disallowing the)entirebDusInessECXPETISEofRs.3,04,345/- (being Bank Cnarges|810/- Depreciation Rs.1,46,641/-.Interest on vehicie Rs.28,538/-.Fiectricity Charges Rs.50,958/- andTelepnone cnarges RS.77,398/-) onthe facts and circumstances of the.Case?| i.Whetherthe|autnoritiesbelowcorrect in law in imposing interest|Under Section 7234 B and 7234 D o theActOP)thefactsandcircumstances of the case? 3. Mr. A. Shankar, the learned senior counsel|appearing for the appellant’s counsel, contends thatthe Assessing Officer misconstrued the income andcame to the conclusion that the expenses as claimedby the assessee are relatable to the business ofsubleasing a property. That the expenditure incurredby the assessee towards depreciation’, ‘interest onvehicle’, electricity charges and telephone charges’are in the course of his business. When these arenot expenses directly relatable to the subleasing ofthe property, the Assessing Officer has misconstruedand wrongly disallowed the same. The Commissionerof Income Tax (Appeals) as well as the Tribunalerroneously affirmed the findings of the AssessingOfficer. | 4. The same is disputed by Sri Jeevan J. |Neeralgi, the learned counsel appearing for therespondent. He contends that there is no materialplaced by the assessee to justify that these expensespertain to the regular business of the assessee.Therefore, the Assessing Officer, in the absence ofany material, came to tne view that the expensesare relatable to subleasing of the property. 5. On nearing learned counsels, we are of theview that the Assessing Officer nas misconstrued theincome. So far facts are concerned, the expensesclaimed by the assessee are towards the headsstated nereinabove and are not relatabie to tnesubleasing of tne property as contended by theAssessing Officer. Therefore, we are of the view,whether the expenses are relatable purely to thebusiness of subleasing the property, or expensesincurred in the regular course of business, is a matter of fact, which is to be considered by theAssessing Officer. | 5. On nearing learned counsels, we are of theview that the Assessing Officer nas misconstrued theincome. So far facts are concerned, the expensesclaimed by the assessee are towards the headsstated nereinabove and are not relatabie to tnesubleasing of tne property as contended by theAssessing Officer. Therefore, we are of the view,whether the expenses are relatable purely to thebusiness of subleasing the property, or expensesincurred in the regular course of business, is a matter of fact, which is to be considered by theAssessing Officer. | 6. In these circumstances, we are of the view.that the matter requires to be remanded to the.Assessing Officer for considering the material available|with him and thereafter, come to a conciusion wnetner|expenses are required to be allowed or not. Consequently, the appeal is disposed off. Thematter is remanded to the Assessing Officer for a fresh consideration. All contentions are kept open. SD/-JUDGE | SD/-|JUDGE kKVK