M/S.amtex Software Solutions Pvt. Ltd., Chennai-18 v. The Assistant Commissioner Of Income Tax (Osd), Corporate Range-1, Chennai-34

In the High Court of Judicature at MadrasDated : 09.7.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.433 of 2019 M/s.Amtex Software SolutionsPvt. Ltd., Chennai-18....AppellantVs The Assistant Commissioner of Income Tax (OSD), CorporateRange-1, Chennai-34....Respondent APPEAL under Section 260A of the Income Tax Act, 1961 to setaside the order dated 02.1.2019 made in ITA.No.399/Chny/2018 onthe file of the Income Tax Appellate Tribunal, Chennai 'C' Benchfor the assessment year 2013-14, preferred against the order ofthe Commissioner of Income Tax(Appeal)-I, Chennai dated29.11.2017 made in ITA.NO.657/CIT(A)-1/2016-17 for theAssessment year 2013-14 against the order dated 23.12.2016passed by the Assistant Commissioner of Income Tax(OSD),Corporate Range 1, Chennai for the Assessment year 2013-2014(PAN.NO. ). For Appellant : Mrs.G.Vardini KarthikFor Respondent :Mrs.R.Hemalatha, SSC Judgment was delivered by T.S.Sivagnanam,J We have heard Mrs.G.Vardini Karthik, learned counsel for theappellant – assessee and Mrs.R.Hemalatha, learned SeniorStanding Counsel accepting notice for the respondent – Revenue. 2. This appeal, filed by the assessee under Section 260A ofthe Income Tax Act, 1961 (for short, the Act), is directedagainst the order dated 02.1.2019 in ITA.No.399/Chny/2018 on thefile of the Income Tax Appellate Tribunal, Chennai 'C' Bench forthe assessment year 2013-14.3. The assessee has filed this appeal by raising thefollowing substantial questions of law : https://hcservices.ecourts.gov.in/hcservices/ “i. Whether, on the facts andcircumstances of the case, the Tribunal wasright in disallowing the guest houseexpenditure based on the undated inspector'sreport, which remains unfurnished to theappellant till date ? ii. Whether, on the facts andcircumstances of the case, the Tribunal wasright in rejecting the documents like leasedeed and e-mail correspondence filed at thetime of hearing without restoring the matterto the Lower Authorities to check on theveracity of the documents filed? Andiii. Whether, on the facts andcircumstances of the case, the Tribunal wasright in denying depreciation on capitalexpenditure incurred for improvements madeto the leasehold property, when the lawpermits under Explanation 1 to Section 32 ofthe Income Tax Act, 1961 ?” 4. The short issue, which falls for consideration in thisappeal, is as to whether the Tribunal was right in disallowingthe guest house expenditure. 5. The Assessing Officer disbelieved the stand taken by theassessee that they incurred expenditure for the maintenance ofthe guest house. It appears that an inspector attached to theoffice of the Assessing Officer was deputed to visit thepremises and that the inspector was stated to have given areport, which appeared to be the basis of the assessment. 6. Aggrieved by the order of assessment dated 23.12.2016,the assessee filed an appeal before the Commissioner of IncomeTax (Appeals)-1, Chennai-34 [for brevity, the CIT(A)], whoconfirmed the order passed by the Assessing Officer vide orderdated 29.11.2017. The assessee filed an appeal before theTribunal as against the order passed by the CIT(A). Before theTribunal, the assessee filed a bunch of documents including e-mail correspondence, etc., to substantiate the plea that theguest house was utilized for accommodating people from abroad,who have come to visit the assessee's business establishment,that the guest house is located near the assessee's businessestablishment situated at Siruseri, that the allotment in theguest house is made through the HR Department of the assesseeand that there are sufficient e-mail correspondence with the HRdepartment of the assessee to show that the premises is used asa guest house. Apart from that, the assessee's case is that thepremises is put to use for conducting periodical meetings, https://hcservices.ecourts.gov.in/hcservices/ conferences, training sessions and for entertainment of officersand staff during weekends and holidays. 7. We find that the CIT(A) had taken note of the bunch ofdocuments filed by the assessee. Nevertheless, she was notconvinced with the stand taken by the assessee and dismissed theappeal. On further appeal by the assessee, the Tribunalconcurred with the findings of the CIT(A) and dismissed theappeal by the impugned order. 8. In our considered view, when once the CIT(A) noted thatthere were documents filed by the assessee to substantiate theircontention, the least that could have been done is to call for aremand report from the Assessing Officer. This is relevant forthe facts of the present case because the matter concernsassessment for the year 2013-14. The Assessing Officer does notgive the date, on which, the inspector attached to the office ofthe Assessing Officer inspected the property and the report,which has been extracted in paragraph 3.3 of the impugned orderalso does not give the date, on which, the inspector submittedhis report. 9. In all probabilities, the inspection would have beenconducted only during November/December 2016 just prior tocompletion of the assessment vide order dated 23.12.2016.Considering all these facts, a remand report would havedefinitely thrown better light on the factual position to enablethe CIT(A) to come to a conclusion. The above reasoning appearsto have weighed in the mind of the CIT(A) while considering theappeals filed by the assessee for the assessment years 2014-15and 2015-16 respectively in ITA Nos.662/CIT(A)-1/16-17 and135/CIT(A)-1/17-18. 10. It is submitted by the learned counsel that already theCIT(A) called for a remand report from the Assessing Officerwith regard to very same claim made by the assessee towardsguest house expenditure for the assessment years 2014-15 and2015-16. 11. Considering these facts, we deem it appropriate to remandthe matter to the CIT(A) so as to enable her to consider theassessee's case for the assessment year 2013-14 also along withthe appeals pertaining to the assessment years 2014-15 and 2015-16. 12. For the above reasons, the above tax case appeal isallowed, the impugned order passed by the Tribunal as well asthe order passed by the CIT(A) dated 29.11.2017 are set aside https://hcservices.ecourts.gov.in/hcservices/ and the matter is remanded to the CIT(A) for a freshconsideration to be heard and decided along with the appealspertaining to the assessment years 2014-15 and 2015-16, forwhich, a remand report has already been called for. Thesubstantial questions of law are left open. No costs. Sd/- Assistant Registrar(CO) //True Copy// Sub Assistant Registrar To 1.The Income Tax Appellate Tribunal, Chennai 'C' Bench 2.The Assistant Commissioner of Income Tax (OSD), CorporateRange I, Chennai-34. 3.The Commissioner of Income Tax(Appeals)-1,Chennai-34. +1cc to Mr.R.Ravi Kumar, Advocate sr.57262+1cc to Mrs.G.Vardini Karthik, Advocate sr.57691+1cc to Mr.T.Ravikumar, Advocate sr.58264 TCA.No.433 of 2019 pm(co)nr 06/08/2019