M/S. JALAN DISTRIBUTORS PVT. LTD. v. COMMISSIONER OF INCOME TAX, KOLKATA
[Citation -2015-LL-0915-2]

Citation 2015-LL-0915-2
Appellant Name M/S. JALAN DISTRIBUTORS PVT. LTD.
Respondent Name COMMISSIONER OF INCOME TAX, KOLKATA
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 15/09/2015
Assessment Year 1998-99
Judgment View Judgment
Keyword Tags substantial question of law • interest paid • interest expenditure in connection with the security deposit • rental expenditure
Bot Summary: Since some disputes arose between the co-sharers, the appellant by an agreement dated 6th August, 1996 obtained 50 portion of the said premises. The said premises was taken by the appellant on rent from the landlord after making a security deposit of Rs.48 lakhs. In response thereto, the assessee submitted a letter stating that the said property was used for commercial purpose but apart from mere claiming, the assessee could not submit any evidence to prove that the said premises were ever 4 used by it for its business purpose. The premises is admittedly situated in residential area of Kolkata. In the facts of the case we hold that the assessee has failed to lead any evidence to suggest that the premises in question were ever used for its business purposes. Perusing the impugned order, we find that the Tribunal had observed that though the Assessing Officer had specifically requested the assessee to file necessary evidence in support of the claim that the premises was used for the purpose of business, the assessee could not submit any evidence to prove that the said premises was used for its business purpose. We further find that on a specific query by the Tribunal the learned counsel had stated that he was unable to submit insurance policy against fire of the building and trade licence to show that the premises was used for business purpose.


ORDER SHEET ITA 41 OF 2005 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE M/S. JALAN DISTRIBUTORS PVT. LTD. Versus COMMISSIONER OF INCOME TAX, KOLKATA BEFORE: Hon'ble JUSTICE SOUMITRA PAL Hon'ble JUSTICE ISHAN CHANDRA DAS Date : 15th September, 2015. For appellant : Mr.Ananda Sen,Advocate Mr.M.Gupta,Advocate Mr.A.Samanta,Advocate For Respondent/revenue : Mr.M.P.Agarwal,Advocate Soumitra Pal, J:- Court : This appeal under section 260A of Income Tax Act, 1961 preferred against order dated 15th October, 2004 passed by Income Tax Appellate Tribunal, C Bench, Kolkata for assessment year 1998-99 was admitted on following substantial question of law: Whether on facts and in circumstances of case Tribunal erred in law in not allowing claim of assessee of interest u/s.36(1)(iii) of 2 I.T.Act, 1961 when on contrary ingredients for claiming deduction u/s.36(1)(iii) of Act was present in instant case and further requirements for claiming said deduction was satisfied by assessee and whether decision arrived at by Hon ble Income Tax Appellate Tribunal by ignoring same and without arriving at independent finding as to how claim of assessee was not sustainable is perverse ? facts, as evident from stay application filed by appellant which is part of Paper Book, are that appellant-company is engaged in business of film production, distribution and exhibition. residential house of directors of company is at 3/1 Queens Park, Kolkata- 700019. said premises is owned by one of Directors of company, namely Pritam Jalan, along with other co-sharers having 50% share therein. Since some disputes arose between co-sharers, appellant by agreement dated 6th August, 1996 obtained 50% portion of said premises. said premises was taken by appellant on rent from landlord after making security deposit of Rs.48 lakhs. property was valuable one and rent was fixed at of Rs.9,000/-. For assessment year 1998-99, appellant filed return of income showing total income of Rs.78,208/-. case was processed under section 143(1) of Income Tax Act, 1961. Subsequently, case was selected for scrutiny. Accordingly notices under section 143(2) and 142(1) were issued and served on appellant. appellant appeared for hearing before Deputy 3 Commissioner of Income Tax and filed details. On 30th March, 2001, Deputy Commissioner of Income Tax passed order under section 143(3) assessing total income at Rs.5,17,330/-. Aggrieved by said assessment order, appellant preferred appeal before Commissioner of Income Tax (Appeals), Kolkata mainly on ground that Assessing Officer erred in law and as well as in fact in disallowing claim of interest expenditure of Rs.3,60,000/- in connection with security deposit given by appellant to landlords for taking said premises for its business purposes and also disallowance of entire payment of rent of Rs.63,000/- for said premises. CIT(A) allowed appeal by deleting disallowance of Rs.3,60,000/- and 63,000/- on ground that Assessing Officer had incorrectly disallowed interest expenditure as well as rental expenditure. Aggrieved, revenue preferred appeal before Tribunal. Tribunal by impugned order allowed appeal by holding as under: We have considered rival submissions. We find that A.O. specifically requested assessee to file necessary evidence in support of its claim that said premises were used for purpose of its business as business asset ever since agreement dated 6.8.1996. In response thereto, assessee submitted letter stating that said property was used for commercial purpose but apart from mere claiming, assessee could not submit any evidence to prove that said premises were ever 4 used by it for its business purpose. premises is admittedly situated in residential area of Kolkata. On specific query from Bench, Ld.Counsel stated that assessee has no evidence of any mention of this premises in insurance policy against fire of building or in bank account etc. We find that CIT (Appeals) has decided issue in favour of assessee by merely observing that A.O. should not have drawn any hasty conclusion on non-business use of premises merely because assessee had failed to produce any case of trade licence etc. before him. In facts of case we hold that assessee has failed to lead any evidence to suggest that premises in question were ever used for its business purposes. Accordingly, we reverese order of CIT (Appeals) on issue and allow grounds of appeal of Revenue for both years. It is submitted by Mr.Ananda Sen, learned Advocate appearing on behalf of appellant that since documents, such as, agreements between co-sharers and answer to questionnaire under section 142(1) prepared by Assessing Officer, were filed before Assessing Officer, Tribunal should have considered same and should have allowed appeal dismissing appeal filed by revenue. Relying on judgement of Calcutta High Court in Tirupati Trading Co. v. CIT (Cal) : (2000) 242 ITR 13 (Cal), Mr.M.P.Agarwal, learned advocate appearing on behalf of revenue has submitted that save and except letter 5 stating that property was used for commercial purpose which was filed before Tribunal, as no other evidence was furnished, order of Tribunal may not be interfered with. Heard learned advocates for parties. Perusing impugned order, we find that Tribunal had observed that though Assessing Officer had specifically requested assessee to file necessary evidence in support of claim that premises was used for purpose of business, assessee could not submit any evidence to prove that said premises was used for its business purpose. We further find that on specific query by Tribunal learned counsel had stated that he was unable to submit insurance policy against fire of building and trade licence to show that premises was used for business purpose. Therefore, as facts were dealt with in detail by Tribunal and no cogent evidence could be adduced by assessee in support of its claim, in view of judgment Tirupati Trading Co. (supra), order of Tribunal requires no interference. Therefore, question is answered in negative, in favour of revenue and against assessee. Hence appeal is dismissed. (SOUMITRA PAL, J.) I agree. (ISHAN CHANDRA DAS, J.) ssaha AR(CR) M/S. JALAN DISTRIBUTORS PVT. LTD. v. COMMISSIONER OF INCOME TAX, KOLKATA
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