IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-1: NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER ITA No.6388/Del/2015 (ASSESSMENT YEAR : 2011-12) M/s. Cascade Enterprises, vs. ACIT, Circle 20 (1), 4, Kaul Apartments, New Delhi. 39, Rajpur Road, Delhi 110 054. (PAN : AAAFC2088C) (APPLICANT) (RESPONDENT) ASSESSEE BY : Shri R.K. Kapoor, CA REVENUE BY : Shri F.R. Meena, Senior DR Date of Hearing : 29.08.2016 Date of Order : 23.09.2016 ORDER present appeal has been filed by assessee assailing correctness of order dated 14.10.2015 of CIT(A)-32, New Delhi pertaining to 2011-12 assessment year on following grounds :- That learned CIT(A) has grossly erred in law in confirming order of Assessing Officer in disallowing expenses incurred by assessee pertaining to Malkaganj Property amounting to Rs. 749,154/- on wholly illegal, unwarranted and untenable grounds. That findings of learned CIT(A) that assessee admitted that Malkaganj Property was not used for its business purposes are factually incorrect and perverse and not borne from records. That learned CIT(A) has grossly erred in law in holding that usages of residential property for commercial purposes would disentitle assessee from claiming expenditure in respect of upkeep and maintenance of such property. 2 ITA No.6388/Del/2015 That learned CIT(A) has erred in law in disallowing depreciation in respect of Jasola Property on wholly untenable and illegal grounds. That findings of learned CIT(A) in respect of Jasola Property are self-contradictory while concluding that Jasola Property was not used by assessee during year under consideration. 2. Both ld. AR and ld. Senior DR were heard. It was common stand of both sides that issue in present appeal pertains to addition on account of Malkaganj property held by assessee. parties were required to address nature of assessee s business. From pages 2 & 3 of assessment order, it was evident that assessee claimed to have utilized said premises for business purposes and as per Inspector s report dated 20.09.2013 taken into consideration by AO, office allegedly shifted to NOIDA, in view of drive of MCD to vacate residential flats and this fact was informed by employee of assessee Nand Lal, found at premises. perusal of pages 5 & 6 further shows that conclusion against assessee was further based fact that for specific period, certain minimum electricity bills were generated. Accordingly on account of these facts, assessee s reply dated 05.12.2013 was dismissed holding that these were not business expenditure. On facts we find that there is no discussion whatsoever as to what was business of assessee. It has neither been addressed by AO nor by CIT (A). ld. AR, relying upon page 5 of assessment order, though submitted that assessee was utilizing premises for storing samples on account of which some orders were received and commission presumably was earned. However, he was also unable to 3 ITA No.6388/Del/2015 address nature of assessee s business. It was his stand that no doubt, specific premises which originally were used for business of assessee had to be vacated on account of drive of MCD and thereafter, said premises were utilized only for storage of record and samples etc. and employee of assessee admittedly was found even in September, 2013 by Inspector. Thus, it was argued claim that premises were utilized for business of assessee cannot be discarded. usage of minimum electricity charges incurred for business it was submitted supports fact that premises were used for storage only. Exactly samples of what commodity were stored he was unable to address. In absence of any discussion on what was business of assessee, ld. AR submitted that he has no objection if issue is restored. ld. Senior DR relied upon orders of authorities below but was also unable to address what was business of assessee as tax authorities had also failed to address same. 3. I have considered rival contentions and perused material on record. It is seen that assessee s return declaring income of Rs.17,77,906/- was subjected to scrutiny assessment. assessee was found to have received commission income of Rs.5,09,07,118/-. As per Inspector s report dated 20.09.2013, extracted in pages 1 & 2 of assessment order, Inspector qua this specific property i.e. 11, Gandhi Square, Malkaganj noted as under :- 4 ITA No.6388/Del/2015 Another premise at 11, Gandhi Square, Malka Ganj Delhi was visited by me on 24.09.2013 comprises three floor (ground + two floors). All this property is under possession of M/s. Cascade Enterprises, whereas Ground floor is vacant, First floor is rented out, Second Floor is also vacant. On enquiry from Mr. Nandlal, Caretaker of this building, I came to know me that office of M/s Cascade Enterprises operated from Ground Floor upto year 2008, after drive of MCD to vacate residential flats used for business purpose, office shifted to Noida. Mr. Nandlal was employee of Cascade Enterprises." 3.1. electricity and water expenses to extent of Rs.21,641/- and Rs.1085/- and repair & painting expenditure to tune of Rs.3,42,792/- were claimed. Considering fact that assessee had accepted that due to impending action of MCD, office was shifted, AO rejected claim which was sustained in appeal by CIT(A). 3.2. In absence of any discussion on facts, conclusion arrives at cannot be sustained. Whether premises, specifically ground floor and basement stated to be under assessee s occupation was used for business of assessee or not would depend on what was business. general answer that some samples were being stored can neither be accepted nor rejected without any discussion on facts. In circumstances, it is deemed appropriate to accept prayer of parties and restore issue back file of AO with direction to first address nature of assessee s business and thereafter, examine whether specific premises have been used as godown/storage place by assessee which is specific claim made by assessee. fact that Inspector in September 2013 found that business premises had shifted elsewhere per se does not detract from assessee s claim as on 5 ITA No.6388/Del/2015 contrary it supports claim that specific premises were manned by assessee s employee. Whether samples were being stored there or not would depended on what was business of assessee. Accordingly issues are restored with afore-mentioned direction back to AO who shall pass speaking order in accordance with law after giving assessee opportunity of being heard. said order was pronounced in presence of parties on date of hearing itself. 4. In result, appeal of assessee is allowed for statistical purposes. Order pronounced in open court on this 23rd day of September, 2016. Sd/- (DIVA SINGH) JUDICIAL MEMBER TS/Amit Kumar Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A)-32, New Delhi. 5. DR, ITAT. ASSTT. REGISTRAR, ITAT, NEW DELHI. M/s. Cascade Enterprises v. ACIT, Circle 20 (1), New Delhi