9911796707
TMI Blog2010 (12) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is tenant of a property situated at Connaught Place having physical possession of about 3857 sq. ft. on the ground and resident floor of the premises. Assessee sub-letted the premises by license an agreement with one company namely Bistro Hospitality (P.) Ltd. for running restaurant and bar in the name of TGI, Friday. The said license agreement stipulated that assessees shall not be responsible for maintenance, management and operations of the restaurant and bar business and had no liability whatsoever in that respect. Assessee claimed business expenditure of Rs. 10,100,32 against remuneration for license of sub-letted premises as under: - Salary Expenses Rs. 8,18,500 Electricity & Water Expenses Rs. 1,18,368 Printing & Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year and is already settled in favour of the assessee in the earlier years save for certain disallowance for electricity charges." 4. The AO was not convinced of disallowed the expenditure by following observations: - "9. The reply furnished by the assessee has been considered and found not to be satisfactory. The nature and the amount of the expenses claimed by the assessee in the profit and loss account do not commensurate with the business of the assessee being the owner of the tenancy rights. The terms of the license agreement are self contained and sufficient so as to prevent any kind of misuse of the tenanted premises. In fact, the income derived by the assessee by licensing the said premise is more in the nature of rental income a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This speak of the guilty intent of the assessee, as the assessee has tried to camouflage the expenses after the case was selected for scrutiny. The assessee has taken the plea that there were certain accounting errors due to which assessee had to file revised return. However, this exercise has been done as mere reshuffling of the expenses under various head so as to unduly justify the expenses claimed in profit and loss account. 11. Considering the above discussion, salary expense of Rs. 8,18,500 as there seems to be no nexus between the commercial expediency of the business and nature of the expense and added back to the income of the assessee as 'income from business'. Also being satisfied that assessee has filed inaccurate particulars o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my view the ld. AO was subjective in reaching the conclusion that the appellant had camouflaged the expenses when selected for scrutiny. In effect, such expenses had been claimed in the past also and also allowed by the department. Moreover, before disallowing such expenses, the AO has not in any way reached to the conclusion that such expenses were not allowable u/s 37(1) of the Income-tax Act, 1961. In any case a revised return if filed before the prescribed date, is a valid return. Further, regarding the disallowance of electricity and water charges I find that such expenses relate to appellant's own premises and the AO has failed to distinguish that the appellant was running his own business separately while a separate part of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of business of letting properties except letting up one tenanted property, which can never be called a business of the assessee. Ld. Counsel for the assessee only contends that it is the old business of the assessee and the income has been taxed as business income on the rule of consistency. In our view the assessment has been framed against the express provisions of law, we are surprised to see the way this assessment has been framed. Principles of res-judicata do not apply to Income-tax proceedings. Further a patent mistake of law cannot be regularized or allowed in the pretext of consistency. It is the duty of the ITAT to ensure that a fair and proper assessment is framed in accordance with law. The assessee has earned no income exce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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