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TMI Blog2017 (11) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... rector General of Mauritius Revenue Authorities in their communication dated 21-12-2011 which has been extracted by the CIT(A) in his order at para 3.4.1. The other documents sent by the Mauritius Revenue Authorities has also been listed by the CIT(A) in the same paragraph. By these documents, a clarification has been received from the Director General of Mauritius Revenue Authorities which was forwarded by the Under Secretary, FT & TR-II, CBDT directly to the AO. Therefore, we are of the view that there is no merit in the arguments of the Ld.DR that the CIT(A) has not considered the necessity of further enquiry with regard to the genuineness of transactions and creditworthiness of the parties. We further are of the opinion that once communication received from the designated authority through FT & TR which is the authorized agency for exchanging information between two countries u/s 90 of the Income-tax Act, 1961 and such information has been received through proper channel, then there is no scope for the AO as well as the CIT(A) to conduct further enquiries with regard to the creditworthiness of the parties. All details like share certificate issued by the assessee company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make a claim of deduction towards property maintenance expenses against business income which has not been taken cognizance on account of limitation. Therefore, we are of the considered view that considering the facts and circumstances of the case and also relying upon the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd [2006 (3) TMI 75 - SUPREME Court] and CIT vs Prithvi Brokers & Shareholders Pvt Ltd (2012 (7) TMI 158 - BOMBAY HIGH COURT), the claim of the assessee with regard to the deduction towards property maintenance expenses against business income needs to be considered in the lights of the facts without going into the technicality of the issue of limitation of filing revised return. Therefore, we set aside the issue to the file of the AO and direct him to consider the issue afresh after affording reasonable opportunity of hearing to the assessee. - I.T.A No.3842/Mum/2012 And I.T.A No.4329/Mum/2012 - - - Dated:- 10-11-2017 - Shri D.T. Garasia (JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Assessee : Shri Chetan Karia For The Revenue : Shri R.S. Arneja (CIT-DR) / Shri Suman Kumar ORDER Per G Manjunatha, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The revenue in its appeal, has raised the following grounds of appeal:- 1.(a) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in coming to the conclusion that the share capital contribution amounting to US $ 2,02,62,114, equivalent to INR 168,00,78,431/- by M/s. Strand Developers Mauritius Ltd., stands explained by the communications dated 22- 12-2011 of Mauritius Revenue Authority, without scrutinising and bringing on record the reasons for the difference in the communication of Mauritius Revenue Authority dated 21-1 1-201 1 on which the addition u/s. 68 had been made and the later communication dated 22-12-201 1. ( b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in technically not giving an opportunity to the A.O to comment on the difference between the two communications of Mauritius Revenue Authority and drawing a unilateral conclusion. 1. (a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in coming to a conclusion that the assessee had discharged the onus, relying upon the reconciliation provided by the appellant assessee, when there were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e India, verification can be conducted through FT TR Division of Department of Revenue, under the Ministry of Finance as the said authority is the designated authority under the bilateral treaty with each country u/s 90 of the Income-tax Act, 1961. The initial communication received from the Mauritius Revenue Authorities through FT TR clearly establishes a fact that Strand Developers Mauritius Ltd does not have capacity to invest such a huge amount in the assessee company. Therefore, the AO came to the conclusion that the assessee has not discharged the onus of proving the capacity and creditworthiness of the investor. Though the subsequent communication received from Mauritius Revenue Authorities through proper channel indicates investment in assessee company by Strand Developers Mauritius Ltd, the reasons for difference between the two communications received from Mauritius Revenue Authorities has not been explained by the assessee to the satisfaction of the AO. The CIT(A), without conducting any further enquiry with regard to the communication received from Mauritius Revenue Authorities and also without affording any opportunity to the AO to offer his comments on such deviat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out by the AO should be through FT TR Division of Department of Revenue, under the Ministry of Finance and hence, the AO cannot ignore the documents received through proper channel to hold that the assessee has failed to discharge its onus in proving the credits. Neither the AO, nor the assessee had any power to cause necessary enquiry except requesting the designated authority. In this case, the AO has received the information through FT TR Division which has been forwarded by the AO to the CIT(A) in the appellate proceedings and the CIT(A) has given opportunity of hearing to the assessee on the said communication which is evidenced from the fact that the CIT(A) in his order has clearly stated that he had the benefit of discussion with the AO on the subject matter. Therefore, there is no merit in the argument of the revenue that the CIT(A) has decided the issue without conducting necessary enquiries and also not giving proper opportunity to the AO. The assessee has fully discharged its onus by furnishing necessary evidence to prove the genuineness of share capital received from M/s Strand Developers Mauritius Ltd and hence, the CIT(A) was right in deleting the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate issued by the assessee company, income-tax return filed by Mauritius company with Mauritius Revenue Authorities, bank statements of M/s Strand Developers Mauritius Ltd, the business customer information cum account opening form of HSBC Mauritius Ltd and financial statement of M/s Strand Developers Mauritius Ltd for the year ended 31-03-2009. The said communication has been received through proper channel, through, the FT TR Division of Department of Revenue, Ministry of Finance which was forwarded by the Under Secretary, FT TR-II, CBDT on 10-01-2012 to the jurisdictional AO. The AO has forwarded the second communication received from the Mauritius Revenue Authorities to the CIT(A) in the remand report and submitted that copy of return and balance-sheet furnished by Mauritius Revenue Authorities was found to be correct. 9. The fact with regard to the identity of the shareholder, M/s Strand Developers Mauritius Ltd has not been disputed by both the authorities. The AO has disputed the fact that there is a difference in two communications received from Mauritius Revenue Authorities which has not been properly explained by the assessee with necessary evidences. The AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mauritius Revenue Authorities and also failed to conduct necessary enquiries either by himself or through AO which violates Rule 46A of the Income-tax Rules, 1962. We do not find any merit in the argument of the Ld.DR for the simple reason that the CIT(A) has relied upon the document received through a designated authority which has been forwarded by Under Secretary, FT TR-II, CBDT directly to the AO. The AO has forwarded such information in a closed cover to the CIT(A) and also stated in the remand report that the information received from the Mauritius Revenue Authorities including the financial statement of M/s Strand Developers Mauritius Ltd was found to be correct. We further notice that the CIT(A) has given a categorical finding in his order to the effect that he had an occasion to discuss with the AO on the communication received from the Mauritius Revenue Authorities and hence, there is no merit in the argument of the revenue that the CIT(A) has passed the order in violation of Rule 46A in the back of the AO. We further notice that the communication received from the Mauritius Revenue Authorities has proved the fact that M/s Strand Developers Mauritius Ltd has investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of transactions and creditworthiness of the parties. The CIT(A), after considering relevant facts has rightly deleted additions made by the AO towards share capital received from M/s Strand Developers Mauritius Ltd. We do not find any error or infirmity in the order of CIT(A). Hence, we are inclined to uphold the order of CIT(A) and dismiss the ground raised by the revenue. 11. In the result, the appeal filed by the revenue is dismissed. ITA No. 3842/Mum/2012 ITA No.4329/Mum/2012 Assessee s appeals 12. The next issue that came up for our consideration from assessee s appeal for the assessment year 2008-09 and 2009-10 is disallowance of proportionate administrative and other sales and marketing expenses attributable to Income from house property. The factual matrix of the impugned addition are that the assessee company is in the business of developing and rendering information technology and infrastructure park called Ozone IT Park at Pune. The assessee generally enters into two separate agreements, one for letting out of premises and another one for letting out of amenities . Income from letting out of premises is offered to tax under the head income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from house property. However, the assessee has not disallowed proportionate expenditure debited to the P L Account which are relatable to the activity of income from house property. Therefore, considering the total expenditure, the AO has worked out proportionate expenses relatable to the activity of income from house property and determined total disallowance of ₹ 3,11,63,455. The AO has determined expenses relatable to the activity of income from house property on the basis of income earned by the assessee from various heads of income. Since the assessee has already disallowed an amount of ₹ 1,17,97,918, the balance amount of ₹ 1,93,65,537 has been added to the income of the assessee. 14. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has reiterated its submissions made before the AO. The assessee further contended that the AO was incorrect in disallowing proportionate expenditure on the basis of gross income from various heads of income ignoring the fact that the assessee itself has disallowed expenses which are directly relatable to the activity of income from house property while comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable, it can be disallowed to the extent of ₹ 36,29,367 but not the disallowance worked out by the AO of ₹ 1,17,97,918. The assessee has filed a paper book explaining the defects in disallowance worked out by the AO and also filed copy of disallowance worked out explaining the reasons for exclusion of certain expenses. 16. The Ld.DR, on the other hand, strongly supported the order of the CIT(A). The Ld.DR further submitted that the AO has righty worked out proportionate expenses as the assessee has failed to disallow expenses incurred in relation to income from house property out of total administrative and other expenses incurred. Though the assessee has incurred various expenditure, failed to disallow expenses relatable to the activity of income from house property even though it has claimed separate deductions towards income from house property u/s 24(a) of the Act. Since the assessee has failed to disallow expenditure and also maintained a common set of books of account for both the activities, the AO was right in disallowing proportionate expenditure on the basis of income generated from various activities. 17. We have heard both the parties, perused the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee that the AO while calculating disallowance of expenditure relatable to income from house property has allowed deductions towards property maintenance expenses already disallowed by the assessee in its computation and failed to deduct rates and taxes, professional fees and donations without any reason. We further observe that the assessee has already disallowed on its own expenses directly relatable to the activity of income from house property. The other expenses debited in the P L Account are purely in the nature of corporate / routine expenses allowable u/s 37. The AO has not given any reasons for not considering the expenses already disallowed by the assessee in its computation and also corporate and other routine expenses, which are allowable u/s 37. Therefore, we are of the considered view that the issue needs to be examined by the AO in the light of the submissions of the assessee that it had already disallowed expenses of ₹ 1,20,45,714 out of total expenses debited in the P L Account and also certain expenses are purely in the nature of corporate / routine expenses allowable u/s 37 of the Act. Hence, we set aside the issue to the file of the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that expenditure incurred under the head property maintenance expenses are in the nature of security, watch and ward and other expenses incurred against property maintenance charges received from the building. We further observe that the AO has not disputed the fact that expenses incurred by the assessee have nexus with the income earned from the property. The AO has denied the deduction only on the ground that the revised return filed by the assessee is beyond limitation. We do not find any merits in the findings of the AO for the reason that it is settled position of law that just assessment does not depend on as to what is claimed by the assessee, but on proper computation of income deduced based upon the provisions of law. The assessing authority cannot allow the claims of the assessee if the related facts and provisions of law did not approve it and similarly, it is also the duty of the AO to allow even those benefits about which the assessee is ignorant, but otherwise legally entitled to. There is no estoppels against the proper application of law. The Hon ble Bombay High Court in the case of CIT vs Prithvi Brokers Shareholders Pvt Ltd 349 ITR 336 (Bom) observed that if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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