Dream Buildcon Pvt. Limited Vs Income Tax Officer (ITAT Kolkata)
ITAT disallowed the expenses claimed by by stating that a property not used for business purposes cannot be treated as a business asset. The property in question was sold and a new property was purchased using the proceeds. The expenses incurred on the new property, including watch & ward expenses and electricity expenses, were disallowed as the property was not shown as a business asset and depreciation was not claimed.
Extract From ITAT order –
The case of the assessee is that it had purchased a property at Vasant Vihar, New Delhi, which was ultimately sold in F.Y. 2009-10 for a total sale consideration of Rs.15 crores. Thereafter a new property at the same place was purchased in the same year, i.e. 2009-10 for an amount of Rs.25.44 crores by utilizing the entire sale consideration and refund of loans and advances. On this property, the assessee has incurred Watch & Ward Expenses and Electricity Expenses. The property is comprised at 61, Vasant Vihar, New Delhi. According to the assessee, this property was used for business purposes as the office of the assessee. The Revenue Authorities have recorded a finding that neither this property has been shown towards assets side nor depreciation was claimed by the assessee. Therefore, it cannot be construed that the property was used for the purpose of business and accordingly the claim of expenses has been disallowed.
FULL TEXT OF THE ORDER OF ITAT Kolkata
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), Guwahati-1, dated 31.12.2019 passed for Assessment Year 20 12-13.
2. The assessee has raised three grounds of appeal, out of which Ground No. 1 is the substantial ground of appeal. In this ground, the assessee has pleaded that ld. CIT(Appeals) has erred in confirming the disallowance of following expenditure:-
