The Pune bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeal, stating that a corporate entity cannot logically incur expenditure for individual property improvement.
The counsel for the assessee Rajiv Thakkar argued that additional evidence, in the form of certain bills issued by Nutech Sales Corporation totaling Rs.2,07,362/- and Rs.8,189/- and found on pages 15 and 16 of the paper book, was submitted before the Commissioner of Income Tax ( Appeals ) (CIT(A)).
The counsel for the assessee contended that the CIT (A) did not take into account the additional evidence presented by the appellant. Furthermore, it was argued that the appellant had purchased the disputed flat from the builder in an unfinished state and subsequently carried out civil work.
The counsel for the assessee also provided photographic evidence to support this claim and submitted a chronological list of bills for the civil work performed. The counsel vehemently argued that both the Assessing Officer ( AO ) and the CIT(A) neglected to consider these pieces of evidence demonstrating the additional work undertaken by the appellant, which should be considered as costs of improvement.
The counsel for the revenue A D Kulkarni, pointed out the list of bills provided by the assessee, which can be found on pages 27 and 28 of the paper book, and explained that a significant portion of these bills were issued in the name of Wings Travel Management India Private Limited and Smt. Bharati Kharat.
Consequently, the counsel for the revenue argued that the Assessing Officer ( AO ) and the CIT (A) were correct in considering only those bills that were in the name of the assessee and disallowing the bills issued to other entities.
The counsel contended that it is not possible to determine from the photographs whether they are related to the disputed flat or not. The Deputy Representative staunchly supported the decisions of both the AO and the CIT (A).
The assessee must demonstrate that expenditure was indeed incurred for enhancing the Immovable Asset. However, the assessee did not provide any evidence to substantiate that expenditure was incurred for improving the disputed immovable asset. The bills submitted by the assessee primarily bear the name of Wings Travel Management India Private Limited, which is a separate entity. It is noted that the assessee has extended an unsecured loan to Wings Travel Management India Private Limited and levied interest on it.
Hence, the bills issued in the name of Wings Travel Management India Private Limited do not serve as evidence of expenditure made by the assessee for the improvement of the flat he owns. The assessee submitted a copy of a declaration signed by the Accounts Manager of Wings Travel Management India Private Limited, dated 15/06/2018, stating that the company had made payments totaling Rs.25,83,223/- during the Financial Year 2012-13 through various vendors towards Flat No.B-1103, and the company had not claimed this expenditure
However, this declaration from Wings Travel Management India Private Limited was considered a self-serving document without independent verification. It is noteworthy that the assessee holds the position of Founder Director in Wings Travel Management India Private Limited, and the letter was issued by an Accounts Manager who directly reports to the assessee as a Director of the Company. Moreover, the letter is dated 15.06.2018, and no explanation has been provided as to why it was not submitted during the assessment proceedings. Consequently,
The two member bench of the tribunal comprising SS Vishwanethra Ravi ( Judicial member ) Dipak P Ripoti ( Accountant member ) found that this declaration does not provide meaningful support to the assessee’s case. Furthermore, it was important to consider that Wings Travel Management India Private Limited was a corporate entity and cannot feasibly incur expenditure for an individual’s flat.
In the result, appeal of the assessee was dismissed
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