Case Number: ITA 1200/DEL/2019
Appellant: BSM Developers Pvt. Ltd., New Delhi
Respondent: ACIT Circle-5(1), New Delhi
Assessment Year: 2014-15
Case Filed On: 2019-02-14
Order Type: Final Tribunal Order
Date of Order: 2022-11-17
Pronounced On: 2022-11-17
The case of BSM Developers Pvt. Ltd. versus the Assistant Commissioner of Income Tax (ACIT), Circle-5(1), New Delhi, involves an appeal filed by BSM Developers against the disallowance of certain expenses claimed in the assessment year 2014-15. The order was passed by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘A’.
The case was heard by a bench comprising:
BSM Developers Pvt. Ltd. filed its return for the assessment year 2014-15 declaring a loss of Rs. 31,60,977. During scrutiny, the Assessing Officer (AO) observed that the company was showing three fixed assets, namely a farm house at Gwal Pahari, Gurgaon (agricultural land), a floor at B-32, Lajpat Nagar, New Delhi, and property at DLF Saket, New Delhi. Out of these, the company had been showing rental income from the Lajpat Nagar property for a long time.
For the assessment year 2013-14, out of the total revenue of Rs. 94,18,009, rental income accounted for Rs. 90,08,750. Similarly, for the assessment year 2014-15, out of the total revenue of Rs. 91,54,878, rental income was Rs. 84,60,315. Other income included maintenance charges, miscellaneous charges, and sales from building material.
The AO noted that the company claimed various expenses not directly related to rental income, leading to a loss against business income, even though no substantial business was conducted during the relevant and previous years. Consequently, the AO disallowed Rs. 12,23,296 on account of employee expenses and Rs. 10,18,681 on account of establishment expenses, allowing Rs. 2,50,000 as finance charges for minimum essential expenses.
The CIT(A)-33, New Delhi, provided partial relief to the assessee by deleting Rs. 1,70,765 from the employee expenses and confirming the remaining Rs. 20,71,212 disallowed by the AO. The appellant appealed against this decision.
The appellant raised the following grounds:
The ITAT heard the case but noted that none appeared for the assessee during the virtual hearing. The assessee had also failed to appear in earlier hearings, and the notice was returned with the remark ‘left’. The DR supported the findings of the tax authorities below.
The ITAT appreciated that the AO had considered the fact that without substantial income from verifiable business, the expenses claimed against rental income were not allowable. The CIT(A) also observed that the appellant failed to substantiate the running of business of trading building material by providing necessary details. The existence of business activity and generating income from it is a fact that can be verified based on relevant information and evidence, which the assessee failed to provide.
The ITAT upheld the findings of the lower tax authorities, noting that the grounds of appeal had no substance. The appeal of the assessee was dismissed.
Order Pronounced: 17th November 2022
Members:
Assistant Registrar: ITAT, New Delhi
BSM Developers Pvt. Ltd. vs. ACIT Circle-5(1), New Delhi: ITA 1200/DEL/2019
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