Decided on May 21,2014



SANJAY GARG,JM. - (1.) THE present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [(hereinafter referred to as CIT(A)] dated 24.05.12 relevant to assessment year 2008 -09. There is a delay of 26 days in preferring the present appeal. The assessee has moved an application for condonation of delay explaining the reasons for the above delay of 26 days. The application is duly supported with the affidavit of the applicant/assessee. In view of the reasons mentioned therein and also in view of the short period of the delay, the delay in preferring the application is hereby condoned and the appeal is heard on merits. The assessee has taken the following grounds of appeal: "1. The Ld. CIT(A) erred in confirming the disallowance of Rs.1,20,000/ - out of total disallowance of Rs.3,60,000/ - being rent paid to Chandrabala D. Raychana for the exclusive use of shop (tenanted premises), without appreciating the fact that, the Assessee does not have any other shop and entire amount was incurred wholly and exclusively for the purpose of the business. Hence, the disallowance may be deleted. 2. Without prejudice to above, the Ld. CIT(A) has not given any comparables to arrive at the conclusion that the Rs.3,60,000/ - is higher than the market rates and thus he has erred in allowing only Rs.2,40,000/ - out of Rs.3,60,000/ - paid as rent for the use of the shop. Hence the disallowance may be deleted. 3. The Ld. CIT(A) erred in confirming the disallowance of Rs.19,359/ - being rent paid (on behalf of Chandrabala D. Raychana) directly to the landlord for the tenanted premises. 4. The Ld. CIT(A) erred in confirming the adhoc disallowance of Rs.15,000/ - without appreciating the fact that the expenses were incurred wholly and exclusively for the purpose of the business. " Ground Nos.1 to 3:
(2.) GROUND numbers 1 to 3 relate to confirmation of disallowance out of rent paid for the use of shop by the assessee to his wife. The assessee claimed to have paid a rent of Rs.3,60,000/ - for the use and occupation of the shop for his business purpose as a subtenant of his wife who is the first tenant of the business premises. Apart from that the assessee claimed a sum of Rs.19,359/ - being the license fee paid by the assessee on behalf of his wife to the landlord of the shop. The Assessing Officer (hereinafter referred to as the AO), however, disallowed the above said rent and license fee observing that the assessee had not been able to substantiate the tenancy of the said property with any documents from his wife to himself.
(3.) IN the first appeal, the ld. CIT(A), after appreciation of the evidence on the file produced before him, observed that the wife of the assessee was the tenant of the said shop. She had also offered the rent income of the shop in her return of income. He further observed that the fact being that the assessee did not have any other business premises and the business could not have been run without using the shop in question. Therefore, the payment of rent to the wife was justified. However, he observed that the assessee had not been able to justify the quantum of the amount paid as rent to the wife. Considering the overall facts and circumstances of the case, he held that a sum of Rs.20,000/ - per month i.e. Rs.2,40,000/ - per annum was sufficient payment as rent for the use of tenanted premises of his wife. He therefore allowed the deduction of Rs.2,40,000/ - and confirmed the remaining disallowance on this issue. The assessee is thus in appeal before us against the confirmation of disallowance of remaining amount of Rs.1,20,000/ -. We have heard the ld. representatives of both the parties and also have gone through the records. The contention of the ld. A.R. has been that the ld. CIT(A), while holding that the rent at the rate of 20,000/ - per month, was justified has not given any comparables to arrive at that conclusion. He has further stressed that the payment of Rs.3,60,000/ - (as a rent of the shop) was paid by the assessee wholly and exclusively for the purpose of his business. On the other hand, the ld. D.R. has relied upon the findings of the lower authorities. ;

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