Exp. incurred by ‘Farah Khan’ on office-cum-residence premises are allowable on proportionate basis: ITAT

Case details: ACIT v. Farah Khan - [2021] 129 taxmann.com 61 (Mumbai - Trib.)

Judiciary and Counsel Details

• • P.P. Bhatt, President and Manoj Kumar Aggarwal, Accountant Member.
  • Chetan Karia for the Appellant. 
  • Dr. Shanteshwar Swami for the Respondent

Facts of the Case

Assessee–Farah Khan was engaged as a film director as well as a professional choreographer. During assessment proceedings, it transpired that assessee owned 6 flats. All the units were stated to be used as office-cum-residence for assessee. Assessee submitted that a specified part thereof was used by her as an office, and the remaining part was used for residential purposes. She claimed a deduction for expenses incurred on the part which was used as an office.

However, Assessing Officer (AO) concluded that assessee could neither produce documentary evidence nor provide any justification to substantiate her claim that the premises were being used as her office. Accordingly, the deduction claimed by assessee was disallowed.

ITAT held

On appeal, Mumbai ITAT held that assessee was a creative artist. She was engaged as Choreographer and film producer. For said purpose, assessee would require creative space from where she could carry out professional engagements. In this year, except for this space, she had not claimed any other office set-up. Till 2011, assessee had similar units at Embassy Tower which were being used as office-cum-residence, in the same manner. The proportionate expenses relating to office in all the earlier years were allowed to assessee.
To meet expanding professional demands and the need for a bigger house, assessee moved to a new duplex apartment. Said premises were stated to be similarly used by assessee for office-cum-residence purposes. Assessee had 6 units, out of which 2 units were stated to be used for professional purposes. Assessee had claimed proportionate expenses relating to these two units. Moreover, assessee had already produced sufficient documentary evidence in the shape of a copy of the Service Tax Registration Certificate, copies of commercial contracts entered into with producers/ third parties, etc.

All these documents mentioned assessee’s residential address and support the claim of assessee. Assessee had also produced the office’s photographs and an affidavit affirming the facts relating to her office at Oberoi Sky Heights. To overcome the deficiency in the photograph, as stated by AO, a video recording of the office and residence to prove that a clearly demarcated part was used as an office was furnished during the hearing. The same clearly support the case of assessee.

In other words, assessee had proved that she used a clearly demarcated part of the premise as the office, which was duly supported by various documents on record. Thus, there was nothing on record to disprove assessee’s claim.