Shri Laxmipat Surana, Kolkata V. ITO, Ward-35(3), Kolkata, Kolkata

CO 14/KOL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3596 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Revised return
• Section: 43B; 143(3); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 2398/KOL/20 16 ASSESSMENT YEAR : 2012-1 3 I.T.O, WARD-35(3), KOLKATA -VS- SHRI LAXMIPAT SURANA [PAN: AKBPS 7037 P] (APPELLANT) (RESPONDENT) C.O. NO. 14/KOL/2017 (ARISING OUT OF I.T. A NO. 2398/KOL/2016 ) ASSESSMENT YEAR : 2012-1 3 I.T.O, WARD-35(3), KOLKATA -VS- SHRI LAXMIPAT SURANA [PAN: AKBPS 7037 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ARINDAM BHATT ACHARJEE, ADDL. CIT FOR THE RESPONDENT : SHRI ANIL KOCHAR, ADVOC ATE DATE OF HEARING : 19.02.2018 DATE OF PRONOUNCEMENT : 07.03.2018 ORDER PER M.BALAGANESH, AM 1. . THIS APPEAL BY THE REVENUE AND THE CROSS OBJE CTION BY THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO.56/CIT(A)-10/35(3)/2015 -16/KOL DATED 20.10.2016 AGAINST THE ORDER PASSED BY THE I.T.O., WARD-35(3), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT) DATED 27.03.2015 FOR THE ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEPRECIATION TO THE ASSESSEE WHO IS NOT THE LEGAL OWNER OF THE 2 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 2 PROPERTY, IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. THE INTERCONNECTED ISSUE INVOLVED IN THE CROSS OBJECTION OF THE ASSESSEE IS AS TO WHE THER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF INTEREST U/S 43B OF THE ACT, IN THE SUM OF RS. 1,56,90,438/-, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IN AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT UNDER THE NAME & S TYLE OF HIS PROPRIETARY CONCERN M/S MAHAVEER CONSTRUCTION. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 WAS FILED BY THE ASSESSEE ON 30.09.2012 DECLARING TOTAL INCOME OF RS. 1,73,179/-. LATER THE ASSESSEE FILED ITS REVISED RETURN ON 29.1 2.2013 DECLARING TOTAL INCOME AT RS. 1,33,143/- WITH CLAIMING CURRENT YEAR LOSS OF RS. 28,74,505/-. THIS REVISED RETURN WAS FILED BY THE ASSESSEE AFTER RECEIVING THE NOTICE U /S 143(2) OF THE ACT DATED 07.08.2013. THE LD. AO OBSERVED THAT THE TOTAL INCOME OF RS. 1, 73,179/- DECLARED IN ORIGINAL RETURN, CONSISTS OF INCOME OF RS. 71,759/-, RS. 45,807/- A ND RS. 1,65,900/- UNDER THE HEAD OF INCOME FROM BUSINESS, INCOME FROM OTHER SOURCES AND INCOME FROM HOUSE PROPERTY RESPECTIVELY. HE ALSO OBSERVED THAT NO CO MPUTATION OF INCOME HAS BEEN SUBMITTED BY THE ASSESSEE REGARDING TOTAL INCOME O F RS. 1,33,143/- AND CURRENT YEAR LOSS OF RS. 28,74,505/- AS PER HIS REVISED RETURN F ILED ON 29.12.2013. THE ASSESSEE HAD TAKEN A VACANT LAND ON LEASE FROM RAILWAYS FOR A PE RIOD OF 25 YEARS WHICH IS FURTHER RENEWABLE FOR A PERIOD OF 25 YEARS. ON THE SAID LAN D, THE ASSESSEE BEING THE LICENSEE, INTENDED TO CONSTRUCT COMMERCIAL COMPLEX CONSISTING OF THREE BLOCKS BEING A, B AND C. BEFORE THE COMPLETION OF B BLOC K, THE ASSESSEE ENTERED INTO AN AGREEMENT TO SUB-LICENSE THE SHOW ROOM PLACED IN B BLOCK TO M/S PANTALOON RETAIL (INDIA) LTD. AND M/S PGI RETAIL STORES PVT. LTD. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED LICENSE FEE OF RS. 2,75,6 3,823/- FROM THE SAID TWO SUB- LICENSEES AND AFTER CLAIMING DEDUCTION FOR VARIOUS EXPENSES INCLUDING DEPRECIATION, NET INCOME OF RS. 71,759/ WAS DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION IN THE RETURN OF INCOME. DUR ING THE COURSE OF ASSESSMENT 3 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 3 PROCEEDINGS, THE ASSESSEE HOWEVER, TOOK A STAND TH AT THE SAID INCOME WAS INADVERTENTLY DECLARED IN THE RETURN AS INCOME FRO M BUSINESS OR PROFESSION INSTEAD OF INCOME FROM HOUSE PROPERTY. THIS STAND OF THE ASSES SEE WAS NOT FOUND ACCEPTABLE BY THE LD. AO RELYING INTER ALIA ON THE DECISION OF HO N'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. REPORTED IN 157 TAXMAN 1 (SC) WHEREIN, IT WAS HELD THAT NO AMENDMENT CAN BE MADE IN THE RETURN AT THE ASSESSME NT STAGE WITHOUT REVISING THE RETURN. THE LD. AO ALSO HELD THAT THE ASSESSEE WAS ONLY A LICENSEE TO DEVELOP AND CONSTRUCT COMMERCIAL COMPLEX ON THE VACANT LAND OWN ED BY THE RAILWAYS AND HE WAS NOT OWNER OF THE PROPERTY. HE, ACCORDINGLY, HEL D THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEPRECIATION ON THE COST OF THE SAID PROPERTY IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT DATED 27.03.2015. THE LD. AO DISALLOWED THE SUM OF RS. 1,56,90,438/- TOWARDS INTEREST ON LOAN FROM SCHEDUL ED BANKS WHICH WAS NOT PAID U/S 43B OF THE ACT AND ARRIVED AT THE TOTAL BUSINESS IN COME OF RS. 1,57,62,197/- IN THE ASSESSMENT. BEFORE THE LD. CIT(A), THE ASSESSEE PLE ADED THAT THE INCOME DERIVED BY THE ASSESSEE TOWARDS LICENSE FEE SHOULD BE TAXED ON LY UNDER THE HEAD INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY. FURTHE R, IT WAS PLEADED THAT DEPRECIATION ON BUILDING WAS THE SOURCE OF THE INCOME BEING DERI VED BY THE ASSESSEE BEING GRANTED TO THE ASSESSEE. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF HIS PREDECESSOR IN ITS OWN CASE FOR THE ASSESSMENT YEAR 2011-12 TO THI S EFFECT. THE LD. CIT(A) FOLLOWED THE ORDER OF HIS PREDECESSOR FOR THE ASSESSMENT YEA R 2011-12 BY OBSERVING AS UNDER: 07. DECISION 1. I HAVE CAREFULLY CONSIDERED THE ACTION OF THE LD. A O FOR THE SUBJECT ASSESSMENT YEAR 2012-13. THERE WAS A SIMILAR ACTION BY THE LD. AO I N THE IMMEDIATELY PREVIOUS ASSESSMENT YEAR 2011-12, AND THE SAME HAS BEEN ADJU DICATED BY ME IN APPEAL NO. 42/CIT(A)-10/WD.35(3)/2014-15/KOL DATED 9 TH NOVEMBER, 2015. IN THE MATTER OF SEC. 43B THE MATTER HAS BEEN ADJUDICATED AGAINST TH E APPELLANT IN THAT YEAR. HOWEVER, I HAD DIRECTED THAT ONCE THE INCOME IS HEL D TO BE FROM BUSINESS, THE APPELLANT WOULD BE ENTITLED TO DEPRECIATION. THE RE LEVANT PORTION OF THE ADJUDICATION FOR THE ASSESSMENT YEAR 2011-12 IS REP RODUCED AS BELOW: 4 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 4 5 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 5 2. IT IS SEEN THAT MATERIAL FACTS ARE IDENTICAL IN THE YEAR UNDER CONSIDERATION, NAMELY ASSESSMENT YEAR 2012-13, AND THEREFORE IN FIND NO R EASON TO FIFER FROM THE DECISION GIVEN FOR THE EARLIER YEAR. IN SUMMARY, THEREFORE, THE ADDITION/ DISALLOWANCE OF RS. 1,56,90,438/- MADE BY THE LD. AO STANDS CONFIRM ED, AND THE INCOME IS TO ASSESSED AS BUSINESS INCOME AS HELD BY THE LD. AO . SIMULTANEOUSLY, IT IS DIRECTED THAT THE APPELLANT BE ALLOWED DEPRECIATION. AS ELIG IBLE FOR BUSINESS INCOME, AS ALSO DIRECTED FOR THE EARLIER YEAR. 6 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 6 THE GROUNDS THEREFORE STAND PARTLY ALLOWED. 4. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, T HE LD. CIT(A) HAS ERRED IN ALLOWING THE DEPRECIATION TO THE ASSESSEE WHO IS NO T THE LEGAL OWNER OF THE PROPERTY. 2. THAT THE APPELLANT CRAVES LEAVE TO MAKE AN ADDITION , ALTERATION AND MODIFICATION OF GROUNDS AT THE APPELLATE STAGE. 4.1. THE ASSESSEE HAS PREFERRED CROSS OBJECTION BEF ORE US ON THE FOLLOWING GROUNDS: 1. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADD ITION/DISALLOWANCE OF RS. 1,56,90,438/- ON ALLEGED GROUNDS. 2. FOR THAT THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE INCOME OF THE APPELLANT, BEING RENTALS, IS TO BE ASSESSED UNDER THE HEAD IN COME FROM HOUSE PROPERTY AND NOT BUSINESS INCOME. 3. FOR THAT FURTHER GROUNDS OF APPEAL MAY KINDLY BE AL LOWED TO BE TAKEN AT THE TIME OF HEARING OF THE APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE AFORESAID ISSUES UNDER DISPUTE ARE SQUARELY COVERED BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO. 142/KOL/2016 FOR ASSESSMENT YEAR 2011-12 AND C.O. N O. 19/KOL/2016 FOR ASSESSMENT YEAR 2011-12 DATED 10.11.2017 WHEREIN IT WAS HELD A S UNDER: 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FIRST CONTENTION RAISED BY THE LEARNED DR IS THAT THE ASSESSEE HAVING NOT CLAIMED DEPRECIATION ON THE LIC ENCED PROPERTY IN THE RETURN OF INCOME, THE LD. CIT (A) WAS NOT JUSTIFIED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEPRECIATION WHICH WAS NOT MADE EITHER IN THE ORIGI NAL RETURN OR EVEN BY FILING REVISED RETURN. WE ARE UNABLE TO ACCEPT THIS CONTENTION OF THE LEARNED DR. IN OUR OPINION, THE RESTRICTION LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) WHICH IS RELIED UPON BY THE ASSESSING OFFIC ER IS APPLICABLE ONLY AT THE ASSESSMENTS STAGE AND THE LD. CIT (A) BEING AN APPE LLATE AUTHORITY IS SUFFICIENTLY EMPOWERED TO ENTERTAIN THE CLAIM MADE BY THE ASSESS EE FOR DEPRECIATION FOR THE FIRST TIME BEFORE HIM WITHOUT EVEN FILING THE REVISED RET URN AS CLARIFIED BY THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (S UPRA) ITSELF. EVEN THE OLD CIRCULAR OF THE CBDT DATED 31.08.1965 RELIED UPON BY THE LEARNE D DR WAS ISSUED IN A DIFFERENT 7 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 7 CONTEXT AND THE SAME THEREFORE IS NOT I.T.A. NO. 14 2 & C.O. NO. 19/KOL/2016 SRI LAXMIPAT SURANA APPLICABLE IN THE PRESENT CONTEXT. AS REGARDS THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON MERIT, THE LEARNED DR HAS RELIE D ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MOTHER HOSPITAL PVT. LTD. VS CIT RENDERED ON MARCH 2, 2017 WHEREIN IT WAS HELD THAT LESSEE UNDER EXPLANAT ION 1 TO SECTION 32 IS ENTITLED TO DEPRECIATION ON THE COST OF CONSTRUCTION INCURRED B Y HIM BUT NOT ON THE COST INCURRED BY THE OWNER. AS CLARIFIED BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD, DEPRECIATION IN THE PRESENT CASE WAS CLAIMED BY THE ASSESSEE ONLY ON THE COST OF CONSTRUCTION INCURRED BY HIM. WE, THEREFORE, FIND N O INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT (A) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEPRECIATION ON THE COST OF LICENCED PROPERTY INCURRED BY HIM AND UPHOLDING HIS IMPUGNED ORDER ON THIS ISSUE, WE DISMISS THIS APPEAL FILED BY THE REVENUE. 7. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE HAS NOT PRESSED THE ISSUES RAISED IN THE CROSS-OBJECTION FILED BY T HE ASSESSEE. THE CROSS-OBJECTION FILED BY THE ASSESSEE IS ACCORDINGLY DISMISSED AS NOT PRE SSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION WE DI RECT THE LD. AO TO GRANT DEPRECIATION ON THE COST OF LICENSE PROPERTY INCURR ED BY THE ASSESSEE. 6.THE LD. AR PRAYED FOR FOLLOWING OF THE SAME ORDER OF THE ASSESSMENT YEAR 2011-12 FOR YEAR UNDER CONSIDERATION ALSO. ACCORDINGLY, RES PECTFULLY FOLLOWING THE SAME AS STATED IN PARA 7 SUPRA IN THE TRIBUNAL ORDER FOR AS SESSMENT YEAR 2011-12, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 07. 03.2018 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.03.2018 SB, SR. PS 8 ITA NO.2398/KOL/2016& C.O.14/KOL/2017 SHRI LAXMIPAT SURANA A.YR.2012-13 8 COPY OF THE ORDER FORWARDED TO: 1. I.T.O, WARD-35(3), KOLKATA, AAYAKAR BHAWAN POORV A, 110, SHANTIPALLY, 8 TH FLOOR, ROOM NO. 816, KOLKATA-700107 2. SHRI LAXMIPAT SURANA, 12, BONFIELD LANE, KOLKATA -700001. 3. C.I.T(A)- , KOLKATA 4. C.I.T.- K OLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S