M/s Vardhman Infrastructure Pvt. Ltd, Surat V. The Income tax Officer,Ward-4(4), Surat

CO 254/AHD/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7557 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 12-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T SANKAR SRDR
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI T.R.MEENA, HONBLE ACCOUNTANT MEMBER ITA NO.1571-1572/AHD/2010 & CO. NO.254-255/AHD/2010 (A/O ITA NO.1571-1572/AHD/2010) ASSESSMENT YEARS:2006-07 & 2007-08 INCOME TAX OFFICER, WARD-4(4), ROOM NO. 219, AAYAKAR BHAVAN, MAJAURA GATE, SURAT VARDHMAN INFRASTRUCTURE PVT. LTD., 724, BELGIUM TOWER, OPP. LINEAR BUS STAND, RING ROAD, SURAT [ PAN NO. AABCV 1128L ] V/S. V/S. VARDHMAN INFRASTRUCTURE PVT. LTD., 724, BELGIUM TOWER, OPP. LINEAR BUS STAND, RING ROAD, SURAT INCOME TAX OFFICER, WARD-4(4), ROOM NO. 219, AAYKAR BHAVAN, MAJURA GATE, SURAT /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI T. SANKAR, SR-DR /BY REVENUE SHRI TUSHAR P HEMANI, AR /DATE OF HEARING 14-09-2012 /DATE OF PRONOUNCEMENT 21 -09-2012 ! ! ! ! /O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THESE TWO APPEALS FILED BY THE REVENUE AND TWO CRO SS OBJECTIONS (CO) FILED BY THE ASSESSEE DIRECTED AGAINST THE COMMON O RDER OF COMMISSIONER OF ITA NO. 1571-72/AHD/2-1- & CO 254-255/AHD/2010 A.YS. 06-07 & 07-08 ITO WD-4(4) SRT V. VARDHMAN INFRASTRUCTURE PVT. LTD. PAGE 2 INCOME-TAX(APPEALS)-IV, SURAT (CIT(A) FOR SHORT) DATED 29-01-2010 FOR THE ASSESSMENT YEARS (AY) 2006-07 AND 2007-08. ALL THES E ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY COMMON ORDER FOR T HE SAKE OF CONVENIENCE. COMMON GROUNDS EXCEPT FIGURES TAKEN IN BOTH THE APP EALS OF THE REVENUE ARE AS UNDER:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDITION OF RS.10,97,250 **(RS.10,90,950/- A.Y. 2007-08 ) MADE BY THE AO TREATING THE SAME AS PROPERTY INCOME INSTEAD OF BUSINESS INCOME. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.71,700/- MADE BY THE AO ON ACCOUNT OF INTEREST INCOME. WE ARE DISPOSING OF THESE APPEALS BY TAKING THE FAC TS OF A.Y. 2006-07. 2. THE FIRST GROUND RELATES TO ADDITION OF RS.10,97 ,250/- MADE BY THE ASSESSING OFFICER (AO) TREATING THE SAME AS INCOME FROM PROPERTY INSTEAD OF BUSINESS INCOME SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPING, OPERATING AND MAINTAINING STATE-OF-T HE ART INFRASTRUCTURE FACILITIES TOGETHER WITH WHOLE BUNCH OF SERVICES, S UCH AS, CANTEEN, SECURITY, HOUSE KEEPING, ADMINISTRATIVE, GOODS DELIVERY AND S TOCK MOVEMENT, ASSET MANAGEMENT ETC. THE RETURN OF INCOME FOR A.YS UNDER APPEAL WAS FILED SHOWING NIL INCOME AND SUBSEQUENTLY SCRUTINY ASSESS MENT U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT HEREINAFTER) WAS CO MPLETED DETERMINING TOTAL INCOME AT RS.11,62,650/- AFTER MAKING ADDITION OF R S.10,97,250/- ON ACCOUNT OF INCOME FROM HOUSE PROPERTY AND OF RS.71,700/- ON ACCOUNT OF INTEREST INCOME. THE ASSESSING OFFICER TREATED THE INCOME FR OM OPERATIONS AS INCOME FROM PROPERTY INSTEAD OF BUSINESS INCOME RELYING UP ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SHAMBHU INVESTMENT PVT. LTD. (2001) 249 ITR 47 (CAL). ITA NO. 1571-72/AHD/2-1- & CO 254-255/AHD/2010 A.YS. 06-07 & 07-08 ITO WD-4(4) SRT V. VARDHMAN INFRASTRUCTURE PVT. LTD. PAGE 3 3. AGGRIEVED BY THIS ORDER, ASSESSEE FILED APPEAL B EFORE LD. CIT(A) ON THE GROUND THAT AMOUNT RECEIVED BY THE ASSESSEE UNDER J OINT BUSINESS AGREEMENT WAS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS INSTEAD OF HOUSE PROPERTY. LD. CIT(A) ALLOWED ASSESSEES APPEAL FOL LOWING THE DECISION OF HIS PREDECESSOR FOR THE A.Y. 2005-06, WHEREIN IT WAS HE LD THAT THE AMOUNT RECEIVED UNDER JOINT BUSINESS AGREEMENT WAS NOT ONL Y USE OF INFRASTRUCTURE BUT ALSO FOR ITS OPERATION AND MAINTENANCE AND FOR PROV IDING HOST OF UTILITIES AND SERVICES. 4. AGGRIEVED BY THIS ORDER, REVENUE IS IN APPEAL BE FORE US. 5. AT THE TIME OF HEARING AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSUE INVOLVED IN THIS APPEAL IS NOW COVERED IN FAVOUR OF ASSESSEE IN ASSESSEE BY THE DECISION OF HONBLE TRI BUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06, WHEREIN THE ORDER PASSED BY LD. CIT(A) HOLDING THAT AMOUNT RECEIVED UNDER JBA WAS BUSINESS INCOME AND N OT PROPERTY INCOME HAS BEEN UPHELD BY THE TRIBUNAL, FOLLOWING THE SAME , THE ORDER PASSED BY LD. CIT(A) MAY KINDLY BE UPHELD. 6. LD. DR HOWEVER, RELIED ON THE ORDER OF ASSESSING OFFICER. 7. AFTER HEARING THE PARTIES AND PERUSING THE RECOR D WE FIND THAT ISSUE INVOLVED IN THIS APPEAL IS NOW COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE VIDE ORDER DATED 04-04-2012 IN ITA NO. 976/ AHD/2009 OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06, W HEREIN FOLLOWING WAS HELD:- WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE AO AND THE CIT(A). WE HAVE ALSO PERUSED THE COPY OF THE JOINT BUSINESS AGREEMENT BETWEEN THE ASSESSEE AND THE POO NAM DIAMOND, ENGLISH TRANSACTION WHEREOF HAS BEEN FILED IN THE C OMPILATION BY THE ITA NO. 1571-72/AHD/2-1- & CO 254-255/AHD/2010 A.YS. 06-07 & 07-08 ITO WD-4(4) SRT V. VARDHMAN INFRASTRUCTURE PVT. LTD. PAGE 4 ASSESSEE. WE FIND THAT THE ASSESSEE HAS AGREED TO P ROVIDE SPACE FOR DIAMOND BUSINESS AND ALSO PROVIDED INFRASTRUCTURE F ACILITIES LIKE ELECTRICAL INSTALLATION, CANTEENS, HOUSE KEEPING, S ECURITY ETC. CLAAUSE-3 OF THE AGREEMENT PROVIDES CERTAIN AMOUNT PAYABLE TO THE ASSESSEE- COMPANY AS SECURED AMOUNT OR RS.1/- PER INWARD CARA T, WHICHEVER IS HIGHER. THUS, THE AMOUNT PAYABLE TO THE ASSESSEE CO MPANY WAS ALSO DEPENDED ON QUANTITY OF INWARD CARAT OF DIAMONDS. T HE ASSESSEE HAS CONVERTED ITS PREMISES IN SUCH A WAY AS TO PROVIDE BASIC INFRASTRUCTURE FACILITY FOR THE BUSINESS AND HAS PROVIDED THESE SE RVICES IN AN ORGANIZED AND CONTINUOUS BUSINESS. IT IS NOT A CASE WHERE THE ASSESSEE HAS LET OUT ITS PREMISES AND HAS EARNED RENTAL INCOME SIMPL ICITOR WITHOUT PROVIDING ANY INFRASTRUCTURE FACILITIES ON COMMERCI AL BASIS. THE INTENTION OF THEREFORE, ASSESSEE OF EXPLOITING ITS INFRASTRUC TURE FACILITIES PROVIDED BY IT IN A COMMERCIAL MANNER CAN BE BORNE OUT IN TH E FACTS OF THE CASE OF THAT ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE LEARNE D CIT(A) IN HOLDING THAT EVEN APPLYING RATIO OF SHAMBHGU INVESTMENT (SUPRA) THE INCOME OF THE APPELLANT IS TO BE ASSESSED AS BUSINESS INCOME SINC E THE INTENTION OF THE APPELLANT IS TO EXPLOIT PROPERTY COMMERCIALLY. ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GR OUNDS OF THE REVENUE ARE DISMISSED. RESPECTFULLY FOLLOWING THE SAME, THE ORDER PASSED B Y LD. CIT(A) FOR BOTH THE YEARS ARE HEREBY UPHELD. THIS COMMON GROUND OF THE REVENUES APPEAL FOR BOTH THE YEARS IS DISMISSED. 8. THE SECOND GROUND OF REVENUES APPEALS IN BOTH T HE YEARS IS NOT ARISING OUT OF LD. CIT(A)S ORDER. THE SAME IS THER EFORE DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. COMING TO ASSESSEES CO NO. 254-255/AHD/2010. 10. BOTH THE COS FILED BY THE ASSESSEE ARE IN SUPPO RT OF THE ORDER PASSED BY LD. CIT(A) AND IN VIEW OF OUR DECISION IN REVENU ES APPEAL IN PARA-7 OF THIS ITA NO. 1571-72/AHD/2-1- & CO 254-255/AHD/2010 A.YS. 06-07 & 07-08 ITO WD-4(4) SRT V. VARDHMAN INFRASTRUCTURE PVT. LTD. PAGE 5 ORDER THE COS OF ASSESSEE HAVE BECOME INFRUCTUOUS A ND SAME ARE DISMISSED AS INFRUCTUOUS. 11. IN COMBINED RESULT, APPEALS OF REVENUE AS WELL AS C OS FILED BY ASESSEES ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (T.R.MEENA) (D.K. TYAGI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP '#$- 21/09/2012 +,- . ! ! ! ! //0 //0 //0 //0 1 0 1 0 1 0 1 0 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. #-#/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 0 89 ///4, /4 , +,- / DR, ITAT, AHMEDABAD 6. 9<= >? / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ @/+ # /4 , +,- . STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 14/09 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 17/09 4) DATE OF CORRECTION 18/09 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 19/09 7) ORDER UPLOADED ON 21/09 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 8) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 21/09