STERLING NEWSPAPERS P. LTD, MUMBAI V. ITO WD 3(3)(3), MUMBAI

CO 38/MUM/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5429 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 10-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 16-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T N SITHARAMAN
• Keywords: Business income; Depreciation

Judgement Text

1 STERLING NEWSPAPERS P LTD I II IN THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL N THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH MUMBAI BENCH MUMBAI BENCH MUMBAI BENCH E EE E MUMBAI MUMBAI MUMBAI MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R R R R K PANDA, AM K PANDA, AM K PANDA, AM K PANDA, AM & SHRI V DURGA RAO, JM & SHRI V DURGA RAO, JM & SHRI V DURGA RAO, JM & SHRI V DURGA RAO, JM IT ITIT ITA NO A NO A NO A NOS SS S. . . . 4337 4337 4337 4337 TO 4340 TO 4340 TO 4340 TO 4340/MUM/2009 /MUM/2009 /MUM/2009 /MUM/2009 (ASSESSMENT YEARS 2003-04 TO 2006-07) THE INCOME TAX OFFICER WARD 3(3)( 3), MUMBAI VS STERLING NEWSPAPERS P LTD 920 TULSIANI CHAMBERS NARIMAN POINT MUMBAI (APPELLANT) (RESPONDENT) CROSS OBJECTIONS NOS 36 & 38/MUM/2010 CROSS OBJECTIONS NOS 36 & 38/MUM/2010 CROSS OBJECTIONS NOS 36 & 38/MUM/2010 CROSS OBJECTIONS NOS 36 & 38/MUM/2010 STERLING NEWSPAPERS P LTD 920 TULSIANI CHAMBERS NARIMAN POINT MUMBAI VS THE INCOME TAX OFFICER WARD 3(3)( 3), MUMBAI (CROSS OBJECTOR) (RESPONDENT) PAN PAN PAN PAN AABCS4949L AABCS4949L AABCS4949L AABCS4949L ASSESSEE BY: SHRI T N SITHARAMAN REVENUE BY: SHRI ANKUR GARG O OO O R RR R D DD D E EE E R RR R PER PER PER PER BENCH BENCH BENCH BENCH: :: : THE ABOVE FOUR APPEALS IN ITA NOS. 4337 TO 4340/M UM/2009 ARE BY THE REVENUE AND THE CROSS OBJECTIONS NOS. 36 TO 38/MUM/ 2010 ARE BY THE ASSESSEE AND ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 30.6.2009 OF CIT(A)-XXXII, MUMBAI RELATING TO ASSESSMENT YEARS 2003-04 TO 2006 -07 RESPECTIVELY. FOR THE SAKE OF CONVENIENCE ALL THE APPEALS FILED BY THE RE VENUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEARD TOGETHE R AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO. 43 ITA NO. 43 ITA NO. 43 ITA NO. 4337 3737 37/MUM/2009 /MUM/2009 /MUM/2009 /MUM/2009(ASSESSMENT YEAR 2003 (ASSESSMENT YEAR 2003 (ASSESSMENT YEAR 2003 (ASSESSMENT YEAR 2003- -- -04) 04) 04) 04) 4 THE EFFECTIVE GROUND OF APPEAL RAISED BY THE REV ENUE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT OCCUPATIONAL CHARGES AND COMM ISSION INCOME SHOULD BE TREATED AS BUSINESS INCOME INSTEAD OF THE INC OME FROM HOUSE PROPERTY AS ASSESSED BY THE ASSESSING OFFICER 2 STERLING NEWSPAPERS P LTD 4.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SING OFFICER IN THE ORDER PASSED U/S 143(3)/147 OF THE I T ACT CONSIDERED THE RENTAL INCOME OF ` 39 LAKHS AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE. WHILE DOING SO, HE RELIED ON THE ORDERS O F HIS PREDECESSORS FOR ASSESSMENT YEAR 1999-00, 2000-01 AND 2001-02. FUR THER, HE ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE TRIBUNAL HAD DI SMISSED THE APPEAL FILED BY THE REVENUE WHERE THE CIT(A) HAD ACCEPTED THE RENTA L INCOME AS BUSINESS INCOME ON THE GROUND THAT THE DEPARTMENT HAS NOT A CCEPTED THE ORDER OF THE TRIBUNAL AND HAS FILED APPEAL BEFORE THE HONBLE BO MBAY HIGH COURT. 4.2 IN APPEAL, THE CIT(A) FOLLOWING THE ORDER OF HI S PREDECESSOR AND THE ORDER OF THE TRIBUNAL HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE RECEIPTS FROM OCCUPATIONAL CHARGES AND COMMISSION A S INCOME FROM HOUSE PROPERTY AND THE SAME SHOULD BE TREATED AS BUSINES S INCOME. 5 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REVE NUE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6 AFTER HEARING THE RIVAL SUBMISSIONS MADE BY BOTH THE PARTIES, WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1999-00 TO 2001-02 HAS DISCUSSED THE ISSUE IN DETAIL AND HELD THAT THE IN COME HAS TO BE TREATED AS BUSINESS INCOME AS AGAINST INCOME FROM HOUSE P ROPERTY HELD BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF THE ORD ER OF THE TRIBUNAL READS AS UNDER: AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND PERUS ING THE MATERIAL AVAILABLE ON RECORD, WE ARE NOT INCLINED TO INTERFE RE IN THE FINDING OF THE CIT(A), BECAUSE IN THE CASE OF CWT VS- CEMA (P) LT D., REPORTED IN 248 ITR 629, THE HONBLE BOMBAY HIGH COURT HAS HELD THA T THE ASSESSEE HAD LET OUT ITS OFFICE PREMISES IN MAKER CHAMBER-III FO R A PERIOD OF FIVE YEARS. 3 STERLING NEWSPAPERS P LTD IT WAS ALSO HELD THAT MERELY BECAUSE THE OFFICE PRE MISES HAVE BEEN LEASED OUT, IT DOES NOT CHANGE THE COMMERCIAL CHARA CTER OF THE ASSET. IN THIS CASE, THE INCOME FROM LETTING OUT WAS ASSESSED AS BUSINESS INCOME AND DEPRECIATION WAS ALLOWED. WE ALSO FIND THAT IN THE PRESENT CASE, THE ASSESSEE IS THE OWNER OF THE OFFICE PREMISES 920, T ULSIANI CHAMBERS, NARIMAN POINT, MUMBAI. THE ASSSSEE WAS PUBLISHING T HE MAGAZINES GENTLEMEN, BIZNET, T.V. & VIDEOWORLD TILL 1997 . THE PUBLICATION BUSINESS OF THE ASSESSEE WAS CARRIED ON FROM THE SA ID PREMISES, WHICH WAS OCCUPLIED AND USED BY THE ASSESSEE FOR THE SAID BUSINESS PURPOSES. CONSEQUENT UPON SUSPENSION OF THE PUBLICATIONS AND UNTIL THEIR RESUMPTION OR COMMENCEMENT OF OTHER BUSINESS, THE A SSESSEE FELT THAT IT WAS COMMERCIALLY PRUDENT TO DERIVE INCOME BY ALLOWI NG THE OFFICE PREMISES TO BE USED BY ITS SUBSIDIARY SO THAT THE C OMPANY COULD GET INCOME AND THAT THE PREMISES COULD BE USED AT POINT OF TIME IN THE FUTURE WHEN THE ASSESSEE NEEDS IT FOR ITS OWN USE. ACCORDI NGLY, THE ASSESSEE ENTERED INTO A FORMAL LEASE DEED ON 22 ND JULY, 1996 TO GIVEN EFFECT TO THE ARRANGEMENT AND EXTENDED THE ARRANGEMENT BY A LETTE R TILL 14 TH NOVEMBER, 1999, SO AS TO ENABLE THE ASSESSEE TO OBTAIN POSSES SION OF THE PREMISES FOR ITS OWN USE AT ANY TIME AS AND WHEN REQUIRED. W E FIND THAT THE REPORT OF THE DIRECTORS ANNEXED TO THE ACCOUNTS FILED BEFO RE THE AUTHORITIES BELOW SHOWS THAT THE COMPANY CONTINUES TO HAVE THE PUBLIC ATIONS RIGHTS OF THE MAGAZINES, AS MENTIONED ABOVE. EVEN THOUGH THE PUBL ICATION OF THESE MAGAZINES HAS BEEN PRESENTLY SUSPENDED, THE COMPANY IS CONSIDERING RESUMING SOME OF THESE MAGAZINES AT AN APPROPRIATE TIME ON ITS OWN OR UNDER SOME SUITABLE LICENSING ARRANGEMENTS. SO THE ASSESSEE HAD DEMONSTRATED THAT THE INTENTION BEHIND GIVING THE P ROPERTY ON SHORT-TERM LEASE WAS NOT WITH A VIEW TO EXPLOIT THE PROPERTY C OMMERCIALLY, BUT ONLY TO EARN INCOME IN THE TEMPORARY PERIOD DURING WHICH TH ERE WAS LULL IN THE ASSESSEES BUSINESS ACTIVITY. SO LETTING OUT THE PR OPERTY IN QUESTION WAS USING THE SAME FOR PUBLICATION BUSINESS AS WELL. I N VIEW OF THE ABOVE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT RENTAL INCOME RECEIVED FROM EXPRESS PUBLICATIONS LTD. SHALL BE TAXED UNDER THE HEAD CA PITAL GAINS OF THE BUSINESS. WE UPHOLD THE SAME. 6.1 WE FIND THE TRIBUNAL FOLLOWING THE ABOVE ORDER HAS AGAIN DISMISSED THE APPEAL FILED BY THE REVENUE VIDE ITA NO.6753/MUM/05 ORDER DATED 30.5.2008 FOR ASSESSMENT YEAR 2002-03. 7 SINCE THE CIT(A) HAS FOLLOWED THE ORDER OF THE TR IBUNAL IN ASSESSEES OWN CASE AND MERELY BECAUSE THE DEPARTMENT HAS NOT AC CEPTED THE DECISION OF THE TRIBUNAL AND HAS FILED APPEAL BEFORE THE HONBLE HI GH COURT; THEREFORE, 4 STERLING NEWSPAPERS P LTD RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASESSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOT ICE AGAINST THE DECISION OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND RAISED BY T HE REVENUE IS ACCORDINGLY DISMISSED. ITA NO. 43 ITA NO. 43 ITA NO. 43 ITA NO. 4338, 4349 & 4340 38, 4349 & 4340 38, 4349 & 4340 38, 4349 & 4340/MUM/2009 /MUM/2009 /MUM/2009 /MUM/2009(ASSESSMENT YEAR 2004 (ASSESSMENT YEAR 2004 (ASSESSMENT YEAR 2004 (ASSESSMENT YEAR 2004- -- -05 TO 200 05 TO 200 05 TO 200 05 TO 2006 66 6- -- -07) 07) 07) 07) 8 AFTER HEARING BOTH THE PARTIES, WE FIND THE GROUN DS RAISED BY REVENUE IN THE ABOVE THREE APPEALS ARE IDENTICAL TO THE GROUND RAISED BY THE REVENUE IN ITA NO. 4337/M/2009. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. FOLLOWING THE SAME RATIO, THE GROUND RAISED BY THE REVENUE IN THE ABOVE THREE APPEALS ARE DISMISSE D. CROSS OBJECTIONS NO. 36 TO 38/MUM/2010 CROSS OBJECTIONS NO. 36 TO 38/MUM/2010 CROSS OBJECTIONS NO. 36 TO 38/MUM/2010 CROSS OBJECTIONS NO. 36 TO 38/MUM/2010 9 AT THE TIME OF HEARING, THE LD COUNSEL FOR THE AS SESSEE DID NOT PRESS THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR WHICH TH E LD DR HAS NO OBJECTION. ACCORDINGLY, THE CROSS OBJECTIONS FILED BY THE ASSE SSEE ARE DISMISSED AS NOT PRESSED. 10 IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THE 19 TH , DAY OF NOV 2010. SD/- SD/- ( (( ( V DURGA RAO V DURGA RAO V DURGA RAO V DURGA RAO ) )) ) JUDICIAL MEMBER ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 19 TH , NOV 2010 RAJ* 5 STERLING NEWSPAPERS P LTD COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI