The ITO, Ward-5, Bharuch V. M/s. A-One Enterprises, Ankleshwar

ITA 1014/AHD/2010

• Counselvise Citation: 101420514 RSA 2010
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-11-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 01-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: S N DIVETIA

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.1014/AHD/2010 [ASSTT.YEAR : 2001-2002] ITO, WARD-5 BHARUCH. /VS. M/S.A-ONE ENTERPRISES KUMBHARIA BLDG. NR. RLY STATION, BHARUCH. PAN : AAHFA 8526 A ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ( . / &/ REVENUE BY : SHRI Y.P. VERMA 1% . / &/ ASSESSEE BY : SHRI S.N. DIVETIA 2 . %3'/ DATE OF HEARING : 7 TH NOVEMBER, 2012 456 . %3'/ DATE OF PRONOUNCEMENT : 07-12-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 2001-2002 IS DIRECT ED AGAINST THE ORDER OF THE CIT(A)-VI, BARODA DATED 9.12.2009. 2. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE AS UNDER: 1(A). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.15,8 5,946/- ON ITA NO.1014/AHD/2010 -2 ACCOUNT OF SALE OF SCRAP AND DEBRIS TREATED AS INCO ME UNDER THE HEAD INCOME FROM OTHER SOURCES. (B) THE CIT(A) FAILED TO APPRECIATE THAT INSTEAD OF OFFERING THE AMOUNT OF RS.15,85,946/- RECEIVED BY THE ASSESS EE FROM SALE OF SCRAP AND DEBRIS GENERATED FROM THE DEMOLITION O F ERSTWHILE KUMBHARIA BUILDING, THE ASSESSEE REDUCED THE AMOUNT FROM THE WORK-IN-PROGRESS WHICH WAS NOT CORRECT THE INCOME OF RS.15,85,946/- EARNED FROM SELLING OF SCRAP AND DEB RIS HAS TO BE TAXED SEPARATELY UNDER THE HEAD INCOME FROM OTH ER SOURCES. 3. THE LEARNED DR SUBMITTED THAT THE AMOUNT RECEIVE D BY THE ASSESSEE ON SALE OF SCRAP AND DEBRIS WERE RIGHTLY T REATED AS INCOME FROM OTHER SOURCES BY THE AO. HE SUBMITTED THAT TH E ASSESSEE HAS RECEIVED THE AMOUNT OF RS.15.85 LAKHS FROM SALE OF SCRAP AND DEBRIS GENERATED FROM THE DEMOLITION OF ERSTWHILE KHUMBHAR IA BUILDING AND THE ASSESSEE WRONGLY REDUCED THIS AMOUNT FROM THE W ORK-IN-PROGRESS SHOWN BY IT. HE REFERRED TO PARA-2 OF THE ASSESSME NT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. THE LEARNED COUNSEL OF THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBM ITTED THAT THE SALE OF SCRAP AND DEBRIS OF OLD DEMOLISHED BUILDING DOES NOT BECOME INCOME IN THE HANDS OF THE ASSESSEE. HE SUBMITTED THAT NO PROFIT AROSE DURING THE RELEVANT YEAR AND IN FACT PROFIT AROSE I N THE NEXT YEAR WHEN PROJECT ITSELF WAS SOLD AND TAXABLE INCOME OF THE A SSESSEE IN THE SUBSEQUENT YEAR WAS COMPUTED AFTER CONSIDERING THE COST OF CONSTRUCTION AS REDUCED BY THE SALE OF DEBRIS AND S CRAP. HE RELIED ON THE ORDER OF THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE SALE PROCEEDS OF SCRAP AND DEBRIS ON DEMOLISHED BUILDING DOES NOT BE COME INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES FOR THE RELEVANT ITA NO.1014/AHD/2010 -3 ASSESSMENT YEAR 2001-2002. THE ASSESSEE SOLD THE P ROJECT IN THE SUCCEEDING ASSESSMENT YEARS AND HAS TAKEN THE PROFI T IN THE SUCCEEDING YEARS AND TAXABLE INCOME OF THE SUBSEQUE NT YEARS HAS BEEN COMPUTED BY THE ASSESSEE AFTER CONSIDERING THE COST OF THE CONSTRUCTION AS REDUCED BY THE SALE PROCEEDS OF SCR AP AND DEBRIS. WE FIND THAT THE CIT(A) HAS DISCUSSED VARIOUS CASE LAW S RELIED UPON BY THE PARTIES IN HIS APPELLATE ORDER. THE CIT(A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE HAS CONCLUDED THAT THE AO HAS NOT SHOWN AS TO HOW THE RECEIPT OF SALE PROCEEDS FROM SCRAP AND DEBRIS WOULD CONSTITUTE AN INCOME AND HAS FAILED TO DISCHARGE HI S BURDEN. WE FIND THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) ON THE ISSUE AND THE SALE PROCEEDS OF SCRAP AND DEBRIS OF DEMOLISHED BUI LDING COULD NOT BE TAKEN AS INCOME IN THE HANDS OF THE ASSESSEE FOR TH E RELEVANT ASSESSMENT YEAR 2001-2002. IN THE SUCCEEDING YEARS THE ASSESSEE HAS COMPUTED ITS TAXABLE INCOME AFTER CONSIDERING THE C OST OF CONSTRUCTION OF THE PROJECT AS REDUCED BY THE SALE PROCEEDS OF D EBRIS AND SCRAP, AND THEREFORE THERE WAS NO REVENUE LOSS IN THE SYSTEM O F ACCOUNTING OF THE ASSESSEE, AND ACCORDINGLY THE ORDER OF THE CIT(A) I S CONFIRMED AND THE GROUND OF THE APPEAL OF THE REVENUE ARE DISMISS ED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT