ARIDENT BUILDERS & STORAGE PVT. LTD., Kota V. ITO, Kota

ITA 1030/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99510 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: B V MAHESHWARI
• Keywords: Capital asset; Business income; Business expenditure; Wrong claim

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 1030/JP/2013 & 8/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 & 2006-07 M/S. ARDENT BUILDERS & STORAGE (P) LTD. 167, MOKHAPARA, KOTA CUKE VS. THE ITO WARD- 2 (2) KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR 9316 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.V. MAHESHWARI, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT-. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 2/12/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE ASSESSEE HAS FILED APPEALS AGAINST TWO SEPARAT E ORDERS OF THE LD. CIT(A), KOTA DATED 18-10-2013 FOR THE ASSESSM ENT YEAR 2007-08 AND 2006-07 RAISING THEREIN FOLLOWING GROUNDS:- ASSESSMENT YEAR 2006-07 1. THAT THE LD AO GROSSLY ERRED IN TREATING THE WAREHOUSING LEASING INCOME AS PROPERTY RENT INSTEAD OF BUSINESS INCOME. THE LD. CIT(A) SUMMARILY REJECTED THE GROUND STATING THAT THE RENT OR LEASE INCOME IS SAM E AND ALSO HELD THAT NO EXPENDITURE IS ALLOWED. THE APPELLANT FILED ITA NO. 1030//JP/2013 M/S. ARDENT BUILDERS & STORAGE (P) LTD. VS. ITO , WARD- 2(2), KOTA . 2 RETURN DECLARING BUSINESS INCOME NIL, THE AO AS WE LL AS LD. CIT(A) HAVE IGNORED THE INCOME DECLARED BY APPELLA NT AND ASSESSED AS RENTAL INCOME OF RS. 2,45,820/-. 2. THAT THE AO AS WELL AS LD. CIT(A) DISALLOWED THE GENUINE BUSINESS EXPENDITURE WITHOUT ANY REASON . THE APPELLANT INCURRED SALARY AND WAGES AND OTHER EXPEN SES OF RS. 4,42,137/- FOR RUNNING THE BUSINESS WHICH HAD B EEN DISALLOWED. ASSESSMENT YEAR 2007-08 1. THAT THE LD AO GROSSLY ERRED IN TREATING THE WAREHOUSING LEASING INCOME AS PROPERTY RENT INSTEAD OF BUSINESS INCOME. THE LD. CIT(A) SUMMARILY REJECTED THE GROUND STATING THAT THE RENT OR LEASE INCOME IS SAM E AND ALSO HELD THAT NO EXPENDITURE IS ALLOWED. THE APPELLANT FILED RETURN DECLARING BUSINESS INCOME OF RS. 39,260/- TH E AO AS WELL AS LD. CIT(A) HAVE IGNORED THE INCOME DECLARE D BY APPELLANT AND ASSESSED AS RENTAL INCOME OF RS. 1,84 ,450/-. 2. THAT THE AO AS WELL AS LD. CIT(A) DISALLOWED THE GENUINE BUSINESS EXPENDITURE WITHOUT ANY REASON . THE APPELLANT INCURRED SALARY AND WAGES AND OTHER EXPEN SES OF RS. 2,66,862/- FOR RUNNING THE BUSINESS WHICH HAD B EEN DISALLOWED. 2.1 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE BY AN AGREEMENT LET OUT ITS GODOWN TO RAJASTHAN STATE WAR EHOUSING CORPORATION AND WAS EARNING LEASE RENTAL THEREFROM. ASSESSEE TREATED THIS LEASE RENTAL INCOME AS BUSINESS INCOME AND CLAIMED RELEVANT EXPENDITURE. THIS HAS BEEN ALLOWED IN THE PAST YEARS U/S 143(1) OF THE ACT. FOR THESE ITA NO. 1030//JP/2013 M/S. ARDENT BUILDERS & STORAGE (P) LTD. VS. ITO , WARD- 2(2), KOTA . 3 YEARS LD. AO ISSUED NOTICES U/S 143(2) OF THE ACT A ND HELD THE RENTAL INCOME TO BE HOUSE PROPERTY INCOME AND INSTEAD OF A LLOWING BUSINESS EXPENDITURE ALLOWED STATUTORY DEDUCTION AS PROVIDED U/S 24 OF THE ACT. 2.2 THE LD. CIT(A) CONFIRMED THE ORDER OF THE AO. 2.3 AGGRIEVED ASSESSEE IS IN 2 ND APPEAL. 2.4 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT: - (I) IN EARLIER YEAR, THE AO HAS THOUGH ACCEPTED THE INCOME UNDER THE HEAD BUSINESS INCOME U/S 143(1) WH ICH MAY BE FOLLOWED IN THESE YEARS ALSO. (2) THE GODOWN WAS NOT LET OUT NOT SIMPLY BUT IT HA D TO PROVIDE SECURITY FOR IT. THEREFORE THE ACTIVITIES A RE OF LEASE RENTALS WHICH IS REGARDED AS BUSINESS ACTIVITY. 2.5 THE LD. DR ON THE OTHER HAND CONTENDS THAT :- (1) ASSESSEE'S EARLIER ASSESSMENT WERE SUMMARY IN NATURE U/S 143(1) OF THE ACT WHICH DO NOT CREATE ANY RES J UDICATA OR BINDING PRECEDENT IN SCRUTINY ASSESSMENTS. THE AO V ERIFIED THE RELEVANT DOCUMENTS FOR THE FIRST TIME AND ASKED FOR RELEVANT EXPLANATION AND EVIDENCE, WHICH ASSESSEE D ID NOT COMPLY. LD. AO ARRIVED AT FINDINGS OF FACTS DEPENDI NG UPON AVAILABILITY OF RECORD. (2) THERE IS NO MERIT IN THE ARGUMENTS OF THE LD. C OUNSEL FOR THE ASSESSEE THAT THE AGREEMENT OBLIGE IT THE D UTY FOR SAFETY OF GODOWNS AS STATE WAREHOUSING CORPORATION NEVER ENTRUSTS SECURITY TO PRIVATE PARTY. THUS RSWC MAINT AINED THE SECURITY AND ASSESSEE FOR ITS OWN SATISFACTION MAY HAVE HIRED A WATCHMAN. IN THE ABSENCE OF PRODUCTION OF DOCUMENTS THIS CANNOT BE TREATED AS STIPULATED BY A LLEGED LEASE AGREEMENT WITH RSWC. DESPITE REPEATED OPPORTU NITIES ITA NO. 1030//JP/2013 M/S. ARDENT BUILDERS & STORAGE (P) LTD. VS. ITO , WARD- 2(2), KOTA . 4 BY AO, NO DOCUMENT WAS PRODUCED BY ASSESSEE BEFORE HIM FOR VERIFICATION. (3) THE LD. CIT(A) HAS GIVEN FURTHER FINDINGS ON FA CTS THAT THE ASSESSEE HAD NO BUSINESS INCOME AND IT IS NOT ENGAGED IN ANY BUSINESS ACTIVITY OF LETTING GODOWNS. THEREFORE , THERE IS NO MERIT IN THE ASSESSEE'S CONTENTION THAT IT IS IN THE BUSINESS OF LEASING THE GODOWN. THESE WERE CAPITAL ASSETS LY ING VACANT TO EARN RENTAL INCOME. THE ASSESSEE HAD LET OUT THEM TO RAJASTHAN STATE WAREHOUSING CORPORATION. (4) ASSESSEE IS LUCKY THAT HIS PAST ASSESSMENTS ARE NOT DISTURBED, AS THEY WERE FIT TO BE REOPENED FOR MAKI NG A PATENTLY WRONG CLAIM OF HEAD OF INCOME TO AVOID TAX ES. 2.6 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND FIND MERIT IN THE ARGUMENTS OF THE LD. DR. THE ASSESSEE FAILED TO PRODUCE ANY RECORD OR EVIDENCE T O SUBSTANTIATE ITS CLAIM OF TREATING RENTAL INCOME AS BUSINESS INCOME AND AV OID TAXES BY CLAIMING EXPENDITURE. NOTHING HAS BEEN BROUGHT ON RECORD BEF ORE AUTHORITIES BELOW AND THE UNDERSIGNED. IT HAS NOT BEEN CONTROVERTED T HAT AFTER TAKING POSSESSION OF GODOWN, RAJASTHAN STATE WAREHOUSING C ORPORATION EMPLOYS ITS OWN SECURITY AND NOT THE ASSESSEE. IN V IEW THEREOF, I FIND NO INFIRMITY IN THE ORDERS OF THE LD. CIT(A) UPHOLDING THE INCOME OF GODOWN RENTAL AS INCOME FROM HOUSE PROPERTY. THUS THE ORDE RS OF THE LD. CIT(A) ARE UPHELD, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ITA NO. 1030//JP/2013 M/S. ARDENT BUILDERS & STORAGE (P) LTD. VS. ITO , WARD- 2(2), KOTA . 5 3.0 IN THE RESULT, ASSESSEE'S APPEALS ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 2/12/ 2015 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 2/12/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. ARDENT BUILDERS & STORAGE (P) L TD. KOTA 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2(2), KOTA 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1030/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR