DCIT,Circle-1, Kolkata, Kolkata V. M/s. Asha Mangal Protfolio(P)Ltd, Howrah

ITA 1058/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75062 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 16-07-2012
• Court: TRIBUNAL
• Department Lawyers: SWETABH SUMAN
• Assessee Lawyers: B C JAIN
• Keywords: Business income; Depreciation; Revenue expenditure
• Section: 143(3); 28

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 1058/KOL/2012 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. ASHA MANGAL PORTFOLIO PVT. LTD. CIRCLE-1, KOLKATA. (PAN: AABCA3340B) (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 06.02.2014 DATE OF PRONOUNCEMENT: 13.02.2014 FOR THE APPELLANT: SHRI SWETABH SUMAN, JCIT, SR. DR FOR THE RESPONDENT: SHRI B. C. JAIN, FCA $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-I, KOLKATA IN APPEAL NO. 210/CIT(A)-1/C-1/10-11 DATED 25.04.2012. ASSESSMEN T WAS FRAMED BY DCIT, CIRCLE-1, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 14.12. 2010. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN TREATING THE INCOME OF THE ASSESSEE AS INCOME FROM BUSINESS AND PROFESSION AS DECLARED BY ASSESSEE AS AGAINST THE ASSESSMENT MADE BY AO UNDER THE HEAD IN COME FROM HOUSE PROPERTY. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO TREAT THE INCOME OF THE ASSESSE E FROM BUSINESS & PROFESSION U/S. 28 OF RS.1,26,73,311/- (CONSISTING OF RS.15,56,156/- AS G ROUND RENT, RS.5,99,068/- AS MAINTENANCE AND RS.1,05,18,087/- AS WAREHOUSE CHARG ES) AND NOT INCOME FROM HOUSE PROPERTY AS TREATED BY THE AO IN THE ASSESSMENT PRO CEEDINGS. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE FILED TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR AYS 2004-05 AND 2005-06, WHEREIN TRIBUNAL CONSIDERING THE FOLLOWING ORDERS ALLOWED THE CLAIM OF THE ASSESSEE: 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FILE D COPY OF TRIBUNALS ORDER IN EARLIER ASSESSMENT YEARS, WHICH ARE AS UNDER:- ITA NO.2005/MUM/2005 ASSESSMENT YEAR 2001-02 ITA NO.6901/MUM/2005 ASSESSMENT YEAR 2002-03 ITA NO.4571/MUM/2006 ASSESSMENT YEAR 2000-01 ITA NO.4572/MUM/2006 ASSESSMENT YEAR 2003-04 2 ITA NO.1058/K/2012 ASHA MANGAL PORTFOLIO PVT. LTD. , AY:2008-09 HE STATED THAT THE TRIBUNAL IN THE ABOVE FOUR YEARS HAS ALLOWED THE ISSUE IN PARA-6.1 TO 6.4 BY HOLDING AS UNDER:- 6.1 THE CONSEQUENTIAL CLAIMS MADE BY THE ASSESSEE IN RESPECT OF THE DEPRECIATION AND EXPENDITURE ON ACCOUNT OF REPAIRS ETC. INCURRED BY THE ASSESSEE TO THE PROPERTY IN QUESTION ARE CONSIDERED. IT IS FOUND NOWHERE THAT T HE DEPARTMENTAL AUTHORITIES HAVE DISPUTED THE QUANTUM OR THE NATURE OF THE EXPENDITU RE CLAIMED BY THE ASSESSEE. THEY HAVE SIMPLY FOUND THAT AS INCOME HAS BEEN TREATED AS INC OME FROM HOUSE PROPERTY, THESE ARE NOT ALLOWABLE AS DEDUCTION FROM INCOME FROM THAT PR OPERTY. IN VIEW OF THE ABOVE FACTS IT IS FOUND THAT THE INCOME OFFERED BY THE ASSESSEE IS TO BE ACCEPTED AS INCOME FROM BUSINESS AND IN THE ABSENCE OF ANY DISPUTE OF THE QUANTUM OR THE NATURE OF THE EXPENDITURE CLAIMED BY THE ASSESSEE, AND STATED TO HAVE BEEN INCURRED FOR EARNING THE INCOME OFFERED FOR TAXATION AND ALSO THE DEPRECIATI ON ON THE INTANGIBLE ASSET CREATED BY THE ASSESSEE TO MEET THE FORESEEN FUTURE CLAIM TO B E MADE OR TO BE CLAIMED BY THE KPT IN FUTURE AND TO COMBAT THAT THE ASSESSEE HAS CREATED INTANGIBLE ASSET ON WHICH THE DEPRECIATION IS ALLOWABLE AGAINST THE BUSINESS INCO ME OFFERED BY THE ASSESSEE FOR TAXATION IN ITS HANDS. TO SUPPORT THIS VIEW, WE FIND THAT TH E DECISION OF THE VARIOUS JUDICIAL FORUMS RENDERED IN THE CASE OF CIT VS. SARABHAI P LTD., 26 3 ITR 197 WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE WAS NOT ONLY RECEIVING THE WAREH OUSING CHARGES FROM THE OCCUPIERS BUT ALSO RECEIVED THE AMOUNT TO THE SERVICES RENDER ED TO THE OCCUPIERS FOR THE SAID PURPOSE. THE ASSESSEE MAINTAINS STAFF AND MAKE INVE STMENTS IN VARIOUS ITEMS LIKE IRON CHEST, FURNITURE AND FIXTURES ETC. SUCH AN ACTIVITY OF RENDERING SERVICES TO THE OCCUPIERS SHOULD BE TREATED AS BUSINESS INCOME AND AS SUCH AL L EXPENSES INCURRED FOR THE PURPOSE OF RENDERING SUCH SERVICES SHOULD BE ALLOWED AS BUS INESS INCOME. 6.2 IN THE CASE OF F.S. GANDHI VS. CWT 184 ITR 36 ( SC), THE HONBLE APEX COURT HAS HELD THAT WHERE THE POSSESSION OF THE LAND ITSELF IS PRECARIOUS DUE TO THE PENDING DISPUTE, THE PROPERTY COULD NOT BE TREATED AS ONE I N WHICH THE ASSESSEE HAS VESTED INTEREST SO AS TO ASSESSEE THE INCOME DERIVED FROM THEM U/S. 2(E)(2)(III) OF THE IT ACT. THE RATIO AND PROPOSITION IN THE CASE OF PODDAR CEMENT AND SH AMBU PROPERTIES RELIED ON BY THE DEPARTMENTAL AUTHORITIES ARE DISTINGUISHABLE FROM T HE FACTS OF THE CASE IN HAND AS THERE IS AGREEMENT TO ACQUIRE RIGHTS IN THE PROPERTIES IN TH E CASE OF PODDAR CEMENTS WHEREAS IN THE PRESENT CASE THAT THE MATERIAL REQUIREMENT OF A GREEMENT OF ACQUIRING THE RIGHT IS VERY MUCH ABSENT. 6.3 IN THE CASE OF BINDALS DEVELOPERS (P) LTD. VS. ITO 292 ITR (AT)178 THE TRIBUNAL HAS HELD AFTER CONSIDERING THE CASE OF PODDAR CEMENT LT D. THAT THE ASSESSEE EARNING THE RENT FROM SUB-LETTING IT NOT HAVING THE OWNERSHIP RIGHT SUCH A RENT HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AND DEDUCTION OF EXPENDIT URE EARNED ON SUCH INCOME IS ALLOWABLE. THE SAME VIEW IS TAKEN BY THE HONBLE MA DRAS HIGH COURT IN THE CASE OF CIT VS. AVK CONSTRUCTIONS P LTD., 292 ITR 512. THE CLAI M OF THE ASSESSEE FOR VARIOUS EXPENDITURE ARE TO BE TREATED AS REVENUE EXPENDITUR E ONLY AS THE ASSESSEE HAS SPENT ON THE PROPERTY TO WHICH IT HAS NO RIGHT WHATSOEVER AN D IN THE CASE OF ANY SITUATION OF HANDING OVER TO THE ORIGINAL OWNER BEING THE KPT TH E ASSESSEE HAS TO SURRENDER ALONG WITH THE IMPROVEMENTS MADE BY IT. SUCH AN EXPENDITU RE HAS TO BE TREATED AS REVENUE EXPENDITURE EVEN THOUGH RESULTING IN A CAPITAL ASSE T. THIS IS THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. MADRAS AU TO SERVICE (P) LTD. 233 ITR 468 (SC).SO ALSO THE HONBLE MARAS HIGH COURT HAS HELD IN THE CASE OF CIT V. KISHANCHAND CHELLARAM 130 ITR 385 (MADRAS) THAT THE RIGHT OVE R THE LAND ON WHICH CONSTRUCTION WAS PUT UP DID NOT BELONG TO THE ASSESSEE; BUILDING TO BECOME PROPERTY OF THE ORIGINAL OWNER OF THE LAND AND HENCE THE EXPENSES INCURRED O N SUCH CONSTRUCTION ON THE LAND ARE DEDUCTIBLE AS REVENUE EXPENDITURE. HENCE IN THE LI GHT OF THE ABOVE DICTUMS OF VARIOUS JUDICIAL FORUMS, WE ARE OF THE CONSIDERED VIEW THAT THE CLAIMS OF THE ASSESSEE AS EXPENDITURE ARE ALLOWABLE, MORE SO THAT THE DEPARTM ENT HAS NOT DISPUTED THEIR QUANTUM OR THE NATURE OF EXPENDITURE CLAIMED BY THE ASSESSE E. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE CLAIMS OF THE VARIOUS EXPE NDITURE AS WELL AS DEPRECIATION 3 ITA NO.1058/K/2012 ASHA MANGAL PORTFOLIO PVT. LTD. , AY:2008-09 CLAIMED BY THE ASSESSEE ARE ALLOWABLE AGAINST BUSIN ESS INCOME. ACCORDINGLY THE DEPARTMENT IS DIRECTED TO ALLOW THE CLAIMS OF THE A SSESSEE. 6.4 THE ONLY ADDITIONAL ISSUE FOR THE AYR. 2000-01 RELATES TO THE REOPENING OF THE ASSESSMENT, IT IS FOUND FROM THE MATERIAL MADE AVAI LABLE WITH THE TRIBUNAL AS CULLED OUT FROM THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORIT IES, THE AO HAS REOPENED THE ASSESSMENT BASING ON THE ASSESSMENT MADE FOR THE NE XT FOLLOWING YEAR 2001-02 BUT NOT ANY OTHER INFORMATION THAT IS COMING TO HIS NOTICE OTHERWISE AND IN THE RE-ASSESSMENT PROCEEDINGS ALSO THE AO ONLY REVISED HIS PREVIOUS D ECISION OF CONSIDERING OF INCOME OFFERED AS BUSINESS INCOME, CHANGED TO THAT OF INCO ME FROM HOUSE PROPERTY IN THE ABSENCE OF ANY MATERIAL THAT CAME TO HIS KNOWLEDGE AFTER THE COMPLETION OF ORIGINAL ASSESSMENT PROCEEDINGS. THIS CONTENTION OF THE ASSE SSEE GAINS SUPPORT FROM THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF DASS FRIENDS BUILDERS (P) LTD. VS. DCIT 280 ITR 77 (ALL) AND FOR REOPENING OF THE ASSE SSMENT CERTAIN DOCUMENTS WERE FOUND RELATING TO THE ASSESSEE AND SUCH PROCEEDINGS WERE MADE IN THE NAME OF M/S. BINANI METALS LTD. IF THAT IS THE CASE THE AO WHO H AS SEARCHED M/S. BINANI METALS LTD. HAS TO SATISFY HIMSELF FIRST THAT THE PAPERS SEIZED DURING THE SEARCH BELONG TO THE THIRD PARTY AND ACCORDINGLY RECORD SATISFACTION AND SEND THEM TO THE AO HAVING JURISDICTION OVER THAT THIRD PARTY TO BE CONSIDERED IN HIS HANDS FOR ASSESSMENT. IN VIEW OF THE SPECIAL PROVISIONS CONTAINED IN CHAPTER XIVB SUCH INFORMATI ON CANNOT BE MADE A BASIS FOR REOPENING THE ASSESSMENT HAS ALREADY CONCLUDED AND HENCE WE ARE OF THE CONSIDERED VIEW THAT THE REOPENING OF THE ASSESSMENT MADE BY T HE AO FOR A.YS. 2000-01 IS VOID-AB- INITIO AND ACCORDINGLY NON-EST. WHEN THIS WAS CONFRONTED TO LD. SR-DR, HE FAIRLY C ONCEDED THAT THERE IS NO FACTUAL CHANGE IN THESE TWO ASSESSMENT YEARS FROM WHAT WERE IN THE EARLIER YEARS, AS DECIDED BY THE TRIBUNAL. BUT HE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 4. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN A SSESSEE'S OWN CASE BY THE TRIBUNALS DECISION IN EARLIER YEARS AND TAKING A CONSISTENT V IEW, AS THERE IS NO FACTUAL DISTINCTION, WE DISMISS THESE APPEALS OF REVENUE. AS THE ISSUE IS EXACTLY THE SAME WITH THE PRESENT I SSUE, THE SAME IS COVERED IN ASSESSEES OWN CASE BY TRIBUNALS DECISION IN EARLIER YEARS. TAKI NG A CONSISTENT VIEW, WE CONFIRM THE ORDER OF CIT(A). HOWEVER, AS REGARDS TO THE OTHER ISSUE, WH ICH ARE CONSEQUENTIAL TO THE FIRST ISSUE NEED NO ADJUDICATION. 4. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 5. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.02.2 014 SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH FEBRUARY, 2014 12 '3' 4 JD.(SR.P.S.) 4 ITA NO.1058/K/2012 ASHA MANGAL PORTFOLIO PVT. LTD. , AY:2008-09 $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT DCIT, CIRCLE-1, KOLKATA 2 ./,- / RESPONDENT M/S. ASHA MANGAL PORTFOLIO PVT. LTD. , 103/24/1, FORESHORE ROAD, HOWRAH-711202. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .