DCIT,Circle-11, Kolkata, Kolkata V. M/s. Concrete Developers Ltd., Kolkata

ITA 1066/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99752 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 27-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-07-2012
• Court: TRIBUNAL
• Assessee Lawyers: RAJ KR AGARWAL
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 1 0 6 5 / KOL /201 2 ASSESSMENT YEAR : 200 6 - 0 7 DEPUTY COMMISSIONER OF INCOME - TAX, VS. M/S. CONCRETE DEVELOPERS LTD. CIRCLE - 11, KOLKATA. (PAN: AABCC0675K) ( APPELLANT ) ( RESPONDENT ) & I.T.A NO.10 66 /KOL/2012 ASSESSMENT YEAR : 200 8 - 0 9 DEPUTY COMMISSIONER OF INCOME - TAX, VS. M/S. CONCRETE DEVELOPERS LTD. CIRCLE - 11, KOLKATA. (PAN: AACCC0659A) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 2 6 .0 8 .2015 DATE OF PRONOUNCEMENT: 14 . 0 9 . 2015 FOR THE APPELLANT: S HRI S ANJAY MUKHERJEE, JCIT, SR. DR FOR THE RESPONDENT: S HRI RAJ KR. AGARWAL, FCA ORDER PER SHRI MAHAVIR SINGH, JM: BOTH THESE APPEAL S BY REVENUE ARE ARISING OUT OF SEPARATE ORDER S OF CIT(A) - X I I , KOLKATA IN APPEAL NO S . 240 / X I I/1 1( 4 )/ 09 - 1 0 & 206/XII/CIR - 1/10 - 11 DATED 24 . 0 4 .2012 . ASSESSMENT S W ERE FRAMED BY ITO, WARD - 1 1( 4 ) , KOLKATA U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR AY S 2006 - 07 AND 200 8 - 0 9 VIDE ITS SEPARATE ORDER S DATED 3 1 . 12 .20 08 AND 13.12.2010 RESPECTIVELY . 2. FIRST WE TAKE UP ITA NO. 1065/K/2012 FOR AY 2006 - 07. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN TREATING THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN TREATING THE RENTAL INCOME DERIVED BY EXPLOITING THE STOCK IN TRADE/WORK - IN - PROGRESS AS INCOME FROM HOUSE PROPERTY. 2 ITA NO.10 6 5 &1066 /KOL/2012 M/S. CONCRETE DEVELOPERS LTD . AY S 06 - 07& 0 8 - 0 9 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE DECLARED TOTAL LOSS AMOUNTING TO RS.20,88,554/ - .THE BIFURCATION WAS THAT BUSINESS LOSS OF THE ASSESSEE WAS RS.28,57,569/ - AND INCOME FROM HOUSE PROPERTY AT RS.7,69,005/ - . THE AO OBSERVED THAT THE INCOME FROM RENTAL IS BUSINESS INCOME AND HENCE HE REDUCED THE BUSINESS LOSS A ND DIRECTED TO BE CARRIED FORWARD THE LOSS TO THE TUNE OF RS.10,99,585/ - . AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE CIT(A) IT WAS CLAIMED THAT THE ASSESSEE HAS COMPUTED INCOME FROM HOUSE PROPERTY BY CLAIMING STANDARD DEDUCTION U/S. 24 OF THE ACT AMOUNTING TO RS.3,29,577/ - OUT OF TOTAL RENTAL INCOME OF RS.10,98,593/ - . ACCORDING TO ASSESSEE, THE AO HAS COMPUTED THE ENTIRE RENTAL INCOME AS BUSINESS INCOME BY DENYING DEDUCTION U/S. 24 OF THE ACT AND ALSO REDUCING THE BUSINESS LOSS. THE CIT( A) FOLLOWING THE TRIBUNAL S ORDER IN ASSESSEE S OWN CASE FOR AYS 2004 - 05 AND 2005 - 06 IN ITA NOS. 1287 & 1288/K/2008 DATED 24.10.2008 ALLOWED THE ASSESSEE S APPEAL ON THE GROUND THAT THE ISSUE OF THE APPEAL IS COVERED BY THE TRIBUNAL S ORDER. AGGRIEVED, R EVENUE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ISSUE IS EXACTLY IDENTICAL AND COVERED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH DECISION IN ASSESSEE S OWN CASE FOR AYS 2004 - 05 AND 2005 - 06 IN ITA NOS. 1287 & 1288/K/2008 DATED 24.10.2008, WHERE IT HAS BEEN HELD AS UNDER: 9. IN THE CASE BEFORE US, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS LET OUT THE SAID FLATS FOR A PERIOD OF THREE YEARS WITH AN OPTION OF RENEWAL FOR TWO SIMILAR TERMS. CONSIDERI NG THE PERIOD FOR WHICH THE FLATS HAVE BEEN LET OUT, AS PER THE AGREEMENT, IT COULD NOT BE SAID THAT THE SAID FLATS HAVE BEEN LET OUT ONLY FOR A SHORT PERIOD. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS LET OUT THOSE FLATS AS AN OWNER TO EXPLOIT TH E INCOME FROM THOSE FLATS AS OWNER OF THE ASSETS. THEREFORE, THE ABOVE DECISION OF THE HON'BLE MADRAS HIGH COURT AS WELL AS THE DECISION OF THE HON'BLE ITAT, GAUHATI BENCH (SUPRA) SQUARELY APPLY TO THE CASE BEFORE US. ACCORDINGLY, WE HOLD THAT THE RENTAL I NCOME REALIZED BY THE ASSESSEE IS THE INCOME FROM HOUSE PROPERTY AND IS TO BE ASSESSED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THEREFORE, WE UPHOLD THE ORDERS OF THE LD. CIT(A) BY REJECTING THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT FOR BOTH THE AS SESSMENT YEARS UNDER CONSIDERATION. 3 ITA NO.10 6 5 &1066 /KOL/2012 M/S. CONCRETE DEVELOPERS LTD . AY S 06 - 07& 0 8 - 0 9 SINCE THE ISSUE IS EXACTLY IDENTICAL IN THE PRESENT CASE AND IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION CITED SUPRA, WE RESPECTFULLY FOLLOWING THE SAME DISMISS THIS ISSUE OF REVENUE S APPEAL. 5 . NOW, COMING TO ITA NO.1066/K/2012 FOR AY 2008 - 09. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION OF INTEREST AND FINANCE CHARGES MADE BY AO HOLDING THE SAME AS CAPITAL IN NATURE. FOR THIS, REVENUE HAS RAISED FOLLOWING G ROUND NO.1: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE INTEREST & FINANCE CHARGES AS REVENUE EXPENDITURE OF THE ONGOING PROJECT. 6. BRIEFLY STATED FACTS ARE THAT DURING THE RELEVANT ASSESSMENT YEA R 2008 - 09 THE ASSESSEE CLAIMED INTEREST AMOUNTING TO RS.39,17,274/ - AND DEBITED TO P&L ACCOUNT ON ACCOUNT OF INTEREST ON LOAN. THE ASSESSEE CLAIMED THAT THE ABOVE LOAN WAS UTILIZED FOR REFUNDING THE ADVANCE TAKEN AGAINST FLAT BOOKING IN THE PROJECT DURING EARLIER YEARS. THE AO DISALLOWED THIS INTEREST ON THE GROUND THAT PROJECT WAS NOT ABANDONED AND HE ALSO MENTIONED THAT LOAN FUND WAS ALSO UTILIZED IN THE DEVELOPMENT OF PROJECT AND PROJECT W AS NOT IN PROGRESS. ACCORDING TO AO, NO LOAN HAS BEEN UTILIZED FOR CONSTRUCTION DURING THE YEAR. ACCORDINGLY, HE DISALLOWED THE CLAIM OF INTEREST. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALLOWED THE CLAIM OF THE ASSESSEE AFTER CONSIDERING THE FRESH SUBMISSIONS MADE BY ASSESSEE BEFORE HIM. WHEN THIS WAS POINTED OUT TO LD. COUNSEL FOR THE ASSESSEE THAT THE PLEA TAKEN BEFORE CIT(A) FIRST TIME AND THE FACTS NARRATED ARE NOT EMANATING FROM THE ORDER OF CIT(A). HE FAIRLY STATED THAT THE FACTS ARE RELATING TO THE ISSUE IN HAND ARE RAISED BEFORE CIT(A) FOR THE FIRST TIME AND THIS CAN BE VERIFIED BY THE AO IN CASE BENCH FEEL S SO. THE RELEVANT FRESH SUBMISSIONS ARE REPRODUCED AT PARA 3 OF CIT(A) S ORDER WHICH NEED NOT TO BE REPRODUCED HERE AGAIN FOR THE SAKE BREVITY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES , WE DEEM IT FIT AND APPROPRIATE IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY TO SET ASIDE THIS ISSUE TO THE FILE OF AO TO CONSIDER THE FRESH SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE CIT(A) FOR THE FIRST TIME AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT ASSESSEE BE GIVEN 4 ITA NO.10 6 5 &1066 /KOL/2012 M/S. CONCRETE DEVELOPERS LTD . AY S 06 - 07& 0 8 - 0 9 REASONABLE OPPORTUNITY OF BEING HEARD. THIS GROUND OF APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, APPEAL OF REVENUE FOR AY 2006 - 07 IS DISMISSED AND THAT O F FOR AY 2008 - 09 IS ALLOWED FOR STATISTICAL PURPOSES. 8 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 14.09.2015 . SD/ - SD/ - ( M. BALAGANESH ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14TH SEPTEMBER , 201 5 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT DCIT, CIRCLE - 11, KOLKATA 2 RESPONDENT M/S. CONCRETE DEVELOPERS LTD., 3/1, LOUDON STREET, KOLKATA - 700 017. 3 . THE CIT (A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .