ACIT, New Delhi V. M/s. Master Infrastructure Pvt. Ltd., New Delhi

ITA 1092/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2431 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Business expenditure
• Section: 271(1)(c); 143(3); 142(1); 143(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1092/DEL/2016 A.Y. : 2011-12 ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-04, NEW DELHI (ERSTWHILE CC-25, NEW DELHI) ROOM NO. 331, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. M/S MASTER INFRASTRUCTURE PVT. LTD. 509, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI 110 019 (PAN: AAECM2740C) (ASSESSEE) (RESPONDENT) REVENUE BY : MR. AMIT KATOCH, SR. DR. ASSESSEE BY : SH. KARAN KUMRA, CA ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGN ED ORDER DATED 23.12.2015 OF THE LD. CIT(A)-23, NEW DELHI RELE VANT TO ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER:- 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN:- 1. THE ORDER OF THE LD. CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE PENALTY OF RS. 52,32,068/- IMPOSED BY THE AO U/S. 271(1)(C) OF THE ACT. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY / ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 30.9.2011 DECLARING INCOME AT RS. NIL AND IT WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS ACT) AND LATER THE CASE WAS PICKED UP FOR SCRUTINY BY ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 10.09.2012 A ND NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE DATED 14.6.20 13 WAS ISSUED AND QAGAIN NOTICE U/S. 142(1) OF THE ACT DAT ED 5.9.2013 WAS ISSUED. IN RESPONSE TO THE STATUTORY NOTICES AND QUE STIONNAIRE, THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FIL ED WRITTEN SUBMISSIONS. THE ASSESSEE COMPANY WAS INCORPORATED ON 10.5.201. 3 NO BUSINESS ACTIVITIES WAS CARRIED OUT BY THE COMPANY DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSEE COM PANY HAD SOME RENTAL INCOME DURING THE YEAR FROM LETTING OUT BUILDING OWNED BY IT. THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S. 143(3) OF THE ACT ON 14.2.2014 AT AN INCOME OF RS. 1,57,50,940/- AS AGAINST THE RETURNED INCOME OF RS. NIL FILED ON 30.9.2011. TH E AO TREATED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY IN PLACE OF INCOME FROM BUSINESS OR PROFESSION SHOWN BY THE ASSE SSEE TO THE TUNE OF RS. 1,94,13,978/-. THEREAFTER, PENALTY PROCE EDINGS U/S. 271(1) OF THE ACT WERE INITIATED IN RESPECT OF ABOVE ADDITION MADE BY THE AO BY ISSUE OF NOTICE U/S. 274 READ WITH SECTI ON 271(1) OF THE ACT DATED 14.2.2014 AND PENALTY OF RS. 52,32,068/- U/S. 271(1) OF THE ACT WAS IMPOSED FOR CONCEALMENT OF PA RTICULARS OF INCOME / FURNISHING OF INACCURATE PARTICULARS OF INCO ME VIDE ORDER DATED 20.8.2014 BY CONSIDERING THE TAX ON RETURNED INC OME OF THE ASSESSEE TO BE NIL AND THUS CONSIDERED THE TAX ON EN TIRE ASSESSED INCOME OF RS. 52,32,068/- AS THE PENALTY U/S. 271(1) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 23.12 .2015 HAS DELETED THE PENALTY IN DISPUTE BY HOLDING THAT MERE C HANGE IN THE HEAD OF INCOME IN ASSESSMENT CANNOT BE CONSTRUED AS CO NCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INC OME AND THUS 4 DOES NOT ATTRACT ANY PENALTY. AGAINST THE ORDER OF THE LD . CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE OR DER OF THE LD. CIT(A) AND FILED A PAPER BOOK CONTAINING PAGES 1-56 BY MEN TIONING THE CASE LAWS BY WHICH THE CASE OF THE ASSESSEE IS SQUARELY COVER ED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE IMPUGNED ORDER AS WELL AS CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THAT LD. CIT(A) HAS ELABORATELY D ISCUSSED THE ISSUE IN DISPUTE VIDE PARA NO. 4 TO 4.1.3 AT PAGE NO. 5-7 OF THE IMPUGNED ORDER. THE RELEVANT FINDING OF THE LD. CIT(A) ARE REPRODUC ED AS UNDER:- 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE PENALTY ORDER. 4.1 THE 1ST AND 2ND GROUNDS RELATE TO IMPOSING PENALTY OF UNDER SECTION 271 (1 )(C) OF THE ACT. THE APPELLANT HAD LET OUT ITS PROPERTIES AND WAS ALSO PROVIDING CERTAIN SERVICES AS PER THE LEASE AGREEMENTS AND IN ITS RETURN OF INCOME IT DECLARED THE RENTAL INCOME AS BUSINESS INCOME AGAINST WHICH EXPENSES WERE CLAIMED INCLUDING DEPRECIATION ON THE PROPERTIES LET OUT ON RENT. THE 5 LD. CIT(A)-1, NEW DELHI HAD, VIDE HIS ORDER DATED 19.11.2013 IN APPEAL NO. 353/11-12 FOR AY 2010- 11 IN THE CASE OF THE APPELLANT, HELD THAT THE RECEIPTS FROM SERVICES RENDERED TO THE TENANTS IN RESPECT OF THE LEASED PROPERTIES IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY ALONGWITH THE RENTAL INCOME AND THAT EVEN IF THERE WAS NO BUSINESS INCOME THE EXPENSES FOR RUNNING OF THE OFFICE/ESTABLISHMENT WAS ALLOWABLE AS BUSINESS EXPENSE, AND SUSTAINED THE DISALLOWANCE OF DEPRECIATION ON THE LET OUT PROPERTIES, AND COMPUTED THE INCOME OF THE APPELLANT ACCORDINGLY. FOLLOWING THIS ORDER OF THE LD. CIT(A), THE AO ASSESSED THE RENTAL INCOME INCLUDING THE INCOME FROM SERVICES RENDERED IN RESPECT OF THE LEASED PROPERTIES AS INCOME FROM HOUSE PROPERTY AND ALLOWED DEDUCTION @30% U/S 24(A) OF THE ACT AND ALSO ALLOWED THE BUSINESS EXPENSES THOUGH THERE WAS NO BUSINESS INCOME AND DISALLOWED DEPRECIATION. THE AO THEREAFTER HAS IMPOSED PENALTY U/S 271(1)(C) OF THE ACT ON THE DIFFERENCE OF THE RETURNED INCOME AND THE ASSESSED INCOME. 4.1.2 THE APPELLANT HAS SUBMITTED THAT EVEN IF THE RETURNED BUSINESS INCOME/LOSS WAS ASSESSED AS 6 INCOME FROM HOUSE PROPERTY WITH REGARD TO THE RENTAL INCOME AND RELATED SERVICES THERE IS MERE CHANGE IN THE HEAD OF INCOME AND COMPUTATION WAS MADE ACCORDINGLY BY THE AO AND THAT IN ANY VIEW OF THE MATTER THIS CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME BY THE APPELLANT AS ALL THE FACTS WERE AVAILABLE ON RECORD. IT HAS ALSO BEEN SUBMITTED THAT THE OPINION OF THE AO IN TREATING THE BUSINESS INCOME AS INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES WAS MODIFIED AND CHANGED BY THE LND. CIT(A) AND HE COMPUTED THE INCOME AS INCOME FROM HOUSE PROPERTY INCLUDING THE ASSESSED INCOME FROM OTHER SOURCES IN COMPUTATION OF THE INCOME FROM HOUSE PROPERTY AND ALSO ALLOWED BUSINESS EXPENSES, AND THEREFORE IT CANNOT BE TREATED AS FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE APPELLANT HAS RELIED UPON THE DECISIONS OF HONBLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 AND OTHER DECISIONS CITED AND MENTIONED IN THE SUBMISSIONS OF THE APPELLANT. THE CONTENTIONS OF THE APPELLANT ARE ALSO COVERED 7 IN ITS FAVOUR BY THE JUDGMENTS IN CIT VS. AMIT JAIN 351 ITR 74 ((DEL) AND PRINCIPAL C.I.T. V. G.K. PROPERTIES (P) LTD 377 ITR 417 (T&AP). IN CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA) AND M/S HINDUSTAN STEEL LTD. VS STATE OF ORISSA (1972) 83 ITR 26(SC) AND THE DECISION OF HONBLE ITAT MUMBAI IN M/S. VIDHYA SYNTHETIC (I) PVT. LTD. V/S DY. COMMISSIONER OF INCOME TAX ITA NO. 3647/MUM./2011-ASSESSMENT YEAR: 2001-02 AND THAT OF THE HONBLE ITAT DELHI B BENCH DY. COMMISSIONER OF INCOME TAX, VS CREW BOS PRODUCTS PVT. LTD., AS WELL AS IN THE DECISIONS THE HONBLE HIGH COURT OF DELHI IN ESCORTS FINANCE LTD. (2009) 226 CTR (DEL) 105 AND THE HONORABLE ITAT(DELHI) IN ESPIRE INFOLABS PRIVATE LIMITED VS. ITO ITA NO. 4190-4191/DEL/2013, NALWA INVESTMENT LIMITED I.T.A. NO.3805/D/2010, ACIT VS. JINDAL EQUIPMENT LEASING AND CONSULTANCY SERVICES LTD. 2012 51 SOT 133 (DELHI) (URO), DCIT VS. MAX INDIA LIMITED ITA NO. 94/2011, RAI INDUSTRIAL POWER PVT. LTD. VS. DCIT ITA NO. 4862/DEL/2013, ACIT VS. GLOBAL ASSOCIATES ITA NO. 4819/DEL/2012 & 4942/DEL/2011, THE PRINCIPLE LAID DOWN BY THE VARIOUS COURTS INCLUDING HONBLE 8 SUPREME COURT IS THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1 )(C); AND THAT TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS; AND MERE CHANGE IN THE HEAD OF INCOME IN ASSESSMENT CANNOT BE CONSTRUED AS CONCEALMENT OF INCOME OR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME BY THE APPELLANT. 4.1.3 CONSIDERING THAT THE PENALTY U/S 271 (1 )(C) OF THE ACT IS NOT ATTRACTED ON MERE CHANGE OF HEAD OF INCOME OR LOSS IN THE ASSESSMENT ORDER WHICH DOES NOT RESULT IN ANY CONCEALMENT OF INCOME, IN VIEW OF THE DECISIONS MENTIONED HEREIN ABOVE THE PENALTY LEVIED IS THEREFORE CANCELLED. 6.1 AFTER PERUSING THE AFORESAID FINDINGS OF THE LD . CIT(A) AND RESPECTFULLY FOLLOWING THE CASE LAWS CITED THEREIN , WE ARE OF THE CONSIDERED VIEW PENALTY U/S. 271(1)(C) OF THE ACT I S NOT ATTRACTED ON MERE CHANGE OF HEAD OF INCOME OR LOSS IN THE ASSESSMENT ORDER WHICH DOES NOT RESULT IN ANY CONCEALMENT OF INCOME, HENCE, LD. CI T(A), HAS RIGHTLY 9 DELETED THE PENALTY IN DISPUTE WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE GROUNDS RAISED BY TH E REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED ORDER PRONOUNCED ON 13/03/2019. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 13/03/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENC HES