VANGUARD BUSINESS SYSTEMS P.LTD, NAVI MUMBAI V. ITO 5(3)(3), MUMBAI

ITA 1116/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9031 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 30-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 16-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATBIR SINGH
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. : 1116/MUM/2012 ASSESSMENT YEAR : 2001-02 M/S. VANGUARD BUSINESS SYSTEMS P. LTD. E/51-52, GRAIN, MERCHANT CHS LTD., SECTOR NO.17, VASHI, NAVI MUMBAI-400 703 PAN NO: AABCV 2308 J VS. ITO - 5(3)(3), AAYKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SAMEER DALAL RESPONDENT BY : SHRI S ATBIR SINGH DATE OF HEARING : 30 .0 8 .2012 DATE OF PRONOUNCEMENT : 14.09.2012 ORDER PER RAJENDRA SINGH, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 04.11.2011 OF CIT(A)-9, MUMBAI FOR THE A.Y. 2001-02 IN RELATION TO THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE U/S .154 OF THE INCOME TAX ACT AGAINST THE ORDER OF THE CIT(A), WHICH HAS BEEN REJECTED BY THE CIT(A). 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY WAS AN AGENT OF SHREE LABH CO-OP. BANK LTD. FOR DEVELOPING BANKING ACTIVITIES. THE ITA NO : 1116/MUM/2012 M/S. VANGUARD BUSINESS SYSTEMS P. LTD. 2 ASSESSEE IN TERMS OF THE AGREEMENT DATED 10.01.1994 HAD RECEIVED A SUM OF RS.3,01,512/- AS CONSIDERATION FOR THE DEVELOPME NT ACTIVITIES OF THE BANK. IN TERMS OF THE SAID AGREEMENT, THE BANK HAD ALSO ADVANCED 60 MONTHS RENT OF RS.60,00,201/- TO THE ASSESSEE AT AN NUAL INTEREST RATE OF 15%. THE ASSESSEE HAD PAID INTEREST OF RS.2,23,235 /- AND HAD ALSO INCURRED CERTAIN OTHER EXPENSES WHICH HAD BEEN CLAI MED AS DEDUCTION AGGREGATING TO RS.3,62,823/-. THE A.O. HAD ASSESSE D THE RENTAL INCOME AS INCOME FROM OTHER SOURCES AND HAD DISALLOWED THE CLAIM OF THE EXPENSES WHICH HAD BEEN UPHELD BY THE CIT(A). IN F URTHER APPEAL, THE TRIBUNAL IN THE ORDER DATED 28.09.2005 IN ITA NO.61 51/M/2003 HELD THAT THE DEVELOPMENT AGREEMENT WAS FOR LETTING OUT PREMISES FOR BANK OCCUPATION AND, THEREFORE, THE INCOME RECEIVED BY T HE ASSESSEE WAS ESSENTIALLY OF THE NATURE OF THE RENTAL INCOME. TH E TRIBUNAL HELD THAT THE INTEREST HAD BEEN PAID ON DEPOSITS UTILISED BY THE ASSESSEE FOR MAKING INVESTMENTS AND HAD NO LINKAGE WITH THE INCOME RECE IVED FROM THE BANK. THE TRIBUNAL, THEREFORE, DISALLOWED THE INTEREST. IN RESPECT OF OTHER EXPENSES, THE TRIBUNAL DRAWING ANALYSING FROM THE A LLOWABILITY OF EXPENSES UNDER THE HOUSE PROPERTY INCOME, ALLOWED 2 5% OF SUCH EXPENSES WHICH COME TO RS.75,000/-. THE ASSESSEE H AD ALSO RAISED AN ADDITIONAL GROUND BEFORE THE TRIBUNAL REGARDING THE NATURE OF RENTAL INCOME I.E. WHETHER IT SHOULD BE ASSESSED AS BUSINE SS INCOME OR INCOME FROM OTHER SOURCES. THE TRIBUNAL RESTORED THIS ISS UE TO THE FILE OF THE ITA NO : 1116/MUM/2012 M/S. VANGUARD BUSINESS SYSTEMS P. LTD. 3 CIT(A) FOR ADJUDICATION. THEREAFTER, THE CIT(A) VI DE ORDER DATED 16.11.2007 ADJUDICATED THE ISSUE AND HELD THAT THE RENTAL INCOME HAD TO BE ASSESSED AS INCOME FROM BUSINESS. SINCE THE SUB STANTIAL PART OF THE EXPENSES HAD NOT BEEN ALLOWED TO THE ASSESSEE ON TH E GROUND THAT THE RENTAL INCOME WAS ASSESSED AS INCOME FROM OTHER SOU RCES, THE ASSESSEE FILED MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL AGAINST THE ORDER DATED 28.09.2005 IN ITA NO.6151/M/2003. THE TRIBUN AL HOWEVER, REJECTED THE MISCELLANEOUS APPLICATION HOLDING THAT THERE WAS NO APPARENT MISTAKE IN THE ORDER. THE TRIBUNAL ALSO O BSERVED IN THE ORDER DATED 18.06.2010 IN MA NO.658/M/2009 THAT THE ASSES SEE IF SO ADVISED COULD CLAIM THE CONSEQUENTIAL EXPENDITURE BEFORE TH E LOWER AUTHORITIES. THEREAFTER, IT APPEARS THE ASSESSEE FILED PETITION U/S.154 BEFORE THE CIT(A) FOR ALLOWING EXPENDITURE BY RECTIFYING THE O RDER DATED 16.11.2007. THE CIT(A), HOWEVER, REJECTED THE MISCELLANEOUS APP LICATION ON THE GROUND THAT THE ISSUE HAD ALREADY BEEN DECIDED BY T HE TRIBUNAL IN ITA NO.6151/MUM/2003 AND THE CIT(A), THEREFORE, COULD N OT RECTIFY THE ORDER PASSED BY THE ITAT. AGGRIEVED BY THE SAID DE CISION, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US, THE LEARNED AR FOR THE ASSESSEE SUBMI TTED THAT ONCE THE CIT(A) HAD ADJUDICATED THE ISSUE RELATING TO THE NA TURE OF RENTAL INCOME, HE WAS REQUIRED TO ALLOW THE EXPENSES ADMISSIBLE AG AINST THE BUSINESS INCOME WHICH HAD NOT BEEN DONE AND, THEREFORE, THER E WAS AN APPARENT ITA NO : 1116/MUM/2012 M/S. VANGUARD BUSINESS SYSTEMS P. LTD. 4 MISTAKE IN THE ORDER. THE LD. DR, ON THE OTHER HAN D, SUPPORTED THE ORDER OF THE CIT(A) ARGUING THAT THERE WAS NO APPARENT MI STAKE. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING THE RECTIFICAT ION OF THE ORDER OF THE CIT(A) DATED 16.11.2007 IN WHICH THE CIT(A) HAD ADJ UDICATED THE NATURE OF RENTAL INCOME RECEIVED BY THE ASSESSEE FROM THE BANK WHICH HAD BEEN TREATED AS INCOME FROM BUSINESS. THE CIT(A) HAD PA SSED THE ORDER CONSEQUENT TO THE DIRECTION OF THE TRIBUNAL IN ITA NO.6151/M/2003 IN WHICH THE TRIBUNAL HAD RESTORED THE ISSUE OF NATURE OF RENTAL INCOME TO THE FILE OF THE CIT(A). THUS THE ISSUE BEFORE THE CIT(A) WAS TO DECIDE THE NATURE OF RENTAL INCOME AND ALLOWABILITY OF EXPENSE S WAS NOT THE ISSUE RESTORED BY THE TRIBUNAL BECAUSE THE TRIBUNAL HAD A LREADY DECIDED THE ALLOWABILITY OF EXPENSES OTHER THAN THE INTEREST AT 25% OF SUCH EXPENSES. THEREFORE, WE DO NOT SEE ANY APPARENT MISTAKE IN TH E ORDER OF THE CIT(A) IN NOT ALLOWING ANY EXPENSES AGAINST THE RENTAL INC OME. IN FACT THE CIT(A) WHILE DECIDING THE NATURE OF INCOME DIRECTED THE A. O. TO TREAT THE INCOME ON ACCOUNT OF DEVELOPMENT CHARGES RECEIVED FROM THE BANK AS INCOME UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR P ROFESSION. THEREFORE, THE CLAIM OF EXPENSES IF ANY COULD HAVE BEEN MADE BY THE ASSESSEE BEFORE THE A.O. WHILE THE INCOME WAS BEING ASSESSED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION A S PER THE DIRECTION OF THE CIT(A). SUCH CLAIM CANNOT BE MADE BY WAY OF AP PLICATION FOR ITA NO : 1116/MUM/2012 M/S. VANGUARD BUSINESS SYSTEMS P. LTD. 5 RECTIFYING THE ORDER OF THE CIT(A) BECAUSE U/S.154 ONLY PATENT AND OBVIOUS MISTAKE CAN BE RECTIFIED. WE HAVE ALREADY HELD THAT WE DO NOT SEE ANY APPARENT MISTAKE IN THE ORDER OF THE CIT(A) AND, THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) REJECTING THE APPLIC ATION U/S.154. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 14 TH DAY OF SEPTEMBER, 2012. SD/- - SD/- ( AMIT SHUKLA ) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 14.09.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI