GUJARAT GROWTH CENTERS DEV. CO. LTD., Gandhinagar V. THE ACIT, GNR CIRCLE, Gandhinagar

ITA 1177/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1678 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: A C SHAH
• Keywords: Business income
• Section: 143(3); 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL, V.P. AND HON'BLE SHRI T.K. SHARMA, J.M .) I.T.A. NO. 1177/AHD./2009 ASSESSMENT YEAR : 2005-2006 GUJARAT GROWTH CENTERS DEVELOPMENT CORPORATION LTD. , GANDHINAGAR (APPELLANT) (P AN : AAACG 6988Q) VS.- THE ACIT, GNR CIRCLE, GANDHINAGAR (RESPONDENT) APPELLANT BY : SHRI A.C.SHAH, D. R. RESPONDENT BY : SHRI R.K.DHANESTA, A .R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 30-01-2009 OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), GANDHI NAGAR FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY INVOLVED IN THE BUSINESS OF SETTING UP OF GROWTH CENTRES. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME ON 02.01.2006 SHOWING TOTAL INCOME AT RS.11, 56,830/- UNDER SECTION 115JB OF THE I.T. ACT, 1961. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 05.11.2007 WHEREIN FOLLOWING THE DECISION OF HONBLE SUPREME C OURT IN THE CASE OF TUTICORIN ALKALIES CHEMICALS AND FERTILISERS LTD. VS- CIT RE PORTED IN 227 ITR 172, ASSESSED THE INTEREST INCOME EARNED BY THE ASSESSEE AT RS.36,21, 297/- AS INCOME FROM OTHER SOURCES. 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS), FOLLOWING HIS ORDER DATED 22.01.2009 FOR THE ASSESSMENT YEAR 2005-06 HELD THAT BESIDES THE BUSINESS RECEIPTS SHOWN BY THE ASS ESSEE AT RS.41,53,563/-, THE FOLLOWING AMOUNTS AS OBTAINED FROM THE ASSESSEES BALANCE-SHE ET SHALL BE ADDED TO THE TOTAL INCOME. I) ON ACCOUNT OF GCC MR DOWN PAY/OFFER/ DEPO A/C.- RS.2,16,69,851 RS.48,69,365 RS .68,00,486 II) ON ACCOUNT OF INSTALMENT RS.37,98,404 RS.2 ,91,296 RS.35,07,108 RS.103,07,594 LESS: INTEREST ON INSTALMENTS BEING COVERED BY SEP ARATE GROUND (AS PER COMPUTATION PROVIDED BY ASSESSEE) RS. 38,88,883 RS. 64,18,711 2 3.1 THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO HELD THAT THE ASSESSEE SHALL BE ENTITLED FOR DEDUCTION OF ADMINISTRATIVE E XPENSES AS PER SCHEDULE J OF RS.28,44,093/-. 3.2 IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), FOLLOWING HIS ORDER DATED 31.03.2008 FOR THE ASSESS MENT YEAR 2004-05, DIRECTED THE ASSESSING OFFICER TO ACCEPT THE OFFER OF RS.5,21,15 1/- OF ACCRUED INTEREST. HE ALSO OBSERVED THAT AMOUNT OF RS.33,63,732/- IS PART OF T HE OVERALL INTEREST WHICH WAS IN QUESTION IN THE PRECEDING YEAR. FOR THIS YEAR ALSO, HE DIRECTED THE ASSESSING OFFICER TO INCLUDE A SUM OF RS.33,63,732/- FOR TAXATION PURPOS ES. 3.3 ON THE BASIS OF ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) RECOMPUTED THE INCOME AT RS.1,10,91,895/- AS UNDER: INCOME AS PER PROFIT & LOSS ACCOUNT RS.41,53,56 3/- ADD: I) INCOME ON ACCOUNT OF INTEREST INCOME FROM LEASE OFFERED FOR TAXATION TO THE A.O. RS .33,63,732 II) INCOME ON ACCOUNT OF DOWN PAYMENT OF LEASE DURING THE YEAR. RS.68,00,468 III) INCOME ON ACCOUNT OF INSTALMENTS OF LEASE RECEIVED DURING THE YEAR. RS 35,0 7,108 RS.1,36,71,308/- RS.1,78,24,871/- LESS: I) AMOUNT PERTAINING TO ACCRUED INTEREST CONSIDERED SEPARATELY FOR BOTH A.YS. RS.38, 88,883 2004-05 & 2005-06, II) ADMINISTRATIVE EXPENSES AS SHOWN IN THE PROFIT & LOSS ACCOUNT FOR THE YEAR. RS.28 ,44,093 RS. 67,32,976/- RS.1,10,91,895/- 4. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON TH E FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN ENHANCING THE I NCOME TO RS. 1,10,91,895 FROM TOTAL INCOME AT RS. 36,21,297 AS ASSESSED BY AO BY INCLUDING THE DOWN PAYMENT OF RS. 68,00,468 AND INSTALLMENT OF RS. 35 ,07,108 AS BUSINESS INCOME IN AS MUCH AS THE CIT(A) CANNOT DISCOVERED THE SOURCE WHICH IS NOT CONSIDERED BY THE AO IN HIS ASSESSMENT ORDER AND WHICH IS NOT DI SCLOSED IN THE RETURN OF INCOME AS HELD IN THE FOLLOWING CASES: 3 (I) CIT V/S. SHAPOORJL PALLONJI MISTRY 44 ITR 851 (SC) (II) CIT V/S. RAI BAHADUR HARDUTROY MOTILAL CHAMAR IA 66 ITR 443 (SC) (III) CIT V/S, SARDARI LAL AND CO. 251 ITR 864 (DE L) FB (IV) CIT V/S. UNION TYRES 240 ITR 556 (DEL) . 2. THE APPELLANT SAYS AND SUBMITS THAT THE DOWN P AYMENT OF RS.68,00,468 AND INSTALLMENT OF RS.35,07,108 IS THE AMOUNT RECEIVED TOWARDS THE COST INCURRED BY THE APPELLANT AND THAT THERE IS NO ELEMENT OF ANY PROFIT. 3. THE APPELLANT FURTHER SAYS AND SUBMITS THAT TH E LEARNED CIT(A) SHOULD HAVE ACCEPTED THE COST AS DETERMINED BY GIDC. THE COST SO DETERMINED CANNOT BE IGNORED BY GUESS WORK AS MADE IN PARA 2.12 OF THE APPELLATE ORDER BY CIT(A). 4. THE LEARNED CITJA) HAS ERRED IN TREATING THE G ROSS AMOUNT OF DOWN PAYMENT OF RS. 68,00,468 AND INSTALLMENT OF RS. 35,07,108 AS THE BUSINESS PROFITS IGNORING THE COST AS DETERMINED BY GIDC. 5. THE LEARNED CIT(A) HAS ERRED IN OBSERVING IN PARA 2.12 THAT 'THERE CAN BE NOTHING INHERENTLY TO STATE THAT THE COMPANY HAS E ARNED NO PROFITS' IN AS MUCH AS THE LEARNED CIT(A) PRESUMED THAT THERE SHOULD BE S OME PROFITS IGNORING THE FACT THAT LAND IS LEASED @ RS.260 PER SQ. MTR AS AGAINS T THE COST OF RS. 261 PER SQ. MTR LEAVING NO PROFIT. 5.1 THE APPELLANT SAYS ANTI SUBMITS THAT THE APP ELLANT IS A GOVERNMENT COMPANY AND THAT THE OBJECT IS TO PROVIDE INFRASTRUCTURAL FACILITIES TO DEVELOP INDUSTRIALLY BACKWARD AREAS WITHOUT ANY PROFIT AS PER CENTRAL G OVERNMENT GUIDELINES. 5. AT THE TIME OF HEARING, SHRI A.C. SHAH APPEARED ON BEHALF OF THE ASSESSEE AND POINTED OUT THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS FOLLOWED HIS DECISION DATED 31.03. 2008 FOR THE ASSESSMENT YEAR 2004- 05. THE ITAT, B BENCH, AHMEDABAD, VIDE ORDER DATE D 22.01.2010 IN ITA NO.2143/AHD/2008 IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2004-05, VIDE PARA NO.20 AT PAGE 9, SET ASIDE THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), SO FAR, THE MATTER OF ENHANCEMENT IS CONCERNED. HE ACCORDINGLY SUBMITTED THAT FOLLOWING THIS ORDER, THE MATTER OF ENHANCEMEN T BE SET ASIDE. THE COUNSEL OF THE ASSESSEE FURTHER DREW OUR ATTENTION TO PARA NOS. 21 AND 22 AT PAGE 9 OF THE ORDER OF THE ITAT WHEREIN THE TRIBUNAL, IN THE ASSESSMENT YEAR 2 004-05, DIRECTED THE ASSESSING OFFICER TO RE-DO THE ASSESSMENT HOLDING THAT JUDGME NT OF THE HON'BLE SUPREME COURT IN THE CASE OF TURICURIN ALKALIES ( SUPRA ) IS NOT APPLICABLE. THE RELEVANT PARA 21 AND 22 OF THE TRIBUNALS ORDER READ AS UNDER: 4 21. THE CASE DOES NOT END HERE. ONCE WE SET ASIDE THE CIT(A) S ORDER ON THE QUESTION OF ENHANCEMENT, WE HAVE TO AGAIN LOOK INTO HIS FINDING ON THE FIRST QUESTION OF COMMENCEMENT OF THE BUSINESS OF THE ASS ESSEE- CORPORATION. THE CIT(A) HAS HELD THAT THE ASSESSES -CORPORATION HAS ITS BUSINESS OPERATIONS IN THE PREVIOUS YEAR, RELEVANT TO THE ASSESSMENT UNDER AP PEAL. THAT FINDING HAS TO BE CARRIED TO ITS LOGICAL CONCLUSION. WHEN IT IS DONE SO, THE EXPENSES CLAIMED BY THE ASSESSEE HAVE TO BE ALLOWED AGAINST THE INTEREST I NCOME DISCLOSED BY THE ASSESSEE. IN OTHER WORDS, THE FINDING OF THE ASSESSING AUTHO RITY RELYING ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TUTICURIN ALKALIES (SUPRA) IS NOT APPLICABLE. 22. TO MAKE THINGS PROPER, WE DIRECT THE ASSESSING AUTHORITY TO RE-DO THE ASSESSMENT AFTER DEDUCTING THE EXPENDITURE CLAIMED BY THE ASSESSEE AGAINST THE INTEREST INCOME EARNED BY IT. THE ASSESSMENT SHALL BE RE-DONE IN THE LIGHT OF THE ABOVE DIRECTION AFTER GIVING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 5.1 TO SUM UP, THE LD. COUNSEL OF THE ASSESSEE POIN TED OUT THAT THE MATTER IS SQUARELY COVERED BY THE DECISION OF THE ITAT,B BENCH, AHME DABAD IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05. THEREFORE, FOLLOWING T HIS DECISION, THE ASSESSING OFFICER BE DIRECTED TO RE-COMPUTE THE INCOME. 6. SHRI R.K.DHANESTA, D.R., APPEARING ON BEHALF OF THE REVENUE, COULD NOT CONTROVERT THE AFORESAID SUBMISSIONS MADE BY THE LD . COUNSEL OF THE ASSESSEE. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE REASONING GIVEN BY THE AO FOR TAXING THE INTEREST INCOME UNDER HEAD INCOME FROM OTHER SOURC ES IS THE SAME AS IN THE ASSESSMENT YEAR 2004-05. THE REASONING GIVEN FOR ENHANCEMENT I S ALSO SAME AS GIVEN BY THE CIT(A) IN THE ASSESSMENT YEAR 2004-05. ADMITTEDLY, THE TRI BUNAL, IN ASSESSEES OWN CASE IN THE ORDER DATED 22.01.2010 ( SUPRA ), SET ASIDE THE MATTER OF ENHANCEMENT AND REDIRECT ED THE AO TO RE-COMPUTE THE INCOME OF THE ASSESSEE, AS PER THE DIRECTION GIVEN IN PARA 21 AND 22 OF THE TRIBUNALS ORDER ( SUPRA ). 7.1 WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 DATED 22.01.2010 ( SUPRA ), RESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION THAT HE SHOULD RE-COMPUTE THE INCOME OF THE ASSESSEE AFRESH, AS PER 5 THE DIRECTIONS GIVEN BY THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05. RESULTANTLY, FOR STATISTICAL PURPOSES, THE APPEAL O F THE ASSESSEE IS TREATED AS ALLOWED. 8. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. THE ORDER PRONOUNCED IN THE COU RT ON 31.03.2011 SD/- SD/- (G.D.AGRAWAL) (T.K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER DATED : 31/03/2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AH MEDABAD. TALUKDAR/ SR. P.S.