M/s R. N. Haritwal & Sons (P) Ltd., Kolkata V. ITO, WD-3(1), KOLKATA, Kolkata

ITA 1191/KOL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5138 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

I.T.A. NO. 1191/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1191/KOL/ 2015 ASSESSMENT YEAR: 2007-2008 M/S. R.N. HARITWAL & SONS (P) LIMITED,............. .........................APPELLANT 7, WATERLOO STREET, 2 ND FLOOR, KOLKATA-700 069 [PAN : AADFR 7063 D] -VS.- INCOME TAX OFFICER,................................ .....................................RESPONDENT WARD-3(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700 069 APPEARANCES BY: SHRI SOUMITRA CHOUDHURY, ADVOCATE, FOR THE ASSESSEE SHRI NILOY BARAN SOM, JCIT, SR. D.R., FOR THE DEPAR TMENT DATE OF CONCLUDING THE HEARING : DECEMBER 17, 2015 DATE OF PRONOUNCING THE ORDER : JANUARY 06, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-V, KOLKATA DATED 30.06.2015 FOR THE ASSESSMENT YEAR 2007-08 AND THE SOLITARY IS SUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF ASSESSEES CLAIM FOR VARIOUS EXPENSES AGAINST RENTAL INCOME. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY. D URING THE YEAR UNDER CONSIDERATION, IT WAS THE OWNER OF A LAND AT JAIPUR, WHICH WAS PARTLY USED FOR AGRICULTURE. A BUILDING WAS CONSTRU CTED ON THE REMAINING PORTION OF THE SAID LAND AND THE SAME WAS GIVEN ON RENT. FOR THE YEAR UNDER CONSIDERATION, A SUM OF RS.2,10,000/- WAS REC EIVED BY THE ASSESSEE I.T.A. NO. 1191/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 4 AS RENT FROM THE SAID BUILDING AND TREATING THE SAM E AS BUSINESS INCOME AND CLAIMING DEDUCTION ON ACCOUNT OF VARIOUS EXPENS ES AGAINST THE SAME, NIL INCOME WAS DECLARED BY THE ASSESSEE IN ITS RETU RN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO THE ASSE SSING OFFICER, THE RENTAL INCOME RECEIVED BY THE ASSESSEE FOR THE BUIL DING OWNED BY IT WAS CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS PER SECTION 22 OF THE ACT. ACCORDINGLY, THE RENTAL INCO ME OF RS.2,10,000/- RECEIVED BY THE ASSESSEE WAS BROUGHT TO TAX BY HIM UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND AFTER ALLOWING STA NDARD DEDUCTION OF RS.63,000/- UNDER SECTION 24, TOTAL INCOME OF THE A SSESSEE WAS COMPUTED BY HIM AT RS.1,47,000/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 09.11.2009 THEREBY DISALLOW ING THE CLAIM OF THE ASSESSEE FOR VARIOUS EXPENSES UNDER THE HEAD PROFI TS AND GAINS OF BUSINESS OR PROFESSION. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DECIDED THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE FOR THE FOLL OWING REASONS GIVEN IN PARAGRAPH NO. 3 OF HIS IMPUGNED ORDER:- 3. IT IS SEEN FROM THE PROFIT AND LOSS ACCOUNT THA T AGAINST NET TAXABLE INCOME OF ABOUT RS.2,15,000/- (EXCLUDING AG RICULTURAL RECEIPTS) THE EXPENSES CLAIMED IS ABOUT RS.2,91,000 /-. FROM THE CHART OF FIXED ASSETS IT IS SEEN THAT THE APPELLANT IS THE OWNER OF LAND (RS.10,78,000/-), FARM HOUSE LAND (RS.2,73,000 /-), FLAT (RS.4,96,000/-), WATER WELL (1,72,000/-) AND BUILDI NG (RS.50,000/-) ETC. THE PROFIT AND LOSS ACCOUNT FIGU RES INDICATE THAT THE RECEIPTS HAD BEEN ADJUSTED BY THE APPELLAN T AGAINST VARIOUS EXPENSES. EVEN THOUGH THERE IS SOME INCOME SHOWN IN THE SAID PROFIT AND LOSS A/C., THE RETURNED INCOME OFFERED BY THE APPELLANT ASSESSEE IS 'NIL'. IT THUS APPEARS TH AT THE INCOME SHOWN IN THE PROFIT AND LOSS ACCOUNT HAS BEEN CLAIM ED AS EXEMPT AND NO TAXABLE PROFIT HAS BEEN SHOWN. APPARE NTLY IT IS IN THIS CONTEXT THAT THE A.O. HAS TREATED THE RENTA LS AS INCOME FROM HOUSE PROPERTY AND ALLOWED BY WAY OF DEDUCTION 30% TOWARDS STANDARD DEDUCTION. THE COMPANY APPELLANT I S HOLDER OF SOME PROPERTIES AND THE INCOME FROM THE SAID HOU SE PROPERTY HAS BEEN TREATED AS INCOME FROM HOUSE PROPERTY BY T HE A.O. AS REGARDS THE TAXABLE INCOME A.O.'S DECISION APPEARS REASONABLE I.T.A. NO. 1191/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 4 EVEN IF HIS DECISION TO TREAT THE INCOME AS INCOME FROM HOUSE PROPERTY CAN BE CHALLENGED. THE APPELLANT'S EXCESSI VE CLAIM OF EXPENSES RESULTING IN THE NET TAXABLE INCOME EQUAL TO ZERO CANNOT BE ACCEPTED. I, THEREFORE, FIND THE A.O.'S D ECISION REASONABLE IN SO FAR AS COMPUTATION OF TOTAL INCOME IS CONCERNED. RELIANCE OF THE APPELLANT ON THE DECISIO N OF THE HON' BLE SUPREME COURT IN THE CASE OF M/S. CHENNAI PROPE RTIES AND INVESTMENT LIMITED SHOULD NOT DIVERT THE ATTENTION FROM THE FACT THAT THE APPELLANT HAS CLAIMED EXCESSIVE DEDUC TION AGAINST RENT AND HIRE CHARGES. THE A.O. PROCEEDED AS PER TH E JUDICIAL DECISION AVAILABLE OR APPLICABLE AT THE TIME OF PAS SING THE ORDER. THE HON'B1E APEX COURT'S DECISION IN M/S. CH ENNAI PROPERTIES AND INVESTMENT LIMITED CASE DOES HAVE TH E EFFECT OF CHANGING THE COLOUR OF THE INCOME. IT MAY RESULT IN TERMING THE RENTALS AS BUSINESS INCOME. BUT THE EXPENSES CLAIME D IN THE PROFIT AND LOSS ACCOUNT IS CONSIDERED AS EXCESSIVE. I, THEREFORE, WITHOUT DECIDING WHETHER THE INCOME IS BUSINESS OR ONE FROM HOUSE PROPERTY CONFIRM THE ADDITION RESULTING FROM COMPUTATION OF TOTAL INCOME BY THE AO AT RS.1,47,00 0/-. AS A RESULT, EVEN, THOUGH THE APPELLANTS GROUND FOR TRE ATING THE RENTALS AS BUSINESS INCOME IS ALLOWED, THE TOTAL IN COME COMPUTED IS CONFIRMED AT RS.1,47,000/- WHICH IS THE SAME AS DETERMINED BY THE AO. FOR STATISTICAL PURPOSE THE A PPEAL IS TREATED AS PARTLY ALLOWED. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY P OINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE FROM THE RELEVANT PORTION OF THE IMPUGNED ORDER OF THE LD. CIT(APPEALS), THE CLAIM OF THE ASSESSEE THAT THE RENTAL INCOME IN QUESTION IS CHARGEABLE TO TAX AS BUSINESS INCOME WA S ACCEPTED BY THE LD. CIT(APPEALS) IN PRINCIPLE BY RELYING TO THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. CHENNAI PROPERTIE S & INVESTMENT LIMITED, BUT HE STILL PROCEEDED TO UPHOLD THE ORDER OF THE ASSESSING OFFICER COMPUTING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,47,000/- OBSERVING THAT THE EXPENSES CLAIMED BY THE ASSESSEE IN THE PROFIT & LOSS A/C. WERE EXCESSIVE. AS RIGHTLY CONTENDED BY THE LD . COUNSEL FOR THE ASSESSEE, THE LD. CIT(APPEALS), AFTER HAVING HELD T HAT THE RENTAL INCOME IN QUESTION IS CHARGEABLE TO TAX AS BUSINESS INCOME SH OULD HAVE CONSIDERED THE ALLOWABILITY OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION OR AT LEAST SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO CONSIDER THE SAME ON MERIT IN ACCORDANCE WITH LAW. I, THEREFORE, SET ASIDE THE IM PUGNED ORDER OF THE LD. I.T.A. NO. 1191/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 4 CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESS EE FOR DEDUCTION ON ACCOUNT OF VARIOUS EXPENSES AND ALLOW THE SAME IN A CCORDANCE WITH LAW. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 06, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 6 TH DAY OF JANUARY, 2016 COPIES TO : (1) M/S. R.N. HARITWAL & SONS (P) LIMITED, 7, WATERLOO STREET, 2 ND FLOOR, KOLKATA-700 069 (2) INCOME TAX OFFICER, WARD-3(1), KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-5, KOLKAT A (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.