M/s Famous Commercial Complex, Udupi V. ITO, Udupi

ITA 1232/BANG/2015

• Counselvise Citation: 123221114 RSA 2015
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-12-2015
• Assessment Year: 1987-1988
• Appeal Filed On: 18-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: PRATHIBHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A SMC BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS.1232 TO 1242/BANG/2015 ASSESSMENT YEARS : 1987-88 TO 1997-98 M/S. FAMOUS COMMERCIAL COMPLEX, NEAR CITY BUS STAND, UDUPI. PAN: AACFF 0317M VS. THE INCOME TAX OFFICER, WARD 1, UDUPI. APPELLANT RESPONDENT APPELLANT BY : SMT. PRATHIBHA, ADVOCATE RESPONDENT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) DATE OF HEARING : 23.12.2015 DATE OF PRONOUNCEMENT : 30.12.2015 O R D E R THESE ELEVEN (11) APPEALS ARE FILED BY THE ASSESS EE AGAINST THE COMMON ORDER DATED 11.03.2015 OF THE CIT(APPEALS), MANGALURU PERTAINING TO ASSESSMENT YEARS AYS 1987-88 TO 1997-98. ALL TH ESE APPEALS INVOLVING IDENTICAL ISSUES WERE HEARD TOGETHER AND ARE DISPOS ED OF BY THIS CONSOLIDATED ORDER. ITA NOS.1232 TO 1242/BANG/2015 PAGE 2 OF 6 2. FOR THE AY 1987-88, THE ASSESSEE HAD FILED THE R ETURN OF INCOME IN ITS 2 IN THE STATUS OF URF ON 15.03.1993 ADMITTING AN INCOME OF 22,865 UNDER THE HEAD BUSINESS. THE ASSESSEES ONLY SO URCE OF INCOME WAS RENTAL INCOME AND THE INCOME WAS DECLARED UNDER THE HEAD BUSINESS AFTER CLAIMING VARIOUS EXPENSES LIKE SALARY, POSTAGE, REP AIRS, PRINTING, CAR MAINTENANCE, ETC. SINCE THE RETURN WAS FILED AFTE R THE SPECIFIED TIME U/S. 139, THE INCOME FROM RENTALS WAS COMPUTED AS BUSIN ESS INCOME INSTEAD OF COMPUTING UNDER THE HEAD HOUSE PROPERTY. THE ASSESSMENTS WERE REOPENED AND ASSESSMENTS COMPLETED U/S. 147. IN DO ING SO, THE ASSESSING OFFICER HELD THE ASSESSEE FIRM IS THE OWN ER OF PROPERTY AND FOLLOWED THE DECISIONS IN THE CASE OF D.R. PUTTANNA SONS PVT. LTD. (162 ITR 468) AND THE HONBLE SUPREME COURT DECISION IN THE CASE REPORTED IN 83 ITR 700 . AND THE AO SUBJECT THE ENTIRE RECEIPTS FROM COMM ERCIAL COMPLEX IN THE HANDS OF AOP. 3. THE ASSESSEE FILED APPEALS FOR THE AYS 1987-88 TO 1997-98 BEFORE THE CIT(APPEALS) WHICH WERE DISMISSED, AGREEING WIT H THE FINDINGS OF THE AO ON MERITS. 4. ON FURTHER APPEALS BEFORE THE TRIBUNAL IN ITA N OS.1181 TO 1191/BANG/2009 FOR THE AYS 1987-88 TO 1997-98. THE TRIBUNAL VIDE ITS ORDER DATED 18.03.2010 SET ASIDE THE MATTER TO THE ASSESSING OFFICER TO VERIFY, WHETHER THE FIRM WAS ACTUALLY IN EXISTENCE OR NOT? ITA NOS.1232 TO 1242/BANG/2015 PAGE 3 OF 6 5. IN ORDER TO THROW SOME LIGHT ON THE SEQUENCE OF EVENTS, IT IS TO BE HIGHLIGHTED THAT THE ASSESSEE HAS NOT BROUGHT TO TH E NOTICE OF THE ITAT BENCH WHILE HEARING ITA NOS.1181 TO 1191/BANG/2009 WITH RESPECT TO THE EARLIER ORDER OF THE TRIBUNAL DATED 31.12.2001 IN I TA NOS. 743 TO 749/BANG/1989 FOR THE AYS 1987-88 TO 1993-94, WHERE IN IT HAS BEEN HELD BY THE TRIBUNAL AT PARA 9 OF ITS ORDER AS FOLLOWS:- 9. NOW, WE HAVE TO CONSIDER WHETHER THE ABOVE THRE E ESSENTIAL REQUIREMENTS ARE FULFILLED IN THE CASE OF OUR HAND. IT IS AN ADMITTED CASE OF BOTH PARTIES THAT THERE WAS AN AGREEMENT BETWEEN THE PARTNERS OF THE FIRM. THE AGREEMENT EV IDENCES THE SHARING OF PROFIT OF BUSINESS EQUALLY AMONG THE PAR TNERS. THIS BUSINESS OF THE FIRM AS PER THE AGREEMENT IS TO BE CARRIED ON BY SHRI AMEERUDDIN, AS MANAGING PARTNER ON BEHALF OF A LL THE PARTNERS. SINCE BOTH PARTIES CONCEDE THAT THE INCO ME FROM TENANT IS INCOME FROM HOUSE PROPERTY, AND THERE IS NO OT HER BUSINESS FOR THE FIRM EXCEPT LETTING OUT THE BUILDINGS, WE A RE OF THE CONSIDERED OPINION THAT THERE IS NO BUSINESS FOR TH E FIRM TO SHARE THE PROFITS OF THE BUSINESS AMONGST THE PARTNERS. HENCE, THE SECOND REQUIREMENT OF SHARING OF PROFIT OF A BUSINE SS IS NOT SATISFIED. HENCE, THERE IS NO VALID FIRM. IN OTHER WORDS, SIN CE THERE IS NO BUSINESS, NO VALID FIRM IS IN EXISTENCE IN THE EYES OF LAW. (EMPHASIS SUPPLIED) 6. WHEN THE MATTER WAS HEARD BY THE TRIBUNAL IN ITA NOS.1181 TO 1191/BANG/2009 FOR THE AYS 1987-88 TO 1997-98, THE TRIBUNAL IN ITS ORDER DATED 18.03.2010 AT PARAS 9.4 AND 9.5 HELD AS FOLLO WS:- 9.4 THE NEXT QUESTION TO BE CONSIDERED IS WHAT SHO ULD BE THE STATUS FOR ASSESSMENT? IT IS POSSIBLE TO ASSESS I N THE STATUS OF AN AOP REPRESENTING AN IMPARTIBLE ESTATE. ITA NOS.1232 TO 1242/BANG/2015 PAGE 4 OF 6 9.5 THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED T O DETERMINE THE STATUS AND COMPLETE THE ASSESSMENT AND ALLOCATE THE INCOME, AFTER EXAMINING THE PRESENT FACTS OF THE CASE AND H EARING THE ASSESSEE IN DETAIL. 7. IT IS THEREFORE CLEAR FROM THE RECORDS THAT THE BENEFIT OF ORDER OF THE TRIBUNAL DATED 31.12.2001 OF THE TRIBUNAL IN ITA NO S.743 TO 749/BANG/1989 WAS NOT AVAILABLE TO THE BENCH, WHILE PASSING THE T RIBUNALS ORDER DATED 18.03.2010 IN ITA NOS.1181 TO 1191/BANG/2009, BECAU SE OF THE LAPSE ON THE PART OF THE ASSESSEE TO PRODUCE THE SAME BEFORE THE BENCH. THE DEPARTMENT HAD GONE ON FURTHER APPEAL BEFORE THE HO NBLE HIGH COURT OF KARNATAKA AGAINST THE TRIBUNALS ORDER DATED 18.03. 2010 IN ITA NO.228 OF 2003. THE HONBLE HIGH COURT BY ITS JUDGMENT DATED 13.11.2007 HAD SET ASIDE THE MATTER TO THE ASSESSING OFFICER TO CONSID ER THE ISSUE AFRESH. 8. IN PURSUANCE OF THE HIGH COURT JUDGMENT, ASSESSM ENT ORDER WAS PASSED BY THE ASSESSING OFFICER ON 31.12.2008 AND I N THE SECOND ROUND THE SAME WAS UPHELD BY THE CIT(APPEALS) AND THEREAF TER REACHED THE TRIBUNAL, WHEREIN THE TRIBUNAL PASSED THE ORDER IN ITA NOS.1181 TO 1191/BANG/2009. ONCE AGAIN, THE DEPARTMENT TOOK UP THE MATTER TO THE HONBLE HIGH COURT OF KARNATAKA, WHICH DISMISSED TH E DEPARTMENTAL APPEALS ON THE GROUND OF MONETARY LIMIT FOR PREFERR ING THE APPEALS BY THE REVENUE BEFORE THE HIGH COURT. ITA NOS.1232 TO 1242/BANG/2015 PAGE 5 OF 6 9. SUFFICE IT TO SAY THAT THE ENTIRE EXERCISE HAS B EEN FUTILE. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED ADDITIONAL GROUN DS OF APPEAL FOR ALL THE YEARS UNDER CONSIDERATION STATING THAT THE ORDER DA TED 31.12.2001 IN ITA NOS. ITA NOS.743 TO 749/BANG/1989 WHEREIN IT HAS BE EN CLEARLY HELD THAT THE FIRM IS NOT IN EXISTENCE HAD NOT BEEN POINTED O UT TO THE BENCH WHILE PASSING THE ORDER DATED 18.3.2010 IN ITA NOS.1181 T O 1191/BANG/2009 AND THEREFORE A SERIOUS MISTAKE HAS CREPT IN, WHICH HAD GIVEN RISE TO A SITUATION WHERE THE ENTIRE MATTER HAD BEEN AGITATED IN APPEAL UPTO THE HONBLE HIGH COURT IN THE FIRST AND SECOND ROUND OF APPEALS. I T WAS THEREFORE PLEADED THAT THE ADDITIONAL GROUNDS NOW RAISED GOES TO THE ROOT OF THE MATTER AND THE SAME MAY BE ADMITTED. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SINCE THE ADDITIONAL GROUNDS ARE VERY RELEVANT FOR THE DECIDING THE ISSUE, WE ADMIT THE SAME. THE ISSUE OF VERY EXISTENCE OF THE FIRM IS SENT BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL GO THR OUGH THE ORDER OF THE TRIBUNAL DATED 31.12.2001 IN ITA NOS. 743 TO 749/BA NG/1989 AND THE SUBSEQUENT TRIBUNAL ORDER DATED 18.3.2010 IN ITA NO S.1181 TO 1191/BANG/2009 AND THEREAFTER THE AO SHALL DECIDE T HE ISSUE IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NOS.1232 TO 1242/BANG/2015 PAGE 6 OF 6 11. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF DECEMBER, 2015. SD/- (ASHA VIJAYARAGHAVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 30 TH DECEMBER, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.