METRO METAL PRINTERS P. LTD, MUMBAI V. ITO WD 9(2)-3, MUMBAI

ITA 124/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3705 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 124/MUM/2011 ASSESSMENT YEAR: 2007-08 M/S METRO METAL PRINTERS P. LTD. CTS NO.132, NEXT TO VINOD SILK MILLS, C.A. ROAD, KANDIVLI (EAST), MUMBAI- 400 101 PAN : AAACM 2670 D VS. ITO, WARD 9-2(3), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DHARMESH SHAH RESPONDENT BY : SHRI MOHIT JAIN DATE OF HEARING : 08.04.2013 DATE OF PRONOUNCEMENT : 08.05.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -20, MUMBAI DATED 11.11.2010 FOR THE A.Y. 2007-08. 2. THE GROUNDS OF APPEALS RAISED BY THE ASSESSEE IN THE APPEAL RELATE TO THE SOLITARY ISSUE OF ASSESSMENT OF RENTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST THE SAME DECLARED BY THE ASSESS EE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE DERIVED RENTAL INCOME OF RS.3,20,000/- PER MONTH FROM LETTING OUT AN INDUSTR IAL GALA ALONG WITH FURNITURE & FIXTURES AND PLANT & MACHINERY. ON GOING THROUGH TH E AGREEMENT ENTERED INTO IN THIS REGARD, THE AO OBSERVED THAT RENT WAS CHARGED SEPAR ATELY FOR GALA WHICH WAS INSEPARABLE FROM LETTING OF THE FURNITURE AND PLANT & MACHINERY AND THE ENTIRE RENT WAS ASSESSABLE IN TERMS OF SECTION 56(2)(III) UNDER THE HEAD INCOME FROM OTHER ITA NO. 12 4/MUM/2011 M/S METRO METAL PRINTERS P. LTD. ASSESSMENT YEAR: 2007-08 2 SOURCES. THE AO, HOWEVER, ALLOWED EXPENSES OF RS.3 0,018/- AND DEPRECIATION OF 6,15,608/- AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, HE COMPUTED TOTAL INCOME AT RS.32,05,370 AS AGAINST THAT RETURNED AT RS.26,82,1 73. 4. ON APPEAL THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO AND THE RELEVANT FINDINGS ARE EXTRACTED HEREUNDER: I HAVE CONSIDERED THE ISSUE. THERE IS NO MERIT IN THIS APPEAL. THE APPELLANT ENTERED INTO A CONDUCTING AGREEMENT ON 13 .08.2001 WITH M/S XAL ENGINEERING (INDIA) P LTD (CALLED CONDUCTOR). THE D URATION OF THE AGREEMENT WAS FOR 5 YEARS EXPIRING ON 13.08.2006. THE CONDUCT OR WAS TO PAY A TOTAL RENT OF RS.3,20,000 PER MONTH CONSISTING OF RS.2,50 ,000 PER MONTH TOWARDS COMPENSATION FOR USE AND OCCUPATION OF THE SAID GAL A, RS.35,000 PER MONTH TOWARDS RENT OF FURNITURE & FIXTURES AND RS.35,000 PER MONTH TOWARDS RENT OF PLANT & MACHINERY. THE CONDUCTOR WAS PERMITTED TO P UT UP CERTAIN FURNITURE, FIXTURES AND ELECTRICAL FITTINGS WHICH WERE REQUIRE D FOR BETTER CONDUCT OF ITS BUSINESS. THE AGREEMENT DID NOT SPECIFY THE NATURE OF FURNITURE & FIXTURES OR THE PLANT & MACHINERY THAT WERE LET OUT. ON BEING A SKED, THE APPELLANT STATED THAT THE PLANT & MACHINERY LET OUT CONSISTED OF PAL LET TRUCK, WEIGHING MACHINE, DRILLING MACHINE AND WELDING MACHINE, AND FURNITURE & FIXTURES COMPRISED CUPBOARD, OFFICE CHAIR, OFFICE TABLE, OFF ICE FURNITURE AND FAX MACHINE. IT IS SEEN THAT THOUGH THE AGREEMENT ALLOW ED THE CONDUCTOR TO PUT UP ADDITIONAL ITEMS OF FURNITURE, FIXTURES AND ELEC TRICAL FITTINGS, IT DID NOT PROVIDE THAT THE CONDUCTOR COULD DO AWAY WITH THE L ET OUT FURNITURE & FIXTURE AND THE PLANT & MACHINERY OR REPLACE THEM WITH OWN FURNITURE & FIXTURE AND PLANT & MACHINERY. THIS MEANS THAT THE CONDUCTOR CO ULD NOT HAVE CONDUCTED ITS BUSINESS WITHOUT THE FURNITURE & FIXTURE AND PL ANT & MACHINERY LET OUT BY THE APPELLANT. ALL THESE SHOW THAT LETTING OUT OF G ALA WAS INSEPARABLE FROM LETTING OF PLANT & MACHINERY AND FURNITURE & FIXTUR ES. THE AO RIGHTLY BROUGHT TO TAX ENTIRE RENTAL INCOME UNDER THE HEAD, INCOME FROM OTHER SOURCES. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE EXPRESSED NO OBJECTION TO ASSESSING RENTAL INCOME, FROM PLANT AN D MACHINERY AND FURNITURE AND FIXTURES UNDER THE HEAD INCOME FROM OTHER SOURCES SUBJECT TO THAT DEPRECIATION IS ALLOWED ON THEM AND DEDUCTION BE ALLOWED OF EXPENSE S INCURRED DIRECTLY TO EARN SUCH RENTAL INCOME AND THE SAME HAS BEEN ACCEDED BY THE AO. ALSO, ON MERITS, WHILE CONSIDERING THE FACTS IN TOTO AND THE REASONS CITED BY THE LD.CIT(A) AS EXTRACTED ABOVE, WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. ITA NO. 12 4/MUM/2011 M/S METRO METAL PRINTERS P. LTD. ASSESSMENT YEAR: 2007-08 3 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF MAY, 2013. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (DR. S.T.M. PAVALAN) JUDICIAL MEMBER MUMBAI, DATED: 08.05.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.