M/s Bellmount Enterprises (p) Ltd, Vizianagaram V. The ITO, Ward-3(1), Visakhapatnam, Visakhapatnam

ITA 124/VIZ/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0227 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Assessee Lawyers: D BALAJI
• Keywords: Business income
• Section: 147; 148

Judgement Text

ITA NO.124/VIZAG/2012 BELLMOUNT ENTERPRISES (P) LTD., VIZIANAGARAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM . . . . , ,, , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER . .. ./ // / I.T.A.NO.124/VIZAG/2012 ( / ASSESSMENT YEAR : 2007-08 ) BELLMOUNT ENTERPRISES (P) LTD VIZIANAGARAM VS. ITO WARD - 3(1) VISAKHAPATNAM [ PAN: AABCB8247L ] (( ( ( ( / APPELLANT) ()*( )*( )*( )*( / RESPONDENT ) ( + / APPELLANT BY : SHRI D. BALAJI, AR )*( + / RESPONDENT BY : SMT. D. KOMALI KRISHNA, DR + 0 / DATE OF HEARING : 19.10.2015 + 0 / DATE OF PRONOUNCEMENT : 29.10.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A), VISAKHAPATNAM DATED 29.12.2011. 2. THE ASSESSEE IS A COMPANY CARRYING ON BUSINESS O F STOCK MANAGEMENT OF BULK ON CARGO ETC FOR VARIOUS PARTIES THROUGH M/S. BOTHRA SHIPPING SERVICES. THE ASSESSEE FILED RETUR N OF INCOME BY DISCLOSING TOTAL INCOME OFRS.2,04,090/-. THE RETUR N FILED BY THE ASSESSEE ITA NO.124/VIZAG/2012 BELLMOUNT ENTERPRISES (P) LTD., VIZIANAGARAM 2 WAS INITIALLY PROCESSED U/S 143(1) OF THE INCOME-TA X ACT, THEREAFTER ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BY ISSUI NG NOTICE U/S 148 OF THE ACT AND ASSESSMENT WAS COMPLETED U/S 143 R.W .S. 148 OF THE ACT. IN THE ASSESSMENT ORDER, THE AO HAS OBSERVED THAT I T IS SEEN FROM THE INFORMATION FURNISHED BY THE ASSESSEE THAT HE HAS C LAIMED THE RENT RECEIPTS AS A BUSINESS INCOME AND CALLED THE ASSESS EE TO EXPLAIN WHY THE RECEIPTS COULD NOT BE TREATED AS AN INCOME FROM HOUSE PROPERTY. IT WAS SUBMITTED BEFORE THE AO THAT THE NATURE OF THE ASSESSEES BUSINESS IS TO UNDERTAKE CONTRACTS OF STOCK MANAGEMENT AND S TORAGE IN WAREHOUSE AND GODOWN. THE NATURE OF THE BUSINESS W OULD NOT BEGIN ON A PARTICULAR FORM ISSUED BY ONE OF THE CONTRACTEES AND SUBMITTED THAT THE RECEIPTS FROM M/S. BOTHRA SHIPPING SERVICES HAV E BEEN TREATED AS BUSINESS RECEIPTS. THE SAME IS OFFERED AS A BUSINE SS INCOME. THE ASSESSING OFFICER HAS CALLED THE ASSESSEE AGAIN AND ASKED THE DETAILS IN RESPECT OF THE STOCKS KEPT IN GODOWN FOR THE PERIOD OF 1.4.2006 TO 31.3.2007 AND ALSO ASKED DETAILS OF THE AMOUNT IN R ESPECT OF STOCKS KEPT IN THE GODOWN. HOWEVER, THE ASSESSEE HAS NOT PRODU CED ANY DETAILS. 3. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSE SSEE HAS LET OUT A GODOWN TO M/S. BOTHRA SHIPPING SERVICES. THE MAIN TENANT M/S. BOTHRA SHIPPING SERVICES WHO IS ALSO A COMPANY PAID MAJOR AMOUNT TREATING IT AS A RENT DEDUCTED TAX AS PER THE PROVISIONS OF SEC TION 194(1) OF THE ACT. ITA NO.124/VIZAG/2012 BELLMOUNT ENTERPRISES (P) LTD., VIZIANAGARAM 3 ACCORDINGLY, HE CAME TO A CONCLUSION THAT THE INCOM E RECEIVED BY THE ASSESSEE FOR RENTING OUT THE GODOWN OWNED BY IT NOT FOR THE PURPOSE OF BUSINESS. IT IS IN THE NATURE OF THE RENTAL RECEIP T. ACCORDINGLY, HE HAS TREATED THE INCOME RECEIVED BY THE ASSESSEE AS A RE NTAL INCOME. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE AO. 4. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT THE ASSESSEE HAS CONSTRUCTED A GODOWN AND THE SAME WAS LET OUT AND THE AMOUNT RECEIVED FROM THE PARTIES WAS TREATED AS A B USINESS INCOME FOR THE SIMPLE REASON THAT THE ASSESSEE HAS CONSTRUCTED A GODOWN ONLY FOR THE PURPOSE OF BUSINESS AND SUBMITTED THAT THE INCO ME RECEIVED BY THE ASSESSEE MAY BE TREATED AS A BUSINESS INCOME. ON T HE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAD CONSTRUC TED THE BUILDING GODOWN AND RENTED IT OUT TO M/S. BOTHRA SHIPPING AG ENCY AND THE SAID AGENCY CONSIDERED THE PAYMENT AS A RENTAL PAYMENT A ND TDS WAS ALSO DEDUCTED AND THE AMOUNT RECEIVED BY THE ASSESSEE IS A RENTAL INCOME BUT NOT THE BUSINESS INCOME. 5. I HEARD BOTH THE SIDES, PERUSED THE RECORDS, GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS CONSTRUCTED A GODOWN IN PORT AREA, VISAKHAPATNAM. THE SAME WAS L ET OUT TO M/S. ITA NO.124/VIZAG/2012 BELLMOUNT ENTERPRISES (P) LTD., VIZIANAGARAM 4 BOTHRA SHIPPING SERVICES. M/S. BOTHRA SHIPPING SERV ICES IS A COMPANY WHICH PAID A MAJOR AMOUNT TO THE ASSESSEE TREATED T HE PAYMENT AS A RENTAL PAYMENT AND TDS WAS ALSO DEDUCTED ON IT. TH EREFORE, THE AO CAME TO A CONCLUSION THAT THE AMOUNT RECEIVED BY TH E ASSESSEE IS A RENTAL RECEIPT NOT A BUSINESS RECEIPT. THE ARGUMEN T OF THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE AO WAS THAT THE GODOWN WAS USED FOR THE PURPOSE OF STOCK MANAGEMENT AND ASSESSEE WAS NOT AB LE TO SUBSTANTIATE THE DETAILS OF THE STOCKS SAID TO HAVE BEEN KEPT IN THE GODOWN. I FIND THAT UNDER THESE FACTS AND CIRCUMST ANCES OF THE CASE, THE AMOUNT RECEIVED BY THE ASSESSEE WAS TREATED BY AO AS A RENTAL INCOME AND SAME WAS CONFIRMED BY THE COMMISSIONER. I FIND THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE COMMISSI ONER. THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH OCT15. SD/- ( (( ( . .. . ) )) ) ( (( ( V. DURGA RAO ) )) ) / // / JUDICIAL MEMBER /VISAKHAPATNAM: 3 / DATED : 29.10.2015 VG/SPS ITA NO.124/VIZAG/2012 BELLMOUNT ENTERPRISES (P) LTD., VIZIANAGARAM 5 + ) 4 / COPY OF THE ORDER FORWARDED TO :5 1. ( / THE APPELLANT M/S. BELLMOUNT ENTERPRISES LTD., C/O SRI D. BALAJI, CHARTERED ACCOUNTANT, DOOR NO.19-6-1/3, A.G. ROAD, VIZIANAGARAM-535002. 2. )*( / THE RESPONDENT ITO WARD-3(1), VISAKHAPATNAM 3. 8 / THE CIT, VISAKHAPATNAM 3. 8 () / THE CIT(A), VISAKHAPATNAM 4. ), , / // / DR, ITAT, VISAKHAPATNAM 5 . . . . / GUARD FILE / BY ORDER // TRUE COPY // => ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM