The ACIT(OSD).,Range-4, Ahmedabad V. Jay Infa Trade Pvt. Ltd., Ahmedabad

ITA 1282/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62901 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: NIMISH VAYAWALA
• Keywords: Business income; Depreciation; Rule of consistency
• Section: 32; 27; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER I.T.A. NO.1282/AHD/2012 A. Y.2008-09 THE ACIT (OSD)-1, CIRCLE-4, AHMEDABAD ( APPELLANT ) VS. JAY INFA TRADE PVT. LTD., JAY HOUSE, PANCHVATI, AMBAWADI, AHMEDABAD PAN-AAACJ3800C ( RESPONDENT ) DEPARTMENT BY : SHRI T. SHANKAR, SR. D.R. ASSESSEE BY : SHRI NIMISH VAYAWALA, A.R. DATE OF HEARING : 08.08.2012 DATE OF PRONOUNCEMENT : 08.08.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A)-VIII, AHMEDABAD DATED 29.03.2012. 2. THE REVENUE HAS TAKEN FOLLOWING GROUND OF APPEAL :- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING ADDITION OF HOUSE KEEPING CHARGES OF RS.71,30,158/- WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE HONBLE ITAT IN THE A SSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR RELIED UPON BY LD. CIT( A) IN THE APPELLATE ORDER HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND T HE MATTER IS SUB- JUDICE BEFORE THE HONBLE HIGH COURT. 3. THE A.O., WHILE MAKING THE ADDITION OF RS.71,30, 158/- HAS OBSERVED AS UNDER:- I.T.A. NO.1282/AHD/2012 A. Y.2008-09 2 THE ASSESSEE COMPANY IS PROVIDING HOUSE KEEPING SE RVICES TO ITS ASSOCIATED CONCERNS. THE TOTAL RECEIPTS OF RS. 8595552/- FROM SUCH SERVICES ARE CREDITED TO THE PROFIT AND LOSS ACCOUN T AND SHOWN UNDER THE HEAD OTHER INCOME IN THE P & L ACCOUNT. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS OF AY 2003-04 THE ASSESSEE W AS ASKED TO FURNISH DETAILS OF HOUSE KEEPING CHARGES RECEIVED A ND THE NATURE OF SERVICE PROVIDED BY IT. IN RESPONSE TO THIS, THE A SSESSEE COMPANY SUBMITTED THAT IT PROVIDED SITTING FACILITIES, TELE PHONE, COMPUTER AND INTERNET FACILITIES, COMPUTER SUPPORT SERVICE ETC. TO VARIOUS CONCERNS OF GROUP UNDER THE ACCOUNT HEAD HOUSE KEEPING CHARGES . THE HOUSE KEEPING CHARGES WERE RECEIVED FROM VARIOUS GROUP CO NCERNS OF ASSESSEE COMPANY WHICH WERE PERSONS COVERED U/S 40A (2)(B) OF THE ACT. ON SCRUTINY OF DETAILS, IT WAS SEEN THAT THE COMPANY DOES NOT HAVE ADEQUATE STAFF OR INFRASTRUCTURE TO PROVIDE TH E SERVICE TO THE EXTENT IT CLAIMED. THESE ASPECTS WERE EXAMINED IN DETAIL IN THE ASSESSMENT ORDER OF AY 2003-04. IN VIEW OF THE DET AILED DISCUSSION AND ANALYSIS MADE BY THE ASSESSING OFFICE IN THE AS SESSMENT ORDER OF AY 2003-04, I PROCEED TO CONSIDER THE RECEIPTS AS I NCOME FROM OTHER SOURCES AND IT IS ACCORDINGLY TREATED WHILE COMPUTI NG THE TOTAL INCOME. CONSIDERING THE DETAILED FINDINGS REGARDING SERVICE S PROVIDED, FACILITIES/INFRASTRUCTURE AVAILABLE VIS--VIS CHARG ES RECEIVED, IT WAS HELD IN THE ASSESSMENT FOR ASSESSMENT YEAR 2003-04 THAT THE AMOUNT TO THE EXTENT OF RS.6,24,725/- CAN BE TREATED AS ASSES SEES INCOME FROM BUSINESS WHERE AS THE BALANCE RECEIPTS WERE TREATED AS INCOME FROM OTHER SOURCES. THEREFORE, THE HOUSE KEEPING CHARGE S OF RS.6,24,725/- ARE TREATED AS BUSINESS INCOME AND THE BALANCE AMOU NT OF RS.7970827/- IS TREATED AS INCOME FROM OTHER SOURCE S ON WHICH THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION OF THE EXPEN SES AS DEBITED TO P&L A/C. IT MAY FURTHER BE STATED THAT THE ASSESSEE HAS PROV IDED OFFICE ACCOMMODATION TO VARIOUS SISTER CONCERNS. IN OTHER SENSE, THE SAME HAS BEEN LET OUT TO THE SISTER CONCERNS. HENCE, TH E PORTION OF HOUSE KEEPING CHARGES REPRESENTED THE RECEIPTS FOR LETTIN G OUT THE PROPERTY AND THE SAME IS NOTHING BUT RENTAL INCOME. IN VARI OUS JUDGMENTS, COURTS HAVE HELD THAT THE COMPOSITE RENT RECEIPTS F OR PROVIDING ADDED AUXILIARY SERVICES IS INCOME FROM OTHER SOURCES. I N THIS REGARD, THE DECISIONS IN THE FOLLOWING CASES ARE RELEVANT TO TH E FACTS OF CASE. I. CIT V. SMT. P ANDAL AMMAL 243 ITR 715 (MAD) II. CIT V. MODEL MFG. CO.(P) LTD.(1986) 159 ITR 270 (CA L) III. ADDL. CIT NATIONAL NEWSPRINT & PAPER MILLS LTD.(197 8 114 753 (CAL) IV. CHITPORE GOLABARI CO.(P) LTD. CIT (1971) 82 ITR 753 (CAL) I.T.A. NO.1282/AHD/2012 A. Y.2008-09 3 NO EXPENSES WOULD HAVE BEEN INCURRED FOR EARNING I NCOME FROM OTHER SOURCES, THEREFORE, NO EXPENSES ARE ALLOWED U/S 57 (III) OF THE ACT. THE INCOME OF THE ASSESSEE COMPANY IS TO BE COMPUTE D ACCORDINGLY. EXPENDITURE CLAIMED IN P&L ACCOUNT FOR SERVICES = R S.6831562?- (EXCLUDING DEPRECIATION) ALLOWABLE EXPENDITURE (AS DISCUSSED ABOVE) = RS.6831562 X 624725 8595552 = RS.496518/- DEPRECIATION RELATABLE TO SERVICES (AS PER IT ACT) ON THE BASIS OF TURNOVER/RECEIPTS = RS.1449186 X 5682383 8595552 = RS.795114/- TOTAL DISALLOWANCE = RS.(9831562-496518 + 795114) = RS.7130158/- ACCORDINGLY, AN AMOUNT OF RS.7130158/- IS HEREBY AD DED TO TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 27 1(1)(C) IS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 4. IN APPEAL, LD. CIT(A), AFTER TAKING INTO CONSIDE RATION THE SUBMISSIONS OF THE ASSESSEE, DELETED THIS ADDITION BY OBSERVING AS UND ER:- I HAVE CAREFULLY CONSIDERED THE FINDING OF THE A.O . AND SUBMISSIONS OF THE APPELLANT. DURING THE ASSESSMEN T YEAR 2003-04 ON THE SAME FACTS IN THE ASSESSEES OWN CASE THE A.O. MADE THE ADDITIONS AND THOSE WERE DELETED BY THE LD. CIT(A) VIDE HIS O RDER NO.CIT(A)- VIII/DC.4/262/05-06 DATED 16.10.2006. THEREAFTER T HE DEPARTMENT FILED THE APPEAL IN THE ITAT, AHMEDABAD AGAINST THE ORDER OF THE CIT(A) THE ITAT CONFIRMED THE ORDER OF THE CIT(A) VIDE ITA NO.261/AHD/2007 DATED 30/09/2009. THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED BELOW:- WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN OUR I.T.A. NO.1282/AHD/2012 A. Y.2008-09 4 CONSIDERED VIEW, THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LEARNED CIT(APPEALS). THE REASONS ARE- (I) THAT, THE ASSESSING OFFICER HAS NOT DOUBTED THA T WHAT THE ASSESSEE IS RECEIVING IS INCOME FROM BUSINESS AS PA RT OF IT AS HAS BEEN SO ASSESSED BY HIM. ONLY A PART AMOUNTING TO RS.69,88,836/- HAS BEEN TR EATED AS INCOME FROM OTHER SOURCES. (II) THAT, THE ASSESSEE HAS BEEN ASSESSED IN THE PA ST ON THESE RECEIPTS FROM HOUSE KEEPING SERVICES UNDER THE HE AD BUSINESS. FACTS REMAINING THE SAME, THE REVENUE SHOULD TAKE A CONSISTENT VIEW. IT HAS BEEN SO HELD BY THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CTT VS. UALBARO POLYCHEM PVT. LTD. (2009) 299 LTR 59 (M.P.). THUS, IF THE FACTS ARE N OT DIFFERENT, THEN VIEW ONCE TAKEN SHOULD BE FOLLOWED IN SUBSEQUE NT YEAR ALSO. (III) IF CERTAIN PART OF EXPENDITURE INCURRED BY G ROUP CONCERNS IN RECEIVING SERVICES FROM THE ASSESSEE COMPANY IS NOT GENUINE OR IS EXCESSIVE, THEN ACTION IS REQUIRED TO BE TAKEN I N THEIR HANDS. ASSESSEE COMPANY IS SHOWING THE RECEIPTS IN FULL AS TAXABLE INCOME. THERE IS NO REASON TO EITHER REDUCE IT OR CHANGE THE HEAD. (IV) THE LOGIC GIVEN BY THE ASSESSING OFFICER IN T REATING THE PART OF THE RECEIPT AS INCOME FROM OTHER SOURCE IS NOT COMPREHENDIBLE AND DOES NOT CREATE ANY LOGICAL DIFF ERENCE BETWEEN RECEIPTS TAKEN UNDER THE HEAD BUSINESS AN D RECEIPT TAKEN UNDER THE HEAD OTHER SOURCES. FOLLOWING TH E RULE OF CONSISTENCY, NO SUCH DISTINCTION SHOULD HAVE BEEN C REATED AND SECONDLY, IT DOES NOT AT ALL AFFECT THE TAXABILITY OF THE RECEIPT AND TAX IMPOSED. THEREFORE, ENTIRE EXERCISES MERELY AC ADEMIC AND COULD HAVE BEEN AVOIDED. (V) FINALLY, THE DEPRECIATION CANNOT BE DISALLOWED WHETHER THE PART OF INCOME IS ASSESSED UNDER THE HEAD BUSINESS OR UNDER THE HEAD OTHER SOURCES AS UNDER BOTH THE HEADS TH ERE IS PROVISION FOR ALLOWING DEPRECIATION. WHEN INCOME I S COMPUTED UNDER THE HEAD BUSINESS, DEPRECIATION IS ALLOWABL E U/S 32 OF THE I.T. ACT, 1961 AS PER RULES AND WHEN INCOME IS COMPUTED U/S 56 OF THE I.T. ACT, 1961 AND INCOME IS OF THE N ATURE OF CLAUSES (II) & (III) OF SECTION (1) OF SECTION 56, THEN DEDUCTION OF THE NATURE OF THAT PROVIDED U/S 32(1) & 32(2) ARE T O BE ALLOWED BY VIRTUE OF SECTION 57(2) OF THE I.T. ACT, 1961. THE RECEIPT I.T.A. NO.1282/AHD/2012 A. Y.2008-09 5 SHOWN BY THE ASSESSEE IS FULLY TAXABLE AND HAS BEEN SO OFFERED BY THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE LEARNED CTT(APPEALS) IS CORRECT AND THEREFORE, DOES NOT REQUIRE ANY INTERFERENCE. IN T HE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. IN VIEW OF THE FACTS MENTIONED ABOVE AND PARTICULAR LY WITH REFERENCE TO THE FACT THAT THE ISSUE IS IDENTICAL AND SQUARELY C OVERED BY THE APPELLANTS OWN CASE IN A.Y. 2003-04 BY THE ORDER O F JURISDICTIONAL ITAT AHMEDABAD. IT IS ALSO SEEN FROM THE RECORDS T HAT THE CIT(A) VIII, HAS DELETED THE SAME ADDITION FOR AY 07-08. THEREAFTER, THE DEPARTMENT FILED THE APPEAL IN THE ITAT, AHMEDABAD AGAINST THE ORDER OF THE CIT(A). THE ITAT CONFIRMED THE ORDER OF THE CIT(A) VIDE ITA NO.80/AHD/2011 DATED 2/12/2011. IN VIEW OF THE ABO VE, AND RESPECTFULLY FOLLOWING THE DECISIONS OF JURISDICTIO NAL ITAT, THE ADDITION MADE BY THE A.O. IS DELETED FOR THE YEAR UNDER APPE AL. THIS GROUND OF APPEAL IS ALLOWED. 5. SINCE THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASS ESSEE BY PLACING RELIANCE ON THE DECISION OF THE ITAT IN ASSESSEES OWN CASE ON IDENTICAL FACTS, WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY HIM AND THE S AME IS HEREBY UPHELD. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08.08.2012 SD/- SD/- (ANIL CHATURVEDI) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD