ACIT, UDAIPUR V. Shri Shanti Lal Singhvi, UDAIPUR

ITA 148/JODH/2013

• Counselvise Citation: 14823314 RSA 2013
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 148/JODH/2013 (A.Y. 2007-08) THE ACIT, VS. SHRI SHANTI LAL SINGHVI, CIRCLE-2, UDAIPUR. PLOT NO. 53, WARD-1, OLD FATEHPURA, UDAIPUR. PAN NO. ABQPX 2830 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 08/10/2013. DATE OF PRONOUNCEMENT : 09/10/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 07/12/2012 OF LD. CIT (A), UDAIPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD CIT(A) HAS ERRED IN:- 1. RESTRICTING THE ALV AT RS. 16,000/- INSTEAD OF R S. 24,000/- TAKEN BY THE AO. 2. DIRECTING THE AO TO SET OFF BUSINESS LOSS OF RS. 3,48,076/- CLAIMED IN PROPRIETORSHIP CONCERNS IGNORING THE FACT THAT NO B USINESS ACTIVITY 2 WAS CARRIED OUT BY THE PROPRIETORSHIP CONCERNS DURI NG THE RELEVANT PREVIOUS YEAR. 3. DIRECTING THE AO TO TREAT LONG TERM CAPITAL GAIN AMOUNTING TO RS.19,00,196/- EXEMPTED U/S 10(38) OF THE I.T. ACT INSTEAD OF BUSINESS INCOME FROM TRADING BUSINESS. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DE LETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. GROUND NO. 1 OF THIS APPEAL RELATES TO THE ANNUAL LET-OUT VALUE (ALV) RESTRICTING AT RS. 16,000/- INSTEAD OF RS. 24 ,000/- ESTIMATED BY THE ASSESSING OFFICER. 3. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER WORKED OUT ALV OF THE HOUSE PROPERTY LOCATED AT DET IYA MAGRI BY INVOKING THE PROVISIONS OF SECTION 23(1) OF THE I.T. ACT, 19 61 (HEREINAFTER REFERRED TO AS ACT, FOR SHORT) AT RS. 24,000/- AND AFTER A LLOWING DEDUCTION @ 30% UNDER SECTION 24(A) OF THE ACT, TAKEN NET HOUSE PRO PERTY INCOME AT RS. 18,000/-. 4. THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT (A) AND SUBMITTED THAT THE VALUE WAS TAKEN AT RS. 12,000/- BY THE PREDECESSOR OF THE LEARNED CIT(A) VIDE ORDER DATED 03/03/2009 FOR THE PRECEDING ASSESSMENT YEAR IN THE ASSESSEES OWN CASE, WHERE T HE ASSESSEE HAD DECLARED THE ALV AT RS. 6,000/-. LEARNED CIT(A) AF TER CONSIDERING THE 3 SUBMISSIONS OF THE ASSESSEE, CONSIDERED IT REASONAB LE TO RESTRICT THE ALV AT RS. 16,000/- AS AGAINST ALV TAKEN BY THE ASSESSI NG OFFICER AT RS. 18,000/- SUBJECT TO DEDUCTION UNDER SECTION 24(A) O F THE ACT. NOW, THE DEPARTMENT IS IN APPEAL. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE IT APPEARS THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS WHILE ESTIMATING THE ALV AT RS. 24,000/- AND THE LEARNED CIT(A) AFTER CONSIDERING THE ORDER DATED 03/03/2009 OF HIS PREDE CESSOR IN THE PRECEDING YEAR, CONSIDERED IT FAIR AND REASONABLE T O RESTRICT THE ALV AT RS. 16,000/-, THEREFORE, WE DO NOT SEE ANY INFIRMIT Y IN THE ORDER OF LEARNED CIT(A). 6. GROUND NO.2 RELATES TO THE SET-OFF OF BUSINESS LOS S AMOUNTING TO RS. 3,48,076/- CLAIMED IN PROPRIETORSHIP CONCERN. DURI NG THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE AT THE VE RY OUTSET SUBMITTED THAT THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE BY THE LEARNED CIT(A) BY FOLLOWING THE DECISION OF THIS BENCH OF THE TRIB UNAL IN ASSESSEES OWN CASE IN ITA NO. 247/JU/2007 FOR THE A.Y. 2003-04. T HEREFORE, THE GROUND RAISED BY THE DEPARTMENT DESERVES TO BE DISMISSED. 4 7. LEARNED D.R. ALTHOUGH SUPPORTED THE ORDER OF THE A SSESSING OFFICER, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION O F THE LEARNED COUNSEL FOR THE ASSESSEE. 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS AL READY BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CAS E IN ITA NO. 247/JU/2007 FOR THE A.Y. 2003-04 VIDE ORDER DATED 3 0/01/2008, COPY OF WHICH IS PLACED AT PAGES NO. 1 TO 3 OF THE ASSESSEE S COMPILATION. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN THE SAID ORDER AT PARA 7, WHICH READ AS UNDER:- 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE RELEVANT MATERIAL ON RECORD, WE FIND IT AS AN UNDIS PUTED POSITION THAT THE ASSESSEE WAS DOING BUSINESS ACTIVITIES IN THIS UNIT IN THE PRECEDING YEARS AS WELL. THE AO HAD HIMSELF ALLOWED SET OFF OF LOSS INCURRED IN THIS UNIT AGAINST NORMAL BUSINESS INCOME AS NOTED A BOVE. IN THIS YEAR THE CLAIM OF THE ASSESSEE HAS BEEN NEGATIVED SIMPLY ON THE OPINION OF THE AO THAT THE ASSESSEE HAD NOT COMMENCED ANY B USINESS ACTIVITY IN THIS UNIT AND HENCE THE AMOUNT IS PRE-COMMENCEME NT EXPENSES. WE ARE UNABLE TO ACCEPT THE VIEW POINT OF THE AO FO R THE OBVIOUS REASON THAT THE BUSINESS COMMENCED IN AN EARLIER YE AR AS COMES OUT FROM THE FACTS RECORDED IN THE ASSESSMENT ORDER. S IMPLY BECAUSE THERE WERE NO SALES AND PURCHASES IN THIS YEAR, IT CANNOT BE SAID THAT THE BUSINESS HAS NOT COMMENCED. ONCE THE BUSINESS COMMENCES IN AN EARLIER YEAR, IT CANNOT BE SAID IN THE LATER YEA R THAT THE BUSINESS HAS NOT COMMENCED. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. L.G. ELECTRONICS (INDIA) LTD. [2006] 282 ITR 54 5 [DEL] HAS HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE AFTER SETT ING OFF OF BUSINESS LOSS WAS ALLOWABLE EVEN THOUGH BUSINESS HAD NOT COM MENCED. THE 5 HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. W ESTERN INDIA SEA FOODS P. LTD. [1993] 199 ITR 177 [GUJ] HAS HELD THA T BUSINESS IS DEEMED TO HAVE BEEN SET UP WHEN FIRST ACTIVITY BEIN G THE PROCUREMENT OF GODOWN WAS DONE AND ALL REVENUE EXPE NSES INCURRED THEREAFTER WAS DEDUCTIBLE THOUGH ACTUAL COMMENCEMEN T OF BUSINESS TOOK LATER ON. FACTS OF OUR CASE LIE ON MUCH MORE S TRONGER FOUNDATION AS THE ASSESSEE HAD ALREADY COMMENCED BUSINESS. MO REOVER, SEC. 70(1) CLEARLY PROVIDES FOR THE ALLOWING OF SET OFF OF LOSS FROM ONE SOURCE AGAINST THE INCOME OF ANOTHER SOURCE. WE, T HEREFORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS IS SUE. 9. SINCE THE FACTS FOR THE YEAR UNDER CONSIDERATION A RE SIMILAR TO THE FACTS INVOLVED IN THE ASSESSMENT YEAR 2003-04 AND T HE LEARNED CIT(A) HAD FOLLOWED THE AFORESAID REFERRED TO ORDER OF THIS BE NCH OF THE ITAT, WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS GROUND OF T HE DEPARTMENTAL APPEAL. 10. THE LAST ISSUE VIDE GROUND NO.3 RELATES TO THE DIR ECTION OF LEARNED CIT(A) TO THE ASSESSING OFFICER TO TREAT THE LONG T ERM CAPITAL GAIN AMOUNTING TO RS. 19,00,196/- EXEMPTED UNDER SECTION 10(38) OF THE ACT. 11. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT IN THE COMPUTATION OF INCOME, THE ASSESSEE CLAIMED LONG TERM CAPITAL G AIN EXEMPTED UNDER SECTION 10(38) OF THE ACT. THE ASSESSING OFFICER, H OWEVER, TREATED THE SAME AS BUSINESS PROFIT. 12. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A), WHO DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE 6 ASSESSEE BY FOLLOWING THE ORDER DATED 03/03/2009 PA SSED BY HIS PREDECESSOR IN ASSESSEES OWN CASE. NOW, THE DEPAR TMENT IS IN APPEAL. 13 . LEARNED D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE WAS HOLDING THE SHARES AS STOCK IN TRADE AND IF THE ASSESSEE REALLY INTENDED TO TREAT IT AS INVE STMENT, IT SHOULD HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNTS AT COST. HE FURTHER SUBMITTED THAT LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION MADE BY THE ASSESSING OFFICER. 14. IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS INVOLVED IN THE PRECEDING YEAR, WHEREIN THE LEARNED CIT(A) HAS ALLOWED THE EXEMPTION UNDER SECTION 10(38) OF THE ACT VIDE ORDER DATED 03/03/2009 AND THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL AGAINST THE SAID ORDER. THEREFORE, TO MAINTAIN CONSISTENCY, THE DEPARTMENT OUGHT NOT TO HAVE FILED THE APPEAL FOR THE YEAR UNDER CONSIDE RATION. COPY OF THE SAID ORDER DATED 03/03/2009 WAS FURNISHED, WHICH IS PLACED AT PAGE NOS. 4 TO 9 OF THE ASSESSEES PAPER BOOK. 15. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT ON THE IDENTICAL ISSUE, THE CLAIM OF THE 7 ASSESSEE WAS ALLOWED IN THE PRECEDING YEAR BY THE L EARNED CIT(A) AND NO APPEAL WAS PREFERRED BY THE DEPARTMENT AGAINST THE SAID ORDER. THEREFORE, KEEPING IN VIEW THE PRINCIPLES OF CONSIS TENCY THE DEPARTMENT OUGHT NOT TO HAVE FILED THE APPEAL FOR THE YEAR UND ER CONSIDERATION IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT REPORTED IN (2011) 336 ITR 2 87 , WHEREIN IT HAS BEEN HELD THAT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSIST ENCY WHEN FACTS AND CIRCUMSTANCES FOR DIFFERENT YEARS WE RE IDENTICAL PARTICULARLY IN THE CASE OF THE SAME ASSESSEE. AGAINST THE AFORESAID ORDER, SLP FILED BY THE DEPARTMENT HAS BEEN DISMISS ED BY THE HON'BLE SUPREME COURT AS REPORTED AT (2011) 334 ITR (ST.) 3 08. 16. SIMILARLY, THE HON'BLE PUNJAB & HARYAN HIGH COURT I N THE CASE OF CIT VS. PRAKASH INDUSTRIES LTD. REPORTED IN (2010) 324 ITR 391 HELD AS UNDER:- THAT IF IN RESPECT OF ASSESSMENT YEAR 1990-91 THE REVENUE HAD ACCEPTED THE ORDER OF THE COMMISSIONER (APPEALS) TH EN IT FOLLOWED THAT IN RESPECT OF THE EARLIER YEAR THE SAME PRINCI PLE WOULD APPLY. ONCE THE REVENUE HAD ACCEPTED THE VIEW OF THE COMMI SSIONER (APPEALS) IN RESPECT OF THE ASSESSMENT YEAR 1990-91 THEN IT WAS NOT OPEN TO THE REVENUE TO CHALLENGE THE SIMILAR FINDIN G AND DEVIATE FROM ITS EARLIER STAND. 17 . WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FA CTS AND THE JUDICIAL PRONOUNCEMENTS AS DISCUSSED HEREINABOVE, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 8 18 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMIS SED. (ORDER PRONOUNCED IN THE COURT ON 09 TH OCTOBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09 TH OCTOBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.