Paladugu Ramakrishna, Vijayawada V. CIT, Vijayawada

ITA 152/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0625 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 27-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 26-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Keywords: Set aside
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.152/VIZAG/2009 ASSESSMENT YEARS : 2004-05 PALADUGU RAMAKRISHNA VIJAYAWADA VS. CIT VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.ACGPP 0953P APPELLANT BY : SHRI G.V.N. HARI, CA RESPONDENT BY : SHRI SUBRATA SARKAR, DR O R D E R PER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 05.9.2008 PASSED BY LD. CIT, VIJAYAWADA U/S 263 OF THE ACT AN D IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE IS CHALLENGING THE DECISION OF LE ARNED CIT IN DIRECTING THE ASSESSING OFFICER TO ASSESSEE THE INCOME OFFERED UN DER THE HEAD HOUSE PROPERTY AS THE INCOME FROM OTHER SOURCES. 3. THE ASSESSEE IS CO-OWNER OF A HOUSE PROPERTY NAMED S.R.TOWERS WHICH WAS LET OUT TO TWO EDUCATIONAL INSTITUTIONS. THE AS SESSEE OFFERED THE RENTAL INCOME FROM THE SAID PROPERTY UNDER THE HEAD INCOM E FROM HOUSE PROPERTY. THE ASSESSING OFFICER ACCEPTED THE SAME IN THE ORDE R PASSED BY HIM U/S 143(3) OF THE ACT. HOWEVER, IT WAS NOTICED BY LEARNED CIT FROM THE LEASE DEED THAT THE MONTHLY RENT WAS DIVIDED INTO TWO PARTS VIZ., ONE P ART TOWARDS RENT AND ANOTHER 2 PART TOWARDS AMENITIES. THE LEARNED CIT HENCE OPINE D THAT THE RECEIPT PERTAINING TO THE AMENITIES IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDING TO LEARNED CIT, BY OFFERING TH E SAID RECEIPTS UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THE ASSESSEE HAS GOT THE BENEFIT OF DEDUCTION OF 30% TOWARDS REPAIRS, THUS RENDERING THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCOR DINGLY LEARNED CIT DIRECTED THE ASSESSING OFFICER TO ASSESS THE INCOME RECEIVED ON AMENITIES AS INCOME UNDER THE HEAD OTHER SOURCES. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. ACCORDING TO THE ASSESSEE, THOUGH THE LEASE DEED PROVIDE FOR SEP ARATION OF TOTAL RECEIPTS INTO TWO PARTS VIZ., TOWARDS RENT AND TOWARDS AMENITIES, THE ASSESSEE DID NOT PROVIDE ANY SPECIAL AMENITIES WARRANTING ASSESSMENT OF RECE IPTS MENTIONED AS TOWARDS AMENITIES AS INCOME FROM OTHER SOURCES. IN SUPPO RT OF HIS CONTENTION THAT THE ENTIRE RECEIPTS IN THIS KIND OF SITUATION ARE ASSES SABLE AS INCOME FROM HOUSE PROPERTY, LEARNED AUTHORISED REPRESENTATIVE RELIED UPON FOLLOWING CASE LAW. A) DDIT VS. G.RAGHURAM (2010) 5 TAXMANN.COM 39 (HY D-ITAT) B) DR. P.A.VARGHESE VS. CIT (1971) 80 ITR 180 (KER ) THUS, ACCORDING TO LEARNED AUTHORISED REPRESENTATIV E, THE VIEW OF THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS AND HENCE THE ASSESSMENT ORDER IS NOT SUSCEPTIBLE TO REVISION U/S 263 OF THE ACT. HOWEVE R, ACCORDING TO LEARNED DEPARTMENTAL REPRESENTATIVE, THE RECITAL IN THE LEA SE DEED IS THE DECIDING FACTOR AND ACCORDINGLY CONTENDED THAT THE ORDER PASSED BY LEARNED CIT U/S 263 OF THE ACT IS TO BE SUSTAINED. 5. THE HON'BLE BOMBAY HIGH COURT, IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92) HAS DEALT WITH THE SCOPE OF PROVISIONS OF SECTION 263 AS UNDER: SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEED INGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER AN 3 ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. THE KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORD ER MUST BE CONSIDERED BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMEN TS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LT D. V. CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISI ON CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME CO URT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLIC ATION OF LAW, WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONE OUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JU STICE OR WITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALLING IN T HAT CATEGORY. THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REV ENUE, THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINE D TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME COURT (HEADNOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICE R ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULT ED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE IN COME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAI NED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V . MAX INDIA LTD. [2007] 295 ITR 282. 6. TURNING TO THE FACTS OF THE CASE, WE NOTICE THAT THE LEARNED CIT HAS GIVEN MUCH RELIANCE TO THE RECITALS OF THE LEASE DE ED. ACCORDING TO THE ASSESSEE, THE AMENITIES THAT WERE PROVIDED WERE ONL Y BASIC AMENITIES SUCH AS ELECTRICITY, WATER SUPPLY, DRAINAGE ETC. AND IN THE CASE LAW RELIED UPON BY THE ASSESSEE, IT HAS BEEN HELD THAT THE RECEIPTS PERTAINING TO SUCH AMENITIES ARE ASSESSABLE AS INCOME FROM HOUSE PROPE RTY ONLY. THE SAID 4 CLAIM OF THE ASSESSEE HAS NOT BEEN PROVED TO BE WRO NG. HENCE THE DECISION TAKEN BY THE ASSESSING OFFICER CANNOT BE T AKEN AS ERRONEOUS ONE. IN THAT CASE, THE ASSESSMENT ORDER FALLS OUTSIDE TH E SCOPE OF REVISION U/S 263 OF THE ACT. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LEARNED CIT PASSED U/S 263 OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 02/07/2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE : 2 ND JULY, 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 NANDKISHORE JHAWAR, N.K. JHAWAR & CO. CHARTERED ACCOUNTANTS, FLAT NO.1A, CLASSIC CIRCLE BUILDINGS, 36-8-8B, RAJ FUNCT ION HALL ROAD, MOGHALRAJAPURAM, VIJAYAWADA-520 010. 02 THE CIT, VIJAYAWADA 03 THE CIT (A), VIJAYAWADA 04 THE DR, ITAT, VISAKHAPATNAM 05 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH