Spectra Developers Company, Ranga Reddy V. Asst. Commissioner of Income Tax, Circle-15(1), Hyderabad

ITA 1569/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0709 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 10-07-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 18-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: M BHOPAL GOUD
• Keywords: Business income; Opportunity of being heard; Set aside
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1569/HYD/2018 ASSESSMENT YEAR: 2013 - 14 SPECTRA DEVELOPERS COMPANY, RANGA REDDY. PAN: ABNFS 4719 G VS. ACIT, CIRCLE - 15(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI M. BHOPAL GOUD REVENUE BY: SRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 10/07/2019 DATE OF PRONOUNCEMENT: 19 /07/2019 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PR. CIT (A) - 7, HYDERABAD DATED 27/03/2018 IN F.NO.6/263/PR.CIT - 7/2017 - 18 PASSED U/S. 263 OF THE ACT FOR THE ASSESSMENT YEAR 2013 - 14. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED SEVERAL GROUNDS HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. PR. CIT HAS ERRED IN INVOKING HIS POWERS U/S. 263 OF THE ACT AND THEREBY SET ASIDE THE ORDER OF THE LD. 2 AO AND FURTHER DIRECTED HIM TO RE - DO THE ASSESSMENT WITH SPECIFIC DIRECTIONS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF CONSTRUCTION FILED ITS RETURN OF INCOME FOR THE AY : 2013 - 14 ON 28/09/2013 DECLARING TOTAL INCOME OF RS. 32,52,220/ - . SUBSEQU ENTLY THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 09/12/2015 WHEREIN THE LD. AO ESTIMATED THE NET PROFIT OF THE ASSESSEE @ 15% OF THE GROSS RECEIPTS AND MADE ADDITION OF RS. 18,11,707/ - . THEREAFTER, THE LD. PR. CIT INVOKED HIS POWERS U/S. 263 OF THE ACT BECAUSE HE WAS OF THE VIEW THAT THE ASSESSMENT MADE BY THE LD. AO IS PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE ESTIMATION OF THE INCOME OF THE ASSESSEE WAS MADE ON THE GROSS RECEIPTS WHICH INCLUD ED INCOME FROM OTHER SOURCES SUCH AS (I) REGISTRATION CHARGES RECEIVED FROM CUSTOMERS RS. 25,03,445/ - ; (II) OTHER MISCELLANEOUS INCOME RS. 2,06,022/ - ; (III) INTEREST ON BANK DEPOSITS RS. 1,83,576; (IV) SALE AGREEMENT FEES RS. 1,000/ - AND (V) SCHEME LOSSES RS. 36,177/ - . THE LD. PR. CIT WAS OF THE VIEW THAT THE LD. AO OUGHT TO HAVE EXCLUDED THE OTHER INCOME OF THE ASSESSEE WHILE ESTIMATING THE BUSINESS INCOME @ 15% AND THEREAFTER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. WHILE HOLDING SO, THE LD . PR. CIT REJECTED THE SUBMISSION OF THE LD. AR THAT THE OTHER INCOME ALSO RELATED TO THE BUSINESS INCOME OF THE ASSESSEE. FOR THE AFORESAID REASONS THE 3 LD. PR. CIT SET ASIDE THE ORDE R OF THE LD. AO AND DIRECTED HIM TO RE - DO THE ASSESSMENT BY OBSERVING AS UNDER: 7I SET ASIDE THE ABOVE ASSESSMENT WITH A SPECIFIC DIRECTION TO EXAMINE THE ASSESSEES INCOME FROM OTHER SOURCES AND ACCORDINGLY BRING TO TAX THE CORRECT INCOME FROM BUSINE SS AS WELL AS OTHER SOURCES SEPARATELY. NEEDLESS TO SAY, ASSESSED SHOULD BE AFFORDED A FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD DURING THE PROCEEDINGS. 4. BEFORE US, LD. AR SUBMITTED THE REGISTRATION CHARGED RECEIVED FROM THE CUSTOMERS OF RS . 25,03,445/ - , OTHER MISCELLANEOUS INCOME OF RS. 2,06,022/ - , SALE AGREEMENT FEES OF RS. 1,000/ - AND SCHEME LOSSES OF RS. 36,177/ - PERTAIN TO THE BUSINESS INCOME OF THE ASSESSEE. THEREFORE, THE ESTIMATION OF 15% ON THE AFORESAID RECEIPTS IS NOT ERRONEOUS. WITH RESPECT TO REGISTRATION CHARGES, THE LD. AR SUBMITTED THAT THEY ARE RECEIVED FROM THE CUSTOMERS TOWARDS EXPENSES LIKE STAMP DUTY, TRAVELING CHARGES, CHALLAN PAYMENT CHARGES, DOCUMENT WRITING CHARGES, SALE AGREEMENT FEE ETC., WHICH ARE ALL RELATE D TO THE BUSINESS OF THE ASSESSEE. THE MISCELLANEOUS INCOME RECEIVED BY THE ASSESSEE WAS TOWARDS PASS BOOK / DUPLICATE PASS BOOK ISSUED TO THE CLIENTS OF THE ASSESSEE , STATEMENT OF ACCOUNTS TO BE FURNISHED TO TH E CLIENTS OF THE ASSESSEE, BANK CHARGES FOR COLLE CTION OF CHEQUE AND TOWARDS OTHER EXPENSES INCURRED. THE LD. AR FURTHER SUBMITTED THAT THE INTEREST ON THE BANK DEPOSITS RECEIVED WAS FROM THE DEPOSITS MADE IN THE BANK OUT OF THE AMOUNT OVERDRAWN FROM THE BANK AS THE ASSESSEE WAS AVAILING OVERDRAFT FACILITY FROM THE BANK. THEREFORE IT WAS ARGUED THAT , THE INTEREST INCOME HAD ARISEN OUT OF THE BUSINESS ACTIVITY OF THE ASSESSEE. 4 IT WAS FURTHER SUBMITTED THAT T HE SCHEME LOSSES WAS DUE TO THE SCHEMES OFFERED TO THE CLIENTS OF THE ASSESSEE TOWARDS EARLY PAYMENTS AND THE SCHEME PROFIT WAS DUE TO SOME EXCESS AMOUNT RECEIVED FROM THE CLIENTS OF THE ASSESSEE. IT WAS T HEREFORE PLEADED THAT TH ESE INCOME ARE ALSO ARISING OUT OF THE BUSINESS OF THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THE SALE AGREEMENT FEE WAS ACTUALLY RECEIVED TOWARDS REGISTRATION WHICH WAS ERRONEOUSLY CREDITED UNDER THE HEAD SALE AGREEMENT FEES. IT WAS THEREFORE SUBMITTED THAT ALL THE ABOVE RECEIPTS DIRECTLY AR O SE FROM THE BUSINESS ACTIVITY OF THE ASSESSEE AND THEREFORE IT HAS TO BE TREATED AS BUSINESS INCOME OF THE ASSESSEE. HENCE, IT WAS PLEADED THAT THE ORDER OF THE LD. PR. CIT INVOKING HIS POWERS U/S. 263 OF THE ACT ON THESE COUNTS IS ERRONEOUS. THE LD. DR O N THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDER OF THE LD. PR. CIT AND PRAYED FOR CONFIRMING THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT ALL THE RECEIPTS EXPLAINED HEREIN ABOVE BY THE LD. AR ARE DUE TO THE BUSINESS ACTIVITIES OF THE ASSESSEE AND THEREFORE, IT HAS TO BE NECESSARILY TREATED AS BUSINESS INCOME. THE LD. DR THOUGH ARGUED VEHEMENTLY IN SUPPORT OF THE ORDER OF THE LD. PR. CIT COULD NO T SUCCESSFULLY CONTROVERT TO ANY OF THE SUBMISSIONS MADE BY THE LD. AR. IN THIS SITUATION, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. AO WHICH IS PREJUDICIAL TO THE 5 INTEREST OF THE REVENUE FOR HAVING TREATED THE ABOVE MENTIONED RECIPES AS THE BUSINESS INCOME OF THE ASSESSEE FOR ESTIMATING THE INCOME OF THE ASSESSEE AT 15% OF THE TURNOVER . THEREFORE, WE HEREBY QUASH THE ORDER OF THE LD. PR. CIT PASSED U/S. 263 OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 19 TH JULY, 2019. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 19 TH JULY , 2019 OKK COPY TO: - 1) M/S. SPECTRA DEVELOPERS COMPANY, 3 - 11 - 456, PLOT NO.9, SY. NO.66/5, MANSOORABAD, SAROOR NAGAR MANDAL, L.B. NAGAR, RANGAREDDY 500068. 2) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 15(1), IT TOWERS, HYDERABAD. 3) THE ADDL. CIT, RANGE - 15, HYDERABAD 4) THE PR. CIT - , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE