ISHA INTERIORS PVT. LTD., MUMBAI V. I.T.O. 2(2)(4), MUMBAI

ITA 1590/MUM/2011

• Counselvise Citation: 159019914 RSA 2011
• Duration Of Justice: 4 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 27-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENADR
• Assessee Lawyers: FIROZE ANDHYARUJINA
• Keywords: Business income; Principle of natural justice; Revised return

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.1590/MUM/2011 ASSESSMENT YEAR: 2007-08 M/S ISHA INTERIORS PRIVATE LIMITED, G48 DHANRAJ MAHAL, CSM ROAD, APOLLO BUNDER, MUMBAI-400008 / VS. ITO-2(2)(4), ROOM NO.542, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( ! ' /ASSESSEE) ( # / REVENUE) P.A. NO. AABCI4497B ! ' / ASSESSEE BY SHRI FIROZE ANDHYARUJINA # / REVENUE BY SHRI OM PRAKASH MEENA-DR $ # % ' & / DATE OF HEARING : 31/08/2015 % ' & / DATE OF ORDER: 01/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 15/12/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE ONLY ARGUED ADDITIONAL GROUND WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ISHA INTERIORS PVT. LTD. ITA NO.1590/MUM/2011 2 ASSESSEE WAS JUSTIFIED IN ORIGINAL CLAIMING LEASE R ENT OF RS.2 LAKH PER MONTH UNDER THE HEAD INCOME FROM BUSINESS AS OPPOSE TO INCOME FROM HOUSE PROPERTY IN SPITE OF FACT THAT AS RECORDED BY THE ASSESSING OFFICER THAT THE ASSES SEE COMPANY WAS ENGAGED IN THE BUSINESS OF PROVIDING SE RVICES OF BUSINESS CENTRE AND BUSINESS SERVICES, INTERIOR DESIGNS AND SERVICE APARTMENTS AS LAID DOWN IN THE MAIN OBJ ECT CLAUSE OF MEMORANDUM OF ASSOCIATION. RELIANCE WAS P LACED UPON THE DECISION IN CHENNAI PROPERTIES AND INVESTM ENT LTD. VS CIT (2015) 373 ITR 673 (SC), DECISION OF TH E TRIBUNAL IN M/S PROLIFIC CONSULTANCY SERVICES LTD. VS ACIT (ITA NO.2312/MUM/2013) AND ALSO THE DECISION OF THE TRIBUNAL IN DHANRAJ GIR BUSINESS PVT. LTD. VS ITO ( ITA NO.2488/MUM/2013) 2.1. ON THE OTHER HAND, THE LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONT ENDING THAT NO AFFIDAVIT WAS FILED BY THE ASSESSEE AS TO W HETHER REVISED RETURN WAS FILED BY THE ASSESSEE AT THE INS TANCE OF THE REVENUE, MORE SPECIFICALLY WHEN THE ASSESSEE IT SELF SURRENDERED BEFORE THE ASSESSING OFFICER AND FILED REVISED RETURN. IT WAS CONTENDED THAT THE AGREEMENT IS ONL Y FOR HIGHER AND MAIN OBJECTS OF THE ASSESSEE IS TO PROVI DE BUSINESS CENTRE, RESIDENTIAL APARTMENTS, THEREFORE, THE CASE OF CHENNAI PROPERTY IS NOT APPLICABLE TO THE CASE O F THE ASSESSEE AS IT IS A RENT SIMPLICITOR. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN ISHA INTERIORS PVT. LTD. ITA NO.1590/MUM/2011 3 BRIEF, ARE THAT THE ASSESSEE WAS INCORPORATED AS PR IVATE LIMITED COMPANY ON 21/11/2005. THE ASSESSEE COMPANY ENTERED IN TO A LEASE AGREEMENT. THE HISTORY OF LEA SE AND LICENSE IS SUMMARIZED AS UNDER:- L ICENSE PERIOD USAGE LICENSE FEE (RS.) RATE /SQ. FT. ON BRU (RS.) REUTERS INDIA P. LTD. 24/10/2005 TO 23/10/2007 RESIDENTIAL RENT:1,00,000 PM + FURNT:1,00,000 PM (TOTAL 2,00,000 PM) 78.77 CLEARSTONE VENTURE ADVISORS PRIVATE LIMITED 15/01/2008 TO 31/03/2009 COMMERCIAL RENT:3,50,000 PM + FURNT;4,00,000 PM (TOTAL 7,50,000 PM) 295.39 CLEARSTONE VENTURE ADVISORS PRIVATE LIMITED (REDUCED) 01/04/2009 TO 14/01/2013 COMMERCIAL RENT;3,00,000 PM + FURNT;3,50,000 PM (TOTAL 6,50,000) 183.66 2.3. AS PER THE ASSESSEE, THE RETURN OF INCOME WAS WRONGLY FILED SHOWING THE INCOME UNDER THE HEAD PR OFIT AND GAINS FROM BUSINESS OR PROFESSION FOR A.Y. 200 7-08 AND 2008-09. AS PER THE ASSESSEE, IN THE VERY BEGIN NING OF THE PROCEEDINGS OF A.Y. 2007-08 REVISED COMPUTATION OF INCOME SHOWING INCOME UNDER INCOME FROM HOUSE PROPERTY WAS FILED AND PAID SELF ASSESSMENT TAX OF RS.4,43,520/- ON 29/08/2009 AND SUBMITTED THE COMPUTATION AND CHALLAN BEFORE THE ASSESSING OFFICE R. AS PER THE ASSESSEE, BASED UPON WRONG ASSUMPTION, THE ASSESSING OFFICER ASSESSED THE FAIR MARKET RENT OF THE ISHA INTERIORS PVT. LTD. ITA NO.1590/MUM/2011 4 FURNISHED RESIDENTIAL FLAT NO. F/35/36 IN THE DHANR AJ MAHAL AT THE RATE OF RS.250/- PER SQ. FT. WHICH COM ES TO RS.76,17,000/- PER ANNUM. IT WAS ALSO CLAIMED THAT NETHERLAND CONSULATE GENERAL LEASE AGREEMENT WAS FR OM 01/08/2009 TO 31/07/2012 AND NOT SINCE MAY 2006. TH E ASSESSEE ALSO INVITED OUR ATTENTION TO A COMPARATIV E AGREEMENT OF CITY GROUP GLOBAL MARKETS INDIA PVT. L TD. OF FLAT G-44/45 IN THE SAME BUILDING NAMELY DHANRAJ MA HAL. 2.4. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS), IT WAS OBSERVED THAT ASSESSEE HAS CR EDITED TO PROFIT AND LOSS ACCOUNT NET PROFIT OF RS.9,67,836/- AS BUSINESS INCOME COMPRISING FURNITURE HIGHER CHARGES OF RS.12 LAKHS AND LICENSE FEE. THE STAND OF THE ASSES SING OFFICER WAS AFFIRMED. 2.5. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, IT IS AN ADMITTED FACT THAT THE FACTS OF THE CASE HAS NOT BEEN PROPERLY EXAMINED BY THE ASSESSING OFFICER. EVEN OTHERWISE, THE MANDATE OF T HE CONSTITUTION IS TO LEVY AND COLLECT DUE TAXES, THER EFORE, KEEPING IN VIEW, THE PRINCIPLE OF NATURAL JUSTICE A ND ALSO NO PREJUDICE IS CAUSED TO EITHER SIDE, WE REMAND THIS FILE TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE CA SE OF THE ASSESSEE AFRESH IN THE LIGHT OF THE DECISIONS MENTI ONED IN PRECEDING PARA OF THIS ORDER (RELIED UPON BY THE AS SESSEE). ISHA INTERIORS PVT. LTD. ITA NO.1590/MUM/2011 5 THE ASSESSING OFFICER IS ALSO TO EXAMINE THE OBJECT S OF THE ASSESSEE ALONG WITH THE DECISION IN THE CASE OF SUL TAN BROTHERS. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEIN G HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, I N SUPPORT OF HIS CLAIM, THUS, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES ONLY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 31/08/2015. SD/ - (RAMIT KOCHAR) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ MUMBAI; ( DATED : 01/10/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. $ 0' ( *+ ) / THE CIT, MUMBAI. 4. $ 0' / CIT(A)- , MUMBAI 5. 2#3 .' , *+& * 4 , $ / DR, ITAT, MUMBAI 6. 5 6 / GUARD FILE. / BY ORDER, /2+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI