ITO WD 20(3)(1), MUMBAI V. ELECTRONICS & ENGINEERING CO., MUMBAI

ITA 1622/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2600 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MA YUR KISHNADWALA
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI . . , , !' , # , $ BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1622/MUM/2014 ( #% & / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER WARD 20(3)-1 ROOM NO.605, 6 TH FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI 400 012. % / VS. M/S. ELECTRONICS & ENGINEERING CO., EEC HOUSE, PLOT NO.C-7, DALIA INDL EST., NEW LINK ROAD, ANDHERI (W) MUMBAI-400 053. ./ ./PAN/GIR NO. : AAAFE 0594 M ( /APPELLANT ) .. ( / RESPONDENT ) CROSS OBJECTION/ '($ NO.96/MUM/2015 ARISING OUT OF ITA NO.1622/MUM/2014 AY : 2009-10 M/S. ELECTRONICS & ENGINEERING CO., ANDHERI (W) MUMBAI-400 053. % / VS. INCOME TAX OFFICER WARD 20(3)-1 MUMBAI 400 012 ( / CROSS OBJECTOR ) .. ( / RESPONDENT ) / DATE OF HEARING: 07.09.2016 /DATE OF PRONOUNCEMENT: 28.09.2016 / O R D E R ASSESSEE BY: SHRI MAYUR KISHNADWALA DEPARTMENT BY: SHRI G. NANTHAKUMAR-DR ITA NO.1622/M/2014 &C.O.96/M/15 A.Y. 2010-11 2 PER AMARJIT SINGH, JM: THE REVENUE AS WELL AS THE ASSESSEE HAVE FILED THE PRESENT APPEAL/CROSS OBJECTION CHALLENGING THE ORDER DATED 11.12.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) -31, MU MBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2009-10 . ITA/1622/MUM/2014: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW BY NOT APPRECIATING THE FACT TH AT THE DECISION OF THE HONBLE ITAT ON THE ISSUE OF CONSID ERING RENT RECEIPT INCOME AS INCOME FROM BUSINESS INSTEAD OF I NCOME FROM HOUSE PROPERTY IS NOT ACCEPTED BY THE REVENUE SINCE THIS ISSUE HAS BEEN SETTLED BY THE APEX COURT IN FAVOUR OF THE REVENUE IN ITS MARK JUDGMENT RENDERED IN THE CASE OF M/S. SHAM BU INVESTMENT PVT. LTD. VS. CIT (263 ITR 143). 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, IS ENGAGED IN BUSINESS AND FILED ITS RETURN OF INCOME ON 31.08.20 09 DECLARING TOTAL INCOME TO THE TUNE OF RS.21.16 CRORES. THE ASSESSIN G OFFICER COMPLETED THE ASSESSMENT U/S.143(3)OF THE ACT DETER MINING ITS INCOME TO THE TUNE OF RS.1.13 CRORES. A NOTICE U/S. 143(2) DATED 15.09.2010 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 22.09.20 10. ITA NO.1622/M/2014 &C.O.96/M/15 A.Y. 2010-11 3 SUBSEQUENTLY, A NOTICE U/S.142(1) DATED 05.07.2010 ALONGWITH QUESTIONNAIRE WAS ISSUED AND SERVED UPON THE ASSESS EE. THE ASSESSEE DECLARED THE RENTAL INCOME RECEIVED FROM LETTING OU T OFFICE PREMISES TO SISTER CONCERNS UNDER THE HEAD BUSINESS CENTRE REC EIPT. THE ASSESSEE FIRM WAS CARRYING OUT BUSINESS ACTIVITIES OF MANUFA CTURING OF NON DESTRUCTIVE TESTING EQUIPMENT & ALLIED QUALITY CONT ROL EQUIPMENTS. THE SAID BUSINESS WAS CLOSED DOWN BY THE ASSESSEE A ND THE ASSESSEE LET OUT THE PROPERTY FOR THE PERIOD W.E.F. F.Y. 200 2-03 ONWARDS. THE ASSESSING OFFICER DEALT WITH THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD BUSINESS CENTRE RECEIPT AS INCOME FROM HOUSE PROPERTY U/S. 22 OF THE I.T.ACT AND ACCORDINGLY TA XED. THEREAFTER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONF IRMED THE ORDER OF THE ASSESSING OFFICER . THEREFORE, THE PRESENT APPE AL HAS BEEN FILED BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE T HROUGH THE RECORDS. THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WRO NGLY AND ILLEGALLY. THEREFORE, THE ORDER OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS THEREFORE LIABLE TO BE SET ASIDE. IT IS ALSO ARGUED THAT THE BUSINESS CENTRE RECEIPT OF THE ASSESSEE HAS RIGHTLY BEEN TR EATED BY THE ASSESSING OFFICER BY HOLDING THE SAID INCOME AS IN COME FROM HOUSE PROPERTY BUT THE CIT(A) HAS WRONGLY TREATED THE B USINESS CENTRE ITA NO.1622/M/2014 &C.O.96/M/15 A.Y. 2010-11 4 RECEIPT AS BUSINESS INCOME. THEREFORE, THE SAID OR DER IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THIS REGARD, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS PLACED RELIANCE ON THE LAW SETTL ED IN THE CASE OF M/S. SHAMBU INVESTMENT PVT. LTD. VS. CIT (263 ITR 1 43). 4.1 ON THE OTHERHAND THE LD. REPRESENTATIVE OF THE ASS ESSEE HAS ARGUED THAT THE LD. CIT(APPEALS) HAS DECIDED THE IS SUE CORRECTLY AND JUDICIOUSLY AND ON THE BASIS OF THE SUBSEQUENT FIND ING OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 2138/MUM/2012 ORD ER DATED 11.10.2013 FOR THE ASSESSMENT YEAR 2008-09. THEREFO RE, THE FINDING OF THE CIT(A) IN QUESTION ON THIS ISSUE IS NOT LIABLE TO BE DISTURBED IN ACCORDANCE WITH LAW. ORDER OF CIT(A) PERUSED. BEFOR E GOING FURTHER, IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD ON THIS ISSUE WHICH READS AS UNDER:- 5.1 IN GROUND NO. 1, THE APPELLANT HAS CHALLENGED T HE ASSESSMENT OF RENT RECEIPTS FROM THE LETTING OUT OF THE BUSINESS CENTR E PREMISES UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AS AGAINST 'INCOME FRO M BUSINESS' AS DECLARED BY THE APPELLANT. ON PERUSAL OF THE ORDERS PASSED BY ITAT IN THE APPELLANTS OWN CASE FOR A.YS. 2005-06, 2006-07, 20 07-08 AND 2008-09, I FIND THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE AP PELLANT AND AGAINST THE REVENUE. THE RELEVANT EXTRACT FROM THE HON'BLE TRI BUNAL'S ORDER IN ITA NO. 2138/MUM/2012 DATED 11.10.2013 FOR A.Y 2008 - 09 IS AS FOLLOWS: '6. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. THE ISSUE BEFORE US HAS BEEN DECIDED IN FA VOUR OF THE ASSESSEE AFTER DETAIL DISCUSSION BY THE TRIBUNAL I N THE EARLIER YEARS. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO FILED A COPY OF BUSINESS CENTRE AGREEMENTS AND THE FLOOR PLAN OF THE BUILDING, SHOWING THAT MO ST OF THE AREA IS BEING USED BY THE ASSESSEE FOR ITS OWN BUSI NESS AND ITA NO.1622/M/2014 &C.O.96/M/15 A.Y. 2010-11 5 OTHER PART HAS BEEN LET OUT DUE TO TEMPORARY SUSPE NSION OF THE MANUFACTURING BUSINESS PENDING DECISION OF THE COU RT CASES BY THE WORKERS. ON A PERUSAL OF THESE DETAILS AND ALS O OTHER ATTENDANT FACTS, WE FIND THAT THIS ISSUE HAS BEEN DISCUSSED AT LENGTH BY THE TRIBUNAL AND HAS ARRIVED TO A CONCLU SION THAT THE BUSINESS CENTRE RECEIPTS HAS TO BE TREATED AS BUSI NESS INCOME. THE DETAIL FINDING HAS BEEN GIVEN IN ITA NO.4516/MU M/2010 IN THE ASSESSMENT YEAR 2005-06, ORDER DATED 30TH NOVEM BER, 2011, WHICH HAS BEEN FOLLOWED IN SUBSEQUENT YEARS I . ASSESSMENT YEAR 2006-07 AND 2007-08 ALSO. CONSISTEN T WITH THE EARLIER YEARS JUDICIAL PRECEDENCE, WE ALSO DI RECT THE ASSESSING OFFICER TO TREAT THE BUSINESS CENTRE RECE IPTS TO BE ASSESSED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY. THUS, THE GROUND RAISED BY THE REVENUE IS TREATED AS DISMISSED. 4.2 THE CIT(A) PASSED THE ORDER ON THE BASIS OF THE FI NDING OF ITAT IN ITA NO.2138/MUM/2012 DATED 11.10.2013 FOR A .Y 2008 09 IN THE ASSESSEE OWN CASE AND COPY OF THE ORDER HAS BEEN PLACED ON RECORD IN WHICH THE TRIBUNAL HAS CONSIDERED THE FIN DING OF M/S. SHAMBU INVESTMENT PVT. LTD. VS. CIT (2003) (263 ITR 143) AND THEREAFTER THE INCOME OF THE ASSESSEE HAS BEEN TREA TED AS INCOME FROM BUSINESS. THE TRIBUNAL HAS CONSIDERED THE COPY OF B USINESS CENTRE AGREEMENTS AND THE FLOOR PLAN OF THE BUILDING, SHOW ING THAT MOST OF THE AREA WAS BEING USED BY THE ASSESSEE FOR ITS OWN BUSINESS AND OTHER PART WAS LET OUT DUE TO TEMPORARY SUSPENSION OF TH E MANUFACTURING BUSINESS PENDING DECISION OF THE COURT CASES BY THE WORKERS. WE FIND NO GROUND TO DEVIATE THE FINDING OF THE ORDER OF TH E TRIBUNAL IN ASSESSEES OWN CASE MENTIONED ABOVE. RESPECTFULLY F OLLOWING THE ORDER OF THE TRIBUNAL WE DECIDE THIS ISSUE IN FAVOU R OF THE ASSESSEE AND AGAINST THE REVENUE. C.O.NO.96/M/2015 (BY ASSESSEE ) : 5. THE ASSESSEE HAS RAISED CROSS OBJECTION REGARDIN G LEVY OF INTEREST U/S. 234(B) AND 234(C ). THIS ISSUE IS CON SEQUENTIAL IN NATURE ITA NO.1622/M/2014 &C.O.96/M/15 A.Y. 2010-11 6 WHICH IS THE OUTCOME OF THE APPEAL FILED BY THE REV ENUE AND ACCORDINGLY IS LIABLE TO BE DEALT WITH ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AND THE C.O. OF THE ASSESSEE CONSEQUENTIAL AS STATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH , SEPTEMBER,2016. 28 , 2016 SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) ' / ACCOUNTANT MEMBER # /JUDICIAL MEMBER # $ MUMBAI; %' DATED : 28 TH SEPTEMBER, 2016 JV, SR. PS ) '# !* +*& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & ( ) / THE CIT(A)- 4. & / CIT 5. '( ) **+, , +, , # $ / DR, ITAT, MUMBAI 6. ) -. / / GUARD FILE. % / BY ORDER, ' * //TRUE COPY// , / ' /(DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI