I.T.O., Ward-8(4), Kolkata, Kolkata V. M/S. Jalan Intercontinental, Kolkata

ITA 1623/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1594 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 07-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R P NAG
• Keywords: Business income
• Section: 143(3); 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI A.T. VARKEY, JM & DR. A.L.SAINI, AM ./ ITA NO.1623/KOL/2014 ( / ASSESSMENT YEAR : 2005-06 ITO, WD-8(4), KOLKATA VS. M/S JALAN INTERCONTINENTAL HOTELS LTD. M/S 9C, LORD SINHA ROAD, KOLKATA-700016 ./ ./PAN/GIR NO. : AAACJ 6688 G ( /ASSESSEE ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI R.P.NAG, ADDL. CIT, SR. DR /REVENUE BY : NONE (AR) / DATE OF HEARING : 31/05/2017 !'# /DATE OF PRONOUNCEMENT 07/ 07/2017 / O R D E R PER DR.ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINI NG TO ASSESSMENT YEAR 2005-06, IS DIRECTED AGAINST THE O RDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)- VI, KO LKATA, IN APPEAL NO. 421/08-09/CIT(A)-VI/WD-8(4)/KOL, DATED 23.06.20 14, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REF ERRED TO AS THE ACT), DATED 26.02.2007. ITA NO.1623/14 JALAN INTERCONTINENTAL. 2 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2005 -06 DECLARING THE TOTAL INCOME OF RS. 1,55,290/-. DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE COMPANY DERIVED INCOME FROM THE FOLLOW ING SOURCES: I) INTEREST :RS. 66,370/- II) COMMISSION &BROKERAGE :224/- III) DIVIDEND ON UNITS :39,11,198/- IV) LONG TERM CAPITAL GAIN :8,31,185/- V) SHORT TERM CAPITAL GAIN :2,73,527/- TOTAL 50,82,504/- THE LD. ASSESSING OFFICER OBSERVED THAT SINCE THE G ROSS RECEIPTS OF THE ASSESSEE IS MORE THAN RS. 40 LAKHS, THEREFORE H E IS REQUIRED TO GET HIS ACCOUNTS AUDITED UNDER SECTION 44AB OF THE INCOME TAX ACT, 1961. DURING THE ASSESSMENT YEAR 2005-06 THE ASSESS EE`S GROSS RECEIPTS WAS AT RS. 50,82,504/- WHICH IS MORE THAN RS.40,00,000/-, THEREFORE THE ASSESSEE IS REQUIRED TO GET HIS ACCOU NTS AUDITED U/S 44AB OF THE I.T.ACT AND FURNISH THE AUDIT REPORT IN THE PRESCRIBED FORM BEFORE THE SPECIFIED DATE 31.10.2005 BUT THE A SSESSEE HAS FAILED TO DO SO THEREFORE, AO IMPOSED PENALTY U/S 2 71-B OF THE ACT AT RS.25,413/- 3. AGGRIEVED WITH THE ORDER OF THE ASSESSING OFFICE R THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-T AX (APPEAL). THE LD. CIT(A) HELD THAT THE PROVISIONS OF SECTION 44AB IS APPLICABLE TO THE ASSESSEE UNDER CONSIDERATION IF THE TURNOVER OR GROSS RECEIPTS EXCEEDS DURING THE PREVIOUS YEAR BY RS. 40,00,000/ - . IN ASSESSEES CASE UNDER CONSIDERATION THE LD. CIT(A) FOUND THAT THE TOTAL RECEIVED IN THE P& L ACCOUNT WAS AT RS. 50,82,504/-. OUT OF THIS GROSS RECEIPTS, THE MAJOR COMPONENT OF THE INCOME WAS DI VIDEND INCOME OF RS. 39,11,198/-. THIS DIVIDEND WAS CLAIMED AND A CCEPTED AS ITA NO.1623/14 JALAN INTERCONTINENTAL. 3 EXEMPT FROM INCOME TAX. EVEN OTHERWISE, AS PER PROV ISION OF SECTION 56(2) OF THE ACT, DIVIDEND IF TAXABLE, IS CHARGEABL E UNDER THE HEAD INCOME FROM OTHER SOURCES, AND NOT UNDER THE HEAD B USINESS INCOME. THE RECEIPTS OF THE ASSESSEE ALSO INCLUDED LONG TERM AND SHORT TERM CAPITAL GAIN WHICH WAS EITHER EXEMPT OR CHARGEABLE UNDER THE HEAD CAPITAL GAINS. THE BUSINESS INCOME OF TH E ASSESSEE, WHICH IS ASSESSABLE UNDER THE HEAD INCOME FROM BUS INESS WAS INTEREST OF RS. 66,370/-, AND COMMISSION AND BROKE RAGE OF RS. 224/- . THEREFORE, THE LD. CIT(A) OBSERVED THAT THESE BUS INESS RECEIPTS ( THAT IS, RS. 66,370/- AND RS. 224/-), ARE MUCH LESS THAN MONETARY LIMIT OF RS. 40 LAKHS, THEREFORE, THE PROVISION OF SECTION 44AB OF THE ACT TO GET THE ACCOUNTS AUDITED IS NOT APPLICABLE T O THE ASSESSEE. BECAUSE IN THE INSTANT CASE, THE ASSESSEE GROSS REC EIPTS UNDER THE HEAD BUSINESS OR PROFESSIONS WERE BELOW RS. 40 LAK HS. THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO GET ITS ACCOUNT AU DITED IN TERMS OF SECTION 44AB OF THE INCOME-TAX ACT, 1961 AND CONSEQ UENTLY, THE PROVISION OF SECTION 271B WAS NOT ATTRACTED IN ITS CASE. THEREFORE, THE LD. CIT(A) OBSERVED THAT IT IS NOT A FIT CASE F OR LEVYING PENALTY U/S 271B OF THE INCOME-TAX ACT AND DELETE THE ADDITION ACCORDINGLY. 4. NOW THE REVENUE IS AN APPEAL BEFORE US AND OBJEC TED THAT THE ASSESSEE IS LIABLE TO GET ITS ACCOUNTS AUDITED U/S 44AB BECAUSE THE GROSS RECEIPTS OF THE ASSESSEE IS AT RS.50,82,504/- WHICH IS MORE THAN RS. 40,00,000/-. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD AND WE NOTICE THAT IN THE ASSES SEES CASE UNDER CONSIDERATION THE BUSINESS RECEIPTS ARE BELOW RS. 4 0,00,000/-.THE BUSINESS INCOME OF THE ASSESSEE, WHICH IS ASSESSABL E UNDER THE HEAD INCOME FROM BUSINESS WAS INTEREST OF RS. 66, 370/-, AND ITA NO.1623/14 JALAN INTERCONTINENTAL. 4 COMMISSION AND BROKERAGE OF RS. 224/-, WHICH IS BEL OW RS. 40,00,000/-, THEREFORE, THE TAX AUDIT PROVISIONS AR E NOT APPLICABLE TO THE ASSESSEE. THAT IS, THE ASSESSEE IS NOT REQUIRED TO GET ITS ACCOUNT AUDITED U/S 44AB AND HENCE, NOT LIABLE FOR PENALTY U/S 271B OF THE ACT. ACCORDINGLY, WE DELETE THE PENALTY U/S 271B OF THE ACT. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07/ 07/2017. SD/- (A.T. VARKEY) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 07/ 07/2017 SB , SR.PS. / COPY OF THE ORDER FORWARDED TO : SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, I.T.A.T., KOLKATA BENCHES, KOLKATA 1. / THE ASSESSEE- ITO, WD-8(4), KOLKATA 2. / THE RESPONDENT.- M/S JALAN INTERCONTINENTAL HOTEL 3. ( ( ) / THE CIT(A), KOLKATA. 4. ( / CIT 5. )* +, , ,# , / DR, ITAT, KOLKATA 6. + -. / GUARD FILE. ) //TRUE COPY// BY ORDER