Alexandria Knowledge Park Private Limited, Hyderabad, Hyderabad V. DCIT, Circle-1(1), Hyderabad, Hyderabad

ITA 1668/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2526 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Business expenditure; Opportunity of being heard
• Section: 143(3)

Judgement Text

`IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1668/HYD/2016 ASSESSMENT YEAR: 2012-13 ALEXANDRIA KNOWLEDGE PARK PVT. LTD., HYDERABAD. PAN AAFCS 6041M VS. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 1(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI LAXMINIWAS SHARMA REVENUE BY : SMT. N. SWAPNA DATE OF HEARING : 29-09-2017 DATE OF PRONOUNCEMENT : 17-10-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 1, H YDERABAD, DATED 19-09-2016 FOR AY 2012-13. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME DECLARING A TOTAL LOSS OF RS. 3,72 ,50,895/- UNDER THE HEAD INCOME FROM BUSINESS AND CLAIMED A REFUND OF RS. 26,68,392/-. THE AO COMPLETED THE ASSESSMENT BY PASSING AN ORDER U/S 143(3) DETERMINING THE TOTAL INCOME OF RS. 2,02,90,509/-. THE AO ASSESSED THE INCOME TOWARDS RENT UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND RECEIPTS TOWARDS MAINTENANCE AND UTILITY SERVIC ES UNDER THE HEAD INCOME FROM OTHER SOURCES. WHILE PASSING THE ORDE R, AO ALLOWED EXPENDITURE ONLY TO THE EXTENT OF RS. 1,58,95,628/- AS AGAINST RS. 2,54,97,914/- INCURRED AND CLAIMED TOWARDS PROVIDIN G OF FACILITIES AS OPERATING EXPENSES. 2 ITA NO. 1668/H/16 ALEXANDRIA KNOWLEDGE PARK PVT. LTD. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A). 4. THE CIT(A) ALLOWED THE INCOME OF THE ASSESSEE TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2011 -12. HOWEVER, HE DID NOT ALLOW THE CLAIM OF EXPENDITURE OF RS. 96 ,02,286/- INCURRED TOWARDS FACILITIES MAINTENANCE OF RS. 43,07,420/- A ND MAN POWER CHARGES OF RS. 52,94,866/- BY HOLDING THAT NO FURTH ER DETAILS WERE SUBMITTED BEFORE HIM REGARDING THE SAME. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT (A) ERRED IN FACTS AND LAW WHILE PASSING ASSESSMENT ORDER U/S 143(3) OF INCOME TAX ACT 1961. 2. THE LEARNED CIT(A) ERRED IN NOT ALLOWING EXPENSE S TOWARDS FACILITIES MAINTENANCE AND MAN POWER AS DEDUCTION A MOUNTING TO RS.43,07,420 AND RS.52,94,866 RESPECTIVELY. 3. THE LEARNED CIT (A) ERRED IN DISMISSING THE GROU ND FOR NON SUBMISSION OF DETAILS RELATING TO EXPENDITURE CLAIM ED IGNORING THE FACT THAT THE ASSESSEE IS A COMPANY WHERE AUDIT UNDER COMPANIES ACT AS WELL INCOME TAX ACT HAS BEEN COMPL ETED AND ALL DOCUMENTS WERE SUBMITTED BEFORE ASSESSING OFFIC ER BUT THE SAID EXPENDITURE WAS DISALLOWED AS HE TREATED THE I NCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 4. FOR THESE & OTHER GROUND WHICH MAY BE RAISED DUR ING OR BEFORE THE APPEAL IS HEARD. IT IS PRAYED THAT THE R ELIEF BE GRANTED. 6. BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT PROVIDING FACILITY, UTILITY AND MAINTENANCE SERVICES IS INTEG RAL PART OF BUSINESS OF THE ASSESSEE AND AS THE MAIN INCOME I.E. RENTAL REC EIPTS ARE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS, THERE FORE INCOME FROM THE ACTIVITY FORMING INTEGRAL PART OF BUSINESS SHOULD ALSO BE CHARGEABLE UNDER THE HEAD INCOME FROM BUSINESS. HE FURTHER SUBMITTED THAT IN PROVIDING THE SERVICES TO ITS TEN ANTS, ASSESSEE HAS 3 ITA NO. 1668/H/16 ALEXANDRIA KNOWLEDGE PARK PVT. LTD. INCURRED VARIOUS EXPENDITURES, NAMELY, CONTRACT CHA RGES FOR PEST CONTROL, JANITORIAL SERVICES, MAINTENANCE, SECURITY AND SAFETY SYSTEMS, PLUMBING ETC. HE SUBMITTED THAT ALL THESE EXPENDITU RES ARE GROUPED UNDER THE HEAD FACILITY MAINTENANCE AND MAN POWER C HARGES UNDER THE MAIN HEAD OF FACILITIES AND OPERATING EXPENSES. TO THIS EFFECT, HE REFERRED TO THE LEDGER EXTRACT PLACED IN THE PAPER BOOK. HE CONTENDED THAT THE LEARNED CIT(A) IGNORED THAT THE ASSESSEE I S A COMPANY AND AUDIT UNDER COMPANIES ACT AND INCOME TAX ACT IS CON DUCTED AND ALL THE DOCUMENTS IN THIS REGARDS WERE SUBMITTED TO AO. HE, THEREFORE, SUBMITTED THAT THESE EXPENSES ARE INCURRED FOR THE PURPOSE OF BUSINESS AND HENCE ALLOWABLE. 6.1 FURTHER, HE SUBMITTED THAT THERE WAS NO SUCH D ISALLOWANCE IN EARLIER YEARS. HE SUBMITTED THAT THE ISSUE WAS WHET HER THE INCOME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY OR INC OME FROM BUSINESS, HON'BLE ITAT DISMISSED THE REVENUE'S APP EAL FOR THE A.Y 2011-12 AND INCOME WAS ASSESSED AS INCOME FROM BUSI NESS. ONCE THE INCOME IS ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS' THESE EXPENSES ARE ALLOWABLE. HE, THEREFORE, PRAYED THAT THE EXPENDITURE CLAIMED BY THE APPELLANT BE ALLOWED. 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. WHEN THE CIT(A) CATEGORICALLY HELD THAT THE INCOME OF THE ASSESSEE IS TO BE ASSESSED UNDER THE HEAD INCOME F ROM BUSINESS, THE CORRESPONDING EXPENDITURE INCURRED IN RELATION TO RUNNING OF BUSINESS ALSO CAN BE ALLOWED. IN THE GIVEN CASE, TH E BUSINESS OF THE ASSESSEE IS DEVELOPING BIOTECH PARKS AND TO PROVIDE INFRASTRUCTURE FACILITIES TO SUCH CLIENTS. THE RELATED EXPENSES IN SUCH BUSINESS ARE ALLOWABLE EXPENSES UNDER THE HEAD INCOME FROM BUSI NESS. LD. CIT(A) HAS DISALLOWED THE EXPENSES BY OBSERVING THA T NO FURTHER 4 ITA NO. 1668/H/16 ALEXANDRIA KNOWLEDGE PARK PVT. LTD. DETAILS WERE SUBMITTED BEFORE HIM REGARDING THE SAM E. WE FURTHER NOTE THAT IN EARLIER ASSESSMENT, THE SAME EXPENSES WERE ALLOWED AS BUSINESS EXPENDITURE. SINCE THE NATURE OF BUSINESS HAS NOT CHANGED DURING THIS AY, WE ARE INCLINED TO ALLOW THE SAME E XPENSES AS RELATING TO RUNNING OF THE BUSINESS. SINCE, THE AO HAS NOT V ERIFIED THE ABOVE EXPENDITURE CONSIDERING THE INCOME OF THE ASSESSEE AS INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES, WE FI ND IT APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE AO TO VERIFY THE ABOVE EXPENSES AND IN CASE IT IS IN LINE OF THE BUSINESS OF THE AS SESSEE, IT MAY BE ALLOWED AND NEEDLESS TO SAY ASSESSEE MAY BE GIVEN P ROPER OPPORTUNITY OF BEING HEARD. ACCORDINGLY, GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER, 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 17 TH OCTOBER, 2017. KV COPY TO:- 1) M/S ALEXANDRIA KNOWLEDGE PARK PVT. LTD., D.NO. 6 -3-569, 4 TH FLOOR, OPP. RTA OFFICE, ABOVE BMW SHOWROOM, KHAIRATABA D, HYD. 2) DCIT, CIRCLE 1(1), HYDERABAD. 3) CIT(A) 1, HYDERABAD 4 PR. CIT 1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 5 ITA NO. 1668/H/16 ALEXANDRIA KNOWLEDGE PARK PVT. LTD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER