ITO Ward 1, Tirunelveli V. Aryaman, Tirunelveli

ITA 1735/CHNY/2017

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7951 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S NATARAJA
• Keywords: Presumptive income; Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.1734 & 1735/CHNY/2017 /ASSESSMENT YEARS: 2011-12 & 2012-13 THE INCOME TAX OFFICER, WARD-1, TIRUNELVELI. VS. M/S.ARYAMAN, 17/2, THILAK NAGAR, MADURAI ROAD, TIRUNELVELI-627 001. [PAN: AATFA 0709 R] ( ' /APPELLANT) ( ()' /RESPONDENT) CROSS-OBJECTION NOS.129 & 130/CHNY/2017 /ASSESSMENT YEARS: 2011-12 & 2012-13 M/S.ARYAMAN, 17/2, THILAK NAGAR, MADURAI ROAD, TIRUNELVELI-627 001. [PAN: AATFA 0709 R] VS. THE INCOME TAX OFFICER, WARD-1, TIRUNELVELI. ( ' /APPELLANT) ( ()' /RESPONDENT) ASSESSEE BY : MR.Y.SRIDHAR, CA DEPARTMENT BY : MR.S.NATARAJA, JCIT + /DATE OF HEARING : 14.02.2018 + / DATE OF PRONOUNCEMENT : 14.02.2018 ITA NOS.1734 & 1735/CHNY/2017 CO NOS.129 & 130/CHNY/2017 :- 2 -: / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.1734/CHNY/2017 IS AN APPEAL FILED BY THE RE VENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3 , MADURAI, IN ITA NO.220/2016-17 DATED 17.04.2017 FOR THE AY 2011-12 & ITA NO.1735/CHNY/2017 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3, MADURAI, IN ITA NO.218/2016-17 DATED 17.04.2017 FOR THE AY 2012-13. CO NO.129/MDS/2017 IS A CROSS-OBJECTION FILED BY THE A SSESSEE IN ITA NO.1734/CHNY/2017 FOR THE AY 2011-12 & CO NO.130/MD S/2017 IS A CROSS-OBJECTION FILED BY THE ASSESSEE IN ITA NO.173 5/CHNY/2017 FOR THE AY 2012-13. 2. SHRI S.NATARAJA, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND SHRI Y.SRIDHAR, CA, REPRESENTED ON BEHALF OF THE AS SESSEE. 3. AS ALL THE APPEALS ARE RELATED TO THE SAME ASSES SEE AND INTER- CONNECTED, ALL APPEALS ARE DISPOSED OFF BY THIS COM MON ORDER. 4. IT WAS SUBMITTED BY THE LD.DR THAT THERE WAS A S URVEY ON THE PREMISES OF THE ASSESSEE ON 18.02.2013. IN THE COU RSE OF THE SURVEY, CERTAIN STATEMENTS WERE RECORDED WHEREIN DECLARATIO NS WERE GIVEN IN RESPECT OF THE COST OF CONSTRUCTION OF THE ASSESSEE S HOTEL. WHEN FILING THE RETURN, THE ASSESSEE HAD DISCLOSED ONLY RS.15,542/- AS HIS TOTAL INCOME BY ITA NOS.1734 & 1735/CHNY/2017 CO NOS.129 & 130/CHNY/2017 :- 3 -: APPLYING PROVISIONS OF SEC.44AD OF THE ACT. CONSEQ UENTLY, THE AO HAS COMPLETED THE ASSESSMENT ON AN INCOME OF RS.39,28,3 20/- BY HOLDING THAT THE ASSESSEE IS NOT MAINTAINED ITS BOOKS OF ACCOUNT S AND THE ASSESSEE HAD DISCLOSED INCOME UNDER THE HEAD BUSINESS, WHEREAS, THE INCOME OF THE ASSESSEE WAS LIABLE TO BE ASSESSED ONLY UNDER THE H EAD INCOME FROM HOUSE PROPERTY. IT WAS A SUBMISSION THAT IN THE CO URSE OF THE SURVEY, A NOTEBOOK CONTAINING A SLIP IN THE NAME OF ARYAMAN 22.06.2010 TO 30.04.2011 RS.62,34,615/-, WAS FOUND. THE AO FR OM THE SAID NOTEBOOK DETERMINED THE TOTAL COLLECTIONS FOR THE R ELEVANT AY 2011-12 AT RS.56,11,881/- AND FOR THE AY 2012-13 AT RS.56,11,1 53/- AND BROUGHT THE SAME TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPER TY. IT WAS A SUBMISSION THAT ON APPEAL, THE LD.CIT(A) HAD DELETE D THE ADDITION AND HELD THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS DOING BUSINESS OF SERVICE APARTMENTS AND CONSEQUENTLY, THE TOTAL RECE IPTS WAS LESS THAN RS.60.00 LAKHS, THE ASSESSEE WAS ENTITLED TO THE BE NEFIT OF SEC.44AD. IT WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WA S LIABLE TO BE REVERSED. 5. IN REPLY, THE LD.AR VEHEMENTLY SUPPORTED THE ORD ER OF THE LD.CIT(A). IT WAS A SUBMISSION THAT THE BUSINESS P REMISES OF THE ASSESSEE WHERE THE SERVICE APARTMENTS WERE BEING OP ERATED UNDER THE NAME ARYAMAN WAS A LEASED PREMISES AND CONSEQUENT LY, THE INCOME GENERATED FROM THERE, COULD NOT BE CONSIDERED AS IN COME UNDER THE HEAD HOUSE PROPERTY IN SO FAR AS THE ASSESSEE WAS NOT TH E OWNER OF THE ITA NOS.1734 & 1735/CHNY/2017 CO NOS.129 & 130/CHNY/2017 :- 4 -: PROPERTY, WHO WAS ENTITLED TO RECEIVE THE INCOME FR OM THE PROPERTY ON HIS OWN RIGHT. IT WAS A SUBMISSION THAT THE TURNOVER O F THE ASSESSEE BEING LESS THAN RS.60.00 LAKHS, THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF SEC.44AD OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 7. A PERUSAL OF THE ASSESSMENT ORDER FOR THE AY 201 1-12 IN PAGE NO.2 CLEARLY SHOWS THAT THE PREMISES, IS A RENTAL PREMIS ES AND THE RENTAL AGREEMENT HAS BEEN EXECUTED ON 02.11.2010. ONCE, T HE FACT THAT THE PREMISES OF THE ASSESSEE IS ACCEPTED AS A RENTED PR EMISES, THEN THE INCOME GENERATED BY THE ASSESSEE BY EXPLOITATION OF THE SAID LEASED PREMISES, WOULD HAVE TO BE CONSIDERED AS INCOME UND ER THE HEAD BUSINESS. THIS IS, BECAUSE, AS PER THE PROVISIONS OF SEC.22 OF IT ACT, THE WORDS USED ARE OF WHICH THE ASSESSEE IS THE OWNER . THE ASSESSEE ADMITTEDLY, IS NOT THE OWNER OF THE PREMISES AND IS ONLY LESSOR OF THE PREMISES. FURTHER, ONCE THE ASSESSEES INCOME FROM THE OPERATION OF THE SERVICE APARTMENTS FROM THE LEASED PREMISES, IS ACC EPTED TO BE ASSESSED UNDER THE HEAD BUSINESS, THEN THE NEXT QUESTION IS AS TO WHETHER THE ASSESSEES TOTAL TURNOVER EXCEEDS RS.60.00 LAKHS OR NOT. IN THE PRESENT CASE, AS PER THE TOTAL INCOME DETERMINED BY THE AO ON THE BASIS OF THE EVIDENCES FOUND IN THE COURSE OF THE SURVEY, CLEARL Y SHOWS THAT THE TOTAL INCOME IS LESS THAN RS.60.00 LAKHS. ONCE, THE TUR NOVER IS BELOW RS.60.00 LAKHS, THEN THE PROVISIONS OF SEC.44AD IS VERY MUCH APPLICABLE TO THE ITA NOS.1734 & 1735/CHNY/2017 CO NOS.129 & 130/CHNY/2017 :- 5 -: ASSESSEE IN SO FAR AS THE PRESUMPTIVE TAXATION WHIC H IS BROUGHT INTO THE STATUTE BOOK W.E.F. AY 2011-12 BY THE FINANCE ACT, 2009 CLEARLY PERMITS THE SCHEME TO BE APPLICABLE TO PARTNERSHIP FIRMS EX CLUDING LIMITED LIABILITY PARTNERSHIP FIRM AND THE SCHEME ALSO EXEM PTS, THE ASSESSEE OPTING FOR THE PRESUMPTIVE TAXATION SCHEME FROM MAI NTENANCE OF THE BOOKS OF ACCOUNTS AS REQUIRED U/S.44AA OF THE ACT. THIS ADMITTEDLY, HAS ALSO BEEN SPECIFICALLY RECORDED BY THE AO IN PAGE N O.3 OF HIS ASSESSMENT ORDER. IN THE PRESENT CASE, ADMITTEDLY, THE PREMIS ES, FROM WHICH, THE ASSESSEES BUSINESS IS BEING OPERATED, IS A LEASED PREMISES AND ITS TURNOVER IS LESS THAN RS.60.00 LAKHS. CONSEQUENTLY , THE INCOME OF THE ASSESSEE IS LIABLE TO BE ASSESSED ONLY UNDER THE HE AD BUSINESS INCOME AND THE ASSESSEE IS ENTITLED TO THE PRESUMPTIVE RATE OF TAXATION U/S.44AD OF THE ACT. A PERUSAL OF THE ORDER OF THE LD.CIT(A) C LEARLY SHOWS THAT HE HAS CONSIDERED THESE FACTS WHEN ADJUDICATING THE APPEAL OF THE ASSESSEE. THE REVENUE HAS NOT BEEN ABLE TO DISLODGE ANY OF THESE FINDINGS AND IN FACT, THE RECORDS IN THE ASSESSMENT ORDER ONLY SUPPORT TH E FINDINGS ARRIVED AT BY THE LD.CIT(A). THIS BEING SO, WE FIND NO ERROR IN THE ORDER OF THE LD.CIT(A) WHICH CALLS FOR ANY INTERFERENCE. CONSEQ UENTLY, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. CROSS-OBJECTION NOS.129 & 130/CHNY/2017 FOR THE AYS 2011-12 & 2012-13: 8. AT THE TIME OF HEARING, THE LD.AR DID NOT WISH T O PRESS THE CROSS- OBJECTIONS FILED BY THE ASSESSEE IN ITA NOS.1734 & 1735/CHNY/2017, ITA NOS.1734 & 1735/CHNY/2017 CO NOS.129 & 130/CHNY/2017 :- 6 -: CONSEQUENTLY, THE CROSS-OBJECTIONS FILED BY THE ASS ESSEE ARE DISMISSED AS NOT PRESSED. 9. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS.1734 & 1735/CHNY/2017 ARE DISMISSED AND THE CROSS-OBJECTIO NS FILED BY THE ASSESSEE IN CO NOS.129 & 130/CHNY/2017 ARE DISMISSE D ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 14, 2018, AT CHENNAI. SD/- SD/- ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 0 /DATED: FEBRUARY 14, 2018. TLN + (12 32 /COPY TO: 1. ' /APPELLANT 4. 4 /CIT 2. ()' /RESPONDENT 5. 2 ( /DR 3. 4 ( ) /CIT(A) 6. /GF