Parner Taluka Sahakari Sakhar Karkhana Ltd., Ahmednagar V. Assistant oint Commissioner of Income-tax,

ITA 186/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7228 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Assessee Lawyers: S N DOSHI; P P BAFNA
• Keywords: Business income; Depreciation
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 86 /P U N/201 5 / ASSESSMENT YEAR : 20 11 - 12 PARNER TALUKA SAHAKARI SAKHAR KARKHANA LTD., A/P DEVIBHOVERE, TAL PARNER, AHMEDNAGAR 414307 . / APPELLANT PAN: AAAAP0849B VS. THE ASST . COMMISSIONER OF INCOME TA X, AHMEDNAGAR CIRCLE, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : S /S HRI S.N. DOSHI AND P.P. BAFNA / RESPONDENT BY : SHRI ANIL CHAWARE / DATE OF HEARING : 12 . 0 1 .201 7 / DATE OF PRONOUNCEMENT: 20 . 0 1 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - I , PUNE, DATED 30 . 0 9 .20 1 4 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA NO. 186 /PN/20 1 5 PARNER TALUKA SSK LTD. 2 1 ) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN UPHOLDING THE VIEW TAKEN BY THE ASSESSING OFFICER THAT THE LEASE C HARGES RECEIVED ON LEASING THE SUGAR FACTORY ALONG WITH ENTIRE INFRASTRUCTURE NAMELY PLANT, MACHINERY, CANE YARD, ETC. AS INCOME FROM OTHER SOURCES OVERLOOKING THE ESTABLISHED LEGAL POSITION THAT THE LEASE CHARGES IN THE GIVEN CIRCUMSTANCES CONSTITUTE THE BUSINESS INCOME. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE TO THE ABOVE GROUND THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE EXPENDITURE OF THE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT AS THE ENTIRE EXPENSES HAVE DIREC T NEXUS TO THE LEASE CHARGES RECEIVED ALTHOUGH ASSESSED AS INCOME FROM OTHER SOURCES AND ALLOWABLE AS DEDUCTION U/S. 57 OF THE I.T. ACT, 1961 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE CLAIM OF UNABSORBED BUSINESS LOSSES OF THE EARLIER YEARS. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT BOTH THE ISSUES RAISED IN THE PRESENT APPEAL ARE COVERED BY THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSME NT YEAR 2010 - 11. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING NIL INCOME. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD NOT CARRIED ANY ACTIVITY EXCEPT TO HAVE RECEIVED BANK INTEREST, BANK DIVIDEND AND O THER INCOME AND INTEREST ON FACTORY RENT. THERE WERE NO SALES AND PURCHASES CONDUCTED BY THE ASSESSEE DURING THE YEAR. THE ASSESSEE HAD RECEIVED RENTAL INCOME OF RS. 3,11,87,000/ - BY LEASING THE FACTORY AS A WHOLE. THE SAID INCOME WAS SHOWN BY THE ASSESS EE AS OTHER RECEIPTS IN THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY THE SAME SHOULD NOT BE TREATED AS INCOME FROM HOUSE PROPERTY OR AS INCOME FROM OTHER SOURCES AS NO BUSINESS ACTIVITIES WERE UNDERTAKEN BY THE A SSESSEE. THE CONTENTION OF ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT THE SAID POSITION OF ASSESSING BUSINESS INCOME WAS ACCEPTED IN ASSESSMENT YEARS 2007 - 08, ITA NO. 186 /PN/20 1 5 PARNER TALUKA SSK LTD. 3 2008 - 09 AND 2009 - 10, WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND RENTAL INCOME WAS TREATED AS INCOME FROM OTHER SOURCES UNDER SECTION 56 OF THE ACT. THE VARIOUS EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT WERE ALSO DISALLOWED EXCEPT THE AMOUNT OF RS.6 LAKHS ALLOWED ON ADHOC BASIS TOWARDS ADMINISTRATIVE AND OTHER LEGAL EXPENSES. FURTHER, DEPRE CIATION OF RS. 78,63,324/ - WAS ALLOWED UNDER SECTION 57 OF THE ACT. 5. THE CIT(A) UPHELD BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE IS IN APPEAL. 6. THE FIRST ISSUE RAISED BY THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.1 I S AGAINST ASSESSABILITY OF LEASE CHARGES RECEIVED FROM LEASING THE FACTORY ALONG WITH INFRASTRUCTURE AND PLANT & MACHINERY, ETC. WE FIND THAT SIMILAR ISSUE OF ASSESSABILITY OF RENTAL INCOME IN THE HANDS OF ASSESSEE AROSE BEFORE THE TRIBUNAL IN ITA NO.2026 /PN/2013 , RELATING TO ASSESSMENT YEAR 2010 - 11 AND VIDE ORDER DATED 29.06.2016, THE TRIBUNAL HELD THAT RENTAL INCOME IS TO BE ASSESSED AS BUSINESS INCOME. THE FINDINGS OF TRIBUNAL ARE IN PARAS 6 TO 10 AND THE ISSUE BEFORE THE TRIBUNAL IN PRESENT APPEAL I S COVERED BY THE RATIO LAID DOWN BY THE TRIBUNAL IN EARLIER YEARS IN THE CASE OF ASSESSEE ITSELF AND FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT RENTAL INCOME IS TO BE ASSESSED AS INCOME FROM BUSINESS IN THE HANDS OF ASSESSEE. THE GROUND OF APP EAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 7. THE SECOND ISSUE RAISED BY THE ASSESSEE IS AGAINST NON - ALLOWANCE OF EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT EXCEPT DEPRECIATION AND ADHOC EXPENDITURE OF RS.5 LAKHS. SIMILAR PLEA WAS RAISED IN EARLIE R YEARS ALSO, ITA NO. 186 /PN/20 1 5 PARNER TALUKA SSK LTD. 4 WHEREIN THE TRIBUNAL HAS REMITTED THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION TO SUBSTANTIATE ACTIVITIES CARRIED OUT AND THE EXPENDITURE IN RESPECT THEREOF. FOLLOWING THE SAME PARITY OF REASONING AND AS DIRECTED IN PARA 11 OF THE ORDER OF TRIBUNAL, WE REMIT THIS ISSUE ALSO BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL DECIDE THE SAME IN LINE WITH DIRECTIONS OF TRIBUNAL IN EARLIER YEARS. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED FOR STATISTICAL PURPOSES. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA) (ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 20 TH JANUARY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , PUNE ; 4. / THE CIT - I, PUNE ; 5. , , / DR A , IT AT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // ASSISTANT REGISTRAR