M/s M.S.Luvish Infoway Projects (P) Limited, Mumbai V. Asst.Commissioner of Income Tax, Circle-16(2), Hyderabad

ITA 1941/Hyd/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8847 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Keywords: Business income; Depreciation; Opportunity of being heard; Reasonable cause; Set aside
• Section: 142(1); 143(1)

Judgement Text

IN T HE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1941 /HYD/201 7 ASSESSMENT YEAR: 20 09 - 1 0 M/S M.S. LUVISH INFOWAY PROJECTS (P) LTD., MUMBAI PAN A ABCL0755F VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 16(2), HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI PRATEEK JAIN REVENUE BY : S MT. AMISHA S. GUPT. DATE OF HEARING : 0 4 / 0 7 /201 9 DATE OF PRONOUNCEMENT : 10 / 0 7 / 201 9 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) 4 , DATED 2 8 / 09 /201 7 , HYDERABAD FOR AY 20 09 - 10 . 2. BRIEF FACTS OF THE CASE ARE, ASSESSEE ENGAGED IN THE ACTIVITY OF LEASING OUT OF PROPERTY FILED IT S RETURN OF INCOME FOR THE AY 2009 - 10 ON 28/09/2009 DECLARING INCOME OF RS. NIL , WHICH WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT) ON 11/12/2010. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S 143 (2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE, AGAINST WHICH, THE LD. AR OF THE ASSESSEE SUBMITTED THE INFORMATION AS CALLED FOR. 2.1 IN THIS CASE, ASSESSEE IS DERIVING INCOME FROM LEASE OF PREMISES, IT HOLDS COMMERCIAL PREMISES BY NAM E AND STYLE OF AO MONTE IT PARK SITUATED AT KHARADI IN PUNE. THE COMPANY LET OUT THE SAME ALONG WITH AMENITIES FOR COMMERCIAL PURPOSES. ASSESSEE 2 ITA NO. 1941 /HYD/1 7 M/S MS LUVISH INFOWAY PROJECTS (P) LTD., MUMBAI ADMITTED THE INCOME FROM LEASE UNDER THE HEAD INCOME FROM BUSINESS AND CLAIMED DEPRECIATION AND OTHER EXPENSE S. IN THE OPINION OF THE AO, IT SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN THIS REGARD, ASSESSEE WAS ASKED TO SUBSTANTIATE THE SAME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AO BROUGHT THIS INCOME UNDER THE HEAD INCOME F ROM HOUSE PROPERTY RELYING ON VARIOUS JUDICIAL PRECEDENTS, MAINLY, IN THE CASE OF CIT VS. CHENNAI PROPERTIES & INVESTMENTS LTD., [2004] 266 ITR 685 (MAD.) AND ACCORDINGLY CONFIRMED RENTAL INCOME RECEIVED BY THE ASSESSEE OF RS. 16,46,638/ - TREATING THE SAM E AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). SINCE NONE APPEARED BEFORE THE CIT(A) ON BEHALF OF THE ASSESSEE, THE CIT(A) DISMISSED THE APPEAL. 4. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, APPELLANT WAS PREVENTED BY REASONABLE CAUSE IN NOT ATTENDING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A) - 4, HYDERABAD, AND THUS THE EX - PARTE ORDER PASSED BY THE LD. CIT(A) DESERVES TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW, LD. CIT(A) - 4, HYDERABAD ERRED IN DISMISSING APPELLANT'S CASE IN LIMINE & WITHOUT CONSIDERING THE MERIT OF THE CASE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - 4, HYDERABAD GROSSLY ERRED IN CONFIRMIN G ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3). 4 . THAT THE LD. ASSESSING OFFICER ERRED IN TREATING THE RENTAL INCOME OF RS 16,46,638/ - AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME. 5. THAT THE LD. ASSESSING OFFICER ERRED IN DENYING THE CLAIM OF DEPRECIATION AND OTHER EXPENSES WHILE CALCULA TING TOTAL INCOME. 3 ITA NO. 1941 /HYD/1 7 M/S MS LUVISH INFOWAY PROJECTS (P) LTD., MUMBAI 6. THAT THE LD. ASSESSING OFFICER ERRED IN TREATING MAINTENANCE CHARGES RECEIVED OF RS. 1,31,820/ - AND OTHER INCOME OF RS.28,428/ - AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME. 7. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTE R, TO DELETE FROM OR SUBSTANTIATE THE ABOVE GROUND OF APPEAL. 5. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED THE FACTS OF THE CASE AND SUBMITTED THAT AS PER THE OBJECT CLAUSE IN THE MOA I.E. THE NATURE OF BUSINESS, TO PURCHASE, ACQUIRE, TAKE ON LEASE OR IN EXCHANGE OR IN NAY OTHER LAWFUL MANNER ANY AREA, LAND, BUILDINGS, STRUCTURE AND TURN THE SAME INTO ACCOUNT, DEVELOP THE SAME AND DISPOSE OF OR MAINTAIN THE SAME AND TO BUILD HI - TECH PARKS, SOFTWARE DEVELOPMENTS ZONES, SOFTWARE TECHNOLOGY PARKS, PORTS , BIO - TECH PARKS, INDUSTRIAL ESTATES, INDUSTRIAL PARKS, TOWNSHIPS, MARKETS OR OTHER BUILDINGS, RESIDENTIAL AND COMMERCIAL OR CONVENIENCES, DRAINAGE FACILITY ELECTRIC, TELEPHONIC, TELEVISION INSTALLATIONS AND TO DEAL WITH THE SAME IN A MANNER WHATSOEVER AND BY ADVANCING MONEY TO AND ENTERING INTO CONTRACTS AND ARRANGEMENTS OF ALL KINDS WITH BUILDERS, TENANTS AND OTHERS. TO CONSTRUCT, ERECT, BUILD, LET OUT, REPAIR, RE - MODEL, DEMOLISH, DEVELOP, IMPROVE, GRADES, CURVE, PAVE, MACADAMIZE, CEMENT AND MAINTAIN BUIL DINGS, STRUCTURE, HI - TECH PARKS, HOUSES, APARTMENTS & HOSPITALS. 5.2 IN THIS REGARD, H E RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD., [2015] 373 ITR 673 AND RAYA LA CORPORATION VS. ACIT, [2016] 72 TAXMANN.COM 149. AS PER THE ABOVE DECISION, HE SUBMITTED THAT THE ASSESSEES LEASE RENT CAN BE CHARGED TO TAX UNDER THE HEAD INCOME FROM BUSINESS. FURTHER, HE RELIED ON THE DECISION IN ASSESSEES O W N CASE FROM THE ITAT, MUMBAI. FURTHER, HE SUBMITTED THAT IN AY 2014 - 15, AO HAS ACCEPTED THE CONTENTION OF THE ASSESSEE AND TAXED THE 4 ITA NO. 1941 /HYD/1 7 M/S MS LUVISH INFOWAY PROJECTS (P) LTD., MUMBAI SAME AS INCOME FROM BUSINESS. IN SUPPORT OF THIS, HE FILED THE ASSESSMENT ORDER. FURTHER, HE SUBMITTED THAT AS PER THE CBDT S CIRCULAR NO. 16/2017, DATED 25/04/2017, RENTAL INCOME EARNED FROM LETTING OUT OF BUILDINGS ON DEVELOPED SPACE IN INDUSTRIAL PARK/SEZ TO BE TREATED AS BUSINESS INCOME. SINCE NONE APPEARED BEFORE THE LD. CIT(A), FACTS IN THE PRESENT CASE MAY BE VERIFIED B Y THE AO AND ACCORDINGLY, HE REQUESTED THAT THIS CASE MAY BE REMITTED BACK TO THE FILE OF AO TO APPRECIATE THE FACTS ON RECORD. 6. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT ASSESSEE HAS LEASED OUT THE PROPERTY IN PUNE AND THE LET OUT THE PROPERTY ALONG WITH THE AMENITIES FOR COMMERCIAL PURPOSES. AS BROUGHT ON RECORD BY THE AO IN 2014 - 15 THAT THE OBJECT CLAUSE IN MOU CONSISTS THAT ASSESSEE CAN LEASE OUT THE PROPERTY FOR COMMERCIAL PURPOSES AND THE BUSINESS OF THE ASSESSEE TO LET OUT THE PROPERTY IS SIMILAR TO THE FACTS IN THE CASE OF CHENNAI PROPERTIES (SUPRA), WHEREIN THE HONBLE SUPREME COU RT HELD AS UNDER: IN THIS CASE, LETTING OF THE PROPERTIES IS IN FACT IS THE BUSINESS OF THE ASSESSEE. THE ASSESSEE THEREFORE, RIGHTLY DISCLOSED THE INCOME UNDER THE HEAD INCOME FROM BUSINESS. IT CANNOT BE TREATED AS 'INCOME FROM THE HOUSE PROPERTY'. FURTHER, THE DEPARTMENT HAS ASSESSED THIS INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION IN THE SUBSEQUENT AYS. SINCE THE ASSESSEE HAS NOT MADE ANY REPRESENTATION BEFORE THE CIT(A) AND ALSO ASSESSEES BUSINESS IS SHIFTED TO MUMBAI, WE REMIT TH IS ISSUE BACK TO THE FILE OF AO TO VERIFY THE FACTS IN THE LINE OF JUDICIAL PRECEDENTS AFTER GIVING PROPERTY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 ITA NO. 1941 /HYD/1 7 M/S MS LUVISH INFOWAY PROJECTS (P) LTD., MUMBAI 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNC ED IN THE OPEN COURT ON 10 TH JULY , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 10 TH JULY , 201 9 KV C OPY TO: - 1) M/S MS LUVISH INFOWAY PROJECTS (P) LTD., SANI ARMAA, RAUT LANE, NEAR ISKCON TEMPLE, JUHU, VILE PARLE (WEST), MUMBAI. 2) ITO 10(2)(4), R.NO. 213, 2 ND FLOOR, AYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 021. 3) CIT(A) 4 HYDERABAD. 4) PR. CIT - 4 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE