ITO, Kota V. URBAN IMPROVEMENT TRUST, Kota

ITA 199/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99355 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 01-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALIKA SINGH
• Assessee Lawyers: RAGHAV BAJAJ ADV DHK
• Keywords: Business income; Revenue expenditure
• Section: 12A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 199/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR 2004-05 INCOME TAX OFFICER, WARD 1(2), KOTA. CUKE VS. URBAN IMPROVEMENT TRUST, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAALU 0110 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KALIKA SINGH (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAGHAV BAJAJ (ADV) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/09/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 09/10/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. IN THIS CASE, THIS BENCH HAD DECIDED THE REVENUES APPEAL VIDE ORDER DATED 28/11/2014 FOR A.Y. 2004-05 IN CONSOLID ATED ORDER WITH ITA NO. 198/JP/2012. IN A.Y. 2004-05 FOLLOWING GROUNDS H AS BEEN RAISED BY THE REVENUE. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS:- ITA NO. 199/JP/2012 ITO VS. URBAN IMPROVEMENT TRUST, KOTA 2 (I) ERRED IN TREATING THE INCOME OF RS. 22.96 LAKHS AS INCOME FROM BUSINESS AGAINST INCOME FROM HOUSE PROPERTY AS ASSESSED BY THE AO. (II) IGNORED THE FACT THAT AFTER THE AMENDMENT OF S ECTION 10(20) AND OMISSION OF SECTION 10(20A) OF THE I.T. ACT, 1961 W.E.F. 1-4-2003, URBAN IMPROVEMENT TRUST IS NOT COVERED UNDER THE DEFINITION OF LOCAL AUTHO RITY. (III) GIVEN RELIEF OF RS. 522.94 LAKHS BY TREATING THE SAME AS REVENUE EXPENDITURE WITHOUT ANY BASIS AND HAS ALSO IGNORED THE FACT THAT THE HON'BLE ITAT JAIPUR BENCH , IN THIS CASE HAS DIRECTED THAT THE STATUS O F THE ASSESSEE CANNOT BE CONSIDERED AS AUTHORITY FOR ALLOWING EXEMPTION U/S 10(20) OF THE ACT. 2. GROUND NO. 2 AND 3 OF THE REVENUES APPEAL HAS B EEN CONSIDERED BY THIS BENCH BUT GROUND NO. 1 HAS LEFT TO BE ADJUD ICATED BY THIS BENCH IN ORDER DATED 28/11/2014. THE REVENUE FILED M.A. NO . 29/JP/2015, WHICH HAS BEEN FINALIZED ON 12/6/2015. THE GROUND NO . 1 I.E. THE CIT(A) HAS ERRED IN TREATING THE INCOME OF RS. 22.96 LACS AS INCOME FROM BUSINESS AGAINST THE INCOME FROM HOUSE PROPERTY AS ASSESSED BY THE LD ASSESSING OFFICER. AFTER CONSIDERING BOTH THE SIDES ARGUMENT AGAINST THE MA PETITION FILED BY THE REVENUE, THE ORDER OF THIS BENCH DATED 28/11/2014 HAS BEEN RECALLED TO THAT EXTENT. THE CAS E HAS BEEN REFIXED AND HEARD IN LENGTH FROM BOTH THE SIDES. ITA NO. 199/JP/2012 ITO VS. URBAN IMPROVEMENT TRUST, KOTA 3 2.1 THE LD AR HAS SUBMITTED THAT THE ASSESSEE IS AN URBAN IMPROVEMENT TRUST AND ASSESSED TO TAX AS ARTIFICIAL JURIDICAL PERSON. THE LD ASSESSING OFFICER OBSERVED THAT DURING THE YEAR, THE ASSESSEE HAS EARNED INCOME FROM HOUSE PROPERTY I.E. INCOME FROM RENT RECEIPT FROM COMMUNITY CENTRE AMOUNTING TO RS. 22.96 LACS. THIS I NCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERT Y AND ACCORDINGLY AS PER SECTION 24 OF HOUSE PROPERTY OUT OF TOTAL RE CEIPTS A SUM EQUAL TO 30% OF THE ANNUAL VALUE IS DEDUCTIBLE. THEREFORE, TH E LD ASSESSING OFFICER ALLOWED DEDUCTION U/S 24 @ 30% AND HE ASSESSE D THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. THE ASSESSEE CHALLENGED THIS ISSUE BEFORE THE LD CIT(A), WHO HAD ALLOWED THE APPEAL BY OBSERVING THAT THE RECEIPT FRO M COMMUNITY CENTRES CANNOT BE EQUATED WITH INCOME FROM HOUSE PRO PERTY ON THE GROUND THAT COMMUNITY CENTRES WERE GIVEN ON RENT FOR FEW DAYS FOR MARRIAGE CEREMONY ETC. AND THE RELATIONSHIP BETWEEN ASSESSEE AND THE PERSON TAKING COMMUNITY CENTRE ON RENT WAS NOT OF TE NANT AND LANDLORD. RELATIONSHIP WAS CONTRACTUAL IN NATURE. INCOME FROM COMMUNITY CENTRES CAN BE COMPARED WITH INCOME FROM HOTELS OR MARRIAGE HALL OR BANQUETTE HALLS. THE ASSESSEE WAS INCURRING VARIOUS EXPENSES LI KE SALARY, ELECTRICITY, MAINTENANCE ETC.. THEREFORE, IT WAS HELD BY THE LD CIT(A) THAT ITA NO. 199/JP/2012 ITO VS. URBAN IMPROVEMENT TRUST, KOTA 4 ACTIVITIES OF THE ASSESSEE WAS BUSINESS IN NATURE AN D HE DIRECTED THE A.O. TO TREAT THESE RECEIPTS AS BUSINESS INCOME. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. HOWEVER, THE LD AR FOR THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD CIT(A) AND ARGUED THAT URBAN IMPROVEMENT TRUST IS A LOCAL AUTHO RITY OF THE RAJASTHAN GOVERNMENT AND ALSO GRANTED REGISTRATION U/S 12A BY THE LD CIT, KOTA. THE NATURE OF THE RECEIPTS AS MENTIONED BY THE LD CIT(A) WAS THAT THE ASSESSEE GOT THE RENTAL INCOME FROM COMMUN ITY CENTRES, WHICH WERE ALLOWED TO BE USED FOR SOME TIME ON CONTRACTUAL BASIS. THERE IS NO RELATIONSHIP BETWEEN ASSESSEE AS LANDLORD AND USER O F THE PREMISES AS TENANT. THEREFORE, THE ASSESSEE HAS DISCLOSED THESE RECEIPTS UNDER THE HEAD BUSINESS INCOME. THUS, HE PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THESE RECEIPTS IN PAST ALSO HAS ACCEPTED AS BUSINESS INCOME. NOTHING CHANGE HAS BEEN BROUGHT OUT ON RECORD BY THE ASSESSING OFFICER. THERE IS NO AGRE EMENT BETWEEN ASSESSEE AND THE USER OF THE PREMISES. THESE FACILIT IES WERE ALLOWED TO BE USED FOR SHORT PERIOD, THEREFORE, WE UPHOLD THE O RDER OF THE LD ITA NO. 199/JP/2012 ITO VS. URBAN IMPROVEMENT TRUST, KOTA 5 CIT(A). ACCORDINGLY, WE DISMISS THE REVENUES APPEAL ON THIS GROUND ONLY. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 09/10/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 TH OCTOBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, WARD 1(2), KOTA. 2. IZR;FKHZ @ THE RESPONDENT- URBAN IMPROVEMENT TRUST, KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 199/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR