ROCKCASTLE PROPERTY P LTD, MUMBAI V. PR CIT 5, MUMBAI

ITA 2183/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1313 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 09-04-2018
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2183/M/2018 ASSESSMENT YEAR: 2013-14 M/S. ROCKCASTLE PROPERTY PVT. LTD., 3 RD FLOOR, SUNAMA HOUSE, OPP. SHALIMAR HOTEL, KEMPS CORNER, MUMBAI 400 036 PAN: AABCR 9466M VS. THE PR. CIT-5, MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : MS. NEHA JAIN, A.R. REVENUE BY : MS. SUNITA BILLA, D.R. DATE OF HEARING : 06.11.2018 DATE OF PRONOUNCEMENT : 28.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.02.2018 OF THE PR. COMMI SSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2013-14. 2. THE ONLY EFFECTIVE ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. PR. CIT(A) PASSED UNDER SECTION 26 3 BY TREATING THE SOCIETY CHARGES AS INCOME OF THE ASSESSEE WITHO UT APPRECIATING THE FACT THAT ASSESSEE HAS ALREADY RED UCED THE REIMBURSEMENT FROM SOCIETY CHARGES PAID. ITA NO.2183/M/2018 M/S. ROCKCASTLE PROPERTY PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED R ETURN OF INCOME ON 28.09.2013 BY DECLARING A LOSS OF RS.19,3 6,763/-. THE ASSESSMENT UNDER SECTION 143(3) WAS FRAMED ON 1 8.02.2016 BY ASSESSING THE TOTAL INCOME AT RS.45,16,650/-. D URING THE YEAR, THE COMPANY HAS RECEIVED RENTAL INCOME OF RS. 19,36,763/- FROM M/S. WIN MEDICARE PVT. LTD. AND FROM M/S. MODI MUNDI PHARMA PVT. LTD. WHICH INCLUDED SOCIETY MAINTENANCE CHARGES OF RS.2,23,272/-. ACCORDING TO THE LD. PR. CIT(A) THE RENTAL + SOCIETY MAINTENANCE CHARGES SHOULD HAVE BEEN THE GR OSS RECEIPT WHICH WORKED OUT TO RS.93,65,952/-. HOWEVER, THE A SSESSEE DECLARED ONLY RS.91,42,680/- BY EXCLUDING THE SOCIE TY MAINTENANCE CHARGES OF RS.2,23,272/- WHILE COMPUTIN G HOUSE PROPERTY INCOME AND THUS THE MAINTENANCE CHARGES OF RS.2,23,272/- WAS NOT BROUGHT TO TAX. THE LD. PR. CIT(A) ISSUED NOTICE UNDER SECTION 263 DATED 08.02.18 GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD ON THE ISSUE. HOWEVER, NO ONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICAT ION FOR ADJOURNMENT WAS FILED AND THE LD. PR. CIT(A) PASSED THE ORDER EX-PARTE BY SETTING ASIDE THE ASSESSMENT FRAMED UND ER SECTION 143(3) OF THE ACT ON THE GROUND THAT ORDER PASSED U NDER SECTION 143(3) IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THUS THE SAID ORDER WAS SET ASIDE BY DI RECTING THE AO TO PASS FRESH ASSESSMENT ORDER AFTER MAKING NECE SSARY ENQUIRIES ON THE ISSUE AFTER AFFORDING AN OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. 4. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE ISSUE IN QUESTION IS THAT THE ISSUE OF SOCIETY MAINTENANC E CHARGES WAS DULY RAISED BY THE AO DURING THE COURSE OF ASSESSME NT PROCEEDINGS WHICH WAS DULY AND SPECIFICALLY REPLIED BY WAY OF ITA NO.2183/M/2018 M/S. ROCKCASTLE PROPERTY PVT. LTD. 3 WRITTEN SUBMISSION DATED 05.04.2018 IN PARA 5 WHERE IN THE ASSESSEE HAS SUBMITTED AND REPLIED IN RESPONSE TO A QUERY BY THE AO IN RESPECT OF SOCIETY MAINTENANCE CHARGES. THE LD. A.R. SUBMITTED THAT ONCE THE ISSUE IS RAISED BY WAY OF Q UERY BY THE AO AND RESPONDED BY THE ASSESSEE THEN A PRESUMPTION HAS TO BE DRAWN THAT THE ORDER IS PASSED BY THE AO ONLY AFTER EXAMINING THE REPLY OF THE ASSESSEE AND THERE IS NO NON APPLI CATION OF MIND ON THE PART OF THE AO. THE LD AR ARGUED THAT THERE FORE THE REVISIONARY JURISDICTION EXERCISED BY THE LD. PR. C IT(A) IS BAD IN LAW AND SO IS THE CONSEQUENT ASSESSMENT ORDER. 5. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF LD. PR. CIT AND SUBMITTED THAT SINCE THE INCOME TO THE EXTENT OF RS.2,23,272/- HAS ESCAPED ASSESSMENT AND THEREFORE THE REVISIONARY JURISDICTION WAS RIGHTLY EXERCISED. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE FROM THE RECORD BEFORE US ESPECI ALLY THE REPLY DATED 04.04.2018 WHICH WAS FILED IN THE INCOME TAX DEPARTMENT ON 05.04.18 WHEREIN THE ASSESSEE HAS REPLIED AS UND ER: 5. THE DETAILS OF THE SOCIETY MAINTENANCE CHARGES ARE AS UNDER : (A) THE TOTAL SOCIETY MAINTENANCE CHARGES WAS RS. 4,73,412/ WHICH AS PER THE CLAUSE 12 (A) OF THE REGISTERED LEAVE AND LICENSE A GREEMENT IS TO BE PAID BY THE CLIENT. HOWEVER, THE CLIENT HAS ONLY PAID US AN AMO UNT OF RS. 2,23,272/- WHICH WE HAVE CLAIMED AS REIMBURSEMENT AND WE HAVE ONLY CLAI MED THE BALANCE AMOUNT OF RS.2,50,140/- AS DEDUCTION UNDER THE HEAD OF 'HOUSE PROPERTY' AS SOCIETY MAINTENANCE CHARGES. WE ARE ENCLOSING A CHART WHICH GIVES A BREAKUP OF THE TOTAL OF SOCIETY MAINTENANCE CHARGES AS ANNEXURE IV. (B) WE HAVE RECEIVED RS. 2,23,272/- TOWARDS REIMBUR SEMENT OF SOCIETY MAINTENANCE CHARGES FROM THE CLIENT. AS PER CLAUSE 12 (A] OF THE REGISTERED LEAVE AND LICENSE AGREEMENT SIGNED WITH THE CLIENT, THE S OCIETY CHARGES ARE TO BE BORNE AND PAID BY THE LICENSEE. HOWEVER, SINCE THE LICENS EE REFUSED TO PAY THE ENTIRE AMOUNT OF SOCIETY CHARGES, THE LICENSEE HAS PAID AN AMOUNT OF RS, 2,23,272/- TOWARDS REIMBURSEMENT OF SOCIETY CHARGES. ITA NO.2183/M/2018 M/S. ROCKCASTLE PROPERTY PVT. LTD. 4 (C) AS ASKED BY YOUR GOODSELF TO JUSTIFY OUR CLAIM REGARDING EXCLUDING SOCIETY MAINTENANCE CHARGES OF RS.2,23,272/- FROM RENTAL RE CEIPTS, WE WISH TO INFORM YOU THAT, SOCIETY MAINTENANCE CHARGES HAS BEEN PAID BY US AND THEREAFTER WE HAVE RAISED REIMBURSEMENT DEBIT NOTE AND ACCORDINGLY THE SAME HAS BEEN REIMBURSED BY THE CLIENT- SINCE THIS IS REIMBURSEMENT OF EXPENSES AND IT IS NOT A PART OF RENTAL INCOME, HENCE THE SAME HAS NOT BEEN TAKEN IN COMPUT ATION OF INCOME. WE ARE ENCLOSING A COPY OF THE DEBIT NOTES RAISED BY US FO R THIS AMOUNT OF RS. 2,23,272/- IN ANNEXURE-V . WE ALSO REQUEST YOU TO REFER TO CLAUSE 12 (A) OF THE REGISTERED LEAVE AND LICENSE AGREEMENT (COPY ENCLOSED 3S ANNEXURE-IV ). (D) WITHOUT PREJUDICE TO ABOVE IF THE SAID RECEIPT S IS TREATED AS INCOME, WE HAVE TO BE ALLOWED TO REVISE THE CLAIM OF SOCIETY M AINTENANCE CHARGES FROM RS.2,50,140/- TO RS. 4,73,412/- AS A DEDUCTION UNDE R THE HEAD ' HOUSE PROPERTY'. (EJ PLEASE ALSO NOTE THAT ISSUE OF SOCIETY MAINTENA NCE CHARGES WAS ALREADY DISCUSSED AT THE TIME OF ASSESSMENT PROCEEDINGS. 7. THUS IT IS APPARENT FROM THE ABOVE THAT THE ISSU E WHICH IS BEING RAKED UP BY THE LD. PR. CIT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE UNDER SECTION 263 OF THE ACT HAS BEEN EXAMINED BY THE AO BY RAISING A QUERY DURING T HE ASSESSMENT PROCEEDINGS WHICH WAS RESPONDED TO BY TH E ASSESSEE BY WAY FILING WRITTEN SUBMISSIONS AS REPRO DUCED ABOVE. THE CASE OF THE ASSESSEE IS ALSO SUPPORTED BY THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GA BRIEL INDIA LTD. 203 ITR 108 IN WHICH THE HONBLE BOMBAY HIGH C OURT HAS HELD THAT WHERE THE AO HAS RAISED THE QUERY DURING THE ASSESSMENT PROCEEDINGS AND WHICH WAS RESPONDED BY T HE ASSESSEE DULY THEN, IT HAS TO BE PRESUMED THAT CLAI M OF THE ASSESSEE IS ALLOWED BY THE AO AFTER HAVING SATISFIE D WITH THE EXPLANATION OF THE ASSESSEE. SIMILARLY, IN THE CAS E OF CIT VS. FINE JEWELLERY INDIA LTD. (2015) 372 ITR 303 (BOM.) THAT QUERY IS RAISED BY THE AO AND RESPONDED BY THE ASSESSEE, THE MERE FACT THAT IT IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO THE CONCLUSION THAT THERE IS NO APPLICATION OF M IND ON THE PART OF THE AO. WE, THEREFORE, RESPECTFULLY FOLLOWING TH E RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE DECISI ONS AS ITA NO.2183/M/2018 M/S. ROCKCASTLE PROPERTY PVT. LTD. 5 DISCUSSED HEREINABOVE, SET ASIDE THE REVISIONARY JU RISDICTION EXERCISED BY THE PR. CIT(A) UNDER SECTION 263 AND A LSO THE CONSEQUENT ORDER PASSED UNDER SECTION 263. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.11.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.