Deputy Commissioner of Income Tax Circle-6(1)(1), Bangalore V. M/s Silver Software Pvt Ltd, Bangalore

ITA 2293/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0736 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESWARI S
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO S . 2292 & 2293 /BANG/201 8 ASSESSMENT YEAR : 20 1 3 - 1 4 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6 (1) (1), BANGALORE. VS. M/S. SILVER SOFTWARE PVT. LTD., NO. 23 & 24, EPIP 1 ST PHASE, KIADB, WHITEFIELD, BANGALORE 560 066. PAN: AADCS6245H APPELLANT RESPONDENT APPELLANT BY : SHRI R.N. SIDDAPPAJI, ADDL. CIT (DR) RESPONDENT BY : SMT. RAJESWARI .S, CA DATE OF HEARING : 2 9 . 11 .2018 DATE OF PRONOUNCEMENT : 30. 11 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE REVENUE FOR THE SAME ASSESSMENT YEAR. OUT OF THESE TWO APPEALS, ONE APPEAL IS ARISING IN COURSE OF ASSESSMENT PROCEEDINGS COMPLETED BY THE AO ON 30.03.2016 U/S. 143(3) OF IT ACT AND THE SECOND APPEAL IS ARISING IN COURSE OF PENALTY PROCE EDINGS U/S. 271(1)(C) OF IT ACT. THESE TWO APPEALS ARE DIRECTED AGAINST TWO SE PARATE ORDERS OF LD. CIT(A)- 6, BANGALORE BOTH DATED 13.03.2018. BOTH THESE APP EALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE LD. DR OF REVENUE SUPPORTED THE ASSESSMENT O RDER AND THE PENALTY ORDER WHEREAS THE LD. AR OF ASSESSEE SUPPORTED THESE TWO ORDERS OF LD. CIT (A). HE ALSO SUBMITTED THAT THE ISSUE IN QUANTUM APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 2010-11 AND 2011-12 IN ITA NOS. 16 42 & 1643/BANG/2014 DATED 29.05.2015. HE SUBMITTED A COPY OF THIS TRIB UNAL ORDER AND DRAWN OUR ATTENTION TO PARA NO. 6.4.11 OF THIS TRIBUNAL ORDER AND POINTED OUT THAT IN THIS PARA, IT WAS HELD BY THE TRIBUNAL THAT IN THE FACTS OF PRESENT CASE, THE RENTAL ITA NOS. 2292 & 2293/BANG/2018 PAGE 2 OF 3 INCOME RECEIVED BY THE ASSESSEE FROM LEASING OUT OF BUILDING PROPERTIES WOULD FALL UNDER THE HEAD INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY AS HELD BY THE AUTHORITIES BELOW AND AFTE R HOLDING THIS, THE APPEAL OF THE ASSESSEE IN THESE TWO YEARS ARE ALLOWED BY THE TRIBUNAL. THEREAFTER, HE SUBMITTED THAT IN THE PRESENT YEAR ALSO, THE ONLY D ISPUTE IN QUANTUM APPEAL IS THIS THAT WHETHER THE RENTAL INCOME RECEIVED BY THE ASSESSEE ON LEASING OUT THE SAME BUILDING PROPERTY IS TAXABLE AS INCOME FROM B USINESS AS DECLARED BY THE ASSESSEE OR AS INCOME FROM HOUSE PROPERTY AS ASSE SSED BY THE AO. HE SUBMITTED THAT THE FACTS ARE IDENTICAL IN THE PRESE NT YEAR AND THEREFORE, IN QUANTUM APPEAL, THE ADDITION MADE BY THE AO IN THE PRESENT YEAR IS LIABLE TO BE DELETED BY FOLLOWING THIS TRIBUNAL ORDER FOR ASSESS MENT YEARS 2010-11 AND 2011-12 IN ASSESSEES OWN CASE AND ONCE, THE QUANTU M ADDITION IS DELETED, THE PENALTY CANNOT SURVIVE. AT THIS JUNCTURE, THE BENCH MADE A SPECIFIC QUERY FROM THE LD. DR OF REVENUE AS TO WHETHER THERE IS A NY DIFFERENCE IN FACTS IN THE PRESENT YEAR AND IN REPLY, LD. DR OF REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARA NO. 6.4.11 FROM THE TRIBUNAL ORDER IN ASSESSEES OWN CA SE FOR EARLIER TWO YEARS I.E. ASSESSMENT YEARS 2010-11 AND 2011-12. THIS PARA RE ADS AS UNDER. 6.4.11 WHAT EMERGES FROM THE ABOVE DISCUSSION FROM PARA 6.1 TO 6.4.10 OF THIS ORDER (SUPRA), IS THAT THE QUESTION OF WHETHER THE RENTAL INCOME DERIVED BY THE ASSESSEE FROM LETTING OUT OF PROPERTY IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY IS ESSENTIA LLY TO BE DECIDED ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF EACH PARTICULAR CASE. THE SCHEME OF THE INCOME TAX ACT, 1961 CONTAINS 6 H EADS OF INCOME UNDER WHICH INCOME CAN BE CATEGORIZED / CLASSIFIED. THESE HEADS OF INCOME ARE, IN A SENSE, EXCLUSIVE OF ONE ANOTHER AN D THE INCOME WHICH FALLS UNDER ONE HEAD CANNOT BE ASSIGNED TO OR TAXED UNDER ANOTHER HEAD. THEREFORE, THE DECIDING FACTOR IS NOT THE OWN ERSHIP OF THE LAND OR THE LEASES THEREOF, BUT THE NATURE OF THE ACTIVI TY OF THE ASSESSEE AND THE NATURE OF THE OPERATIONS IN RELATION TO THEM. I N THE CASE ON HAND, CONSIDERING THE NATURE OF THE ASSESSEE'S DEALINGS W ITH THE PROPERTY, APART FROM LETTING THEM OUT AND THE MANNER AND EXTE NT OF ITS ACTIVITIES, INTER ALIA, LIKE PROVIDING OF WARD AND WATCH, SECUR ITY, MAINTENANCE OF COMMON AREA AND LIGHTING THEREOF, FIRE SAFETY, SUPP LY OF WATER, PROVIDING LIFTS, INSTALLATION OF ELECTRICTRANSFORME RS, GENERATORS, WATER TANKS, ETC. AND AS LISTED OUT AT PARAS 6.4.1 AND 6. 4.2 OF THIS ORDER (SUPRA); GO TO CLEARLY ESTABLISH THAT THE ENTIRE AC TIVITY IS CONDUCTED IN AN ORGANIZED MANNER TO EARN PROFITS OUT OF THE INVE STMENT MADE BY THE ITA NOS. 2292 & 2293/BANG/2018 PAGE 3 OF 3 ASSESSEE AS A COMMERCIAL VENTURE. WE ARE THEREFORE OF THE CONSIDERED OPINION THAT THE OPERATIONS OF THE ASSESSEE IN EARN ING THE RENTAL INCOME RECEIVED FROM LEASING OUT OF THE BUILDING PR OPERTIES WOULD FALL UNDER THE HEAD INCOME FROM BUSINESS AND NOT INCO ME FROM HOUSE PROPERTY AS HELD BY THE AUTHORITIES BELOW AND CONS EQUENTLY ALLOW THE ASSESSEE'S APPEAL. 4. SINCE NO DIFFERENCE IN FACTS COULD BE POINTED OU T BY LD. DR OF REVENUE IN THE PRESENT YEAR, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR AND THEREFORE, BY RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) IN QUANTUM PROCEEDINGS AND AS A CONSEQUENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) IN PENALTY BECA USE ALSO BECAUSE ONCE THE QUANTUM ADDITION STANDS DELETED, PENALTY IMPOSED BY THE AO U/S. 271(1)(C) CANNOT SURVIVE. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 30 TH NOVEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.