NAYAN BUILDERS AND DEVELOPERS P. LTD, MUMBAI V. ITO 7(1)(1), MUMBAI

ITA 23/MUM/2011

• Counselvise Citation: 2319914 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-02-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 03-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HASHIM K MODI
• Assessee Lawyers: SANJEEV M SHAH
• Keywords: Sale consideration of property below Jantri Value; Business income; Business expenditure
• Section: 234B; 37(1); 144

Judgement Text

, CH CHCH CH INCOME TAX APPELLATE TRIBUNAL MUMBAI - B BENCH MUMBAI . . , / ! ! ! ! , BEFORE S/SH.B.R.MITTAL,JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 23/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR 2002-03 NAYAN BUILDERS AND DEVELOPERS PVT. LTD., 36 FANCY CHAMBERS, 94, SURAT STREET, MUMBAI-400009 VS. ITO 7(1)(1), AAYAKAR BHAVAN, 6 TH FLOOR, 621 M.K.MARG, MUMBAI-400020 PAN: AAACN1198H ( $% / APPELLANT ) ( &'$% / RESPONDENT) /. ITA NO. 24/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR 2003-04 NAYAN BUILDERS AND DEVELOPERS PVT. LTD., 36 FANCY CHAMBERS, 94, SURAT STREET, MUMBAI-400009 VS. ITO 7(1)(1), AAYAKAR BHAVAN, 6 TH FLOOR, 621 M.K.MARG, MUMBAI-400020 PAN: AAACN1198H ( $% / APPELLANT ) ( &'$% / RESPONDENT) /. ITA NO. 22/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR 2004-05 NAYAN BUILDERS AND DEVELOPERS PVT. LTD., 36 FANCY CHAMBERS, 94, SURAT STREET, MUMBAI-400009 VS. ITO 7(1)(1), AAYAKAR BHAVAN, 6 TH FLOOR, 621 M.K.MARG, MUMBAI-400020 PAN: AAACN1198H ( $% / APPELLANT ) ( &'$% / RESPONDENT) $% $% $% $% ( (( ( ) ) ) ) / ASSESSEE BY : SHRI SANJEEV M. SHAH &'$% ( ) / REVENUE BY : SHRI HASHIM K. MODI ' ' ' ' ( (( ( *+ *+ *+ *+ / DATE OF HEARING : 11 . 02 .201 4 ,-# ( *+ / DATE OF PRONOUNCEMENT : 12.03 .201 4 ' ' ' ' , 1961 ( (( ( 254 )1( *.* *.* *.* *.* / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER OF THE CIT(A)-13,MUMBAI,ASSES SEE-COMPANY HAS FILED APPEALS FOR THREE AYS.I.E.2002-03,2003-04 AND 2004-05. ITA/23/MUM/2011-AY.2002-03: ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL FOR THE AY.2002-03 (1)THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) [CIT(A)] ERRED IN CONFIRMING THE ASSESSMENT OF THE RECEIPTS RS.796701.60/-FROM MANDV I BANK AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME OFFERED BY THE APPELLANT. (2)THE LEARNED CIT(A) FURTHER ERRED IN THIS CONNECT ION IN IMPLIEDLY DISALLOWING EXPENSES RS.796701.60/-CLAIMED BY THE APPELLANT AS DEDUCTIBL E FOR EARNING THE AFORESAID RECEIPTS. (3).THE LEARNED CIT(A) ERRED IN AFFIRMING THE DISAL LOWANCE OF INTEREST OF RS.419453/ AND SECURED LOAN RS.321894.14 RESPECTIVELY AND HENCE IN CONCLUD ING THAT IT IS NEITHER ALLOWABLE UNDER SECTION 36(1)(II)OR 22. 2 ITA NOS. 23, 24 & 22/MUM/2011 NAYAN BUILDERS AND DE VELOPERS P. LTD. (4)THE LEARNED CIT(A) FURTHER ERRED IN THIS CONNECT ION IN HOLDING THAT THE LOAN RS. 321894.14 HAS NOT BEEN UTILISED BY THE APPELLANT FOR ITS CONSTRUC TION ACTIVITIES. (5)THE LEARNED AO ERRED IN LEVYING INTEREST UNDER S ECTION 234B AND 234C. (6)THE APPELLANT CRAVES LEAVE TO ADD TO AND/OR AMEN D AND/OR DELETE AND/OR MODIFY AND/OR ALTER THE AFORESAID GROUNDS OF APPEAL AS AND WHEN THE OCC ASION DEMANDS. (7).ALL THE AFORESAID GROUNDS OF APPEAL ARE INDEPEN DENT IN THE ALTERNATIVE & WITHOUT PREJUDICE TO ONE ANOTHER. ITA/24/MUM/2011-AY.2003-04 GROUNDS OF APPEAL READ AS UNDER FOR THE YEAR UNDER APPEAL: (1)THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) [CIT(A)] ERRED IN CONFIRMING THE ASSESSMENT OF THE RECEIPTS RS.635220/-FROM MANDVI B ANK AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME OFFERED BY THE APPELLANT. (2)THE LEARNED CIT(A) FURTHER ERRED IN THIS CONNECT ION IN IMPLIEDLY DISALLOWING EXPENSES RS.7,42,088.50CLAIMED BY THE APPELLANT AS DEDUCTIBL E FOR EARNING THE AFORESAID RECEIPTS. (3).THE LEARNED CIT(A) ERRED IN AFFIRMING THE DISAL LOWANCE OF INTEREST ON LOAN 5,09,450/- (5,04,188+5262)AND SECURED LOAN RS.29,64,360/- RES PECTIVELY AND HENCE IN CONCLUDING THAT IT IS NEITHER ALLOWABLE UNDER SECTION 36(1)(II)OR 22. (4)THE LEARNED CIT(A) FURTHER ERRED IN THIS CONNECT ION IN HOLDING THAT THE LOAN RS.29,64,360/- HAS NOT BEEN UTILIZED BY THE APPELLANT FOR ITS CONSTRUC TION ACTIVITIES. (5)THE LEARNED AO ERRED IN LEVYING INTEREST UNDER S ECTION 234B AND 234C. (6)THE APPELLANT CRAVES LEAVE TO ADD TO AND/OR AMEN D AND/OR DELETE AND/OR MODIFY AND/OR ALTER THE AFORESAID GROUNDS OF APPEAL AS AND WHEN THE OCC ASION DEMANDS. (7).ALL THE AFORESAID GROUNDS OF APPEAL ARE INDEPEN DENT IN THE ALTERNATIVE & WITHOUT PREJUDICE TO ONE ANOTHER. ITA/22/MUM/2011-AY.2004-05 FOLLOWING ARE THE GROUNDS FOR AY.2004-05 (1)THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) [CIT(A)] ERRED IN CONFIRMING THE ASSESSMENT OF THE RECEIPTS RS.745200/FROM MANDVI BA NK AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME OFFERED BY THE APPELLANT. (2)THE LEARNED CIT(A) FURTHER ERRED IN THIS CONNECT ION IN IMPLIEDLY DISALLOWING EXPENSES RS.482727(RS.31482 +RS.451245)CLAIMED BY THE APPELL ANT AS DEDUCTIBLE FOR EARNING THE AFORESAID RECEIPTS. (3).THE LEARNED CIT(A) ERRED IN AFFIRMING THE DISAL LOWANCE OF INTEREST ON UNSECURED LOAN RS.31842/- AND SECURED LOAN RS.4,57,245/- RESPECTIV ELY AND HENCE IN CONCLUDING THAT IT IS NEITHER ALLOWABLE UNDER SECTION 36(1)(II)OR 22. (4)THE LEARNED CIT(A) FURTHER ERRED IN THIS CONNECT ION IN HOLDING THAT THE LOAN RS.35,64,000/ HAS NOT BEEN UTILIZED BY THE APPELLANT FOR ITS CONSTRUC TION ACTIVITIES. (5)THE LEARNED AO ERRED IN LEVYING INTEREST UNDER S ECTION 234B AND 234C. (6)THE APPELLANT CRAVES LEAVE TO ADD TO AND/OR AMEN D AND/OR DELETE AND/OR MODIFY AND/OR ALTER THE AFORESAID GROUNDS OF APPEAL AS AND WHEN THE OCC ASION DEMANDS. (7).ALL THE AFORESAID GROUNDS OF APPEAL ARE INDEPEN DENT IN THE ALTERNATIVE & WITHOUT PREJUDICE TO ONE ANOTHER. ASSESSEE IS A BUILDER AND DEVELOPER OF COMMERCIAL P REMISES.DETAILS OF DATES OF FILING OF RETURNS,INCOMES RETURNED,DATES OF ASSESSMENT,ASSESS ED INCOMES,DATES OF ORDERS OF THE CIT(A)CAN BE SUMMARISED AS UNDER : DT.OF FILING OF RETURN RETURNED INCOME (RS.) DATE OF ASSESSMENT ASSESSED INCOME DT. OF ORDERS OF CIT(A) 2002-03 30.10.2002 87,672/- 14.12.2007 6,12,720/- 10.08.2010 2003-04 01.12.2003 68,760/- 14.12.2007 4,62,250/- 10.08.2010 2004-05 14.06.2005 79,100/- 31.07.2006 5,23,780/- 10.08.2010 3 ITA NOS. 23, 24 & 22/MUM/2011 NAYAN BUILDERS AND DE VELOPERS P. LTD. ITA/23/MUM/2011-AY.2002-03: 2. FIRST GROUND OF APPEAL IS ABOUT THE ASSESSMENT OF T HE RECEIPTS RS.7,96,710/-FROM MANDVI BANK AS INCOME FROM HOUSE PROPERTY AS AGAINST BUSINESS I NCOME OFFERED BY THE ASSESSEE.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT DURING THE YEA R UNDER APPEAL ASSESSEE HAD CONSTRUCTED A BUILDING CONSISTING OF SEVERAL COMMERCIAL AND INDUS TRIAL UNITS AT SHREE GANESH INDUSTRIAL HOUSE, GHATLA VILLAGE, CHEMBUR, MUMBAI COMPRISING 67 UNITS ,OUT OF WHICH 9 UNITS REMAINED UNSOLD AS ON 31.02.2002. AO FOUND THAT OUT OF THE UNSOLD NINE UNITS SIX UNITS WERE LOCATED IN THE BASEMENT AND ONE EACH ON THE GROUND,FIRST AND SECOND FLOOR R ESPECTIVELY WHICH WERE REFLECTED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AS STOCK IN TRADE ,THAT THE ASSESSEE HAD CREDITED TO PROFIT & LOSS ACCOUNT INCOMES UNDER THE HEADS GODOWN-RENT AND MAINTENANCE-RECEIPTS,THAT AGAINST THE SAID INCOME THE ASSESSEE HAD DEBITED A NUMBER OF EXPENSE S AND HAS ARRIVED AT PROFIT OF RS.5,38,940/-, THAT PROFIT DECLARED BY IT WAS SET-OFF AGAINST THE BROUGHT-FORWARD BUSINESS LOSSES OF EARLIER YEARS AND NET INCOME OF RS.87,672/- WAS DECLARED IN THE R ETURN FILED.AO FURTHER FOUND THAT THE ASSESSEE HAD DECLARED THE AFORESAID INCOME,OF RS.87,672/-,AS BUSINESS INCOME.HE FURTHER HELD THAT THE TREATMENT OF THE GODOWN RENT AS BUSINESS INCOME WAS INCORRECT,THAT THE AFORESAID INCOME HAD TO BE TREATED AS INCOME FROM HOUSE PROPERTY. 2.1. AS THE AO WAS OF THE OPINION,THAT THE RENTAL INCOME OF RS.7,96,710/- COULD NOT BE ASSESSED AS BUSINESS INCOME,SO,VIDE HIS OFFICE LETTER DATED 19. 10.2007,HE DIRECTED THE ASSESSEE TO SHOW CAUSE AS TO WHY THIS RENTAL INCOME OF SHOULD NOT BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY.BUT,ASSESSEE DID NOT FILE ANY WRITTEN SUBM ISSIONS.CONSIDERING THE MATERIAL AVAILABLE WITH HIM,AO HELD THAT THE ASSESSEE WAS NOT ENGAGED IN TH E BUSINESS OF LETTING OUT OF PROPERTIES ON LEASE OR HIRE BASIS,THAT THE ASSESSEE-COMPANY WAS A BUILD ER AND DEVELOPER AND HAD LET OUT A GODOWN FROM ITS STOCK,THAT INCOME DERIVED FROM THE SAME HA D TO BE TREATED AS INCOME FROM HOUSE PROPERTY.RELYING UPON THE JUDGMENTS OF CHUGANDAS & CO.(55 ITR 17-SC),PREMCHAND JUTE MILLS LTD(164 ITR 288.CAL),M/S.SHAMBHU INVESTMENTS PVT LT D.(263ITR143-SC),HE HELD THAT INCOME OF THE INCOME OFFERED UNDER THE HEAD BUSINESS INCOME W AS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY.HE FURTHER HELD THAT THE ASSESSEE WAS ALSO RECEIVING INCOMES IN THE FORM OF SECURITY CHARGES & SERVICE CHARGES,THAT THE AFORESAID INCOME S WERE PART AND PARCEL OF THE MONTH -LY PAYMENTS TO THE ASSESSEE,THAT IN VIEW OF THE DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF M/S.SHAMBHU INVESTMENTS PVT LTD. (SUPRA) SECURITY C HARGES & SERVICE CHARGES RECEIVED BY THE ASSESSEE WERE TO BE TREATED AS INCOME FROM HOUSE PR OPERTY U/S. 22 OF THE ACT. 2.2. AFTER PERUSING THE PROFIT & LOSS ACCOUNT AND THE BA LANCE SHEET FILED BY THE ASSESSEE,AO HELD THAT THE ASSESSEE HAD NOT DEBITED ANY EXPENSE TO IT S CONSTRUCTION ACCOUNT EXCEPT THE AMOUNT OF INTEREST PAID THAT THE ASSESSEE HAD NOT CARRIED OUT ANY WORK DURING THE YEAR UNDER APPEAL,THAT THE CONSTRUCTION ACTIVITY CARRIED OUT BY IT WAS OVER. 2.3. NEXT GROUND OF APPEAL IS ABOUT DISALLOWANCE OF INTE REST AMOUNT.AO FOUND THAT THE ASSESSEE COMPANY HAD GIVEN THE GODOWN ON RENT TO M/S. MANDVI CO-OPERATIVE BANK(MCB)AND AGAINST THE SAME THE IT HAD RECEIVED RENTAL INCOME.AS PER THE A O,CLAUSE 2(A) OF THE AGREEMENT DATED 01. 07.2003 REVEALED THAT THE LICENEEE MCB HAD GIVEN A LOAN OF RS. 35,64,000/- BEARING INTEREST @ 11% TO THE ASSESSEE COMPANY.HE FURTHER FOUND THAT I NTEREST,AMOUNTING TO RS.4,19,453/- WAS DEBITED TO THE P & L A/C.BY THE ASSESSEE.HE HELD TH AT INSTEAD OF GIVING AN INTEREST FREE DEPOSIT, THE LICENCEE-MCB,HAD GIVEN AN INTEREST BEARING LOAN TO THE ASSESSEE COMPANY,THAT LOAN TAKEN BY THE ASESSEE COMPANY HAD NOT BEEN UTILIZED BY IT IN ITS CONSTRUCTION ACTIVITIES,THAT INTEREST OF RS. 4,19,453/- COULD NOT BE ALLOWED AS A DEDUCTION EITH ER U/S.36(1)(III) OR 24(B) OF THE ACT. 3. AGAINST THE ORDER PASSED BY THE AO U/S.144 OF THE A CT,ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).AFTER PERUSING THE L EAVE & LICENCE AGREEMENT,HE HELD THAT THE AGREEMENT WAS IN NATURE OF RENT OF LEASE AND NOT LI CENCE,THAT EVEN THOUGH THE WORDS LEAVE AND LICENCE WERE USED IN THE AGREEMENT, THAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE HAD DIRECT NEXUS TO THE HOUSE PROPERTY.HE RELIED UPON THE CASE S M/S. SHAMBU INVESTMENT(249ITR47),M/S. 4 ITA NOS. 23, 24 & 22/MUM/2011 NAYAN BUILDERS AND DE VELOPERS P. LTD. BHAKTAWAR CONSTRUCTION P.LTD.(162ITR452)EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST (42 ITR49),CHUGAMDAS & CO.(55 ITR 17).,S. G. MERCANTILE CORPN.(P) LTD(83ITR700),S.B (HOUSE & LAND)PVT.LTD(119ITR785)D. R. PUTTANA SONS (P)LTD.(1 62ITR 468),N. L.MEHTA CINEMA ENTER - PRISES (P) LTD.(208 ITR 975)AND HELD THAT THE OBJEC T OF ASSESSEE WAS NOT AT ALL RELEVANT TO DECIDE THE ISSUE BEFORE HIM AND THAT THE RENT RECEIVED BY IT WAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. 3.1. AS REGARDS TREATING MAINTENANCE CHARGES AS INCOME F ROM OTHER SOURCES,FAA HELD THAT THE AO WAS JUSTIFIED IN HOLDING THAT INCOME HAD NOT BEEN E ARNED BY THE ASSESSEE IN THE COURSE OF CARRYING ON ITS NORMAL BUSINESS,THAT THE INCOME IN QUESTION WAS TO BE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. 3.2. DELIBERATING UPON THE ISSUE OF DISALLOWANCE OF BUSI NESS EXPENSES AS WELL AS INTEREST ON LOAN,FAA HELD THAT THE ISSUES WERE INTER RELATED,TH AT THE ONLY SOURCE OF INCOME OF THE ASSESSEE CONSISTED OF MAINTENANCE CHARGES(RS.60,775/-)AND RE NT(RS.7.96 LAKHS),THAT THE INCOME FROM PROPERTY HAD BEEN TREATED AS INCOME FROM HOUSE PROP ERTY THE QUESTION OF ALLOWING THE BUSINESS EXPENSES DID NOT ARISE,THAT NO BUSINESS HAS BEEN CA RRIED OUT,THAT BUSINESS EXPENSES WERE NOT ALLOWABLE,THAT THERE WERE NO INDICATION OF ANY BUSI NESS REVIVAL,THAT NO MATERIAL HAD BEEN BROUGHT ON RECORD TO SHOW THAT ASSESSEE WANTED TO REVIVE TH E BUSINESS EXCEPT STATING THAT LITIGATIONS WERE PENDING. RELYING UPON THE CASES OF NARAYAN DAS [149 ITR339] AND S.P.V. BANK LTD[126 ITR 773],HE HELD THAT IN ORDER TO SUSTAIN A CLAIM FOR DEDUCTION ,BY WAY OF BUSINESS EXPENDITURE,THE EXPENDITURE MUST HAVE BEEN INCURRED FOR THE PURPOSE OF A BUSINESS WHICH WAS IN EXISTENCE IN THE YEAR OF ACCOUNT,THAT THERE WAS NO BUSINESS DURING T HE YEAR UNDER APPEAL,THAT QUESTION OF ALLOWABILITY OF EXPENSES WOULD NOT ARISE.,THAT NONE OF THE EXPENSES WERE ALLOWABLE U/S. 37(1) AS THE BUSINESS HAD CEASED TO EXIST. 3.4. AS REGARDS THE TO THE ALLOWABILITY OF INTEREST EXPE NSES,FAA HELD THAT AO HAD DISCUSSED THE ISSUE IN DETAILS,THAT INTEREST COULD NOT BE ALLOWED U/S.36(1)(III)OR 24(B)OF THE ACT,THAT AO WAS JUSTIFIED IN DISALLOWING THE CLAIM MADE,THAT LOAN T AKEN BY THE ASSESSEE WAS NOT UTILISED BY THE ASSESSEE FOR ITS BUSINESS, THAT LOAN WAS ALSO NOT U SED FOR ACQUISITION OF PROPERTY GIVEN ON RENT. FINALLY,HE DISMISSED THE APPEAL FILED BY THE ASSESS EE. ITA/24/MUM/2011-AY.2003-04: 4. FOR THE AY.2003-04,ASSESSE WAS ISSUED NOTICE U/S.14 7 OF THE ACT,BY THE AO AS HE WAS OF THE OPINION THAT INCOME HAD ESCAPED ASSESSMENT.AS PER T HE AO,THE ASSESSEE WAS GIVEN MORE THAN FIVE OPPORTUNITIES TO PRESENT ITS CASE,BUT IT DID NOT FU RNISH ANY DETAIL.AO FINALISED THE ASSESSMENT U/S. 144 OF THE ACT.HE HELD THAT INCOME OFFERED BY THE A SSESSEE UNDER THE HEAD BUSINESS INCOME WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY,THAT INTE REST PAID BY IT WAS NOT ALLOWABLE UNDER SECTION 24 OR 36 OF THE ACT,THAT OTHER INCOMES EARNED BY IT WAS TO BE ASSESSED UNDER THE HEAD INCOME OTHER SOURCES. IN THE APPELLATE PROCEEDINGS,FAA UPHELD THE ORDER O F THE AO,AS HE HAD DONE IN THE EARLIER YEAR. ITA/22/MUM/2011-AY.2004-05: 5. FOR THE YEAR UNDER APPEAL,FACTS AND CIRCUMSTANCES W ERE SAME AS OF EARLIER TWO AYS,EXCEPT THAT THE ASSESSMENT WAS NOT FRAMED U/S.144 OF THE ACT.AO HAD CONSIDERED THE SUBMISSIONS OF THE ASSESSEE,BUT HE ARRIVED AT THE SAME CONCLUSION AS T HAT OF EARLIER AYS.IN THE APPELLATE PROCEEDINGS ,FAA UPHELD THE ORDER OF THE AO. 6. BEFORE US,AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPING INDUSTRIAL ESTATES,THAT IT HAD SOLD I NDUSTRIAL GALAS,THAT OUT OF NONE UNSOLD GALAS ONE WAS LET OUT TO BANK,THAT IT HAD TAKEN A LOAN FROM T HE BANK AND INTEREST WAS PAID ACCORDINGLY, THAT INCOME EARNED BY THE ASSESSEE WAS RIGHTLY DISCLOSED AS INCOME FROM HOUSE BUSINESS IN THE RETURNS OF INCOME, THAT AO AND FAA HAD DISALLOWED THE INTER EST CLAIMED BY THE ASSESSEE, HE RELIED UPON THE CASES OF NEHA BUILDERS (296 ITR 661), LATE(SMT) NIRMALA SHAHU-ORDER DT.19.12. 2013 OF 5 ITA NOS. 23, 24 & 22/MUM/2011 NAYAN BUILDERS AND DE VELOPERS P. LTD. ALLAHABAD HIGH COURT,SMK SHARES & STOCK BROKING- OR DER DT. 24.11. 2010(ITA NO. 799/MUM/2009-AY-2005-06),NAISHADH VACHHARAJANI-ORDE R DATED 25.02.2011 (ITA NO.(L) 1042/ 2011 DT. 222.09.2011-BOMBAY HIGH COURT.HE ALTERNATI VELY SUBMITTED THAT IF INCOME WAS TO BE ASSESSED UNDER THE HEAD HOUSE PROPERTY EXPENSES,INC LUDING INTEREST PAID,SHOULD BE ALLOWED AS PER LAW.DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE O RDER OF THE FAA AND RELIED UPON THE CASE OF MANGLA HOMES PVT. LTD.(325 ITR 281)DELIVERED BY THE HONBLE HIGH COURT OF BOMBAY.IN THE REJOINDER,AR SUBMITTED THAT FACTS OF THE CASE OF MA NGLA HOMES PVT. LTD.(SUPRA) WERE DIFFERENT THAN THE FACTS OF THE CASE UNDER CONSIDERATION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMON AND INTERCONNECTED.FOR T HE AY.S2002-03 AND 2003-04 THE ASSESSMENT ORDERS WERE PASSED U/S.144 OF THE ACT.AFTER PERUSIN G THE ORDERS OF THE AOS/FAA FOR ALL THE THREE AY.S UNDER CONSIDERATION,WE ARE OF THE OPINION THAT THE ISSUE AS TO WHETHER THE RENTAL INCOME IS TO BE CONSIDERED UNDER THE HEAD INCOME FROM HOUSE PRO PERTY OR NOT HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS FOR THE FIRST AY I.E. AY 2002-03 .AS THE SAID DECISION FOR AY 2002-03 WILL HAVE CONSEQUENTIAL EFFECT IN THE SUBSEQUENT AY.S, THEREF ORE,IN THE INTEREST OF JUSTICE,WE CONSIDER IT PRUDENT THAT THE ISSUE MAY BE CONSIDERED AFRESH BY THE AO FOR ALL THE THREE AY.S ,AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER CO NSIDERING SUCH EVIDENCES AS MAY BE PLACED BEFORE HIM.WE MAY ADD,THAT IF THE ASSESSEE FAILS TO CO-OPERATE THE AO AND/OR DO NOT FURNISH THE REQUISITE DOCUMENTS AS MAY BE REQUIRED BY HIM,THE A O WILL BE AT LIBERTY TO DECIDE AND PASS THE FRESH ASSESSMENT ORDER AS PER LAW ON THE BASIS OF T HE PAPERS AVAILABLE BEFORE HIM BY A REASONED ORDER.HENCE,THE ORDERS OF THE FAA FOR ALL THE THREE AY.S UNDER CONSIDERATION ARE SET-ASIDE TO THE FILE OF THE AO. GROUNDS OF APPEAL TAKEN BY THE ASSE SSEE ARE ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT,APPEALS OF THE ASSESSEE FOR THE AYS 2 002-03 TO 2004-05 STAND ALLOWED FOR STATISTICAL PURPOSES. 0*1'2* 4 5 ( . *'6 #7(2002-03 2 004-05)( @ 5A( BC D6 E ( * FG. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH,2014 . / ( ,-# @ I' 12 EKPZ EKPZ EKPZ EKPZ , 201 4 - ( . J SD/- SD/- ( . . . B.R.MITTAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, I' /DATE: 12.03.2014. SK / / / / ( (( ( &*K &*K &*K &*K L K#* L K#* L K#* L K#* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT (A) / M N , 4. THE CONCERNED CIT / M N 5. DR B BENCH, ITAT, MUMBAI / KO. &*' CH CHCH CH , . . . 6. GUARD FILE/ . 0 'K* 'K* 'K* 'K* &* &*&* &* //TRUE COPY// /' / BY ORDER, B / F DY./ASST. REGISTRAR , /ITAT, MUMBAI