The DCITAnand Circle, Anand V. M/s. Agriculture Produce Market Committee, Anand

ITA 2303/AHD/2009

• Counselvise Citation: 230320514 RSA 2009
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR SRDR
• Keywords: Business income; Depreciation; Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.2303/AHD/2009 ASSESSMENT YEAR:2006-07 DY. COMMISSIONER OF INCOME-TAX, ANAND CIRCLE, ANAND V/S . M/S AGRICULTURE PRODUCE MARKET COMMITTEE, SARDARGUNJ, ANAND, PAN NO.AAAAT5823E (APPELLANT) .. (RESPONDENT) /BY APPELLANT SHRI RAHUL KUMAR, SR-DR /BY RESPONDENT SMT. ARTI N SHAH, AR /DATE OF HEARING 18-06-2012 /DATE OF PRONOUNCEMENT 09-08-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS PRESENT APPEAL OF THE REVENUE IS DIRECTED AGA INST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-IV, BARODA DAT ED 07-05-2009 FOR THE ASSESSMENT YEAR 2006-07. THE REVENUE HAS RAISED SOL ITARY GROUND, WHICH READS AS UNDER:- 1. THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSES SING OFFICER TO CONSIDER THE RENTAL INCOME OF FRUIT YARD, MUKYA YAR D AND VEGETABLE YARD AS BUSINESS INCOME AND SHOW DEPRECIATION ON TH OSE ASSETS OVERLOOKING THE FACT THAT ASSESSEE WAS NOT CARRYING ON THE BUSINESS OF LETTING OUT PROPERTIES. 2. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTI NY FOR ASSESSMENT YEAR 2006-07 AND THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE INCOME-TAX ITA NO.2303/AHD/2009 A.Y. 2006-07 DCIT, ANAND CIR V. M/S APMC, SARDARGUNJ ANAND PAGE 2 ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WER E CONCLUDED VIDE ORDER DATED 15-12-2008. THE ASSESSING OFFICER WHILE FRAMING ASS ESSMENT DISALLOWED THE DEPRECIATION OF RS.44,02,791/-. 3. AGAINST THIS ORDER OF ASSESSING OFFICER, THE ASS ESSEE FILED APPEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE HELD THAT THE RENTAL INCOME OF FRUIT YARD, MUKYA YARD AND VEGETAB LE YARD BE ASSESSED AS BUSINESS INCOME FOR WHICH NO DEDUCTION U/S.24 IS AD MISSIBLE. FOR SBI BUILDING, THE RENTAL INCOME IS DIRECTED TO BE ASSESSED UNDER THE HEAD HOUSE PROPERTY WITH CORRESPONDING DEDUCTION U/S.24 OF THE ACT. NO DEPRECIATION IS TO BE ALLOWED IN RESPECT OF BAZAR SAMAITI/SBI BUILDING, W HEREAS ADMISSIBLE DEPRECIATION IS TO BE ALLOWED FRUIT YARD, MUKYA YAR D AND VEGETABLE YARD. AGAINST THIS ORDER OF LD. CIT(A), NOW REVENUE HAS F ILED THIS APPEAL BEFORE THE TRIBUNAL. 4. LD. DR OF THE REVENUE SUBMITTED THAT LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT BUSINESS OF THE ASSESSEE IS NOT RENTI NG THE PROPERTY AND ASSESSEE HAS BEEN CHARGING VAKHAR FEES AND COMMISSI ON ETC. FOR THE FACILITIES PROVIDED TO THE VEGETABLE PRODUCERS. HE FURTHER SUB MITTED THAT RENT RECEIVED FROM THE OPEN YARDS FROM THE FARMERS CANNOT BE TREA TED AS BUSINESS INCOME. THE ASSESSEE HAS BEEN SHOWING ITSELF THE RENTAL INC OME AND THE RENT RECEIVED YARD FACILITIES BY THE ASSESSEE AS INCOME FROM HOU SE PROPERTY, HOW LD. CIT(A) COULD DECIDE IT OTHERWISE. ON THE CONTRARY, LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE STRONGLY ARGUED THAT THE ORDER PASSED BY LD. CIT(A) IS JUSTIFIED AND THE FACILITIES GIVEN TO THE AGRICULTURAL PRODUCERS BUSINESS OF THE ASSESSEE. SHE FURTHER RELIED UPON THE ORDER OF LD. CIT(A) IN PARA-2.1, WHICH IS REPRODUCED HEREINBELOW FOR THE SAKE OF CLA RITY:- 2.1 BEFORE ME, IT WAS SUBMITTED THAT THE APPELLANT WAS AN AGRICULTURAL PRODUCE MARKET COMMITTEE PROVIDING FACILITIES TO FA RMERS TOWARDS SALE OF AGRICULTURAL PRODUCE. THE REQUIRED SPACE AND ARE A WAS PROVIDE FOR HANDLING OF AGRICULTURAL PRODUCE, IN CONSIDERATION OF WHILE MARKET CESS, LICENSE FEE, RENT AND OTHER CHARGES WERE COLLECTED. IT WAS SUBMITTED THAT RENTAL INCOME WAS DERIVED AS UNDER:- ITA NO.2303/AHD/2009 A.Y. 2006-07 DCIT, ANAND CIR V. M/S APMC, SARDARGUNJ ANAND PAGE 3 PLACE RUPEES CONSIDERATION OF INCOME A MUKHYA YARD, ANAND 2,43,114 OPEN PLOT AREA UTILIZED BY FARMERS FOR HANDLING THEIR PRODUCE FROM WHOM MARKET FEE IS CHARGED. B VEGETABLE YARD, ANAND 4,42,732 OPEN PLOT AREA UTILIZED BY PRODUCERS FOR HANDLING AND SELLING THEIR PRODUCE C FRUIT YARD, ANAND 2,05,026 AREA UTILIZED BY PRODUCERS AND TRADERS FOR STORAGE AND PRESERVATION OF THEIR PRODUCE IN THE YARD. D BAZAR SAMITI 4,56,840 AREA HANDED OVER BY ?GOVT. WITH BOOK COST AT RS.7,19,235/- IS LET OUT TO STATE BANK OF INDIA. TOTAL 13,47,712 IT WAS SUBMITTED THAT EXCEPT RENT RECEIVED FROM SBI OF RS.4,56,840/- ALL THE INCOME WAS ANCILLARY AND INCIDENTAL TO THE MAIN BUSINESS OF PROVIDING FACILITIES TO THE PRODUCERS AND TRADERS I N THE MARKET YARD. APPELLANT MADE DETAILED SUBMISSIONS THAT THE DECISI ON IN THE CASE OF NEHA BUILDERS P. LTD. REFERRED TO BY THE AO WAS NOT AT ALL RELEVANT TO IT S CASE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT DISPUTED THAT APART FROM RENT FROM THE VARIOUS YARDS AND BUILDING, THE ASSESSEE-MARKET COMMITTEE I S ALSO CHARGING MARKET CESS, LICENCE FEE, VAKHAR FEES ETC., IT IS ALSO NOT DISPUTED THAT THE ASSESSEE- MARKET COMMITTEE IS NOT HAVING BUSINESS OF GIVING P ROPERTY ON RENT. WE FIND THAT ASSESSING OFFICER HAS OBSERVED IN PARA-3 OF HI S ASSESSMENT ORDER THAT ASSESSEE HAS DECLARED IN HIS RETURN OF INCOME FROM HOUSE PROPERTY AND BUSINESS INCOME. THE BUSINESS INCOME INCLUDED LICEN SE FEE, MARKET CESS, VAKHAR FEES ETC., DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS OF RENT RECEIVED I N RESPECT OF ITS BUILDING. THE DETAIL OF RENT RECEIVED FROM VARIOUS BUILDING D URING THE YEAR WAS GIVEN AS UNDER:- SL.NO. NAME OF YARD AMOUNT(RS) 1 MUKYA YARD 233114 ITA NO.2303/AHD/2009 A.Y. 2006-07 DCIT, ANAND CIR V. M/S APMC, SARDARGUNJ ANAND PAGE 4 2 VEGETABLE YARD 442736 3 FRUIT YARD 205025 BESIDES THIS, WE FIND THAT LD. CIT(A) HAS OBSERVED THAT RENT RECEIVED FROM UTILIZATION OF VHAKAR OPEN SPACE OF WAS ONLY INCIDE NTAL TO THE ASSESSEES BUSINESS. LD. CIT(A) HAS NOT GIVEN ANY CLEAR FINDIN G AS TO HOW THE PART UTILIZATION OF OTLA, OPEN SPACE OF YARDS ETC., SPAC E YARD AND RENT RECEIVED THEREFROM IS INCIDENTAL TO THE ASSESSEES BUSINESS. IN THIS VIEW OF THE MATTER, THIS ISSUE IS RESTORED BACK TO THE FILE OF LD. CIT( A) WITH A DIRECTION TO DECIDE AFRESH WHETHER RENT RECEIVED FROM UTILIZATION OF OT LA, OPEN SPACE OF YARDS IS A INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS BY WAY OF SPEAKING ORDER. NEEDLESS TO SAY, LD. CIT(A) PROVIDE REASONAB LE OPPORTUNITY OF BEING HEARD TO THE CONCERNED PARTIES AS PER LAW. THIS GRO UND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 09/08/2012 ()* + ,- ,- ,- ,- ../ ../ ../ ../ 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. *.3 , ,4 / CONCERNED CIT 4. , ,4- / CIT (A) 5. /78 ...3, , .3 , ()* / DR, ITAT, AHMEDABAD 6. 8;< => / GUARD FILE. BY ORDER/ ,- , ITA NO.2303/AHD/2009 A.Y. 2006-07 DCIT, ANAND CIR V. M/S APMC, SARDARGUNJ ANAND PAGE 5 ?/ ( @ , .3 , ()* + STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 23/07 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 25/07 4) DATE OF CORRECTION 27/07 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 13/08/2012