M/s.Desai Rachana P. Ltd, Cochin V. The ACIT, Cochin

ITA 241/COCH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7690 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 27-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 24-05-2016
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: RADHESH BHATT
• Section: 143(3); 263

Judgement Text

ITA NO.241/COCH/2016 1 , IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN . . , ., ! ! ! ! BEFORE S/SHRI B. P. JAIN, AM & GEORGE GEORGE K., JM ' ' ' ' ./ I.TA NO.241/COCH/2016 ( #$ % /ASSESSMENT YEAR : 11-12) M/S. DESAI RACHANA PVT. LTD., XL/1736, BROADWAY POST OFFICE, BPO LINK ROAD, MARKET ROAD, ERNAKULAM-682011. VS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), KOCHI. ( &' &' &' &' /ASSESSEE APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /REVENUE -RESPONDENT) & . . ' ./PAN NO. AAACD8486A &' * + /ASSESSEE BY SHRI RADHESH BHATT, CA ( ) &' * + /REVENUE BY SHRI SHANTAM BOSE, CIT(DR) ,- * ./ / DATE OF HEARING 27/09/2016 0 % * ./ /DATE OF PRONOUNCEMENT 28/09/2016 1 1 1 1 /ORDER PER B.P. JAIN, AM: THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME-TAX, KOCHI-1 DATED 18/03/201 6 FOR THE ASSESSMENT YEAR 2011-12. ITA NO.241/COCH/2016 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (CIT) WENT W RONG IN SETTING ASIDE U/S. 263 OF THE IT ACT, THE SCRUTINY ASSESSMENT ORD ER ISSUED BY THE LEARNED ASSESSING OFFICER(AO) VIDE PROCEEDINGS U/S. 143(3) OF THE IT ACT AND DIRECTING THE ASSESSING OFFICER TO PASS A SPEAKING ORDER AS PER THE PROVISIONS OF THE IT ACT. THERE IS NO ERROR WHICH IS PREJUDIC IAL TO THE INTEREST OF REVENUE WHICH REQUIRES REVISION U/S. 263 OF THE IT ACT. 2. THE LD. CIT WENT WRONG IN HOLDING THAT THE ASSESSI NG OFFICER (HAS OMITTED TO EXAMINE THE ASPECT OF THE COMMON MAINTENANCE CHARGE S RELATED TO HOUSE PROPERTY INCOME DEBITED TO P&L ACCOUNT. THE DETAILS OF COMMON MAINTENANCE CHARGES WERE FURNISHED BEFORE THE LEARN ED ASSESSING OFFICER, WHICH WERE DULY VERIFIED DURING THE COURSE OF ASSES SMENT. 3. THE LD. CIT ERRED IN STATING THAT THE APPLICABILITY OF PROVISIONS OF SEC. 2(22)(E) OF THE IT ACT WAS NOT EXAMINED IN RESPECT OF LOAN G IVEN TO M/S. DESAI HOMES. THE LEARNED CIT OUGHT TO HAVE NOTED THAT PR OVISIONS OF SEC. 2(22)(E) OF THE IT ACT HAS NO APPLICATION IN THE HA NDS OF THE APPELLANT BEING THE PAYER. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE FURTHER ADD UCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED ASSESSING OFFICER REQUIRES TO BE MODIFIED SUITABLY. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINE SS OF BUILDERS, DEVELOPERS AND CONSTRUCTION CONTRACTS. THE COMPANY FILED ITS RETURN OF INCOME ON 30-09- 2011 DECLARING A TOTAL INCOME OF RS.23,54,775/- AND CURRENT YEAR LOSS OF RS.9,08,496/-. THE ASSESSMENT U/S. 143(3) WAS COMP LETED ON 30/12/2013 ON A TOTAL INCOME OF RS.25,45,040/-. THE BRIEF FACTS OF THE CASE AS STATED BY THE LD. CIT ARE UNDER:- ITA NO.241/COCH/2016 3 I) THE RENTAL INCOME WAS ASSESSED AS INCOME FROM H OUSE PROPERTY IN THE ASSESSMENT. HOWEVER, THE COMMON MAINTENANCE EXPENSE S RELATED TO THE HOUSE PROPERTY INCOME DEBITED TO P&L ACCOUNT WAS NO T DISALLOWED. II. APPLICABILITY OF THE PROVISIONS OF SECTION 2(22 )(E) WAS NOT EXAMINED IN RESPECT OF LOAN GIVEN TO M/S. DESAI HOMES. III. THE ADVANCE TAX ACCOUNT WAS NOT EXAMINED. 5. ACCORDINGLY, NOTICE U/S. 263 OF THE ACT WAS ISSUED TO THE ASSESSEE. IT WAS OBSERVED BY THE LD. CIT AFTER GIVING OPPORTUNITY TO THE ASSESSEE THAT THE ASSESSEE WAS SHOWING INCOME FROM HOUSE PROPERTY AND THE MAINTENANCE CHARGES PAID BY THE TENANTS SHOULD BE PART OF THE R ENTAL INCOME WHICH HAS NOT BEEN SHOWN BY THE ASSESSEE AND THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVEST MENT (P) LTD. VS. CIT (2003) 129 TAXMAN 70. SIMILARLY, THE ASSESSING OFFICER H AS NOT EXAMINED WHETHER THE PROVISIONS OF SECTION 2(22)(E) WILL BE APPLIED IN T HE PRESENT CASE OR NOT AND THEREFORE, IT WAS HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF T HE REVENUE. ACCORDINGLY, THE LD. CIT SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) ON THE LIMITED ISSUE AND DIRECTED THE ASSESSING OFFICER TO PASS A SPEAKING ORDER AS PER THE PROVISIONS OF THE ACT, AFTER GIVING AMPLE OPPORTUNI TY OF HEARING TO THE ASSESSEE. ITA NO.241/COCH/2016 4 6. THE LD. AR ARGUED THAT THE ASSESSEE HAS SUBMITT ED THE DETAILS OF MAINTENANCE CHARGES RELATING TO RENTAL INCOME AND T HEREFORE, THERE IS NO ERROR PREJUDICIAL TO THE INTEREST OF THE REVENUE REQUIRIN G REVISION UNDER SECTION 263 OF THE ACT. HE RELIED UPON VARIOUS COURTS OF LAW IN THIS REGARD. THE LD. COUNSEL ALSO ARGUED THAT THERE ARE TWO POSSIBLE VIEWS WITH REGARD TO SECTION 2(22)(E) OF THE ACT AND IN THIS REGARD ALSO HE RELIED UPON VARI OUS COURTS OF LAW. 7. THE LD. DR ON THE OTHER HAND RELIED UPON T HE ORDER OF THE LD. CIT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE FACTS OF THE CASE. AS REGARDS THE FIRST ISSUE THE ASSESSEE SUBMITTED THE LETTER AVAILABLE AT PB 7 WHEREIN HE HAS MENTIONED THE DETAILS OF MAINTENANCE CHARGES BUT HAS NOT SUBMITTED THE SAID DETAILS FOR OUR PERUSAL. NEITHER THE LEDG ER ACCOUNT HAS BEEN SUBMITTED NOR THE FULL DETAILS OF MAINTENANCE CHARGES INCLUDI NG THE BILLS AND VOUCHERS HAVE BEEN SUBMITTED AND WHETHER THE SAME HAVE BEEN VERIFIED BY THE ASSESSING OFFICER HAS NOT BEEN ESTABLISHED. THEREF ORE, THE ORDER TO THAT EXTENT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. 9. AS REGARDS THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT, THE ASSESSING OFFICER HAS NOT EXAMINED THE SAME AND THE ARGUMENT OF THE L D. AR THAT THERE ARE TWO POSSIBLE VIEWS CANNOT BE OF HELP TO THE ASSESSEE IN THIS REGARD. ACCORDINGLY, THE NON-EXAMINATION OF THE ISSUE LEADS TO THE ORDER OF THE ASSESSING OFFICER ITA NO.241/COCH/2016 5 BEING ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL OF T HE INTEREST OF THE REVENUE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE LD. CIT WHO HAS RIGHTLY SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT ON THE LIMITED ISSUE AND DIRECTED THE ASSESSING OFF ICER TO PASS A SPEAKING ORDER AFTER GIVING AMPLE OPPORTUNITY OF HEARING TO THE AS SESSEE. THUS ALL THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I .T.A. NO. 241/COCH/2016 IS DISMISSED. ORDER PRONOUNCED IN THE O PEN COURT ON 28 -09-2016. SD/- S D/- ( . ) (GEORGE GEORGE K.) ( . . ) (B. P. JAIN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER & /PLACE: /COCHIN 2 /DATED: 28 TH SEPTEMBER, 2016 GJ/ 1 * (.3 43%. /COPY TO: 1. &' /M/S. DESAI RACHANA PVT. LTD., XL/1736, BROADWAY PO ST OFFICE, BPO LINK ROAD, MARKET ROAD, ERNAKULAM-682011. 2. () &' /THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1 (1), KOCHI. ITA NO.241/COCH/2016 6 3. ,5 . ( )/THE PRINCIPAL COMMISSIONER OF INCOME-TAX, KOCHI. 4. 367 (. , /THE DR/ITAT, COCHIN BENCH. 5. 79 :- /GUARD FILE. 1, /BY ORDER ; /ASSISTANT REGISTRAR - .