INDIA CONTIANER TERMINAL P.LTD, MUMBAI V. CIT 2, MUMBAI

ITA 2495/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71203 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 22-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Keywords: Business income
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 2495/MUM/2012 ASSESSMENT YEAR : 2007-08 INDIA CONTAINER TERMINAL PVT. LTD. 29, BANK STREET, FORT MUMBAI-400 001. PAN NO.AAACI 0974 L VS. C OMMISSIONER OF IT - 2 AAYAKAR BHAVAN, 3 RD FLOOR, ROOM NO.344 MAHARSHI KARVE ROAD MUMBAI-400 012. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARSH SHAH R EVENUE BY : SHRI P.K. SHUKLA DATE OF HEARING : 22/08/2013 DATE OF PRONOUNCEMENT : 11 / 0 9 /2013 O R D E R PER B. RAMAKOTAIAH, AM: THIS IS AN ASSESSEES APPEAL AGAINST THE ORDER OF C IT-2 UNDER SECTION 263 DATED 09.02.2012. THE ASSESSEE FILED R ETURN OF INCOME ON 26.10.2007 DECLARING LOSS OF RS.9,12,946/-. THE SAM E WAS PROCESSED UNDER SECTION 143(1) AND AN ORDER U/S 143(3) WAS PA SSED DETERMINING THE TOTAL LOSS AT RS.5,71,696/-. THE LD. CIT ON NOT ICING THAT ASSESSEE HAS RECEIVED RS.23,10,000/- AS INCOME FROM LETTING OUT OF GODOWNS, WAS OF THE VIEW THAT THE AO DID NOT EXAMINE THE NATURE OF THE SAID RECEIPT AND ALSO WHETHER SAME CAN BE CONSIDERED AS INCOME FROM BUSINESS OR INCOME FROM HOUSE PROPERTY . ACCORDINGLY, HE INVOKED PROVI SIONS OF SECTION 263, ISSUED SO CAUSE NOTICE TO THE ASSESSEE AND AFTER TA KING THEIR OBJECTION ON ITA NO.2495/M/12 A.Y.07-08 2 RECORD SET ASIDE THE ORDER DATED 29.12.2009 TO BE F RAMED DENOVO AFTER BRINGING ALL FACTS ABOUT WAREHOUSING AT KANDLA AND TO DERIVE THE INFERENCE UNDER WHICH HEAD OF INCOME SUCH INCOME WO ULD BE TAXABLE. EVENTHOUGH LD. CIT GAVE DIRECTION FOR RECONCILIATIO N OF TDS CERTIFICATES VIZ-A-VIZ THE INCOME OFFERED, IT SEEMS THERE IS NO DISCREPANCY ABOUT THE AMOUNTS BEING BROUGHT TO TAX. WE ARE LEFT WITH ONLY ONE ISSUE FOR CONSIDERATION. 2. LD. COUNSEL REFERRING TO THE PROFIT & LOSS A/C A CCOUNT, STATEMENTS FILED BEFORE ASSESSING OFFICER AT THE TIME OF SCRUT INY SUBMITTED THAT ASSESSEES BUSINESS CONSISTS OF HANDLING, STORAGE A ND REPAIRS OF CONTAINERS AT KOLKATA AND ALSO FOR RENTING OF ITS F ORKLIFTS THAT ARE USED IN CARGO HANDLING OPERATIONS. IT WAS SUBMITTED THAT TH E ASSESSEE HAD TAKEN PLOT OF LAND AT HALDIA DOCK COMPLEX AND KANDLA PORT TRUST WHICH ARE ACQUIRED FOR CONTAINER STORAGE HANDLING ETC. DURING THE YEAR ASSESSEE CONSTRUCTED WAREHOUSE, PUT UP ELECTRICAL INSTALLATI ONS INCLUDING WEIGH- BRIDGE IN ITS CARGO HANDLING BUSINESS BUT THESE PRE MISES WERE GIVEN ON RENT TO M/S. J.M. BAXI & CO. FOR A PERIOD OF ELEVE N MONTHS AND RECEIVED RENTAL CHARGES AT RS.5.25 PER SQ.FT. PER MONTH DURI NG THE YEAR. IT WAS THE SUBMISSION THAT ALL DETAILS WERE FURNISHED BEFORE A O WHO ALLOWED THE TREATMENT GIVEN BY THE ASSESSEE AS BUSINESS INCOME AND THEREFORE, THERE IS NO NEED FOR SETTING ASIDE THE ASSESSMENT BY CIT. HE REFERRED TO THE VARIOUS CLARIFICATIONS GIVEN TO AO IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT THE ASSE SSEE HAD INCOME FROM STORAGE INCOME WHICH WAS ACCEPTED AS BUSINESS INCOM E. THEREFORE, LEASE CHARGES RECEIVED ON GODOWN LEASE IS ALSO BUSINESS I NCOME AND WITHOUT PREJUDICE SINCE ASSESSEE DOES NOT OWN THE PLOT THER E AND CONSTRUCTED WAREHOUSES IN PORT AREA, THE SAME CAN BE CONSIDERED AS INCOME FROM OTHER SOURCES. THEREFORE, THERE IS NO PREJUDICE CAU SED TO THE REVENUE. THE LD. DR SUBMITTED THAT AO DID NOT ENQUIRE THE NA TURE OF INCOME AND THEREFORE CIT WAS CORRECT IN INVOKING THE JURISDICT ION. ITA NO.2495/M/12 A.Y.07-08 3 3. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FA CTS ON RECORD. THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT THE ASSESSEE EXPLAINED TO THE INCOME TAX OFFICER IN THE COURSE OF ASSESSME NT PROCEEDINGS VIDE LETTERS DATED 11.07.2009, 28.08.2009, 20.11.2009 AN D FINALLY 16.11.2009 NOT ONLY ABOUT NATURE OF BUSINESS, CAPITALIZATION O F GODOWNS AT KPT PLOT NO.3 AND 4 AT KANDLA AND THE COST OF BUILDING CAPIT ALIZED, ELECTRICAL FITTINGS CAPITALIZED AND ALSO WEIGHBRIDGE WHICH WER E SHOWN SEPARATELY IN SCHEDULE OF FIXED ASSETS. NOT ONLY THAT THE ASSESS EE ALSO ENCLOSED COMPLETED DETAILS OF ADDITIONS TO FIXED ASSETS AND DETAILS IN CONNECTION WITH THE GODOWN AND ALSO DETAILS OF THE LEASED RENT RECEIVED. AO ALSO ENQUIRED ABOUT PLOT LEASE CHARGES BEING PAID BY THE ASSESSEE TO AN EXTENT OF RS.9.30 LACS VIDE LETTER DATED 20.11.2009. FURT HER VIDE LETTER DATED 16.12.2009 IT WAS CLARIFIED BY THE ASSESSEE THAT EL ECTRICAL INSTALLATIONS ARE FOR INDUSTRIAL ELECTRIFICATION AND BASICALLY FO R HEAVY DUTY USE AND ACCORDINGLY THEY ARE CATEGORIZED UNDER PLANT AND M ACHINERY. ALL THIS INDICATES THAT ASSESSING OFFICER DID MAKE ENQUIRIES WITH RESPECT TO NATURE OF THE INCOME AND TREATMENT OF ASSESSEE OF R ECEIPT AS BUSINESS RECEIPTS. FURTHER AS SEEN FROM THE INCOME FROM OPE RATIONS ASSESSEE HAD HANDLING INCOME OF RS.12.93 LACS, STORAGE INCOME OF RS.27.32 LACS, CONTAINER REPAIRS INCOME OF RS.15.05 LACS, FORK LIF T HIRE INCOME OF RS.3.92 LACS. ASSESSEE RECEIVED STORAGE AND WAREHO USING INCOME OF RS.23.10 LACS WHICH IS A MAJOR COMPONENT OF INCOME FROM OPERATIONS. THEREFORE, IT CAN NOT BE STATED THAT ASSESSEES MAI N BUSINESS IS NOT WAREHOUSING BUT LETTING OF HOUSE PROPERTY. HON'BLE BOMBAY HIGH COURT IN THE CASE OF NUTAN WAREHOUSING COMPANY P. LTD. VS. DY.CIT (326 I TR 94) HAS CONSIDERED SIMILAR ISSUE AND RESTORED THE MATTE R TO THE FILE OF ASSESSING OFFICER TO EXAMINE WHAT IS THE DOMINANT I NTENTION OF ASSESSEE, WHETHER TO EXPLOIT A COMMERCIAL ASSET BY CARRYING O N A COMMERCIAL ACTIVITY, THE INCOME OF WHICH WOULD BE INCOME FROM BUSINESS OR LETTING OUT OF PROPERTY WHICH SHOULD BE CONSIDERED AS INCOM E FROM HOUSE PROPERTY. IN THIS CASE THE ASSESSEE HAS CONSTRUCTED TWO GODOWNS AT ITA NO.2495/M/12 A.Y.07-08 4 KANDLA PORT WHICH HAS CERTAIN FACILITIES TO IT LIK E A WEIGH-BRIDGE AND HEAVY DUTY ELECTRICAL INSTALLATIONS WHICH CAN BE CO NSIDERED AS PLANT AND MACHINERY. AS IS EVIDENT FROM THE DETAILS FILED ON RECORD, THE ASSESSEE HAS NOT ENTERED INTO ANY WRITTEN AGREEMENT AND PERI OD OF LEASE WAS ONLY FOR ELEVEN MONTHS FOR STORAGE OF CARGO. ON THESE FA CTS, IT CAN NOT BE CONSIDERED THAT ASSESSEES DOMINATING INTENTION IS TO LET OUT PROPERTY, AS ASSESSEE IS IN THE BUSINESS OF HANDLING, STORAGE AN D REPAIR OF CONTAINERS AND HIRE OF ITS FORK LIFTS USED IN CARGO HANDLING ACTIVITY AT PORT. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS TREATED INCOME CORRECTLY UNDER THE HEAD BUSINESS. EVEN OTHER-WISE, SINCE BUILDINGS WERE CONSTRUCTED FOR THE PURPOSE OF CARGO HANDLING ON THE PREMISES OF THE PORT BY TAKING ON LEASE OF PLOT, SAME MAY ALSO QUALIFY UNDER THE HEAD OTHER SOURCES. THERE IS NO PREJUDICE CAUSED TO REV ENUE BY TREATING THIS AS BUSINESS INCOME. THEREFORE, WE ARE OF THE OPINIO N THAT ON THE FACTS OF THE CASE, EXERCISE OF JURISDICTION BY CIT IS NOT CO RRECT AS ASSESSING OFFICER HAS ALREADY EXAMINED THESE ASPECTS AND ALLOWED ASSE SSEES CLAIM AS BUSINESS INCOME. LD CIT CAN NOT EXERCISE JURISDICTI ON U/ 263 WHEN THE SAME WAS EXAMINED AND ALLOWED AND FURTHER, NO PREJU DICE WAS SHOWN. THEREFORE, THE ORDER OF CIT U/S. 263 IS CONSIDERED BAD IN LAW. SAME IS SET ASIDE. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 SEPTEMBE R, 2013. SD/- SD/- (AMIT SHUKLA) JUDICIAL MEMBER (B. RAMAKOTAIAH ) ACCOUNTANT MEMBER MUMBAI, DATED: 11/09/2013. JV.