Bhabatarini Griha Nirman Pvt. Ltd., , Kolkata V. DCIT, Circle - 12(1) , Kolkata

ITA 2629/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4233 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHRUBAJYOTI RAY
• Keywords: Business income; Depreciation; Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH KOLKATA BEFORE SHRI S. S. GODARA, JM & DR. A. L. SAINI, AM /I.T.A NO.2629/KOL/2018 ( [ [ / ASSESSMENT YEAR: 2014-15) BHABATARINI GRIHA NIRMAN PVT. LTD. SOUTH BLOCK, IDEAL PLAZA, SARAT BOSE ROAD, KOLKATA 700020. VS. DCIT, CENTRAL-12(1), KOLKATA. ./ ./PAN/GIR NO.: AABCB9211C (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ANIL KOCHAR, ADVOCATE RESPONDENT BY : SHRI DHRUBAJYOTI RAY, JCIT / DATE OF HEARING : 29/01/2020 /DATE OF PRONOUNCEMENT : 28/02/2020 / O R D E R PER SHRI S. S. GODARA: THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX(APPEALS)-4, KOLKATAS ORDER DATED 15.01.2018 PASSED IN CASE NO.620/CIT(A)-4/C-12(1)/16-17 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. FOR THE REASON STATED IN ASSESSEES CONDONATION PETITION DATED 19.12.18 AND ON ACCOUNT OF NO OBJECTION FROM THE REVENUE SIDE, WE CONDONE ITS 11 DAYS DELAY IN FILING OF THE MAIN APPEAL STATED TO BE ATTRIBUTABLE TO COMMUNICATION GAP AND COMPILATION OF NECESSARY RECORDS. THE MAIN APPEAL IS TAKEN UP FOR ADJUDICATION ON MERITS. I.T.A NO.2629/KOL/2018 BHABATARINI GRIHA NIRMAN PVT. LTD. PAGE | 2 3. COMING TO MAIN APPEAL, WE NOTICE THAT THE SOLE SUBSTANTIVE GRIEVANCE CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING BUSINESS LOSS OF RS.8,66,284/- IN THE COURSE OF ASSESSMENT AS AFFIRMED IN THE LOWER APPELLATE PROCEEDINGS AS FOLLOWS: 4. GROUND NOS. 3 & 4 RELATES TO DISALLOWANCE OF RS.8,66,284/- BEING BUSINESS LOSS CLAIMED BY THE ASSESSEE. THE A.O. HAS STATED THE FOLLOWING IN SUPPORT OF THE DISALLOWANCE - 'IT HAS BEEN OBSERVED FROM THE PROFIT & LOSS A/C AND RETURN OF INCOME OF THE ASSESSEE FOR THE F.Y. 2013-14 THAT, THE ASSESSEE'S PRINCIPAL SOURCE OF INCOME IS FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES ONLY. IN THE COLUMN NATURE OF BUSINESS OR PROFESSION' OF THE INCOME TAX RETURN FILED BY THE ASSESSEE COMPANY IT IS SEEN THAT THE ASSESSEE COMPANY HAS WRITTEN THE NATURE OF BUSINESS OR PROFESSION AS REAL ESTATE. FURTHER, THE ASSESSEE VIDE ITS LETTER DATED 11TH MAY, 2015, HAS ALSO STATED THAT THE ASSESSEE COMPANY IS HAVING INCOME BY WAY OF RENTALS, INTEREST AND DIVIDEND.' THEREFORE, THE ASSESSEE COMPANY HAD NO INCOME FROM BUSINESS OR PROFESSION AND WAS NOT DOING ANY BUSINESS ACTIVITY DURING THE RELEVANT YEAR. AS PER THE COMPUTATION OF TOTAL INCOME AND RETURN OF INCOME FILED BY THE ASSESSEE, IT HAS BEEN NOTICED THAT THE ASSESSEE HAD CLAIMED RS.8,66,284/- AS LOSS FROM BUSINESS/PROFESSION, RS. 2,12,05,095/- AS INCOME FROM HOUSE PROPERTY AND RS.10,38,655/- AS INCOME FROM OTHER SOURCES, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAS BEEN OBSERVED FROM PROFIT & LOSS ACCOUNT UNDER THE HEAD OTHER INCOME' THAT THE ASSESSEE HAD EARNED RS.2,50,684/- AS INTEREST INCOME, RS.96,266/- AS OTHER INCOME AND RS.6,91,705/- AS PROFIT ON SALE OF MUTUAL FUND. THE ASSESSEE COMPANY HAS CLAIMED THE OTHER INCOME OF RS.10,38,655/ AS INCOME FROM OTHER SOURCES, THEREFORE, THE ASSESSEE HAS NO BUSINESS INCOME DURING THE PY. 2013-14. AS SUCH, DURING THE COURSE OF HEARING ON 29.06.2016, THE A/R OF THE ASSESSEE WAS REQUESTED TO EXPLAIN WHY THE BUSINESS LOSS OF RS.8,66,284/- SHOULD NOT BE DISALLOWED. IN RESPONSE TO THE SAME, THE A/R OF THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION REGARDING THE SAME. IN THE LIGHT OF THE ABOVE FACTS, THE BUSINESS LOSS OF RS.8,66,284/- CLAIMED BY THE ASSESSEE FOR THE F.Y. 2013-14 IS NOT BEING DISALLOWED.' 4.1 DURING THE COURSE OF HEARING, THE A/R STATED THAT MOST OF THE EXPENSES ARE STATUTORY IN NATURE E.G. AUDITOR'S REMUNERATION IS A STATUTORY INCURRED ONCE A COMPANY IS FORMED AND THEREFORE, THE EXPENSES SHOULD BE ALLOWED. I HAVE PERUSED THE ASSESSMENT ORDER AND THE ARGUMENTS OF THE LD. A/R. IT IS SEEN THAT FROM THE P & L A/C AND BALANCE SHEET OF THE ASSESSEE THE TOTAL REVENUE OF THE ASSESSEE IS 3.20 CRORE OUT OF WHICH RS.3.1 CRORE IS INCOME FROM HOUSE PROPERTY. THEREFORE, MORE THAN 95% OF THE INCOME OF THE ASSESSEE IS DERIVED FROM GIVING PROPERTIES ON RENT. MOST OF THE ASSETS APPEARING IN THE BALANCE SHEET ALSO RELATES TO THIS HOUSE PROPERTY INCOME. FURTHER, DURING THE COURSE OF HEARING, THE A/R FAIRLY CONCEDED THAT THE ASSESSEE IS NOT DOING ANY OTHER BUSINESS DURING THE YEAR. SINCE 95% OF THE INCOME OF THE ASSESSEE IS DERIVED FROM GIVING PROPERTIES ON RENT, NATURAL COROLLARY IS THAT MOST OF THE EXPENDITURE CLAIMED BY THE ASSESSEE RELATES TO SUCH RENTAL INCOME. RENTAL INCOME IS TAXED UNDER CHAPTER-IV HEADING-C OF THE I.T. ACT. SECTION 24 MANDATES THE DEDUCTIONS WHICH ARE TO BE THE ALLOWED IN COMPUTATION OF INCOME FROM HOUSE PROPERTY. U/S. 24(A) THE ASSESSEE GETS A LUMP SUM DEDUCTION OF 30% I.T.A NO.2629/KOL/2018 BHABATARINI GRIHA NIRMAN PVT. LTD. PAGE | 3 ANNUAL VALUE. THIS DEDUCTION HAS BEEN PERMITTED IN LIEU OF MISCELLANEOUS EXPENDITURE WHICH THE ASSESSEE IS LIKELY TO INCUR TOWARDS THE HOUSE PROPERTY [INCLUDING DEPRECIATION, REPAIRS, COLLECTION CHARGE. DEDUCTION FOR COLLECTION CHARGE WAS EARLIER ALLOWED SEPARATELY AND THE SAME WAS MERGED AND THE AMOUNT OF DEDUCTION WAS INCREASED FROM 1/6 TH TO 30%. THEREFORE, THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR THAT THIS 30% DEDUCTION IS TO TAKE CARE OF ALL EXPENDITURE LIKELY TO BE INCURRED BY THE ASSESSEE AGAINST THE HOUSE PROPERTY INCOME. IT WOULD BE ANOMALOUS IF THE ASSESSEE CLAIMS BOTH 30% DEDUCTION AS WELL AS OTHER EXPENDITURE INCURRED TOWARDS THE HOUSE PROPERTY WHICH THE ASSESSEE IS TRYING TO DO. IN VIEW OF THE ABOVE DISCUSSION, THE STAND OF THE ASSESSING OFFICER IS JUSTIFIED AND THE ASSESSEE SHOULD BE DENIED DEDUCTION FOR EXPENSES FORMING PART OF THE BUSINESS LOSS OF RS,8,66,284/-, THEREFORE, THE GROUND NOS. 3 & 4 IS DISMISSED. 4. IT IS THEREFORE CLEAR THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) ARE OF THE VIEW THAT SINCE THE IMPUGNED EXPENDITURE DOES NOT PERTAIN TO THE DECLARED HEADS OF INCOME I.E. INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES ONLY, THE IMPUGNED SUM IS STATED TO HAVE BEEN INCURRED AS BUSINESS EXPENDITURE AND CLAIMED AS BUSINESS LOSS, IS NOT ALLOWABLE. WE MAKE IT CLEAR THAT THE REVENUE IS VERY FAIR IN NOT DISPUTING GENUINENESS OF THE ASSESSEES BUSINESS EXPENSES. THAT BEING THE CASE, WE ARE OF THE VIEW THAT IMPUGNED EXPENDITURE HAS BEEN RIGHTLY TREATED AS BUSINESS LOSS BY THE ASSESSEE SINCE IT HAD NOT DERIVED ANY BUSINESS INCOME. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO TREAT THE SUM IN DISPUTE OF RS.8,66,288/- AS AN ALLOWABLE LOSS UNDER THE BUSINESS HEAD FOLLOWED BY CONSEQUENTIAL COMPUTATION AS PER PROVISIONS OF THE ACT. 5. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.02.2020. SD/- ( A. L. SAINI ) SD/- (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER /KOLKATA; / DATE: 28/02/2020 RS I.T.A NO.2629/KOL/2018 BHABATARINI GRIHA NIRMAN PVT. LTD. PAGE | 4 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT - BHABATARINI GRIHA NIRMAN PVT. LTD. 2. THE RESPONDENT- DCIT, CENTRAL-12(1), KOLKATA. 3. ( ) / THE CIT(A), KOLKATA [SENT THROUGH EMAIL] 4. / CIT 5. , , / DR, ITAT, KOLKATA [SENT THROUGH EMAIL] 6. [ / GUARD FILE.