The Assistant Commissioner of Income Tax, Circle-2(1)(2), Vadodara V. M/s. Oceanic Buildcon Pvt. Ltd., Baroda

ITA 2734/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4100 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 06-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Source of fund
• Section: 271(1)(c); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER THE ACIT, CIRCLE - 2( 1 )(2) , VADODARA (APPELLANT) VS M/S. OCEANIC BUILDCON PVT. LTD. GF - 1, CINE MALL, NR. NATUBHAI CIRCLE, RACE COURSE ROAD, VADODARA PAN: AAAC08023E (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: WRITTEN SUBMISSION DATE OF HEARING : 07 - 03 - 2 019 DATE OF PRONOUNCEMENT : 12 - 03 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2010 - 11 , ARI SES FROM ORDER OF THE CIT(A) - 2, VADODARA DATED 26 - 09 - 2 017 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE SOLITARY GROUND OF APPEAL OF THE REVENUE IS AGAINST THE DECISION OF LD. CIT(A) IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. I T A NO . 2734 / A HD/20 17 A SS ESSMENT YEAR 2010 - 11 I.T.A NO. 2734 /AHD/20 17 A.Y. 2010 - 11 PAGE NO ACIT VS. M/S. OCEANIC BUILDCON PVT. LTD. 2 3. AT THE TIME OF HEARING, LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT QUANTUM ADDITION ON THE BASIS OF WHICH INSTANT PENALTY WAS LEVIED HAS BEEN DELETED BY THE CO - ORDINATE BENCH OF THE I TAT VIDE ITA 3034/AHD/2014, 1865 , 1866 & 3487/AHD/2016 DATED 15 - 10 - 2018 M/S. OCEANIC BUILD COM PVT. LTD. VS. ACIT. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE AFORESAID DECISION OF CO - ORDINATE BENCH OF THE ITAT AND NOTICED THAT TH E QUANTUM APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF CO - ORDINATE BENCH OF THE ITAT IS REPRODUCED AS UNDER: - 19. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER. THE CONSTRUCTION OF THE BUILDING IS COMME NCED IN THE FINANCIAL YEAR 2007 - 08 AND IS COMPLETED IN THE FINANCIAL YEAR 2009 - 10. THE SOURCE OF FUNDS FOR THE CONSTRUCTION OF MALL BEING OWN FUNDS, UNSECURED LOANS FROM PROMOTERS AS ALSO BORROWING TO THE EXTENT OF RS. 8.65 CRORES FROM FINANCIAL INSTITUTIO NS. THE COMPANY HAD STARTED MARKETING THE AVAILABILITY OF PREMISES IN THE MALL AND ENTERED INTO A MOU DATED 19.02.2007 WITH CINEMAX PROPOSING THE BROAD TERMS ON WHICH THE PROPERTY WOULD BE LICENSED/LEASED. IN THE ACCOUNTS PREPARED FOR THE FINANCIAL YEAR 20 08 - 09, THE BUSINESS OF THE CONSTRUCTION OF MALL HAD ALREADY COMMENCED AND THE APPELLANT DERIVED SOME INCOME FROM RENTING OF HOARDING SIGNS ETC. AND MAINLY COMPANY IS ENGAGED IN RENTING OF PREMISES AND IN THE ASSESSMENT YEAR 2010 - 11, LD. A.O. DENIED THE CLA IM OF LOSS OF RS.2,46,03,893/ - AS CLAIMED IN THE RETURN OF INCOME HOLDING THAT ASSESSEE S PROJECT WAS STILL UNDER CONSTRUCTION AND THAT THE LOSS COULD NOT BE ALLOWED. 20. IN APPEAL BEFORE LD. CIT(A), APPELLANT CONTENDED THAT IT HAD SET UP ITS BUSINESS DURIN G THE YEAR AND MALL UNDER CONSTRUCTION WAS CAPITALIZED AND CONTENDED THAT LOSS WAS REQUIRED TO BE ALLOWED. BUT LD. CIT(A) HELD THAT INCOME OF THE APPELLANT TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 21. AS WE CAN SEE, THAT IN SIMILAR CIRCUMSTANCE S, HON BLE SUPREME COURT IN THE MATTER OF CHENNAI PROPERTIES & INVESTMENTS LTD. (SUPRA) DECIDED MATTER IN FAVOUR OF THE ASSESSEE HOLDING THAT INCOME FROM RENTING A PROPERTY OF MALL TO BE TREATED AS BUSINESS INCOME AND IN THOSE CIRCUMSTANCES, APPELLANT CASE IS FULLY COVERED BY THE AFORESAID JUDGMENT. ITAT BENCH OF MUMBAI IN THE MATTER OF HAGWOOD COMMERCIAL DEVELOPERS PVT. LTD. (SUPRA) HAS ALSO GIVEN FINDING IN FAVOUR OF ASSESSEE. TO THE EFFECT THAT EVEN IF MALL HAD NOT COMMENCED BUSINESS TILL END OF RELEVANT YEAR, ASSESSEE HAD RIGHTLY DEBITED GENERAL OVERHEAD EXPENSES BEING INDIRECT EXPENSES INCURRED, IN PROFIT AND LOSS ACCOUNT. THUS, WE ARE CONSIDERED OPINION, THAT IN ASSESSEE S CASE, THE INCOME FROM RENTING A PROPERTIES IN MALL TO BE TAXED AS BUSINESS INCOM E AND NOT INCOME FROM HOUSE PROPERTY AS WELL AS BUSINESS LOSS ALSO TO BE ALLOWED. 22. SO FAR INITIATING OF PENALTY PROCEEDING U/S. 271(1)(A) IS CONCERNED, SAME ARE PREMATURE. THUS, WE DO NOT WANT TO COMMENT ON THAT. 23. IN THE RESULT, APPEAL FILED BY THE APPEL LANT IS ALLOWED. 4. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE CONSIDER THAT THE PENALTY LEVIED U/S. 271(1)(C) IN THE CASE OF ASSESSEE HAS BECOME INFRUCTUOUS I.T.A NO. 2734 /AHD/20 17 A.Y. 2010 - 11 PAGE NO ACIT VS. M/S. OCEANIC BUILDCON PVT. LTD. 3 BECAUSE OF DELETING OF QUANTUM ADDITION ON THE BASIS OF WHICH THE IMPUGNED PENALTY WAS LE VIED, THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 12 - 03 - 201 9 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 12 /03 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,