ITO 3(3)(3), MUMBAI V. TRIDHARA INVESTMENTS P. LTD, MUMBAI

ITA 275/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9335 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-01-2010
• Assessment Year: 1996-1997
• Appeal Filed On: 13-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: AMISHA GANDHI
• Keywords: Business income; Depreciation
• Section: 271(1)(c); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M.JAGTAP, AM & SMT. P.MADHAVI DEVI, JM I.T.A.NOS.275, 276 & 277/MUM/2009 A.YRS. 1996-97, 1997-98 & 1998-99 THE INCOME TAX OFFICER 3 (3)(3) MUMBAI VS. M/S TRIDHARA INVESTMENTS P. LTD., 1203-06, ARCADIA, 195 BACKBAY RECLAMATION, NCPA MARG, NARIMAN POINT, MUMBAI 400 021. PAN NO. AABCT 4941 M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NAVEEN GUPTA. ASSESSEE BY : SMT. AMISHA GANDHI. O R D E R PER P.MADHAVI DEVI, JM: ALL THESE APPEALS OF THE REVENUE ARE DIRECTED AGAI NST CIT(A)S ORDERS FOR THE RELEVANT ASSESSMENT YEARS CANCELLING THE PENALTY LEVIED U/S.271[1][C] OF THE INCOME TAX ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURNS OF INCOME AND THE ASSESSMENTS WERE COMPLETED U/S.143(3 ) FOR ALL THE RELEVANT ASSESSMENT YEARS. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAD OFFERED INCOME ARISING OUT OF LETTING OUT OF ITS OFFICE PREMISES ON LEAVE AND LICENSE BASIS. AO THEREFORE ASSESSED THE SAID INCOME AS INCOME FROM H OUSE PROPERTY. THEREAFTER HE INITIATED PENALTY PROCEEDINGS U/S.271 [1][C] OF THE ACT. THE ASSESSMENT OF INCOME AS INCOME FROM HOUSE PROPE RTY WAS CONFIRMED BY THE CIT[A] AS WELL AS THE TRIBUNAL. I N THE PENALTY 2 PROCEEDINGS, AO HELD THAT THE ASSESSEE HAS WILLFULL Y FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND THEREFORE IS LIABLE FOR PENALTY U/S.271[1][C] OF THE ACT. HE ALSO PLACED RELIANCE U PON THE ORDER OF THE CIT[A] IN THE PENALTY PROCEEDINGS FOR THE A.Y 1999 -2000 ON THE SAME SET OF FACTS I.E. RENTAL INCOME DECLARED AS BUSINES S INCOME BEING ASSESSED AS INCOME FROM HOUSE PROPERTY. HE ACCORDIN GLY LEVIED MINIMUM PENALTY U/S.271[1][C] OF THE ACT. 3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE CIT[A] . THE CIT[A] TAKING NOTE OF THE ORDER OF HIS PREDECESSOR FOR A.Y 1999-2000 IN THE PENALTY PROCEEDINGS AND ALSO OF THE FACTS OF THE CASE, CAME TO THE CONCLUSION THAT THE ISSUE AS TO WHETHER THE REN TAL INCOME IS TAXABLE AS BUSINESS INCOME WAS FINALLY DECIDED BY THE HON'B LE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. WHICH W AS DELIVERED ON 21/01/2003 AND THEREFORE ON THE DATE OF FILING OF T HE RETURN OF INCOME, ASSESSEE WAS, FOR THE PURPOSE OF FILING OF RETURN O F INCOME, GUIDED BY THE DECISION TAKEN BY THE BOARD OF THE COMPANY AND THE THEN PREVALENT DECISIONS FROM VARIOUS TRIBUNALS ACROSS THE COUNTRY TO THE EFFECT THAT SUCH INCOME CAN BE TAXABLE AS BUSINESS INCOME AND A CCORDINGLY DEPRECIATION WAS ALSO CLAIMED. HE WAS, THUS, SATISF IED WITH THE EXPLANATION OF THE ASSESSEE AND DELETED THE PENALTY LEVIED U/S.271[1][C] OF THE ACT. AGGRIEVED BY THE SAME, TH E REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DR PLACED RELIANCE UPON THE ORDER OF THE CIT[A] , WHILE THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE OF LEVY OF PENALTY ON SIMILAR SET OF FACTS HAD COME UP BEFORE THE TRIBUNAL FOR A.Y 3 1999-2000 AND E BENCH OF THIS TRIBUNAL VIDE ORDER DATED 25 TH NOVEMBER, 2009 IN I.T.A.NO.2416/M/08 HAS HELD THAT WHERE ONLY THE HEAD OF THE INCOME HAS BEEN CHANGED DURING THE ASSE SSMENT PROCEEDINGS, PENALTY U/S.271[1][C] IS NOT ATTRACTED . THE RELEVANT PORTION OF THE ORDER IS AS UNDER- 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E PENALTIES HAVE BEEN LEVIED MAINLY BECAUSE INCOME FROM PROPERTY WHI CH WAS LEASED OUT ON LEAVE AND LICENSE BASIS WAS TREATED AS BUSIN ESS INCOME BY THE ASSESSEE BUT WAS ASSESSED AS INCOME FROM HOUSE PROP ERTY. WE FURTHER FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. ROBORANT INVESTMENT (P) LTD.(2006) 7 SOT 181, H AS TAKEN THE VIEW THAT WHERE ONLY THERE IS A CHANGE OF HEAD OF I NCOME FROM BUSINESS TO INCOME FROM HOUSE PROPERTY PENALTY UNDE R SECTION 271(1)(C) IS NOT ATTRACTED. THIS VIEW HAS BEEN FURT HER FOLLOWED IN THE CASE OF ITO V. GANGES INK & RESINS P.LTD., ITA NO. 5375 TO 5381/M/08 FOR THE ASSESSMENT YEARS 1998-99 TO 2004- 05 ORDER DATED 18.8.2009, IN WHICH ONE OF US WAS A PARTY. THEREFO RE, FOLLOWING THESE DECISIONS, WE HOLD THAT WHEN AN INCOME RETURN UNDER THE HEAD BUSINESS INCOME HAS BEEN CHANGED TO THE HEAD INC OME FROM HOUSE PROPERTY THEN PENALTY UNDER SECTION 271(1)(C) IS N OT ATTRACTED AND ACCORDINGLY WE DELETE THE PENALTY. 5. AS THE FACTS AND CIRCUMSTANCES FOR THE RELEVANT ASSESSMENT YEARS ARE ALSO SIMILAR, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT[A] AND THE REVENUES APPEALS ARE DISMISSED. 6. IN THE RESULT, REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JANUARY, 2010. SD/- SD/- (P.M.JAGTAP) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 29 TH JANUARY, 2010. P/-* 4 COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY /ASST.REGISTRAR,ITAT MUMBAI. SR.NO. PARTICULARS DATE INITIALS 1 DRAFT DICTATED ON 27-1-10 P 2 DRAFT PLACED BEFORE AUTHOR 27-1-10 P 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO SR.PS/PS 6 ORDER KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER