M. VISVESVARAYA INDUSTRIAL RERSEARCH & DEVELOPMENT CENTRE, MUMBAI V. DCIT CIR 12(2), MUMBAI

ITA 3037/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55094 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 11-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Business income
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F,MUMBAI BEFORE SHRI T.R. SOOD (AM) & SHRI V. DURGA RAO (JM ) I.T.A.NO.3037/MUM/2010 (A.Y. 2006-07) M. VISVESVRAYA INDUSTRIAL RESEARCH & DEVELOPMENT CENTRE, 31 ST FLOOR, WORLD TRADE CENTRE, CUFFE PARADE, MUMBAI-400005. PAN: AABCM0996K VS. DY.COMMR. OF INCOME-TAX, CIR. 12(2), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI FIROZE B. ANDHYARUJINA. RESPONDENT BY SHRI S HANTAM BOSE. DATE OF HEARING 11-08-2011 DATE OF PRONOUNCEMENT -08-2011 O R D E R PER T.R. SOOD, AM : IN THIS APPEAL, VARIOUS GROUNDS HAVE BEEN RAISED B UT, AT THE TIME OF HEARING, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT BASICALLY THREE ISSUES ARE INVOLVED, NAMELY, (1) REGISTRATION U/S.12A, (2) ASS ESSMENT OF LEASE RENTAL UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND (3) DISAL LOWANCE OF UNPAID LIABILITY ON ACCOUNT OF GOVT. SHARE OF PROFIT U/S.43B. ISSUE NO.1: 2. THE LD. COUNSEL OF THE ASSESSEE NARRATED IN DETA IL THE HISTORY OF THE CASE AND POINTED OUT THE TRIBUNAL HAD HELD THAT LEASE MO NEY RECEIVED BY THE ASSESSEE SHOULD BE CONSIDERED AS RECEIPT FROM SALE OF LEASE RENTAL, AND WHEN THE MATTER CAME UP BEFORE THE HONBLE HIGH COURT, IT WAS OBSER VED THAT THERE WAS NO ITA NO. 3037/M/2010 M. VISVESVARAYA INDL.RESEARCH & DEVELOPMENT CENTRE. 2 CONCEPT OF SALE OF LEASE RIGHTS AND THE HONBLE HIG H COURT SOUGHT A REMAND REPORT FROM THE TRIBUNAL. SUCH REPORT WAS FURNISHED BY THE TRIBUNAL AND THE MATTER IS PENDING BEFORE THE HONBLE HIGH COURT. I N THE MEANTIME, WHEN OTHER YEARS APPEALS CAME UP FOR CONSIDERATION, THEN THE MATTER WAS REMANDED BACK TO THE FILE OF CIT(A) TO BE DECIDED IN THE LIGHT OF TH E DECISION OF HONBLE HIGH COURT AND THE LD. COUNSEL OF THE ASSESSEE FILED COPIES OF ORDERS OF TRIBUNAL FOR VARIOUS YEARS. 3. COMING TO THE SECOND ASPECT, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE ALSO CAME UP FOR CONSIDERATION OF TRIBUNAL IN ASSTT. YEARS 2002-03 AND 2005-06 IN ITA NOS. 7110 & 7111/MUM/200 8 WHERE THIS ADDITION WAS DELETED ON PRINCIPLE SUBJECT TO VERIFICATION BY THE AO. IN THIS REGARD, HE ALSO REFERRED TO THE ORDER GIVING EFFECT TO THE ORDER OF CIT(A) AND THE TRIBUNAL VIDE ORDER DATED 06-05-2010, COPY OF WHICH IS PLACED AT PAGES 40 AND 41, WHERE THE ADDITION ON ACCOUNT OF SECONDARY BASIC RENT WAS ULT IMATELY DELETED. 4. AS FAR AS THE THIRD ISSUE IS CONCERNED, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT GOVT. HAS PASSED A RESOLUTION BY WHI CH SURPLUS, IF ANY, WAS TO BE SHARED WITH THE GOVT. AND ASSESSEE HAD PROVIDED FOR THE SAID LIABILITY. SUCH SHARING OF SURPLUS CANNOT BE BY ANY STRETCH OF IMAG INATION CALLED A TAX OR DUTY OR A CESS IN TERMS OF SEC. 43B AND THEREFORE THE SAME COULD NOT HAVE BEEN DISALLOWED. 5. ON THE OTHER HAND, THE LD. D.R. STRONGLY RELIED ON THE ORDER OF CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION OF TRIBUNAL IN VARI OUS ASSESSMENT YEARS AND THE SAME WAS SET ASIDE TO THE FILE OF AO. PARAS 3 TO 5 OF ORDER DATED 20-10-2008 IN ITA NO.6716/MUM/2006 FOR ASSTT. YEAR 2003-04 READ A S UNDER : ITA NO. 3037/M/2010 M. VISVESVARAYA INDL.RESEARCH & DEVELOPMENT CENTRE. 3 3. WE FIND FROM THE RELEVANT PART OF THE TRIBUNAL S ORDER FOR A.Y. 2000-01, THAT ON SIMILAR GROUNDS RAISED IT WAS HELD AS UNDER : 3. THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OU R ATTENTION TO THE ORDER DATED 29.03.1996 PASSED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 1989-90 AND 1990-91. HE SUBMITTED THAT THE APPEAL AGAINST THE SAID ORDER W AS FILED BEFORE THE HIGH COURT. THE HONBLE HIGH COURT BY ITS ORDER DATED 15.03.2001 HAS MADE CERTAIN OBSERVATIONS HAVING MATERIAL BEARING ON THE ISSUES BEFORE US. THE FINDING RECORDED BY THE TRIBUNAL IN ITS ORDER DATED 29.3.1996 AND THE OBSERVATIONS MADE BY THE HONBLE HIGH COURT IN ITS ORDER DATED 15.3.2001 WERE HIGHLIGHTED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAVE NOT KEPT IN VIEW THE ORDER DATED 15.3.2001 PASSED BY THE HONBL E HIGH COURT AND DECIDED THE MATTER SOLELY ON THE BAS IS OF THE TRIBUNAL ORDER DATED 29.3.1996. HE, THEREFOR E, URGED THAT THE ORDER OF THE LEARNED CIT(A) SHOULD B E SET ASIDE AND THE MATTER BE RESTORED TO HIM WITH DIRECTION TO DECIDE THE ENTIRE ISSUE IN THE LIGHT O F THE ORDER OF THE HONBLE HIGH COURT DATED 15.3.2001. 4. 5. IT IS EVIDENT FROM THE ORDER OF THE LEARNED CIT(A) THAT HE WAS GUIDED BY THE ORDER OF THE TRIBUNAL. HE DOES NOT SEEM TO HAVE CONSIDERED AND KEPT IN VIEW THE ORDER DATED 15.03.2001 PASSED BY THE HONBLE HIGH COURT. WE CONSIDER IT APPROPRIATE TO SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTO RE THE MATTER TO HIM WITH DIRECTION TO RE-DECIDE ALL T HE ISSUES KEEPING IN VIEW THE ORDER DATED 15.03.2001 PASSED BY THE HONBLE HIGH COURT. THE ABOVE ORDER HAS BEEN FOLLOWED EVEN IN ASSTT. YE AR 2004-05. THEREFORE, FOLLOWING THE ABOVE ORDER, WE SET ASIDE THE ORDER O F LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF LD. CIT(A) WITH A DIRECT ION TO DECIDE THE SAME IN THE LIGHT OF THE ORDERS OF HIGH COURT IN THE ASSESSEES CASE. ISSUE NO.2: 7. WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE TR IBUNAL IN ITS ORDER DATED 20-11-2009 IN ITA NOS.7110 & 7111/MUM/2008 VIDE PAR A 22, WHICH IS AS UNDER: ITA NO. 3037/M/2010 M. VISVESVARAYA INDL.RESEARCH & DEVELOPMENT CENTRE. 4 22. AS REGARDS GROUND NO.4 RELATING TO THE ADDITI ON MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF SECONDARY BASIC RENT, THE LD. COUNSEL FO R THE ASSESSEE HAS SUBMITTED THAT THIS ADDITION HAS BEEN MADE IN THE YEAR UNDER CONSIDERATION I.E. A.Y. 2005-06 M ERELY FOLLOWING THE EARLIER YEARS ORDERS WITHOUT APPRECIA TING THAT NO SECONDARY BASIC RENT WAS RECEIVED BY THE ASSESSE E DURING THE SAID YEAR. KEEPING IN VIEW THE SUBMISSIO NS MADE BY THE LD. COUNSEL FOR THE ASSESSEE, WE RESTOR E THIS ISSUE TO THE FILE OF A.O. WITH A DIRECTION TO VERIF Y THE SUBMISSIONS OF THE ASSESSEE FROM THE RECORD AND DEL ETE THE ADDITION MADE ON THIS ISSUE IF IT IS FOUND THAT NO SECONDARY BASIC RENT WAS ACTUALLY RECEIVED BY THE A SSESSEE DURING A.Y. 2005-076. GROUND NO. 4 OF ASSESSEES AP PEAL IS ACCORDINGLY TREATED AS ALLOWED. FURTHER, WHILE GIVING EFFECT TO THIS ORDER, IT WAS OBSERVED IN PARAS 4 & 5 BY THE AO AS UNDER : 4. IN THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE A.O. VIDE ORDER U/S.143(3) ON 26-122007 IN PAGE NO.3 TH E AO HAS TREATED THE SECONDARY BASIC RENT AS INCOME FROM HOUSE PROPERTY BASED ON THE EARLIER ASSESSMENT YEARS. THE CIT(A) HAS CONFIRMED THE ABOVE ORDER. THE ASSESSEE HAS FIL ED FURTHER APPEAL IN THE TRIBUNAL AND BEFORE THE TRIBUNAL HA S SUBMITTED IN AY 2005-06, THEY HAVE NOT RECEIVED ANY SECONDARY BASIC RENT AND THE TRIBUNAL VIDE ORDER IN ITA NO.7111/UM/ 08 F BENCH DT. 20.11.2009 HAS DIRECTED THE AO TO VERIFY THE RECEIPT OF SECONDARY BASIC RENT AND CONSIDER THE ISSUE. 5. THE ASSESSEE HAS SUBMITTED THAT THE LEASE AGREEM ENT WAS AMENDED WEF 01-02-2004 FOR DISCONTINUATION OF SECONDARY BASIC RENT AND FILED THE CONFIRMATION AND STATED THAT IT WAS FILED BEFORE THE ASSESSING OFFICER AT T HE TIME OF ASSESSMENT. THE ASSESSEE SUBMITTED IN THE BOOKS OF ACCOUNTS AND IN COMPUTATION OF INCOME, NO INCOME UNDER THE H EAD SECONDARY BASIC RENT HAS BEEN ADMITTED. THE ASSE SSING OFFICER IN THE COMPUTATION OF INCOME IN HIS ASSESSM ENT ORDER HAS ALSO MENTIONED THIS FACT. ACCORDINGLY THE ASSES SEE SUBMITTED THAT THE INCOME COMPUTED UNDER THE HEAD INCOME FROM HOUSE PROPERTY SHOULD BE DELETED. THE ASSESSI NG OFFICER HAS WORKED OUT THE ALV (NOTIONAL INCOME) AND DEDUCT ED THE MUNICIPAL TAXES FROM THE ALV AND ARRIVED AT A NET H P LOSS OF RS.6,25,018/-. THE SUBMISSION OF THE ASSESSEE IS FO UND TO BE CORRECT. ACCORDINGLY THE SECONDARY BASIC RENT ASSES SED BY THE AO UNDER THE HEADS INCOME FROM HOUSE PROPERTY I.E. LOSS OF RS.6,25,018/- IS DELETED. THERE IS NO CHANGE IN THE INCOME DUE TO THE DELETION OF HP LOSS. THE PAYMENT OF MUNI CIPAL TAXES AMOUNTING TO RS.5,06,26,528/- IS GIVEN CREDIT AGAINST ITA NO. 3037/M/2010 M. VISVESVARAYA INDL.RESEARCH & DEVELOPMENT CENTRE. 5 THE BUSINESS INCOME AND THE INCOME ASSESSED AS PER THE EARLIER ORDERS IS REVISED ACCORDINGLY. THEREFORE, FOLLOWING THE ABOVE, WE SET ASIDE THE OR DER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO D ELETE THE ADDITION ON ACCOUNT OF SECONDARY BASIC RENT UNDER THE HEAD INCOME FROM HO USE PROPERTY AFTER VERIFICATION OF THE FACTS THAT NO SUCH RENT WAS REC EIVED DURING THE YEAR. ISSUE NO.3: 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THE ADDITION ON ACCOUNT OF SEC. 43B HAS BEEN CONFIRMED BY THE LD. C IT(A) WITHOUT CONSIDERING THE EXACT NATURE OF THE LIABILITY. IT WAS STATED THAT I T WAS IN THE NATURE OF SHARING OF SURPLUS BY THE GOVT. RESOLUTION. NORMALLY SPEAKING, SHARING OF SURPLUS OR PROFIT CANNOT BE TERMED AS A TAX OR DUTY OR CESS. THEREFOR E, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO HIS FILE WI TH A DIRECTION TO DECIDE THE SAME AFTER EXAMINING THE NATURE OF RECEIPT PARTICUL ARLY AFTER EXAMINING THE RESOLUTION PASSED BY THE GOVT. AND/OR ANY OTHER AGR EEMENT REACHED BY THE ASSESSEE WITH THE GOVT. FOR SHARING OF SUCH SURPLUS AND THEN DECIDE THE ISSUE ACCORDINGLY. NEEDLESS TO SAY THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY TO EXPLAIN ITS STAND. 9. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THE 30TH DAY OF AUGUST , 2011. SD/- SD/- (V. DURGA RAO) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 30TH AUGUST, 2011. NG: COPY TO : 1. ASSESSEE. ITA NO. 3037/M/2010 M. VISVESVARAYA INDL.RESEARCH & DEVELOPMENT CENTRE. 6 2.DEPARTMENT. 3 CIT(A)-23,MUMBAI. 4 CIT-XII,MUMBAI. 5.DR,F BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO. 3037/M/2010 M. VISVESVARAYA INDL.RESEARCH & DEVELOPMENT CENTRE. 7 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 11-08-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 17-08-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON 30-08-2011 SR.PS/ 7. FILE SENT TO THE BENCH CLERK 30-08-2011 SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER