Shri Ahmedabad Flexible Tube Mfg. & Yarn Proc.Co.Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-1(1), Ahmedabad

ITA 3133/AHD/2011

• Counselvise Citation: 313320514 RSA 2011
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHUBRATA VERMA JDIT
• Assessee Lawyers: N C AMIN
• Keywords: Business income

Judgement Text

, , , , SMC, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, SMC BENCH . .. . . .. . , !' # ' !' # ' !' # ' !' # ' BEFORE SHRI G.C. GUPTA, VICE-PRESIDENT ITA NO.3133/AHD/2011 [ASSTT.YEAR : 2008-2009] SHRI AHMEDABAD FLEXIBLE TUBE MFG. & YARN PROC. CO. P. LTD. 25, NEW CLOTH MARKET O/S.RAIPUR GATE AHMEDABAD 380 002. PAN : AAECA 9201 A /VS. ITO, WARD-1(1) AHMEDABAD. ( (( (%& %& %& %& / APPELLANT) ( (( ('(%& '(%& '(%& '(%& / RESPONDENT) )* + , #/ ASSESSEE BY : SHRI N.C. AMIN . + , #/ REVENUE BY : SHRI SHUBRATA VERMA, JDIT / + *01/ DATE OF HEARING : 14 TH OCTOBER, 2013 234 + *01/ DATE OF PRONOUNCEMENT : 13.11.2013 #5 / O R D E R THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XVI, AH MEDABAD DATED 18. 10.2011. 2. THE GROUND NOS.1 AND 2 OF THE ASSESSEES APPEAL ARE AS UNDER: ITA NO.3133/AHD/2011 -2- 1) THAT THE CIT(A) HAS ERRED IN LAW AND ON THE FACT S O THE CASE IN CONFIRMING THE ADDITIONS OF RS.99,724/- MAD E BY LD.AO U/S.41(1) OF THE IT ACT. 2) HAVING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND WITH OUT PROPERLY APPRECIATING THE DECISIONS CITED BY THE AP PELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS AND CONS IDERING THE SAME, DISALLOWANCE MADE BY LD.CIT(A) BE ALLOWED .. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ISSUE OF CESSATION OF LIABILITY UNDER SECTION 41(1) OF THE A CT IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. NITIN S. GARG, 71 DTR (GUJ) 7 3. HE SUBMITTED THAT THE LIABILITIES ARE STILL OUTSTANDING IN THE B ALANCE SHEET, AND THEREFORE, IT CANNOT BE SAID THAT THE SAME HAS CEAS ED TO EXIST. THE LEARNED DR HAS OPPOSED THE SUBMISSION OF THE LEARNE D COUNSEL OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THAT THE LIABILITIES ARE STILL OUTSTANDING AS ON THE LAST DA TE OF THE RELEVANT ASSESSMENT YEAR. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 4. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). I FIND THAT THE LIABILITIES ARE STILL OUTSTANDING IN THE BALANCE SHEET AS ON THE LAST DATE OF RELEVAN T ACCOUNTING PERIOD IN THE STATEMENT OF ACCOUNT SUBMITTED WITH THE DEPARTM ENT. THERE IS NO MATERIAL ON RECORD TO PROVE THAT THE SAID LIABILITI ES HAVE CEASED TO EXIST. THE ASSESSEE HAS NOT WRITTEN OFF THE SAID O UTSTANDING LIABILITY IN ITS BOOKS OF ACCOUNTS. IN THESE FACTS OF THE CASE, I HOLD THAT THE RATIO OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. NITIN S. GARG (SUPRA) APPLIES TO THE FACTS OF THE CASE OF THE ASSESSEE, AND RESPECTFULLY FOLLOWING THE DECISION O F THE HONBLE ITA NO.3133/AHD/2011 -3- JURISDICTIONAL HIGH COURT, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE, AND THE ADDITION OF ` 99,724/- IS DELETED, AND THE GROUND NOS.1 AND 2 ARE ALLOWED. 5. THE GROUND NOS.3 AND 4 OF THE ASSESSEES APPEALS ARE AS UNDER: 3. THAT THE LD.CIT(A) HAS FURTHER ERRED IN CONFIRM ING INCOME SHOWN AT RS.78,800/- AS PROPERTY INCOME, INS TEAD OF BUSINESS INCOME SHOWN BY THE APPELLANT. 4. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT THE INCOME OF RS.78,800/- SHOWN BY APPELLANT MAY PLEASE BE HELD AS BUSINESS INCOME INSTEAD OF PR OPERTY INCOME ASSESSED BY AO AND CONFIRMED BY CIT(A). 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT DUE TO TEMPORARY LULLNESS IN THE TEXTILE BUSINESS OF THE A SSESSEE, THE ASSESSEE HAS LET OUT ITS PREMISES TO A LESSEE. HOWEVER, NO WRITTEN AGREEMENT WAS ENTERED INTO WITH THE LESSEE-PARTY. HE SUBMITT ED THAT THE ASSESSEE HAS NOT DISMANTLE ITS BUSINESS, AND STILL ALL THE E QUIPMENTS AND INFRASTRUCTURE IS IN PLACE AT ITS PREMISES. HE REF ERRED TO THE DECISION OF THE HONBLE SUPREME COURT IN GUNTUR MERCHANTS COTTO N PRESS CO. LTD. V. COMMISSIONER OF INCOME-TAX, 154 ITR 861, AN D SUBMITTED THAT INCOME FROM LET OUT OF THE PROPERTY DUE TO TEMPORAR Y LULLNESS IN THE BUSINESS OF THE TEXTILE SHOULD BE ASSESSED UNDER TH E HEAD BUSINESS INCOME, AS SHOWN BY THE ASSESSEE. THE LEARNED DR H AS RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 7. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). IN REPLY TO A SPECIFIC QUER Y FROM THE BENCH, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TILL THE DATE THE PROPERTY IS CONTINUED TO BE LET OUT TO THE LESSEE A ND THE ASSESSEE COULD ITA NO.3133/AHD/2011 -4- NOT TAKE BACK ITS PREMISES OR TO START ITS BUSINESS . IN THESE FACTS OF THE CASE, AS THE ASSESSEE RIGHT FROM THE ACCOUNTING YEA R 2007-2008 TILL THE DATE, COULD NOT START ITS BUSINESS AND THE BUSINESS PREMISES ARE CONTINUOUSLY LET OUT TO THIRD PARTY, AS A TENANT, I T COULD NOT BE SAID THAT IT IS A CASE OF TEMPORARY LULLNESS IN THE BUSINESS OF THE ASSESSEE. THE CIT(A) HAS REFERRED NUMBER OF DECISIONS IN SUPPORT OF HIS CONCLUSION THAT THE INCOME FROM LET OUT OF THE BUSINESS PREMIS ES WAS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE B USINESS PREMISES WERE ADMITTEDLY LET OUT ON RENT TO THE LES SEE, AND THE POSITION OF LET OUT OF THE PREMISES CONTINUED FOR THE LAST A BOUT SIX YEARS. THE INCOME FROM EXPLOITATION OF A PROPERTY HAS TO BE TA XED UNDER THE HEAD INCOME FROM HOUSE PROPERTY, AND THERE SEEMS TO BE N O ELEMENT OF BUSINESS IN LET OUT THE PREMISES BY THE ASSESSEE ON RENT IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE. IN THES E VIEW OF THE MATTER, I HOLD THAT NO INTERFERENCE IN THE ORDER OF THE CIT (A) IS CALLED FOR ON THIS ISSUE, AND ACCORDINGLY, THE GROUND NOS.3 AND 4 OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD