M/s. G.M.P. Properties Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 3150/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4492 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 08-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Depreciation
• Section: 143(3); 12; 2

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 3150 /MDS/2016 / ASSESSMENT YEAR :20 1 2 - 1 3 M / S. G.M.P. PROPERTIES PRIVATE LTD., NO. 9, PANDIAN STREET, SANKARAN AVENUE, VELACHERY, CHENNAI 600 042. [PAN: A A BCG1724B ] VS. THE ASSISTANT COMMISSIONER OF I NCOME TAX , CORPORATE CIRCLE 2 , CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI QUADIR HOSEYN , ADVOCATE / RESPONDENT BY : SHRI S UPRIYO PAL , J CIT / DATE OF HEAR ING : 08 . 0 5 .201 7 / DATE OF P RONOUNCEMENT : 24 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 6 , CHENNAI DATED 31 . 0 8 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 , WHEREIN , VARIOUS GROUNDS IN ITS APPEAL HAVE BEEN RAISED . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 27 .0 9 .20 1 2 ADMITTING INCOME OF . 55,43,726 / - . T HE RETURN FILED BY I.T.A. NO. 3150 /M/16 2 THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER DETAILED SCRUTINY, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] DATED 30 .0 3 .201 5 BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .1, 4 3, 9 3, 5 2 0/ - AFTER MAKING VARIOUS ADDITIONS . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND CONSIDERING THE FACTS OF THE CASE, THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASS ESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . IN ITS APPEAL, THE ASSESSEE HAS RAISED THREE GROUNDS VIZ., (I) NON - ADJUDICATION OF ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A), (II) CONFIRMATION OF DISALLOW ANCE OF EXPENSES INCURRED AGAINST INTEREST INCOME AND (III) THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF .78,84,603/ - 5. THE ASSESSEE HAS ADMITTED RENTAL INCOME OF .70,68,189/ - AND OTHER INCOME OF .95,32,65 0/ - TOTALLING TO .1,66,00,839/ - AND CLAIMED EXPENSES SUCH AS FINANCE COST, DEPRECIATION AND OTHER EXPENSES OF .24,70,925/ - AND COMPUTED INCOME FROM BUSINESS AT .85,67 ,363/ - AND SET OFF OF CARRY FORWARD OF LOSS OF .78,84,603/ - AND COMPUTED NET PROFIT UN DER BUSINESS AT .6,82,760/ - , ADMITTED RENTAL INCOME OF .48,60,867/ - AFTER DEDUCTING STATUTORY DEDUCTION AND ARRIVED AT THE TAXABLE INCOME OF .55,43,626/ - . IN THE I.T.A. NO. 3150 /M/16 3 COMPUTATION OF INCOME, THE ASSESSEE HAS BROUGHT THE RENTAL INCOME UNDER INCOME FROM HOUSE PROPERTY AND ARRIVED TAXABLE INCOME AT .48,60,857/ - AND THUS, THE ASSESSING OFFICER BROUGHT THE SAME TO TAX. BEFORE THE LD. CIT(A) THE ASSESSEE PREFERRED AS ADDITIONAL AND ALTERNATIVE GROUND, WHICH IS REPRODUCED AS UNDER: THE INCOME FROM HOUSE PROPERTY MAY BE DIRECTED TO BE TREATED AS INCOME FROM BUSINESS APPLYING THE RATIO OF THE APEX COURT DECISION IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. V. CIT 373 ITR 673. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WITH REGARD TO ADMISSION AND AD JUDICATION OF THE ABOVE ADDITIONAL GROUND, THE LD. CIT(A) HAS CONCLUDED THAT THE ASSESSEE IS ATTEMPTING TO REVISE ITS OWN COMPUTATION IN ORDER TO OBTAIN THE BENEFITS OF DEDUCTION AND THE HEAD BUSINESS AND AVAIL SET OFF OF LOSS AND SINCE THE ASSESSEE HAS NOT PROVED/JUSTIFIED ITS BONA FIDE IN FILING THE ADDITIONAL GROUND OF APPEAL, THE LD. CIT(A) NEITHER ADMITTED NOR ADJUDICATED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT AS PER THE STAT UTE, THE APPELLATE AUTHORITY IS CONFERRED UPON THE POWER TO ADMIT AND ADJUDICATE THE ADDITIONAL/ALTERNATIVE GROUND RAISED BEFORE THE APPELLATE AUTHORITIES. NO COURT IN THE COUNTRY HAS NEVER EVER GIVEN A JUDGEMENT THAT THE LAW LAID DOWN BY THE HON BLE COURT IS ONLY PROSPECTIVE AND NOT RETROSPECTIVE. THUS, THE LD. COUNSEL FOR THE ASSESSEE HAS PRAYED THAT THE ADDITIONAL GROUND RAISED BEFORE THE LD. CIT(A) SHALL BE ADMITTED AND SUITABLE I.T.A. NO. 3150 /M/16 4 DIRECTIONS MAY BE GIVEN TO THE DEPARTMENT FOR ITS ADJUDICATION AND THE ASSE SSEE MAY BE ALLOWED THE BENEFITS OF DEDUCTION AND THE HEAD BUSINESS AND AVAIL SET OFF OF LOSS. ON THE OTHER HAND, THE LD. DR DUTIFULLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AN D GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE COMPUTATION OF INCOME, INADVERTENTLY, THE ASSESSEE HAS BROUGHT THE RENTAL INCOME UNDER INCOME FROM HOUSE PROPERTY AND ARRIVED TAXABLE INCOME AT .48,60,857/ - AND, THE ASSESSING OFFICER ALSO BROUGHT T HE SAME TO TAX. 8. AT THE TIME OF FILING OF RETURN OF INCOME, THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. V. CIT(SUPRA) WAS NOT AVAILABLE. THAT IS WHY THE ASSESSEE HAS NOT BROUGHT THE RENTAL INCOME UNDER INC OME FROM BUSINESS. ADMITTEDLY, ONE OF THE MAIN BUSINESSES OF THE ASSESSEE IS RENTAL INCOME FROM IMMOVABLE PROPERTIES. SINCE THE ASSESSEE GOT THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. V. CIT (SUPRA) AT T HE TIME OF FILING APPEAL BEFORE THE APPELLATE AUTHORITY ON 24.04.2015, THE ASSESSEE HAS PREFERRED AN ADDITIONAL/ALTERNATIVE GROUND. THE INCOME TAX ACT/RULE CANNOT BE USED AS A WEAPON TO PUT TAX BURDEN ON THE ASSESSEE. VIDE CIRCULAR NO. 14(XL - 35) OF 1955, D ATED APRIL 11, 1955 , THE CBDT DIRECTED THE DEPARTMENT TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF I.T.A. NO. 3150 /M/16 5 CLAIMING AND SECURING RELIEFS. . . . WHEN THE LAW LAID DOWN BY THE COURT IS VERY MUCH AVAILABLE BEFORE HIM, THE LD. CIT(A) I S REQUIRED TO EXAMINE ITS APPLICABILITY TO THE FACTS OF THE CASE OF THE ASSESSEE RATHER THAN REJECTING THE GROUND. UNDER THE ABOVE CIRCUMSTANCES, WE DIRECT THE LD. CIT(A) TO ADMIT AND ADJUDICATE THE ADDITIONAL GROUND AND DECIDE, IN THE GIVEN CASE, APPLICAT ION OF THE ABOVE DECISION IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. V. CIT(SUPRA) AND ADJUDICATE AS TO WHETHER THE INCOME EARNED BY THE ASSESSEE IS INCOME FROM PROPERTY OR INCOME FROM BUSINESS. 9. WITH REGARD TO SET OFF OF BROUGHT FORWARD BUS INESS LOSS OF .78,84,603/ - , THE LD. CIT(A) HAS BEEN DIRECTED TO ADJUDICATE AS TO WHETHER THE INCOME EARNED BY THE ASSESSEE IS FROM HOUSE PROPERTY OR BUSINESS IN VIEW OF THE DECISION IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD. V. CIT(SUPRA) AND C O NSEQUENTLY, HE SHALL DECIDE THE ISSUE OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS. THUS, BOTH THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) FAILED TO ALLOW THE EXPENSES INCURRED AGAINST THE INTEREST INCOME. THE ASSESSEE HAS SHOWN INTEREST RECEIPTS FROM FD AND ICD OF .95,32,651/ - . THE ASSESSEE HAS CLAIMED EXPENSES SUCH AS FINANCE COST, DEPRECIATION AND OTHER EXPENSES. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS I.T.A. NO. 3150 /M/16 6 OBSERVED THAT THE ABOVE INTEREST RECEIPTS ARE ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND CANNOT BE CONSTRUCTED AS ARISING IN THE COURSE OF BUSINESS OF THE ASSESSEE SO AS TO BE ASSESSABLE UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. THEREFORE ASSESSING OFFICER HAS HELD THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE NOT RELATABL E TO THE INTEREST INCOME OFFERED FROM FD AND ICD AND NOT ELIGIBLE TO CLAIM DEDUCTION. 11. THE ABOVE FINDINGS OF THE ASSESSING OFFICER WAS FURTHER CONFIRMED BY THE LD. CIT(A) ONLY ON THE GROUND THAT THE ASSESSEE HAS NOT MADE ANY SPECIFIC SUBMISSIONS. THE MAIN BUSINESS OF THE ASSESSEE IS PROPERTY DEVELOPERS RENTAL INCOME FROM IMMOVABLE PROPERTIES. IT IS NOT CLEAR FROM THE ASSESSMENT ORDER WITH REGARD TO THE SOURCE FOR THE DEPOSITS MADE IN FD AND ICD. IF THE SOURCES FOR THE ABOVE DEPOSITS ARE DIRECTLY ATTR IBUTABLE TO ASSESSEE S BUSINESS, THEN THE EXPENSES SUCH AS FINANCE COST, DEPRECIATION AND OTHER EXPENSES ARE REQUIRED TO BE ALLOWED AS DEDUCTION AGAINST THE INTEREST INCOME. ONCE DEPOSIT IN ICD WAS CARRIED ON AS PART OF ORGANIZED AND REGULAR BUSINESS ACTIV ITY OF THE ASSESSEE, THEN THE EXPENSES INCURRED IN THE ASSESSEE S REGULAR COURSE OF BUSINESS SHOULD ALSO BE ALLOWED. NO DETAILS ARE EMANATING FROM THE ASSESSMENT ORDER. SINCE WE HAVE REMITTED TWO ISSUES TO THE FILE OF THE LD. CIT(A), WE DIRECT THE LD. CIT( A) TO DECIDE TH IS ISSUE ALSO AFRESH AFTER GETTING DETAILS FROM THE ASSESSEE WITH REGARD TO THE SOURCE FOR THE DEPOSITS IN FD/ICD AS WELL AS EXPENDITURE DETAILS IN I.T.A. NO. 3150 /M/16 7 ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE AS WELL AS TO THE A SSESSING OFFICER. 12 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 24 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 24 . 0 5 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.