ACIT 20(3), MUMBAI V. UNIVERSAL TEXTILE WATERPROOF CO. (INIDA), MUMBAI

ITA 3300/MUM/2010

• Counselvise Citation: 330019914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAN BOSE
• Keywords: Business income
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER I.T.A. NO. 3300/MUM/2010 ASSTT. YEAR : 2004-05. DY. COMMISSIONER OF INCOME-TAX, M/S UNIVERSAL TEXTILE 20(3), MUMBAI. VS. WATERPROOF CO. (INDIA), B-12, VEERA INDUST RIAL ESTATE, NEW LINK ROAD, AND HERI (W), MUMBAI 400 058. PAN : AABFU 2040B. APPELLANT RESPONDENT. C.O. NO. 45/MUM/2011 (IN I.T .A. NO. 3300/MUM/2010) ASSESS MENT YEAR : 2004-05. M/S UNIVERSAL TEXTILE DY. COMMISSIONER OF WATERPROOF CO. (INDIA), VS. INCOME-TAX, 20(3), MUMBAI. MUMBAI. CROSS OBJECTOR RESPONDENT. REVENUE BY : SHRI SHANTAN BOSE. ASSESSEE BY : SHRI VIJAY MEHTA. DAT E OF HEARING : 28.09.2011. DATE OF PRONOUNCEMENT : 14-10-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-31, MUMBAI DATED 02-02-2010 AND THE SA ME IS BEING DISPOSED OF ALONG WITH CROSS OBJECTION FILED BY THE ASSESSEE BE ING C.O. NO. 45/MUM/2011. 2 ITA NO.3300/MUM/2010 C.O. NO.45/MUM/2011 ASSESSMENT YEAR 2004.05. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS RUNNING A BUSINESS CENTRE. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 12-10-2004 DECLARING TOTAL INCOME OF RS.9,65, 077/-. IN THE SAID RETURN, THE COMPENSATION/RENT RECEIVED FROM BUSINESS CENTRE AMO UNTING TO RS.53,39,317/- TO THE EXTENT OF 80% WAS DECLARED BY THE ASSESSEE UNDE R THE HEAD INCOME FROM HOUSE PROPERTY AFTER CLAIMING DEDUCTION FOR PROPER TY TAX AND STATUTORY DEDUCTION UNDER 24(A) AT 30%. THE REMAINING 20% COMPENSATION/ RENT AMOUNTING TO RS.11,50,789/- RECEIVED ON ACCOUNT OF SERVICES REND ERED WAS DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST WHICH EXPENSES VARIOUS EXPENSES WERE CLAIMED THEREBY DECLARING A LOSS OF RS.5,87,257/-. THE SAID RETURN FILED BY THE ASSESSEE WAS ORIGINALLY PROCESS ED BY THE AO U/S 143(1) ON 29- 10-2005. SUBSEQUENTLY THE ASSESSMENT WAS REOPENED B Y HIM BY ISSUING NOTICE U/S 148 ON 10-12-2007 AND IN THE ASSESSMENT COMPLETED U /S 143(3) READ WITH SECTION 147 VIDE AN ORDER DATED 11-12-2008, THE ENTIRE INC OME AMOUNTING TO RS.53,39,317/- WAS BROUGHT TO TAX BY THE AO IN THE HANDS OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND AFTER ALLOWIN G DEDUCTION ON ACCOUNT PROPERTY TAX AND STATUTORY DEDUCTION AT 30% U/S 24( A), THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY HIM AT RS.29,69,516/- AS AGAINST THE RETURNED INCOME OF RS. 9,65,077/-. IN THE PROCESS, THE AO DISALLOWE D THE EXPENSES CLAIMED BY THE ASSESSEE AGAINST INCOME FROM SERVICE CHARGES DECLAR ED UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3) R. W.S. 147, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(AP PEALS) WHO DIRECTED THE AO TO ASSESS 80% OF THE COMPENSATION/RENT RECEIVED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND BALANCE 20% UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION FOLLOWING THE ORDER OF T HE TRIBUNAL IN ASSESSEES OWN 3 ITA NO.3300/MUM/2010 C.O. NO.45/MUM/2011 ASSESSMENT YEAR 2004.05. CASE FOR ASSESSMENT YEAR 1998-99 ON A SIMILAR ISSUE . HE ALSO DIRECTED THE AO TO ALLOW THE PERMISSIBLE DEDUCTIONS U/S 24 OF THE ACT IN THE CASE OF HOUSE PROPERTY INCOME AND TO ALLOW PROPORTIONATE EXPENSES UNDER TH E HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION IN THE SAME RATIO AS APPLI ED IN RESPECT OF COMPENSATION/RENT RECEIVED BY THE ASSESSEE. AGGRIEV ED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS AGREED BY THE LEARNED REPRES ENTATIVES OF BOTH THE SIDES, THE SOLITARY ISSUE INVOLVED IN THE REVENUES APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDERS OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARLIER YEARS ON A SIMILAR ISSUE. IN ONE OF SUCH CASES DECIDED RECENTL Y BY THE TRIBUNAL FOR ASSESSMENT YEAR 2003-04 VIDE ITS ORDER DATED 9 TH SEPT., 2009 IN ITA NO. 4691/MUM/2008, THE TRIBUNAL HAS UPHELD THE ORDER OF THE LEARNED CIT(AP PEALS) DIRECTING THE AO TO TREAT 80% OF THE RENTAL INCOME AS HOUSE PROPERTY INCOME A ND THE BALANCE 20% AS BUSINESS INCOME. RESPECTFULLY FOLLOWING THE SAID DE CISION OF THE COORDINATE BENCH OF THIS TRIBUNAL, WE UPHOLD THE IMPUGNED ORDER OF T HE LEARNED CIT(APPEALS) DIRECTING THE AO TO TREAT 80% OF THE INCOME FROM LE TTING OUT THE PREMISES AS HOUSE PROPERTY INCOME AND THE BALANCE 20% AS BUSINESS INC OME. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 5. AS REGARDS THE CROSS OBJECTION FILED BY THE ASSE SSEE, IT IS OBSERVED AT THE OUTSET THAT THERE IS A DELAY OF 28 DAYS ON THE PART OF THE ASSESSEE IN FILING THE SAID CROSS OBJECTION. IN THIS REGARD, AN APPLICATION HAS BEEN MOVED BY THE ASSESSEE SEEKING CONDONATION OF THE SAID DELAY AND KEEPING I N VIEW THE REASONS GIVEN THEREIN WHICH ARE DULY SUPPORTED BY AN AFFIDAVIT FI LED BY THE ASSESSEE, WE ARE 4 ITA NO.3300/MUM/2010 C.O. NO.45/MUM/2011 ASSESSMENT YEAR 2004.05. SATISFIED THAT THERE WAS SUFFICIENT CAUSE WHICH PR EVENTED THE ASSESSEE FROM FILING THE CROSS OBJECTION IN THE PRESCRIBED TIME. WE, THE REFORE, CONDONE THE SAID DELAY AND PROCEED TO DISPOSE OF THE CROSS OBJECTION FILED BY THE ASSESSEE ON MERIT. 6. THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HA VE AGREED THAT THE ISSUE INVOLVED IN THE CROSS OBJECTION FILED BY THE ASSESS EE IS ALSO SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DATED 9 TH SEPT., 2009 FOR ASSESSMENT YEAR 2003-04 (SUPRA) WHEREIN IT WAS HELD THAT THE RATIO OF 80% AND 20% A DOPTED IN RESPECT OF ASSESSING THE INCOME FROM RENT/COMPENSATION AS HOUSE PROPERTY INCOME AND BUSINESS INCOME CANNOT BE APPLIED FOR THE PURPOSE OF ALLOWING THE E XPENSES CLAIMED BY THE ASSESSEE AND THE EXPENSES CLAIMED BY THE ASSESSEE AS ALLOWAB LE UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION SHOULD BE ALLOWED IN THE ENTIRETY. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(APPEALS) ON THIS ISSU E AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR VARIOUS EXPENSES UNDE R THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION IN ACCORDANCE WITH LAW AFTE R NECESSARY VERIFICATION. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ACCORDINGL Y ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCT., 2011. SD/- SD/ - (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH OCT., 2011. WAKODE 5 ITA NO.3300/MUM/2010 C.O. NO.45/MUM/2011 ASSESSMENT YEAR 2004.05. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, F-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI