TECHSTAR INFOTECH (I) P.LTD, MUMBAI V. ITO 10(3)(3), MUMBAI

ITA 3626/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1728 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Capital receipt; Set aside

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 3626 /MUM/ 2017 (ASSESSMENT YEAR 20 11 - 12 ) M/S. TECHSTAR INFOTECH (INDIA) PVT. LTD. 15, BHANDUP VILLAGE ROAD NEXT TO WMI CRANES ROAD BHANDUP, WEST MUMBAI - 400 068. PAN : AABCT7637C V S . ITO - 10(3)(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI ANUJ KISNADWALA DEPARTMENT BY SHRI CHAITANYA ANJARIA DATE OF HEARING 10.6 . 201 9 DATE OF PRONOUNCEMENT 10 . 6 . 201 9 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 14.2.2017 AND PERTAINS TO A.Y. 2011 - 12. 2. THE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN TREATING DISPUTED AMOUNT OF RS. 49,77,751/ - CREDITED INTO THE BANK ACCOUNT BY WAY OF ECS RECEIVED FROM MTNL AS RENTAL INCOME IN THE HANDS OF THE ASSESSEE MERELY RELYING ON THE DETAILS STATED IN FORM NO. 26AS WITHOUT APPRECIATING THAT THE TENANT - MTNL IS NO BETTER THAN A MERE TRESPASSER I.E. PERSON IN WRONGFUL POSSESSION O F THE PROPERTY WHEREIN AN EVICTION SUIT IS FILED BY THE ASSESSEE AND IS PENDING FOR ADJUDICATION. THUS ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, LEARNED CIT(A) ERRED IN CONFIRMING RECEIPT OF DISPUTED AMOUNT AS RENTAL INCOME TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. IT TRANSPIRES THAT IDENTICAL ISSUE WAS CONSIDERED BY THIS ITAT IN A.Y. 2010 - 11 IN ASSESSEES OWN 2 CASE VIDE ORDER DATED 22.5.2019, FACTS OF THE CASE ARE IDENTICAL AND THE TRIBUNAL HAS SET ASIDE THE MATTER AND DIRECTED AS UNDER : - 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE LANDED REPRESENTATIVE OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO DELIBERATED ON VARIOUS CASE LAWS REL IED BY LOWER AUTHORITIES. THE FACTS OF THE CASE THAT THE TENANT/ LICENSEE DESPITE EFFLUX OF LEASE PERIOD ARE OCCUPYING THE TENANTED PORTION ARE NOT IN DISPUTE. THE TENANT IS REMITTING THE USER CHARGES BY WAY OF ECS. THE ASSESSEE HAS CLAIMED THAT THE PAYMEN T MADE THROUGH ECS IS NOT ON ACCOUNT OF CONTRACTUAL PAYMENT OF RENT AND NOTHING BUT PART OF MESNE PROFIT. THE ASSESSEE HAD TREATED THE SAID AMOUNT AS PART PAYMENT OF DEPOSITS OF MESNE PROFIT. THE PARTIES HAVE LOCKED THEIR HORN ON THE TAXABILITY OF RECEIPT, WHETHER IT SHOULD BE TAXED AS REVENUE RECEIPT CHARGEABLE TO TAX OR IT SHOULD BE TREATED AS MESNE PROFIT BEING CAPITAL RECEIPT AND NOT CHARGEABLE TO TAX. THE LEARNED AR OF THE ASSESSEE HAD STRONGLY RELIED UPON THE DECISION OF SPECIAL BENCH IN NARANG OVERSE AS PRIVATE LTD (SUPRA) WHEREIN THE SPECIAL BENCH OF MUMBAI TRIBUNAL HELD THAT WHEN THE ASSESSEE WAS DEPRIVED OF THE USE AND OCCUPATION OF THE PROPERTY AND THEREFORE, THE MESNE PROFIT RECEIVED BY THE ASSESSEE UNDER THE CONSENT DECREE AWARDED BY THE APEX COU RT AT THE RATE OF RS. 10 LAKHS P.M. WAS ON ACCOUNT OF DAMAGES FOR DEPRIVATION OF USE AND OCCUPATION OF THE PROFITS AND THEREFORE, THE SUM SO RECEIVED WAS CAPITAL IN NATURE NOT CHARGEABLE TO TAX. IN THE PRESENT CASE THE ASSESSEE HAS FILED ALREADY OBTAINED A JUDGEMENT AND DECREE OF VACANT AND PEACEFUL POSSESSION OF TENANTED PREMISES VIDES ORDER DATED 29 TH JULY 2016 PASSED BY LEARNED JUDGE OF SMALL CAUSE COURT BOMBAY. WHILE PASSING THE JUDGEMENT IN DEGREE THE LEARNED JUDGE OF SMALL CAUSE COURT BOMBAY DIRECTED THE ASSESSEE TO INITIATE SEPARATE PROCEEDING UNDER ORDER 20 RULE 12 OF CPC FOR INQUIRY FOR RECOVERY OF MESNE PROFIT. THE SAID PROCEEDING FOR DETERMINATION OF QUANTUM OF MESNE PROFIT UNDER ORDER 20 RULE 12 OF CPC INITIATED BY ASSESSEE IS STILL PENDING. THE MAIN THRUST OF SUBMISSION OF LEARNED AR OF THE ASSESSEE WAS THAT THE ISSUE OF TAXABILITY OR OTHERWISE OF MESNE PROFIT DOES NOT ARISE DURING THE YEAR UNDER CONSIDERATION AND ALL THE SUBMISSION OF MADE ONLY TO THE DEMONSTRATE THE FACTS THAT THE AMOUNT RECEI VED DURING THE YEAR IS TO BE ADJUSTED AGAINST MESNE PROFIT WHICH MIGHT BE AWARDED BY LEARNED SMALL CAUSE COURT IN A SEPARATE PROCEEDINGS. THEREFORE, CONSIDERING THE SUBMISSION OF LEARNED AR OF THE ASSESSEE THAT THE DECISION OF LEARNED SMALL CAUSE COURT ON THE QUANTUM OF MESNE PROFIT IS AWAITED, THIS GROUND OF APPEAL IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AFTER TAKING IN TO CONSIDERATION OF DECISION OF SMALL CAUSE COURT. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE DECISION OF SPECIAL BENCH OF IN NARANG OVERSEAS PRIVATE LTD (SUPRA) AND PASS THE ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO RECORD THAT ASSESSING OFFICER SHALL GRANT FAIR AND PROPER OPPORTUNITY BEFORE PASSING ORDER ON THE ISSUE. IN 3 THE RESULT THE GROUNDS OF THE APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 4. RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, I SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH SAME DIRECTION AS ABOVE. 5 . IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 10 . 6 . 201 9 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 10 / 6 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI