PALM COURT BUILDINGS P.LTD, MUMBAI V. ITO 1(2)(4), MUMBAI

ITA 3678/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3729 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 20-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2013
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

, , C, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3678/MUM/2013 ASSESSMENT YEAR: 2008-09 M/S. PALM COURT BUILDINGS P. LTD., FLAT NO.6 2 ND FLOOR, 152, M.K. RD. CHURCHGATE MUMBAI-400020 / VS. ITO 1(2)(4) AAYAKAR BHAVAN, M.K. RD. MUMBAI- (ASSESSEE ) (REVENUE) P.A. NO. AAACP3434A !' / ASSESSEE BY SHRI NISHIT GANDHI (AR) / REVENUE BY SHRI C.W. ANGOLKAR (DR) # $ % & / DATE OF HEARING : 13/04/2016 % & / DATE OF ORDER: 29/04/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI-2 {(IN SHORT CIT(A)}, DATED 22.02.2013 PASSED AGAIN ST PALM COURT B. P. LTD. 2 ASSESSMENT ORDER U/S 143(3) DATED 30.12.2010 FOR TH E ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS: 1.1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, MUMBAI, ['LD. CIT (A)'] ERRED CONFIRMING THE ACTION OF THE ASSESSING OFFICER ['THE A.O.'] IN COMPUTING THE COMPENSATION INCOME OF RS. 32,94,300/- UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF COMPUTING THE SAME UNDER THE HEAD 'PROFITS AND GAIN S OF BUSINESS'. 1.2. IT IS SUBMITTED THAT, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR, 1.3. THE APPELLANT PRAYS THAT THE INCOME OF RS. 32,94,300/- BE COMPUTED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS'. 2.1. WITHOUT PREJUDICE TO THE GENERALITY OF THE ABO VE GROUND, IT IS SUBMITTED THAT, IN ANY CASE, THE LD. CIT (A) ERRED CONFIRMING THE ACTION OF THE A.O. IN COMPUTING THE COMPENSATION DERIVED FROM TATA TEA LTD. UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF COMPUTING THE SAME UNDER THE HEAD 'PROFI TS AND GAINS OF BUSINESS'. 2.2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT (A ) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN TREATING TH E COMPENSATION RECEIVED FROM TATA TEA LTD. UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF COMPUTING T HE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. WITHOUT PREJUDICE TO THE ABOVE: 3.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN NOT BIFURCATING THE COMPENSATION INCOME BETWEEN THE INCOME THAT IS LIABLE TO BE TAXED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AND THE INCOME THAT IS LIABLE TO BE TAXED UNDER THE HEAD 'INCOME F ROM OTHER SOURCES'. 3.2 IT IS SUBMITTED THAT, IN THE FACTS AND CIRCUMS TANCES OF THE CASE, AND IN LAW, THE COMPENSATION INCOME, IF N OT LIABLE TO BE TAXED AS BUSINESS INCOME, WAS REQUIRED TO BE APPROPRIATELY BIFURCATED BETWEEN HOUSE PROPER TY INCOME AND INCOME FROM OTHER SOURCES. 4. WITHOUT PREJUDICE TO THE ABOVE: PALM COURT B. P. LTD. 3 4.1 THE A.O. ERRED IN NOT COMPUTING THE INCOME UNDE R THE HEAD 'INCOME FROM HOUSE PROPERTY' IN ACCORDANCE WIT H LAW. WITHOUT PREJUDICE TO THE ABOVE: 5.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN NOT ALLOWING THE ESTABLISHMENT EXPENSES AND OTHER SIMILAR EXPENSES INCURRED BY THE APPELLANT AS BUSIN ESS EXPENSES OR BUSINESS LOSS UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS'. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI NISHIT GANDHI, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI C.W. ANGOLKAR, DEPARTME NTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. DURING THE COURSE OF HEARING, IT HAS BEEN SUBMITTED BY THE LD. COUNSEL THAT MAIN ISSUE INVOLVED IN THIS CASE I S WITH REGARD TO DETERMINATION OF HEAD OF INCOME BETWEEN T HE INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS. 3.1. IT IS NOTED FROM THE FACTS BORNE OUT FROM THE ORDE RS OF THE LOWER AUTHORITIES THAT DURING THE YEAR, THE ASSESSE E COMPANY WAS ENGAGED IN EARNING INCOME FROM RENT FROM VARIOU S TENANTS OF ITS PROPERTY KNOWN AS PALM COURT SITUATED AT 152 , M.K. MUMBAI. THE ASSESSEE SHOWED THE SAID INCOME IN ITS RETURN OF INCOME UNDER THE HEAD OF INCOME FROM BUSINESS. TH E AO CONDUCTED THE PROCEEDINGS IN DETAIL AND ASSESSED TH E SAID INCOME FROM HOUSE PROPERTY. 3.2. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A) WHEREIN NO RELIEF WAS GIVEN AND ORDER OF THE AO WAS UPHELD AND APPEAL OF THE ASSESSEE WAS REJECTED. PALM COURT B. P. LTD. 4 3.3. BEING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFOR E THE TRIBUNAL. 3.4. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSE L OF THE ASSESSEE SUBMITTED AT THE VERY OUTSET THAT FACTS OF ASSESSEES BUSINESS HAVE NOT BEEN PROPERLY APPRECIATED BY THE LOWER AUTHORITIES. OUR ATTENTION WAS DRAWN ON THE VARIOUS PAGES AS CONTAINED IN THE MEMORANDUM OF ASSOCIATION OF THE A SSESSEE COMPANY TO ARGUE THAT ASSESSEE WAS ENGAGED IN THE B USINESS OF MANAGEMENT OF ESTATE. HE PLACED RELIANCE UPON TH E RECENT JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CH ENNAI PROPERTIES AND INVESTMENTS LTD V/S CIT (2015) 373 I TR 673 (SC) AND SUBMITTED THAT CASE OF THE ASSESSEE WA S SQUARELY COVERED WITH THE JUDGMENT OF HONBLE SUPREME COURT. 3.5. PER CONTRA, THE LD. DR SUBMITTED THAT THE FACTS OF THE CASE OF THE ASSESSEE NEED TO BE EXAMINED, IN VIEW O F THE GUIDELINES GIVEN BY THE HONBLE SUPREME COURT IN TH E AFORESAID JUDGMENT. HE ALSO PLACED RELIANCE UPON TH E JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SH AMBHU INVESTMENT (P) LTD. VS. CIT 263 ITR 143 (SC). 3.6. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES AS WELL AS ORDER OF SUPREME COURT. IN OUR VIEW, THI S APPEAL NEEDS TO BE SENT BACK TO THE FILE OF THE AO FOR PRO PER VERIFICATION OF FACTS IN VIEW OF JUDGMENT OF HONBL E SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTM ENTS LTD. (SUPRA). THUS, WE SEND THIS APPEAL ALONG WITH ALL T HE GROUNDS PALM COURT B. P. LTD. 5 RAISED BEFORE US BACK TO THE FILE OF THE AO WHO SHA LL GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE BEF ORE PASSING A FRESH ORDER. THE ASSESSEE SHALL SUBMIT DETAILS AN D EVIDENCES AS MAY BE REQUIRED BY THE AO AS PER LAW. THE AO SHA LL VERIFY THE FACTS OF THE BUSINESS OF THE ASSESSEE IN THE LI GHT OF THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF C HENNAI PROPERTIES AND INVESTMENTS LTD. (SUPRA) AND DECIDE THESE GROUNDS AFRESH. THE ASSESSEE IS FREE TO RAISE ALL L EGAL AND FACTUAL ISSUES BEFORE THE AO. THUS, WITH THESE DIRE CTIONS, THESE GROUNDS ARE SENT BACK TO THE FILE OF THE AO A ND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE M AY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER # $ MUMBAI; ( DATED 29/04/2016 CTX? P.S/. . . %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / # 0 ( * ) / THE CIT, MUMBAI. 4. / / # 0 / CIT(A)- , MUMBAI 5. 34 - , / *& 5 , # $ / DR, ITAT, MUMBAI 6. 6! 7$ / GUARD FILE. / BY ORDER, PALM COURT B. P. LTD. 6 .3* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI