K.Raheja IT Park (Hyderabad) Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-2(1), Hyderabad, Hyderabad

ITA 38/HYD/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7206 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 06-01-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 18-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: AARTHI SATHE
• Keywords: Business income
• Section: 143(3); 201; 207; 43; 13; 22; 54; 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH B HYDERABAD (THROUGH VIDEO CONFERENCE ) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 38 /HYD./201 6 A.Y. : 201 1 - 12 K . RAHEJA I.T.PARK (HYDERABAD) PVT. LTD. VS. DY. CIT, CIRCLE 2(1) HYDERABAD HYDERABAD PAN: AACCK 1914G (APPELLANT) (RESPONDENT) FOR ASSESSEE: SRI PER CY PARDIWALA, ADV. & MS. AARTHI SATHE, ADV S . FOR REVENUE: SRI Y.V.S.T. SAI, CIT, D.R. DATE OF HEARING : 06/01/2021 DATE OF PRONOUNCEMENT : 22 /01/2021 O R D E R PER BENCH THIS ASSESSEES APPEAL FOR A.Y. 2011 - 12 ARISES FROM COMMISSIONER OF INCOME TAX (APPEALS) - 9 [CIT(A) IN SHORT] HYDERABADS ORDER DATED 29.10.2015 IN CASE NO. 0404/DCIT CIRCLE 2(1)/2015 - 16 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES . CASE FILE PERUSED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING TWO SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL. ITA NO. 38 /HYD/201 6 AY 201 1 - 12 K.RAHEJA IT PARK (HYDERABAD) LTD. 2 1. ON THE FACTS AND IN CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF AO THAT THE INCOME EARNED BY THE APPELLANT FROM LETTING OUT ITS IMMOVABLE PROPERTIES IS ASSESSABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND NOT UNDE R THE HEAD INCOME FROM HOUSE PROPERTY . THE APPELLANT PRAYS FOR THE FOLLOWING RELIEF: (A) THE HONBLE TRIBUNAL BE PLEASED TO HOLD THAT THE RENTAL RECEIPTS ARE ASSESSABLE AS INCOME FROM HOUSE PROPERTY AND NOT AS BUSINESS INCOME. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OMIT OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT THE TIME OF APPEAL, TO ENABLE THE LD.ITAT TO DECIDE THE APPEAL ACCORDING TO LAW. 3. BOTH THE LEARNED REPRESENTATIVES APPEARING AT ASSESSEES AND R EVENUES BEHALF INFORM US DURING THE COURSE OF HEARING THAT THE SOLE SUBSTANTIVE ISSUE THAT ARISES FOR OUR APT ADJUDICATION IN THE ABOVE TWIN EXTRACTED GROUNDS IS THAT OF CORRECTNESS OF LOWER AUTHORITIES ACTION IN TREATING THE ASSESSEES RENTAL INCOME O F RS.106,49,97,564/ - DECLARED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS BUSINESS INCOME U/S 28 OF THE ACT. 3.1. MR. PERCY P A RDIWALA AT THIS STAGE STATED VERY FAIRLY AT THE BAR THAT THE ASSESSEE HAS ITSELF DECLARED THE VERY KIND OF RECEIPT DERIVED IN THE SUBSEQUENT ASSESSMENT YEARS UNDER THE HEAD BUSINESS INCOME ONLY AND THEREFORE, IT DOES NOT DISPUTE THE LOWER AUTHORITIES AC TION UNDER CHALLENG E WHICH HAS BEEN THE SUBJECT MATTER ABOVE EXTRACTED TWIN GROUNDS . AND MORE SO , IN VIEW OF HONBLE A PEX COURTS DECISION IN CHENNAI PROPERTIES & INVESTMENT LTD., VS. CIT (2015) 373 ITR 673 (SC) AND TRIBUNALS DECISION IN ASSESSEES OWN CASE FOR A.Y. 2010 - 11 DATED 11.7.2016 . WE DECLINE THE ASSESSEES ABOVE TWO SUBSTANTIVE GROUND S IN FOREGOING TERMS THEREFORE . 4. NEXT COMES THE ISSUE BETWEEN THE PARTIES. THE ASSESSEE HAS MOVED ITS APPLICATION DATED 8.12.2020 DURING THE PEND ENCY OF INSTANT APPEAL SEEKING TO RAISE AN ADDITIONAL GROUND THAT BOTH THE LOWER AUTHORITIES OUGHT TO HAVE HELD ITA NO. 38 /HYD/201 6 AY 201 1 - 12 K.RAHEJA IT PARK (HYDERABAD) LTD. 3 THAT HIGHER AND SECONDARY EDUCATION CESS PAID BY THE ASSESSEE AMOUNTING TO RS.23,93,221/ - IS AN ELIGIBLE DEDUCTION U/S 37 R.W.S. 40 (A) (II) OF THE ACT WHILE COMPUTING INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS /PROFESSION . MR. PARDIWALA HAS QUOTED NAT IONAL THERMAL POWER CORPORATION VS. CIT [229 ITR 383 (SC)] HOLDING THAT THE T RIBUNALS JURISDICTION U/S 2 54 OF THE ACT HAS TO BE INTERPRETED IN THE WIDEST THAN IN NARROWER SENSE. HE SPECIFICALLY QUOTED PARAS 4 TO 6 OF THEIR L ORDSHIP S D ISCUSSION THAT NOTHING COMES IN THE WAY OF THE TRIBUNAL TO ENTERTAIN AN ALTOGETHER NEW GROUND ; IN CASE THE RELEVANT FACTS ARE ALREADY ON RECORD, SO AS TO DETERMINE THE CORRECT TAX LIABILITY OF AN ASSESSEE. 4.1. THE REVENUE HAS OBJECTED TO ADMISSION OF ASSSESSEES FOREGOING ADDITIONAL GROUND AT THIS BELATED STAGE. HE ARGUED VEHEME NTLY THAT RIGHT FROM THE ASSESSEES RETURN FILED ON 29.11.2011 TILL DATE, NO SUCH CLAIM HAS BEEN RAISED SEEKING TO ALLOW THE IMPUGNED EDUCATION CESS EVEN IN THE AUDIT REPORT AS WELL. HE THEN TOOK US THROUGH THE CASE RECORD S INDICATING THE INSTANT APPEAL PENDING SINCE THE YEAR 2016 ; ARGUED AT LENGTH ON 20 TH OCTOBER,2020 FOLLOWED BY FURTHER ADJOURNMENTS ON 4.11.2020. MR.SAIS PLEA THEREFORE IS THAT BY VIRTUE OF ASSESSEES ADDITIONAL GROUND, IT WOULD GAIN AN UNDUE ADVANTAGE AND THE R EVENUE WOULD BE AT UNDUE LOSS IF WE PROCEED TO ADMIT THIS GROUND . HE ALSO QU OTED CIT VS. BEGUM NOOR BANU (1993) 204 ITR 166. HE INVITED OUR ATTENTION TO THEIR LORDSHIPS DETAILED DISCUSSION IN PARAS 12 AND 13 THEREOF. M ORE SPECIFICALLY THAT THE TRIBUNAL OUGHT TO ADMIT ONLY THAT ADDITIONAL GROUND WHICH IS IN RELATION TO OR CONNE CTED TO THE GROUNDS ALREADY RAISED IN THE CONCERNED LITIGANTS FORM 36 FILED EARLIER . THE R EVENUES PLEA THEREFORE IS THAT ONCE THE ASSESSEEES FIRST FOREGOING TWIN SUBSTANTIVE GROUNDS, DO NOT IN ANY WAY RAISE EDUCATION CESS ISSUE , IT WOULD GIVE AN ALTOG ETHER NEW COMPLEXION TO ITS GRIEVANCE S ALREADY CANVASSED IN THE APPEAL. HE, THEREFORE, SOUGHT TO DECLINE THE ADMISSION OF ASSESSEES ADDITIONAL GROUND. LEARNED CIT NEXT REFERRED TO HONBLE APEX COURT TWO DECISIONS IN M/S SRD NUTRIENTS PVT LTD. VS. CCE IN CIVIL APPEAL NO. 2781 - 2790/2010 DATED 10.11.2017 AND BAJAJ AUTO LTD. VS. UOI AND OTHERS IN CIVIL APPEAL NO. 3239 OF 2019 DATED 27.3.2019 THAT THE CLINC HING WORD TAX ALSO INCLUDES CESS AND ITA NO. 38 /HYD/201 6 AY 201 1 - 12 K.RAHEJA IT PARK (HYDERABAD) LTD. 4 THEREFORE, HE PRAYED FOR REJECTING ASSESSEES IMPUGNED GRIEV ANCE ON MERITS AS WELL. 4.2. MR.PERCY P A RDIWALA REITERATED ASSESSEES STAND THAT IT DESERVES RELIEF ON BOTH COUNTS ON ADMISSION OF ASSESSEES ADDITIONAL GROUND ON LEGAL PRINCIPLES FOLLOWED BY FAVOURABLE ADJUDICATION ON MERITS. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE FOREGOING RIVAL CONTENTIONS IN SUPPORT OF ADMISSION OF ASSESSEES ADDITIONA L GROUND ON LEGALITY AS WELL AS ON MERITS. COMING TO THE FORMER ASPECT OF LEGALITY , WE ARE OF THE OPINION THAT THE TRIBUNALS JURISDICTION CONTINUES RIGHT FROM FILING OF THE APPEAL TILL FINAL DISPOSAL U/S 254 OF THE ACT. THEIR LORDSHIPS LANDMARK JUDGEMENT IN NTPC (SUPRA) HAS CLARIFIED THAT TH IS SECOND APPELLATE JURISDICTION HAS TO BE TAKEN IN WIDEST THAN IN A NARROW ER SENSE. W E MAKE IT CLEAR THE HONBLE JURISDICTIONAL HIGH COURTS DECISION (SUPRA) ; EVEN IF TAKEN AS DIRECTLY DEALING WITH THE ISSUE , CAME M UCH PRIOR IN TIME . WE THUS GO BY THE JUDICIAL HIERARCHY TO DECLINE THE R EVENUES OBJECTION S REGARDING ADMISSION OF ASSSESSEES ADDITIONAL GROUND. WE ALSO QUOTE THIS TRIBUNALS DECISION AL L C ARGO GLOBAL LOGISTICS LTD. VS. DCIIT (2012) 137 ITD 207 (MUM - IITAT) (SB) THAT WE CAN VERY WELL ENTERTAIN AND ADMIT AN ADDITIONAL GROUND TO DETERMINE THE CORRECT TAX LIABILITY OF AN ASSESSEE PROVIDED THE RELEVANT FACTS ARE AL READY ON RECORD. WE THUS ACCEPT ASSESSEES LETTER/PETITION DATED 8 TH OCTOBER,2020 SEEKING ADMISSION OF THE FOREGOING ADDITIONAL GROUND. 5.1. COMING TO THE ISSUE OF ALLOWABILITY OF EDUCATION CESS AS AN ALLOWABLE DEDUCTION, WE FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE SESA GOA LTD., VS. JT.CIT (2020) 117 TAXMANN.COM 96 (BOM.) ; H ONBLE RAJASTHAN HIGH COURT IN CHA MBAL F ERTILIZERS & CHEMICALS LTD. VS. CIT IN ITA 52/2018 HAVE DECLINED THE R EVENUES VERY STAND SEEKING TO INCLUDE EDUCATION CESS AS A PART OF TAX U/S 40 (A) (II) OF THE ACT. THEIR LORDSHIPS HAVE ALSO PLACED RELIANCE ON THE CBDT C IRCULAR TO THIS EFFECT ISSUED W AY BACK ON 18.5.1967 THAT THE EXPRESSION TAX DOES NOT INCLUDE CESS. COMING TO R EVENUES OBJECTION THAT THE RELEVANT FACTS ARE NOT ON RECORD, WE HOLD THAT THE ASSSESSEES PAPER BOOK ITA NO. 38 /HYD/201 6 AY 201 1 - 12 K.RAHEJA IT PARK (HYDERABAD) LTD. 5 RUNNING INTO 43 PAGES AND MORE SPECIFICALLY PAGES 1 AND 3 CLEARLY DEMONSTRATE THAT IT HAD ITSELF ADDED BACK THE EDUCATION CESS AMOUNT SUO MOTO. ITS FURTHER ARGUMENT THAT WE HAVE TO GO BY HON BLE APEX COURTS DECISIONS DEALING WITH CENTRAL EXCISE LAW ALSO DOES NOT FIND FAVOUR WITH US IN VIEW OF HONBLE BOMBAY HIGH COURTS DECISION IN SESA GOA LTD. (SUPRA) SPECIFICALLY DEALING WITH THIS PLEA IN PARA 34 ONWARDS THEREBY CONCLUDING THAT A CESS UNDER THE PROVISIONS OF THE ACT IS NOT TO BE TAKEN AS TAX FOR THE PURPOSE OF S.40 (A) (II) DISALLOWANCE . THEREFORE WE ACCEPT ASSESSEES CLA IM SEEKING TO ALLOW EDUCATION CESS OF RS.23,93,221/ - AND DIRECT THE A SSESSING O FFICER TO FINALISE THE CONSEQUENTIAL COMPUTATION AS PER LAW. THE A SSESSEES INSTANT ADDITIONAL SUBSTANTIVE GROUND IS ALLOWED. THUS A SSESSEES APPEAL I S PARTLY ALLOWED IN ABOVE TERMS. PRONOUNCED IN OPEN COURT ON 22 ND JANUARY, 2021. SD/ - SD/ - (LAXMI PRASAD SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 22 ND JANUARY, 2021. * GMV ITA NO. 38 /HYD/201 6 AY 201 1 - 12 K.RAHEJA IT PARK (HYDERABAD) LTD. 6 COPY OF THE ORDER FORWARDED TO: 1. K . RAHEJA IT PARK (HYDERABAD) PVT. LTD., MINDSPACE, CYBERABAD, S.NO.64 (PART), NEXT OF VSNL BUILDING, APIIC SOFTWARE UNIT LAYOUT, 1 ST FLOOR, TITUS TOWERS, BUILDING 10, MADHAPUR, HYDERABAD 500 081 , TELANGANA 2. DY.CIT, CIRCLE 2(1) , HYDERABAD 3. ACIT, RANGE 2, HYDERABAD. 4. CIT(A) - 9 , HYDERABAD. 5. PR.CIT - 2, HYDERABAD 6. DR, ITAT, HYDERABAD. 7. GUARD FILE.