SIMTO PROPERTY DEVELOPERS LTD, MUMBAI V. ITO 5(3)(2), MUMBAI

ITA 3852/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1103 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 15-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 01-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Keywords: Business income; Depreciation; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO.3852/M/2012 SIMTO PROPERTY DEVELOPERS LIMITED ASSESSMENT YEAR 2003-04 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3852/MUM/2012 ( / ASSESSMENT YEAR: 2003-04) SIMTO PROPERTY DEVELOPERS LIMITED C/O JAIN AMBAVAT & ASSOCIATES 10 CHEMOX HOUSE 3 RD FLOOR, 7 BARRACK ROAD OPPOSITE BOMBAY HOSPITAL MUMBAI 400 020 / VS. INCOME TAX OFFICE R 5(3)(2) AAYKAR BHAVAN M.K.ROAD MUMBAI -400 020 !' ./ ./PAN/GIR NO. AAACS-5299-L ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ / APPELLANT BY : NONE %&'$ / RESPONDENT BY : DR. A.K. NAYAK, LD. DR / DATE OF HEARING : 26/04/2017 / DATE OF PRONOUNCEMENT : 28 /04/2017 ITA NO.3852/M/2012 SIMTO PROPERTY DEVELOPERS LIMITED ASSESSMENT YEAR 2003-04 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSME NT YEAR [AY] 2003-04 CONTESTS THE ORDER OF LD. COMMISSIONER OF INCOME TA X (APPEALS)-9 [CIT(A)], MUMBAI DATED 22/02/2012 QUA REASSESSMENT PROCEEDINGS ON LEGAL GROUNDS AS WELL AS ON MERITS. SINCE NONE HAS APPEARED BEFOR E US ON BEHALF OF THE ASSESSEE DESPITE BEING PROVIDED WITH SUFFICIENT OPP ORTUNITY OF BEING HEARD, THEREFORE, WE PROCEED TO DECIDE THE APPEAL ON THE B ASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DR. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT FIRM, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 VIDE ASSESSING OFFICER [AO] ORDER DATED 07/12/2010 WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.80,640/- AS AG AINST RETURNED LOSS OF RS.5,32,666/- FILED BY THE ASSESSE ON 27/11/2003. THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(1) OF THE ACT VIDE ORDER DATE D 11/02/2004 ACCEPTING THE RETURNED LOSS . THE ASSESSEE REFLECTED INCOME FROM RENTING OF FAC TORY PREMISES FOR RS.1,15,200/- AS BUSINESS INCOME AND CLAIMED EXPENSES OF RS.1,13,412/- AND DEPRECIATION OF RS.5,25,454/- AGA INST THE SAME WHICH LED TO THE TRIGGERING OF REASSESSMENT PROCEEDINGS BY ISSUA NCE OF NOTICE DATED 15/10/2009 U/S 148 WHICH WAS DULY SERVED ON THE ASS ESSEE. IN RESPONSE, THE ASSESSEE FAILED TO FILE THE RETURN OF INCOME, WHICH LED TO ISSUANCE OF ANOTHER NOTICE ON 08/11/2010. AGAINST THE SAME, THE ASSESSE E REQUESTED TO TREAT THE ORIGINAL RETURN FILED BY HIM AS RETURN IN RESPONSE TO THE SAID NOTICE AND ALSO REQUESTED TO SUPPLY THE REASONS FOR REOPENING WHICH WERE DULY SUPPLIED. THE ASSESSEE RAISED OBJECTION AGAINST REOPENING WHICH W ERE DULY REJECTED BY AO. FINALLY, THE AO TREATED THE RENTAL INCOME UNDER THE HEAD HOUSE PROPERTY ITA NO.3852/M/2012 SIMTO PROPERTY DEVELOPERS LIMITED ASSESSMENT YEAR 2003-04 3 AGAINST WHICH THE ASSESSEE WAS ALLOWED STATUTORY DE DUCTION TO THE EXTENT OF 1/3 RD ONLY IGNORING THE EXPENSES AND DEPRECIATION CLAIME D BY THE ASSESSEE FOR RS. 1,13,412/- & RS.5,25,454/- RESPECTIVELY. AGGRIE VED, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WITHOUT ANY SUCCESS VI DE ORDER DATED 22/02/2012 WHEREIN THE ASSESSEE ASSAILED REOPENING ON LEGAL GR OUNDS AS WELL AS CONTESTED THE IMPUGNED ADDITIONS ON MERITS. THE LD. CIT(A) WHILE UPHOLDING THE REOPENING PLACED RELIANCE ON THE DECISION OF IT S PREDECESSOR IN ASSESSEES OWN CASE FOR AY 2001-02 & 2002-03 AND CONFIRMED THE ORDER OF LD. AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIA NCE ON THE FINDINGS OF THE LD. CIT(A) AND FAIRLY STATED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2001-02 & 2002-03 ITA NO. 1578-1579/M/12 ORDER D ATED 18/11/2016 ALLOWED ASSESSEES APPEAL QUA EXPENDITURE AND DEPRECIATION CLAIM OF THE ASSESSEE. HOWEVER, THE ISSUE OF RENTAL INCOME EARNE D BY THE ASSESSEE WAS NOT COVERED BY THE SAID ORDER AND THE SAME HAS RIGH TLY BEEN ASSESSEE UNDER THE HEAD HOUSE PROPERTY. 4. WE HAVE HEARD THE SAME AND PERUSED RELEVANT MATE RIAL ON RECORD. SO FAR AS REOPENING IS CONCERNED, WE SEE NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) AS THE ORIGINAL RETURN WAS PROCES SED U/S 143(1) AND THE REOPENING HAS BEEN INITIATED WITHIN A PERIOD OF SIX YEARS AND THEREFORE, THE ONLY CONDITION TO BE SATISFIED IN THIS REGARD IS TH AT THE ASSESSING OFFICER HAS REASONS TO BELIEVE THAT CERTAIN INCOME EARNED BY AS SESSEE HAS ESCAPED ASSESSMENT. THE LD. AO AFTER PERUSING THE ASSESSMEN T OF EARLIER YEARS CAME TO A CONCLUSION THAT NO BUSINESS WAS BEING CARRIED ON BY THE ASSESSEE DURING IMPUGNED AY AND HENCE THE EXPENDITURE CLAIMED BY HI M WERE NOT ALLOWABLE TO HIM. THEREFORE, LEGAL GROUNDS RAISED BY ASSESSEE STANDS REJECTED. ITA NO.3852/M/2012 SIMTO PROPERTY DEVELOPERS LIMITED ASSESSMENT YEAR 2003-04 4 5. ON MERITS, WE FIND THAT THE TRIBUNAL IN THE CITE D ORDER FOR 2001-02 & 2002-03 HAS ALLOWED EXPENDITURE & DEPRECIATION CLAI M OF THE ASSESSEE ON THE REASONING THAT THE SAME WERE ESSENTIAL EXPENDITURE TO MAINTAIN THE ASSESSEES BUSINESS ASSETS AND THEREFORE, FOLLOWING JUDICIAL DISCIPLINE, WE HELD SO. THE ASSESSEE SHALL BE ALLOWED DEPRECIATION AND OTHER EXPENDITURE CLAIMED BY HIM, SUBJECT TO VERIFICATION BY AO. AS F AR AS THE RENTAL INCOME EARNED BY THE ASSESSEE IS CONCERNED, PRIMA FACIE, THE SAME HAS RIGHTLY BEEN TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS THE ASSESSEE HAS RECEIVED RENT AGAINST CERTAIN PREMISES AND RENTING IS NOT THE BUSINESS OF THE ASSESSEE AND THEREFORE, THE FINDING OF LD. AO TO TH AT EXTENT ARE CONFIRMED. AGAINST THE SAME, THE ASSESSEE HAS RIGHTLY BEEN ALL OWED STATUTORY DEDUCTIONS AS PER SECTION 24. THE GROUNDS OF APPEAL, ON MERITS , ARE THUS PARTLY ALLOWED. THE LD. AO IS DIRECTED TO RE-COMPUTE THE INCOME / B USINESS LOSS OF THE ASSESSEE IN TERMS OF OUR ORDER. 6. IN NUTSHELL, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH APRIL, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTA NT MEMBER MUMBAI; DATED : 28.04.2017 SR.PS:- THIRUMALESH ITA NO.3852/M/2012 SIMTO PROPERTY DEVELOPERS LIMITED ASSESSMENT YEAR 2003-04 5 / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. %. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI