The Dy. Commr. Of Income Tax, Cir.-1(2), RAJKOT-GUJARAT V. M/s Opera Polypack Pvt. Ltd., RAJKOT-GUJARAT

ITA 434/RJT/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6634 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 22-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Business income; Depreciation; Deemed to accrue or arise in india

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY , MEMBER ITA NO. 434/RJT/2015 : ASS T. YEAR : 2011 - 12 DCIT, CIRCLE - 1(2), RAJKOT (APPELLANT) VS M/S. OPERA POLYPACK PVT. LTD., 201, MAHALAXMI COMPLEX, NR. K.K.V. HALL, KALAWAD ROAD, RAJKOT (RESPONDENT) PAN : AAACO2488F APPELLANT BY : SHRI AVINASH KUMAR, DR RESPONDENT BY : NONE DATE OF HEARING : 2 2 /0 3 /201 7 DATE OF PRONOUNCEMENT : 24/ 0 3 /201 7 O R D E R PER K. NAR A SIMHA CHARY, MEMBER, JM : THIS APPEAL BY THE REVENUE IS CHALLENGING THE ORDER DATED 25.6.2015 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, RAJKOT (FOR SHORT HEREINAFTER REFERRED TO AS LD. CIT(A) ) IN APPEAL NO.CIT(A) - I/RJT/0030/14 - 15. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF POLYTHENE BAGS. THERE WAS A SURVEY U/S 133 OF THE INCOME TAX ACT, 1961 (FOR SHORT HEREINAFTER REFERRED TO AS THE ACT ) CONDUCTED AT T HE BUSINESS PREMISES OF THE 2 M/S. OPERA POLYPACK PVT. LTD. ITA NO. 434/RJT/2015 ASSESSEE ON 14.3.2011. EXCESS STOCK OF RS.6,05,429/ - WAS FOUND AND SO ALSO THE DIRECTOR OF THE COMPANY VOLUNTARILY SURRENDERED AN ADDITIONAL INCOME OF RS.40,10,120/ - AS INCOME EARNED OUT OF REAL ESTATE TRANSACTIONS, MAKING A TO TAL DISCLOSURE TO THE TUNE OF RS.46,15,549/ - FOR THE FINANCIAL YEAR 2010 - 11. SUBSEQUENTLY, THE ASSESSEE FILED RETURN OF INCOME INCLUDING THE DISCLOSED INCOME IN THE PROFIT & LOSS ACCOUNT, BUT CLAIMED EXPENDITURE AND WORKED OUT A LOSS OF RS.37,979/ - . ON T HE INSTRUCTIONS OF THE RANGE JCIT, THE ASSESSING OFFICER TREATED RS.40,10,120/ - VOLUNTARILY SURRENDERED BY THE DIRECTOR OF THE COMPANY AS DEEMED INCOME NOT FALLING UNDER ANY OF THE HEADS OF INCOME SPECIFIED U/S 14 OF THE ACT AND HELD THAT IT IS NOT AVAILAB LE FOR SET OFF AGAINST ANY LOSS. ON THIS PREMISE, THE ASSESSING OFFICER PROCEEDED TO ADD RS.40,10,120/ - . 3. AGGRIEVED BY SUCH ADDITION, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT( A) AND LD. CIT(A) BY WAY OF THE IMPUGNED ORDER DELETED THE SAME AND ALLOWED THE APPEAL. 4. CHALLENGING THE SAID IMPUGNED ORDER, REVENUE IS BEFORE US IN THIS APPEAL URGING THAT THE DEEMED INCOME OF RS.40,10,120/ - DOES NOT FALL UNDER ANY OF THE HEADS SPEC IFIED U/S 14 OF THE ACT AND LD. CIT(A) WAS NOT CORRECT IN TREATING IT AS EITHER BUSINESS INCOME OR INCOME FROM OTHER SOURCES AND THEREBY ALLOWING SET OFF OF BUSINESS LOSS, AS SUCH THE IMPUGNED ORDER CANNOT BE SUSTAINED AND THE ORDER OF THE ASSESSING OFFICE R HAS TO BE RESTORED. 3 M/S. OPERA POLYPACK PVT. LTD. ITA NO. 434/RJT/2015 5. PER CONTRA , IT IS THE ARGUMENT OF THE LD. AR THAT IN ORDER TO BE TAXED, THE INCOME DECLARED IN THE SURVEY HAS NECESSARILY TO FALL UNDER ANY OF THE HEADS OF INCOME AND THAT WITHOUT IT BEING CLASSIFIED AS INCOME U/S 14 OF THE ACT, I T CANNOT BE BROUGHT TO TAX. WHEN ONCE THE INCOME IS CONSIDERED TO BE THE BUSINESS INCOME OR INCOME FROM OTHER SOURCES, IT FOLLOWS THAT IT CAN BE SET OFF AGAINST DEPRECIATION ALLOWANCE. THE LD. AR, THEREFORE, PRAYED TO DISMISS THE APPEAL. 6. WE HAVE CARE FULLY GONE THROUGH THE MATTER ON RECORD IN THE LIGHT OF THE ARGUMENTS ADVANCED BEFORE US. IT IS SUBMITTED BEFORE THE LD. CIT(A) AS WELL AS BEFORE US THAT IN THE CASE OF CIT VS SHILPA DYEING & PRINTING MILLS (P.) LTD., (2014) 100 DTR 381 THE HON BLE GUJARA T HIGH COURT HAS HELD AS UNDER : - THEREFORE, FOR THE INCOME DECLARED IN SURVEY TO BE TAXED, IT HAS TO FALL UNDER ONE OF THE HEADS OF INCOME. ONCE A HEAD OF INCOME IS ASSIGNED TO THE ADDITIONAL INCOME DISCLOSED, WHETHER BUSINESS OR OTHER SOURCE, IT BECOMES AVAILABLE FOR SET OFF AGAINST CURRENT YEAR BUSINESS LOSS AS CURRENT YEAR BUSINESS LOSS IS ALLOWED TO BE SET OFF AGAINST CURRENT YEAR INCOME UNDER ANY OTHER HEAD (SECTION 71) .. SUFFICE IT TO STATE THAT THE ACT DOES NOT ENVISAGE TAXING ANY INCO ME UNDER ANY HEAD NOT SPECIFIED IN SECTION 14 OF THE ACT. IN THE CIRCUMSTANCES, THERE IS NO QUESTION OF TRYING TO READ ANY CONFLICT IN THE TWO JUDGEMENTS OF THIS COURT AS SUBMITTED BY THE LEARNED COUNSEL FOR THE REVENUE. THE LD. CIT(A) WHILE FOLLOWING T HE ABOVE DECISION ANSWERED THE QUESTION AS TO WHETHER THE ADDITIONAL INCOME DECLARED DURING THE SURVEY IS BUSINESS INCOME OR NOT IN THE AFFIRMATIVE. FURTHER, IN THE ALTERNATIVE, HE AGREED WITH THE ASSESSEE THAT EVEN IF THIS ADDITIONAL INCOME HAS TO BE CON SIDERED AS INCOME FROM OTHER SOURCES, STILL IT CAN BE SET OFF AGAINST DEPRECIATION ALLOWANCE. NOTHING MATERIAL IS BROUGHT BEFORE US 4 M/S. OPERA POLYPACK PVT. LTD. ITA NO. 434/RJT/2015 SHOWING THAT THIS FINDING OF THE LD. CIT(A) IS PERVERSE OR CONTRARY TO LAW. ON THE OTHER HAND, IT IS THE OBSERVATIONS OF T HE LD. CIT(A) THAT WHEN IN FACT THERE WAS NO BUSINESS LOSS AT ALL, THE ASSESSING OFFICER TREATING THE DEPRECIATION ALLOWANCE/LOSS AS BUSINESS LOSS IS A MISTAKE. WE, THEREFORE, ARE IN AGREEMENT WITH THE FINDINGS OF LD. CIT(A) THAT THE ADDITIONAL INCOME DIS CLOSED DURING THE SURVEY IS VERY MUCH IN THE NATURE OF BUSINESS INCOME AND THE ASSESSEE HAS RIGHTLY GIVEN IT TREATMENT IN THE BOOKS OF ACCOUNT. FURTHER, IN THE ABSENCE OF REVENUE BRINGING ANY MATERIAL TO SHOW THAT THE ADDITIONAL INCOME DECLARED BY THE ASS ESSEE WAS FROM THE REAL ESTATE TRANSACTIONS OR NOT, THE BENEFIT SHALL GO TO THE ASSESSEE. WITH THIS VIEW OF THE MATTER, WE FIND THAT THE APPEAL IS DEVOID OF MERITS AND IS LIABLE TO BE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDE R PRONOUNCED IN THE OPEN COURT ON 2 4 T H MARCH , 201 7 . SD/ - SD/ - ( S.V. MEHROTRA ) ACCOUNTANT MEMBER ( K. NARASIMHA CHARY ) JUDICIAL MEMBER RAJKOT , DATE : 2 4 T H MARCH , 201 7 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, RAJKOT 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, RAJKOT