NARESH KANAYALAL RAJWANI, MUMBAI V. DCIT WD 22(2)2, MUMBAI

ITA 4351/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7893 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-03-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 30-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: NEHA PARAMJPE LD ARS
• Keywords: Business income; Speculation loss
• Section: 143(3); 147

Judgement Text

ITA.NO.4351/MUM/2013 NARESH KANAYALAL RAJWANI ASSESSMENT YEAR-2003-04 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.4351/MUM/2013 ( / ASSESSMENT YEAR: 2003-04) NARESH KANAYALAL RAJWANI 73,JAI HIND MARKET DR.C.G.ROAD CHEMBUR COLONY MUMBAI-400 074 / VS. DEPUTY COMMISSIONER OF INCOME TAX WARD 22(2) MUMBAI ! ./ ./PAN/GIR NO. AAAPR-8791-F ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : K.GOPAL & NEHA PARAMJPE ,LD.ARS RE VENUE BY : SUMAN KUMAR, LD. SR.DR / DATE OF HEARING : 31/10/2017 / DATE OF PRONOUNCEMENT : 13/12 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2003-04 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-33 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-33/IT/347/10-11 DATED 22/03/2012. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ITA.NO.4351/MUM/2013 NARESH KANAYALAL RAJWANI ASSESSMENT YEAR-2003-04 2 DEPUTY COMMISSIONER OF INCOME TAX WARD 22(2), MUMBA I [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON 20/12/2010. 2. THE REGISTRY HAS NOTED THAT THE APPEAL HAS BEEN FILED WITH A DELAY OF 368 DAYS, AGAINST WHICH THE ASSESSEE HAS FILED C ONDONATION PETITION DATED 28/09/2015 WHICH IS DULY SUPPORTED BY THE AFF IDAVIT OF THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THE CIRCUMSTAN CES, WHICH HAS LED TO THE DELAY IN FILING THE APPEAL. THE ASSESSEE HAS ATTRIBUTED THE DELAY TO HIS EDUCATIONAL BACKGROUND AND PLEADED THA T THE DELAY HAS TAKEN PLACE DUE TO HIS DEPENDENCY ON THE PROFESSION AL / TAX CONSULTANT AND THE DELAY WAS DUE TO INADVERTENT / UNINTENTIONA L MISTAKE ON THE PART OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIV E [DR] OPPOSED THE SAME ON THE PREMISES THAT THE ASSESSEE WAS REQUIRED TO SATISFACTORILY EXPLAIN EACH DAYS DELAY. AFTER CONSIDERING THE RIVA L CONTENTIONS, BENCH FORMED AN OPINION THAT IN THE INTEREST OF JUSTICE A ND KEEPING IN VIEW THE ASSESSEES EDUCATIONAL BACKGROUND, THE ASSESSEE DES ERVED CONDONATION OF DELAY, HOWEVER, UPON PAYMENT OF COST OF RS.10,000/-. THE SAME HAS SINCE BEEN DEPOSITED BY THE ASSESSEE V IDE CHALLAN NO. 51559 DATED 01/11/2017, BSR CODE 0271852. A COPY OF THE SAME HAS BEEN PLACED ON RECORD. HENCE, THE DELAY IS CONDONED AND WE PROCEED FURTHER ON THE MERITS OF THE APPEAL. 3. THE EFFECTIVE GROUNDS PRESSED BY LD. AR IN THE A PPEAL READS AS FOLLOWS:- 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O.IN TREATIN G AND ASSESSING THE SUB-LEASE INCOME FROM LIC AND BHARAT CO-OPERATIVE BANK LTD. A S INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME AS CLAIMED BY TH E APPELLANT. ITA.NO.4351/MUM/2013 NARESH KANAYALAL RAJWANI ASSESSMENT YEAR-2003-04 3 6. WITHOUT PREJUDICE TO THE GROUND NO.5 & ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HA VE DIRECTED DISALLOWANCE FULLY AND ERRED IN UPHOLDING THE ACTION OF THE A.O. WHICH WAS NOT JUSTIFYING IN RESTRICTING THE ALLOWANCE OF RENT & MAINTENANCE EXP ENDITURE AT 50% I.E.RS.2,92,055/- INCURRED AGAINST THE SUB-LEASE IN COME OF THE APPELLANT AND FURTHER REJECTING ALL THE OTHER CLAIMS OF THE APPEL LANT. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O.IN RESTRIC TING AND ALLOWING EXPENSES ONLY TO EXTENT OF RS.6,09,992/- AS AGAINST THE CLAIM OF RS.28,54,029/- 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) OVERLOOKED THE SPECULATION LOSS OF SHARES TRADING A MOUNTING TO RS.1,01,336/- WHILE COMPUTING THE TOTAL INCOME 4.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL EARNING INCOME FROM BROKERAGE HAS BEEN ASSESSED FOR IMPUGNED AY U/S 143(3) ON 20/12/2010 AT RS.33.37 LA CS AFTER CERTAIN ADDITIONS / ADJUSTMENTS AS AGAINST RETURNED INCOME OF RS.13.73 LACS FILED BY THE ASSESSEE ON 20/11/2003. 4.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE REFLECTED SUB-LEASE INCOME OF RS.30.30 LACS WHICH WAS RECEIVED FROM LIC AND BHARAT CO-OPERATIVE BANK LTD. UNDER THE HEAD BUSINESS INCOME. HOWEVER, THE SAME, IN THE OPINION OF LD. AO, WAS A SSESSABLE AS INCOME FROM OTHER SOURCES AGAINST WHICH THE ASSESSEE WAS ELIGIBLE TO CLAIM RENTAL PAYMENT OF RS.1.56 LACS AND REPAIRS & MAINTENANCE EXPENSES TO THE EXTENT OF 50% ONLY. RESULTANTLY, TH E SUB-LEASING INCOME WAS ASSESSED AT RS.27.38 LACS. FURTHER, THE ASSESSE E REFLECTED BROKERAGE INCOME OF RS.9 LACS AS BUSINESS INCOME AND CLAIMED CERTAIN EXPENSES UNDER VARIOUS HEADS AGGREGATING IN ALL TO RS.28.54 LACS. SINCE, SUB-LEASING INCOME WAS ASSESSED AS INCOME FROM OTHER SOURCES, LD. AO RESTRICTED THESE EXPENSES TO RS. 6.09 LACS O NLY. FINALLY, THE INCOME, IN THIS MANNER, WAS ASSESSED AT RS. 33.37 L ACS. 5. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED WHERE T HE LD. CIT(A), AFTER ITA.NO.4351/MUM/2013 NARESH KANAYALAL RAJWANI ASSESSMENT YEAR-2003-04 4 CONSIDERING ASSESSEES SUBMISSION AND FOLLOWING ORD ER OF ITS PREDECESSORS IN ASSESSEES OWN CASE FOR EARLIER YE ARS DISMISSED THESE GROUNDS. AGGRIEVED THE ASSESSEE IS IN FURTHER APPEA L BEFORE US. 6. THE LD. AR, AT THE OUTSET DREW OUR ATTENTION TO THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2007-08 AND CONTENDED THAT THE MATTER IN THAT YEAR HAS BEEN RESTORED BACK TO THE F ILE OF LD. AO WITH CERTAIN DIRECTIONS AND THEREFORE, THE SAME VIEW MAY BE TAKEN IN THE INSTANT APPEAL. THE LD. DR RAISED NO SERIOUS OBJECT IONS AGAINST THE SAME. 7. WE HAVE HEARD AND PERUSED RELEVANT MATERIAL ON R ECORD AND INCLUDING CITED ORDER OF THE TRIBUNAL FOR AY 2007-0 8, ITA NO.1291/MUM/2012 DATED 24/04/2017. WE FIND THAT SIM ILAR ISSUE AROSE IN AY 2007-08 ALSO WHERE THE TRIBUNAL HAS REMITTED THE MATTER BACK TO THE FILE OF LD. AO IN THE FOLLOWING MANNER:- 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE P ARTIES AND WITH THE HELP OF LD. REPRESENTATIVES PERUSED THE ORDERS OF AUTHORITIES B ELOW. THE AO HAS NOT DISPUTED THE ACTIVITIES UNDERTAKEN BY ASSESSEE. THE AO TREAT ED THE INCOME FROM SUB-LEASED ACTIVITIES AS INCOME FROM OTHER SOURCES. THE ASSE SSEE HAS PLACED ON RECORD THE LEDGER ACCOUNT OF EXPENDITURE INCURRED ON SUB-LEASI NG ACTIVITIES AS PER THE DETAILS AVAILABLE AT PAGE NO. 21 TO 37 OF THE PAPER BOOK(PB ). THE ASSESSEE HAS ALSO PLACED ON RECORD THE COPY OF LEAVE AND LICENSE AGRE EMENT OF VARIOUS PROPERTIES FROM PAGE NO.38 TO 93 OF PB. THE ASSESSEE HAS SHOWN THE INCOME FROM SUB-LEASED PROPERTY AS BUSINESS INCOME. HOWEVER, THE AO TREA TED THE SAID INCOME AS INCOME FROM OTHER SOURCES. THE HONBLE APEX COURT IN CHENNAI PROPERTY & INVESTMENT LTD. (SUPRA) WHILE REFERRING THE EARLIER DECISION IN CONSTITUTION BENCH OF SULTAN BROTHERS PVT.LTD. [51 ITR 353(SC)] HELD THAT EACH CASE HAS TO BE LOOKED AT FROM THE BUSINESSMEN POINT OF VIEW TO FIND OUT WHET HER THE LETTING WAS OF THE BUSINESS OR THE EXPLOITATION OF HIS PROPERTIES BY T HE OWNER. CONSIDERING THE OBSERVATIONS OF HONBLE APEX COURT, WE DIRECT THE A O TO CONSIDER THE MATTER AFRESH. NEEDLESS TO SAY THAT THE AO SHALL GRANT ADEQUATE OP PORTUNITY OF HEARING BEFORE PASSING THE ORDER. WE MAY FURTHER DIRECT THE AO THA T IN CASE, THE AO CAME TO THE CONCLUSION THAT INCOME EARNED FROM SUB-LEASING OF P ROPERTY IS TREATED AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME. T HE AO SHALL ALLOW THE EXPENDITURE INCURRED FOR EARNING THE INCOME FROM SU B-LEASED PROPERTY. ITA.NO.4351/MUM/2013 NARESH KANAYALAL RAJWANI ASSESSMENT YEAR-2003-04 5 THEREFORE, SINCE A VIEW HAS ALREADY BEEN TAKEN IN T HE MATTER BY THE COORDINATE OF THE TRIBUNAL AND THE FACTS BEING IDEN TICAL, THE MATTER IS RESTORED BACK TO THE FILE OF LD. AO WITH SIMILAR DI RECTIONS. THE CLAIM OF THE ASSESSEE QUA VARIOUS EXPENDITURE MAY ALSO BE CONSIDERED BY LD. AO ACCORDINGLY. 8. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.12. 2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. . / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI