DCIT, Jaipur V. GOLCHA MINERALS PVT. LTD., Jaipur

ITA 436/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5028 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Business income
• Section: 143(3); 56; 28

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 436/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S GOLCHA MINERALS PVT. LTD., GOLCHA TRADE CENTRE, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCG 6614 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/10/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 19/10/2016 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 25/01/2016 PASSED BY THE LD CIT(A), ALIGARH AT JAIP UR (CAMP OFFICE) FOR THE A.Y. 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF IN COME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 06/10/2010 DECLARIN G TOTAL INCOME OF RS. ITA 436/JP/2016_ DCIT VS M/S GOLCHA MINERALS PVT. LTD. 2 13,75,029/-. THE ASSESSMENT WAS FINALIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 12/03/2013 AT AN IN COME OF RS.42,60,440/-. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) , WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE, AGAINST WHICH, THE REVEN UE IS IN APPEAL BEFORE ME. 4. THIS CASE WAS POSED FOR HEARING ON 01/9/2016, ON WH ICH SHRI A.B. DANGYACH ATTENDED AND REQUESTED FOR ADJOURNMENT. TH E SAME WAS GRANTED FOR 18/10/2016. ON 18/10/2016, NONE ATTENDED ON BEH ALF OF THE ASSESSEE. LD. DR WAS HEARD. AFTER CONSIDERING THE PLEADINGS OF THE REVENUE AND THE MATERIAL AVAILABLE ON THE RECORD, THIS APPEAL IS BE ING ADJUDICATED. IN THIS APPEAL, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF A PPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THE IN COME OF RS. 60,00,000/- AS INCOME FROM BUSINESS AS AGAINST INCOME FROM OTHER SOURCES ASSESSED BY THE ASSESSING OFFICE R. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS. 4,82,593/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF ENVIRONMENT EXPENSES. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF RS. 3,35,268/- MADE BY AO ACCOUNT OF DISALLOWANCE OF DEAD RENT EXPENSES. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION OF ITA 436/JP/2016_ DCIT VS M/S GOLCHA MINERALS PVT. LTD. 3 RS. 17,99,281/- MADE BY AO ACCOUNT OF DISALLOWANCE O F BONUS EXPENSES. 5. IN GROUND NO. 1 OF APPEAL, THE REVENUE HAS CHALL ENGED THE ISSUE OF HOLDING THE INCOME OF RS. 60,00,000/- AS INCOME FRO M BUSINESS AS AGAINST INCOME FROM OTHER SOURCES ASSESSED BY THE ASSESSING OFFICER. AS PER ASSESSING OFFICERS OBSERVATION, THE ASSESSEE COMPA NY WAS ENGAGED IN THE BUSINESS OF MINING/TRADING OF SOAP STONE CRUDE AND MANUFACTURING, TRADING OF SOAPSTONE POWDER, WHICH ARE USED FOR PRODUCTION OF COSMETICS, PHARMACEUTICALS, PAPER, RUBBER, SOAPS ETC. IT WAS AL SO NOTED BY THE ASSESSING OFFICER THAT THE COMPANY WAS GRANTED MININ G LEASES BY THE GOVERNMENT OF RAJASTHAN FOR EXCAVATION AND MANUFACT URING OF DIFFERENT GRADES OF SOAPSTONE AND LUMPS. THE ASSESSING OFFICER ALSO FOUND THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY AS IS EVIDENT FROM THE P&L AC COUNT. THE ONLY INCOME SHOWN IN THE P&L ACCOUNT WAS RENTAL RECEIPT FOR LEASI NG OUT ITS PULVERIZER TO M/S U.M.D.S.P. LTD.. THE ASSESSEE CLAIMED THAT, IT H AS A BUSINESS INCOME FOR THE REASON THAT THE BUSINESS WAS CLOSED FOR TEMP ORARY LULL AND THE MACHINERY WAS LET OUT, WHICH WAS INCIDENTAL TO THE BUS INESS OF THE ASSESSEE. THE ASSESSING OFFICER AFTER PROVIDING OPP ORTUNITY TO THE ASSESSEE BY ISSUING NOTICES, ASSESSED THE INCOME AS INCOME F ROM OTHER SOURCES. THE RELEVANT PARAGRAPHS OF THE ASSESSING OFFICER IS REP RODUCED AS UNDER:- ITA 436/JP/2016_ DCIT VS M/S GOLCHA MINERALS PVT. LTD. 4 2.4 THE SUBMISSIONS OF THE ASSESSEE ARE NOT FOUND A CCEPTABLE BECAUSE OF THE FOLLOWING REASONS:- (A) NO BUSINESS ACTIVITY WAS CARRIED ON BY THE ASSE SSEE DURING THE YEAR UNDER CONSIDERATION AND WHEN THE INCOME IS NOT EARNED IN THE COURSE OF BUSINESS. SECONDLY, THE ASSESSEE IS NOT ENGAGED IN THE BUSINE SS OF LETTING OUT OF PLANT AND MACHINERY. THEREFORE, IT CANNOT BE ASSESSED UNDER THE HEAD 'BUSINESS INCOME' . (B) THE INCOME FROM BUSINESS AND PROFESSION IS BEING DEALT WITH IN SECTION 28 OF THE I.T. ACT AND THE CASE OF TH E ASSESSEE IS NOT FOUND COVERED IN THE DEFINITION GIV EN IN SEC. 28. (C) THE CASE OF THE ASSESSEE IS NEITHER COVERED UNDE R 'INCOME FROM BUSINESS OR PROFESSION' NOR 'INCOME FR OM HOUSE PROPERTY'. SECTION 22 IS CONFINED TO BUILDING S OR LANDS APPURTENANT THERETO WHICH MAY BE CONVENIENTLY CALLED 'HOUSE PROPERTY' AND IN THIS CASE THE ASSET OF THE ASSESSEE CANNOT BE CATEGORIZED AS 'HOUSE PROPERTY. (D) THE INCOME OF THE ASSESSEE IS TO BE ASSESSED UND ER ONE THE FOLLOWING HEADS. - INCOME FROM BUSINESS OR PROFESSION, - INCOME FROM HOUSE PROPERTY OR - INCOME FROM OTHER SOURCES. INCOMES UNDER THE FIRST TWO HEADS ARE SPECIFICALLY DEFINED AND IF AN INCOME IS NOT COVERED UNDER THE F IRST ITA 436/JP/2016_ DCIT VS M/S GOLCHA MINERALS PVT. LTD. 5 TWO HEAD, THEN IT IS TO BE ASSESSED UNDER THE INCOME FROM OTHER SOURCES. E) THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS K.NARENDRA (2000) ITR 579 HAD UPHELD THAT 'AS THE ASSESSEE WAS NOT CARRYING ON ANY BUSINESS ACTIVITY A ND HAD ONLY LET OUT THE NOTARY PRESS ON RENTAL BASIS, LEASE MONEY OBTAINED BY HIM WAS ASSESSABLE AS INCOME FROM OTHER SOURCES. G) SECTION 56 IS THE RESIDUAL HEAD IN WHICH INCOME N OT FALLING IN OTHER HEADS ARE BROUGHT TO TAX. H) SINCE, THE INCOME RECEIVED BY THE ASSESSEE IS NOT COVERED UNDER SECTION 22 OR 28 IT IS TO BE ASSESSED U/S 56 OF THE I.T. ACT. 2.5 THEREFORE, KEEPING IN VIEW THE ABOVE FACTS, IT IS HEL D THAT INCOME EARNED BY THE ASSESSEE FROM LEASE RENT IS AS SESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. SIMILAR LY, THE INCOME RECEIVED FROM INTEREST, DIVIDEND, SUNDRY BAL ANCES WRITTEN OFF AND PRIOR PERIOD ADJUSTMENTS IS ALSO HEA TED AS INCOME FROM OTHER SOURCES. HENCE, TOTAL INCOME OF R S 62,05,761/- DECLARED BY THE ASSESSEE IS TREATED AS INCOME FROM 'OTHER SOURCES'. FURTHER THE ASSESSING OFFICER DID NOT ALLOW VARIOUS EXPENSES CLAIMED BY THE ASSESSEE AS THE EXPENSES FROM THE INCOME ASSESSED U NDER THE HEAD ITA 436/JP/2016_ DCIT VS M/S GOLCHA MINERALS PVT. LTD. 6 INCOME FROM OTHER SOURCES CAN BE ALLOWED AS PER PR OVISIONS OF SECTION 57(III) OF THE ACT. 6. AFTER HEARING THE REVENUE AND FROM PERUSAL OF TH E RECORDS AVAILABLE, IT IS NOTICED THAT THERE IS NOTHING ON THE RECORD, WHICH SUGGESTS THAT THE BUSINESS WAS CLOSED DUE TO TEMPORARY LULL. SINCE THE PULVERIZER WAS LEASED OUT TO M/S U.M.D.S.P. LTD. FOR THE SAME PURPOSE, WHI CH THE ASSESSEE WAS DOING FROM THE SAME MACHINERY. THEREFORE, IT IS NOT ESTABLISHED THAT THERE WAS A TEMPORARY LULL IN THE BUSINESS. FURTHER, IT IS ALSO NOT CLEAR FROM THE RECORD FOR WHAT PERIOD THIS PULVERIZER WAS LEASED OUT TO M/S U.M.D.S.P. LTD. WHETHER THE LEASE WAS ONLY FOR THE YEAR UNDER CONSI DERATION OR FOR A LONGER PERIOD. FURTHER, WHAT WAS STATUS IN THE SUBSEQUENT Y EARS. THE CRUCIAL FACTS REGARDING TEMPORARY LULL IN THE BUSINESS ARE NOT AV AILABLE ON RECORD. THE PERIOD OF LEASE IS ALSO NOT KNOWN FROM THE RECORDS A VAILABLE. CONSIDERING ALL THESE FACTS, I FIND IT APPROPRIATE THAT IN THE INTE REST OF JUSTICE AND EQUITY TO RESTORE THE ISSUE TO THE FILE OF THE LD. CIT(A). ACC ORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 7. GROUNDS NO. 2 TO 4 OF THE REVENUES APPEAL ARE A GAINST DELETING THE ADDITIONS OF VARIOUS EXPENSES DISALLOWED BY THE ASSE SSING OFFICER. SINCE, THESE ISSUES CAN BE DECIDED ONLY WHEN THE CHARACTER OF THE RENTAL INCOME OF RS. 60,00,000/- RECEIVED ON ACCOUNT OF LEASING O UT THE PULVERIZER TO M/S ITA 436/JP/2016_ DCIT VS M/S GOLCHA MINERALS PVT. LTD. 7 U.M.D.S.P. LTD. IS DECIDED, I HAVE ALREADY RESTORED BACK THE ISSUE TO THE FILE OF THE LD. CIT(A). THEREFORE, THESE GROUNDS ARE ALSO RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR DECIDING THE ISSUES DE NO VO. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/2016. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 TH OCTOBER, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S GOLCHA MINERALS PVT. LTD., JAIPU R. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 436/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR