HARA ESTATES AND CAPITAL P.LTD, MUMBAI V. ITO 2(1)(4), MUMBAI

ITA 4413/MUM/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4161 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Keywords: Difference of opinion; Change of opinion
• Section: 143(3); 148

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 4413 / MUM/ 20 1 3 ( ASSESSMENT Y EAR : 200 7 - 20 0 8 ) HARA ESTATES AND CAPITAL PVT. LTD., 44 AJAYDEEP BUILDING, 240 PERIN NARIMAN STREET , MUMBAI - 400 001 VS. ITO 2 ( 1 )( 4 ) , MUMBAI PAN/GIR NO. : A A ACH 8373 A ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI NISHIT GANDHI /REVENUE BY : SHRI O.P.SINGH DATE OF HEARING : 2 ND JULY , 201 3 DATE OF PRONOUNCEMENT : 12 TH JULY , 2013 O R D E R TH IS APPEA L HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 25 - 4 - 2013 OF CIT(A) - 4 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 7 - 0 8 . 2 . THE ASSESSEE IS OBJECTING IN CONFIRMING THE REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 AND ALSO OBJECTING IN DISAL LOWING THE LOSS OF RS. 2,94,690/ - . 3. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 18 - 11 - 2009. THEREAFTER NOTICE UNDER SECTION 148 DATED 4 - 3 - 2011 WAS ISSUED AFTER RECORDING THE REASON. THOUGH THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) , HOWEVER, FROM PERUSAL OF PROFIT AND LOSS ACCOUNT, IT IS NOTICED THAT THE RENT RECEIPT OF RS. 17,88,724/ - AFTER CLAIMING DEDUCTION UNDER SECTION 24 AND OTHER MUNICIPAL TAXES ETC., THE NET RATE WAS ITA NO. 4413 /20 1 3 2 COMPUTED AT RS. 4,67,712/ - . THE AO FURTHER NOTED THAT THE ASSE SSEE HAS CLAIMED VARIOUS EXPENSES WHICH ARE RELATED TO BUSINESS ACTIVITY AND NO EXPENSES CAN BE ALLOWED AGAINST THE PROPERTY INCOME AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT P. LTD. V. COMMISSIONER OF INCOME - TAX, REPORTED IN (2 003) 263 ITR 143 (SC) . THEREFORE, THE ASSESSMENT WAS REOPENED BY OBSERVING THAT INCOME HAS ESCAPED ASSESSMENT. THEREAFTER REASSESSMENT PROCEEDING WAS STARTED AND THE AO DISALLOWED THE CLAIM O F VARIOUS EXPENSES MADE IN PROFIT AND LOSS ACCOUNT. IN THIS WAY, TOTAL INCOME WAS COMPUTED AT RS. 4,72,440/ - . 4 . ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) , WHO CONFIRMED THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . AFTER CONSIDERING THE SUBMI SSION IN RESPECT TO LEGAL GROUND, I FOUND THAT THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF CHANGE OF OPINION. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) . THIS FACT HAS BEEN NOTED BY THE AO WHILE RECORDING REASONS BEFORE ISSUING NOTICE UNDER SEC TION 148. THE AO HAS HIMSELF OBSERVED THAT THE ASSESSEE HAS CLAIMED VARIOUS EXPENSES IN ITS PROFIT AND LOSS ACCOUNT. THE VERY FROM SAME PROFIT AND LOSS ACCOUNT WAS AVAILABLE AT THE TIME OF COMPLETING THE ASSESSMENT ORIGINALLY. THEREFORE, IN MY CONSIDERED VIEW, THERE WAS NO MATERIAL BEFORE THE AO TO HOLD THAT ANY INCOME HAS ESCAPED ASSESSMENT. ON CHANGE OF OPINION, THE ASSESSMENT CANNOT BE REOPENED AS HELD BY VARIOUS COURTS INCLUDING THE HON BLE BOMBAY HIGH COURT IN THE CASE OF M. J. PHARMACEUTICALS LTD. V. DEPUT Y COMMISSIONER OF INCOME - TAX, REPORTED IN 297 ITR 119 AND IN THE CASE OF COMMISSIONER OF INCOME - ITA NO. 4413 /20 1 3 3 TAX V. KELVINATOR OF INDIA LTD. , REPORTED IN 256 ITR 1 , WHICH HAS BEEN APPROVED BY THE HON BLE SUPREME COURT REPORTED IN 320 ITR 561 . EVEN AND OTHERWISE ON MER IT ALSO, CERTAIN EXPENSES ARE ALLOWABLE FOR MAINTAINING THE ESTABLISHMENT OF THE COMPANY. THE ASSESSEE IS A PRIVATE LIMITED COMPANY . THEREFORE, CERTAIN EXPENSES ARE TO BE ALLOWED AS HELD BY VARIOUS COURTS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CA SE, ON DEBATABLE ISSUE, THE ASSESSMENT ALREADY COMPLETED UNDER SECTION 143(3) CANNOT BE REOPENED. ACCORDINGLY, I HOLD THAT THE ISSUANCE OF NOTICE UNDER SECTION 147/148 WAS BAD IN LAW. HENCE, I QUASH THE ASSESSMENT. 6 . SINCE, I HAVE ALLOWED THE LEGAL GROUND , THEREFORE, I AM NOT INCLINED TO DISPOSE THE GROUNDS ON MERIT AT THIS STAGE. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JU LY .2013 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI; DATED : 12/07 / 2013 / PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI