Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 3985 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 8 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-02-2016
Appeal Filed By
Department
Bench Allotted
C
Assessment Year
2010-2011
Appeal Filed On
24-06-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO.4417/M/2014 (ASSESSMENT YEAR: 2010 - 2011 ) DCIT, CIRCLE 7(1), MUMBAI. / VS. M/S. PRISTINE DEVELOPERS PVT LTD., 3, NARAYAN BUILDING, 23, L.N. ROAD, DADAR (E), MUMBAI 400014. ./ PAN : AADCP5436F ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO.3342/M/2014 (ASSESSMENT YEAR: 2010 - 2011 ) M/S. PRISTINE DEVELOPERS PVT LTD., 3, NARAYAN BUILDING, 23, L.N. ROAD, DADAR (E), MUMBAI 400014. / VS. DCIT, CIRCLE 7(1), MUMBAI. ./ PAN : AADCP5436F ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI VIJAY MEHTA / REVENUE BY : SHRI RAVINDRA SINDHU, DR / DATE OF HEARING : 25.02.2016 / DATE OF PRONOUNCEMENT : 25.02.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS RELATING TO THE ASSESSMENT YEAR 2010 - 2011. THESE TWO APPEALS ARE FILED AGAINST THE ORDER OF THE CIT (A) - 13, DATED 11.4.2014. SINCE, THE ISSUES RAISED IN THESE APPEALS ARE INTER - CONNECTE D, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2 GROUNDS RAISED IN REVENUES APPEAL ARE AS UNDER: - (I) THE LD CIT (A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INCOME RECEIVED BY WAY OF LETTING OUT OF UNSOLD STOCK AS INCOME FROM HOUSE PROPERTY WITHOUT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX AS CLEARLY BROUGHT O UT BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. (II) THE LD CIT (A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INCOME RECEIVED BY WAY OF LETTING OUT OF UNSOLD STOCK AS INCOME FROM HOUSE PROPERTY WITHOUT PROPERLY APPR ECIATING THE FACT THAT THE ASSESSEE WAS ENGAGED IN BUSINESS OF CONSTRUCTION AND UNSOLD STOCK ON WHICH IT EARNED RENT, WAS PART OF PROJECT UNDERTAKEN AS BUSINESS ACTIVITY. GROUNDS RAISED IN ASSESSEE S APPEAL ARE AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE TREATMENT OF INCOME FROM SALE OF PROPERTY HELD AS CAPITAL ASSET AS INCOME FROM BUSINESS AT RS. 5,01,55,244/ - AS AGAINST CAPITAL GAIN OF RS. 5,68,08,656/ - SHOWN IN THE RETURN OF INCOME. THE DISAL LOWANCE IS THEREFORE BAD IN LAW AND NEEDS TO BE DELETED. 2. ON THE FACTS OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLEGING THAT THE APPELLANT HAD CLAIMED THE EXPENSES IN RELATION TO CONSTRUCTION OF THE COMMERCIAL PREMISES AND CARRIED FORWARD RESULTANT BUSINESS LOSSES PERTAINING TO AY 2006 - 07 TO 2008 - 2009 IGNORING THE FACT THAT THE EXPENSES WERE DEBITED TO WORK - IN - PROGRESS A/C AND NOT DEBITED TO PROFIT & LOSS ACCOUNT AND THEREFORE, NEITHER THE EXPENSES NOR THE RESULTANT LOSSES WERE CLAIMED IN THE RETURN OF INCOME FOR AY 2006 - 07 TO AY 2008 - 2009. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN ALLEGING THAT THE APPELLANT HAD CLAIMED DEPRECIATION ON THE COMMERCIAL PREMISES IGNORING THE FACT THAT THE DEPRECIATION CLAIMED IN THE ORIGINAL RETURN OF INCOME FILED FOR AY 2009 - 2010 AND AY 2010 - 11 WAS WITHDRAWN IN THE REVISED RETURN OF INCOME FILED SUBSEQUENTLY. 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS RAISED IN REVENUES APPEAL AND SUBMITTED T HAT THE ISSUE RAISED IN THE APPEAL ITA NO. 4417/M/2014 STANDS COVERED AGAINST THE REVENUE BY THE ORDER OF THE TRIBUNAL VIDE APPEAL ITA NO.3379/M/2013 (AY 2009 - 2010), DATED 27.8.2014. IN THE SAID APPEAL DECIDED BY THE TRIBUNAL (SUPRA), WHILE ADJUDICATING TH E ISSUE RELATING TO THE TAXABILITY OF THE INCOME EARNED ON LETTING OF THE HOUSE PROPERTY , THE TRIBUNAL HELD THAT THE HEAD INCOME FROM HOUSE PROPERTY IS RELEVANT FOR CHARGING THE IMPUGNED INCOME. CONSEQUENTLY, THE INCOME GENERATED BY THE SAID ASSET CONST ITUTES INVESTMENT AND THE SALE PROCEEDS EARNED ON SALE OF SUCH ASSET IS REQUIRED TO BE TAXED AS CAPITAL GAINS. PARAS 7 AD 8 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) DATED 27.8.2014 ARE RELEVANT IN THIS REGARD . 3. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 3 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION OF THE TRIBUNAL (SUPRA), DATED 27.8.2014. THE ISSUES RAISED BY THE ASSESSEE AS WELL AS THE REVENUE, I N THEIR RESPECTIVE APPEALS, REVOLVE AROUND THE APPROPRIATE HEAD OF INCOME FOR TAXING THE RENTAL / SERVICE CHARGES AND SALE PROCEEDS ON SALE OF THE CAPITAL ASSET / INVESTMENT. ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL (SUPRA), WHEREIN ONE OF US (AM) I S A PARTY TO THE SAID ORDER, WE FIND PARAS 7 AND 8 OF THE TRIBUNALS ORDER ARE RELEVANT IN THIS REGARD AND THE SAME ARE EXTRACTED HERE UNDER FOR THE SAKE OF COMPLETENESS OF THIS ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENU E AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE SAID ORDER OF THE CIT (A) IN GENERAL AND PARA 2.3 IN PARTICULAR, WE FIND THE SAME IS RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT CONTENTS OF THE SAID PARA 2.3 OF THE CIT (A)S ORDER ARE REPRODUCED HERE WHICH READ AS UNDER: 2.3.THE APPELLANT FILED ORIGINAL RETURN OF INCOME DECLARING TOTAL BUSINESS INCOME AT RS. 4,54,26,491/ - . THEREAFTER, THE APPELLANT FILED REVISED RETURN OF INCOME D ECLARING RENTAL INCOME AND SERVICE CHARGES INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY SHOWING LOSS OF RS. 1,83,68,059/ - . IN THE ORIGINAL RETURN OF INCOME, THE APPELLANT DID NOT CLAIM INTEREST EXPENDITURE OF RS. 7,82,37,859/ - PERTAINING TO THE YEAR UNDER CONSIDERATION AND INTEREST OF RS. 1,53,67,625/ - BEING 1/5 TH OF THE INTEREST PERTAINING TO PRE - CONSTRUCTION PERIOD. THESE INTEREST EXPENSES WERE CLAIMED BY THE APPELLANT IN THE REVISED RETURN OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. I T IS BECAUSE OF CLAIM OF INTEREST, POSITIVE INCOME OF ORIGINAL RETURN BECAME THE LOSS IN THE REVISED RETURN OF INCOME. IN THE P & L A/C, THIS INTEREST EXPENDITURE IS NOT APPEARING. THE APPELLANT HAS EXPLAINED THAT THIS INTEREST EXPENDITURE WAS APPEARING IN THE WORK - IN - PROGRESS ACCOUNT. THE VALUE OF BUILDING OF 52.47 CRORE AND LAND AT RS. 13,47 CRORE HAS BEEN CAPITALIZED DURING THE YEAR AND THE INTEREST PERTAINING TO THE YEAR UNDER CONSIDERATION AND THE INTEREST PERTAINING TO PRE - CONSTRUCTION PERIOD HAS B EEN CLAIMED IN THE REVISED RETURN OF INCOME. IN MY CONSIDERED VIEW, THE APPELLANT WAS ENTITLED TO CLAIM THIS INTEREST EXPENDITURE EVEN IF THE RENTAL INCOME AND SERVICE CHARGES INCOME WAS ASSESSABLE UNDER THE HEAD BUSINESS INCOME. WITHOUT PREJUDICE, THE FILING OF REVISED RETURN OF INCOME, THE APPELLANT WOULD HAVE CLAIMED THIS INTEREST EXPENDITURE DURING ASSESSMENT PROCEEDINGS ITSELF WHICH WOULD HAVE BEEN RESULTED IN ASSESSED LOSS. IN VIEW OF THE ABOVE FACTS THE AO IS DIRECTED TO ASSESS THE RENTAL INCOME AS WELL AS SERVICE CHARGES RECEIPTS UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 8. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE WHILE ALLOWING THE ASSESSEES APPEAL. THEREFORE, IN OUR VIEW THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORD INGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE DIRECT THE AO TO GIVE EFFECT TO THE SAID ORDER OF THE TRIBUNAL (SUPRA) DATED 27.8.2014, WHILE ADJUDICATING THE GROUNDS RAISED BY THE REVE NUE AND THE ASSESSEE IN THE PRESENT APPEALS. ACCORDINGLY, GROUNDS RAISED BY THE REV E NUE ARE DISMISSED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED BEING CONSEQUENTIAL. 4 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESS EE IS ALLOWED BEING CONSEQUENTIAL. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEBRUARY, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 25.2.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
