BAKUL INVESTMENTS P.LTD, MUMBAI V. ITO 2(1)(1), MUMBAI

ITA 444/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5456 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 234B

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE HONBLE SHRI G. S. PANNU , VP & HONBLE SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO. 444 /MUM/2016 ( / ASSESSMENT YEAR: 2012 - 13 ) BAKUL INVESTMENTS PVT. LTD. 63 SONAWLALBLDG , BOMBAY SAMACHAR MARG FORT, MUMBAI - 400001 . / VS. ITO 2(1)(1) R. NO. 561, 5 TH FLOOR, AAYAKARBHAVAN, M.K. MARG, MUMBAI - 400020. & ./ I.T.A. NO . 33 /MUM/2016 ( / ASSESSMENT YEAR: 2012 - 13 ) ITO 2(1)(1) R. NO. 561, 5 TH FLOOR, AAYAKARBHAVAN, M.K. MARG, MUMBAI - 400020. / VS. BAKUL INVESTMENTS PVT. LTD. 63 SONAWLALBLDG, BOMBAY SAMACHAR MARG FORT, MUMBAI - 400001. ./ ./ PAN/GIR NO. A A ACB2438C / APPELLANT BY : SHRI KIRITKAMDAR, A R / RESPONDENTBY : SHRI T. A. KHAN, D R / DATE OF HEARING : 05/10 /2018 / DATE OF PRONOUNCEMENT : 31/10/2018 2 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. / O R D E R PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER : THE SE TWO A PPE AL S FILED BY THE ASSESSEE AS WELL AS REVENUE ARE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 4, MUMBAI DATED 07.10.15 FOR AY 2012 - 13 . 2. SINCE ALL THE ISSUES INVOLVED IN THESE TWO APPEALS ARE COMMON, THEREFORE, THEY HAVE BEEN CLUBBED , HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. I TA NO. 444 /MUM/2016 (AY 20 12 - 13 ) 3 . FIRST OF ALL WE TAKE UP ASSESSEE S APPEAL IN ITA NO. 444 /MUM/2016 FOR ASSESSMENT YEAR 2012 - 13 AS LEAD CASE . THE GROUND OF APPEAL ARE MENTIONED HEREIN BELOW: - 1. IN CONFIRMING THE RECLASSIFICATION OF INCOME FROM LEAVE AND LICENSE FEES ON SUB - TENANCY AS 'INCOME FROM HOUSE PROPERTY INSTEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION' AND CONSEQUENTLY DISALLOWING ADMINISTRAT IVE AND OTHER OPERATING EXPENSES OF RS 3 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. 32,22.056 AND DEPRECIATION EXPENSE OF RS 1,55.956 INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. 2. WITHOUT PREJUDICE TO GROUND NO. 1, ERRED IN NOT ALLOWING A DEDUCTION OF THE LEASE RENT AL EXPENSES AMOUNTING TO RS 22.596 FROM THE ANNUAL LETTING VALUE OF THE PROPERTY WHERE THE INCOME FROM LEAVE AND LICENSE FEES ON SUB - LETTING OF THE PROPERTY IS RECLASSIFIED AS INCOME FROM HOUSE PROPERTY'. 3. WITHOUT PREJUDICE TO GROUND NO. 1, ERRED IN NOT ALLOWING A DEDUCTION FOR THE EXPENSES AMOUNTING TO RS 22,16.808 STATUTORILY INCURRED BY THE APPELLANT. 4. WITHOUT PREJUDICE TO GROUND NO. 1, ERRED IN DIRECTING THE ASSESSING OFFICER TO VERIFY THE FACTS OF PAYMENT OF RS 4,20.000 BY THE APPELLANT TO THE LESS OR RELYING ON THE ORDER OF HIS PREDECESSOR INSTEAD OF TREATING IT AS REIMBURSEMENT OF THIRD PARTY MAINTENANCE CHARGES AND ACCORDINGLY NOT IN THE NATURE OF INCOME. 5. ERRED IN LEVYING THE CONSEQUENTIAL INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND THE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT, THE TIME OF HEARING OF THE APPEAL, SO AS TO 4 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. ENABLE THE HONOURABLE INCOME TAX APPELLATE TRIBUNAL TO DECIDE THIS APPEAL ACCORDING TO LA W. 4 . AS PER TH E FACTS OF THE PRESENT CASE, THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE RETURN OF INCOME WAS FILED FOR THE YEAR UNDER CONSIDERATION ON 28.09.12 DECLARING TOTAL INCOME AT RS. 19,33,920. SUBSEQUENTLY, THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY OF ASSESSEE, THE AO PASSED ASSESSMENT ORDER U/S 143(3) THEREBY MAKING ADDITIONS IN RESPECT OF INCOME FROM HOUSE PROPERTY AND OTHERS SOURCES . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALL OWED THE APPEAL OF THE ASSESSEE . AGGRIEVED BY THE O RDER OF LD. CIT(A), BOTH I.E. ASSESSEE AS WELL AS THE REVENUE HAVE FILED THE IR RESPECTIVE APPEAL S BEFORE US. HOWEVER AT PRESENT WE ARE DEALING WITH THE APPEAL FILED BY THE ASSESSEE ON THE GROUND S MENTIONED HEREIN ABOVE . 5 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. GROUND NO. 1 5 . THIS GROU ND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) I N CONFIRMING THE RECLASSIFICATION OF INCOME FROM LEAVE AND LICENSE FEES ON SUB - TENANCY AS 'INCOME FROM HOUSE PROPERTY INSTEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION' AND CONSEQUENTLY DISALLOWING ADMINISTRATIVE AND OTHER OPERATING EXPENSES O F RS 32,22, 056 AND DEPRECIATION EXPENSE OF RS 1,55, 956 INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPO SE OF BUSINESS OF THE ASSESSEE. 6 . LD. AR APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BY THE ASSESSEE BEFORE LD. CIT(A) . THE LD. AR FURTHER SUBMITTED BEFORE US THAT THE PRESENT CASE IS COVERED BY THE ORDER OF HONBLE ITAT IN ITA NO. 4512/MUM/11 & OTHERS FOR AY 2001 - 2002 TO 2010 - 11 IN ASSESSEES OWN CASE WHEREIN THE IDENTICAL GROUND RAISED IN THE PRESENT APPEAL HAVE ALREADY BEEN DECIDED ON MERITS. LD. AR FURTHER SUBMITTED THAT THE HONBLE ITAT HAD SET ASIDE THE ORDER PASSED BY LD CIT(A) AND REMANDED TO THE FILE OF AO TO DECIDE AFRESH IN THE LIGHT OF THE JUDGMENT OF HONBLE SUPREME COURT IN 6 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. THE CASE OF CHENNAI PROPERTI ES AND INVESTMENT LTD. V RS. CIT (2015) 373 ITR 673 (SC). 7 . ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY REVENUE AUTHORITIES. 8 . WE HAVE HEARD BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISED BY THE ASSESSEE IN ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 3.3 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 3 . 3. I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICE R AS WELL AS RIVALSUBMISSION OF THE APPELLANT, CAREFULLY. I FIND THA T THIS ISSUE HAS BEEN DECIDED BY MY LD. PREDECESSOR AGAINST THE APPELLANT WHICH IS IN UNDER : - 7 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. 5.2.1 . HAVING CAREFULLY AND DISPASSIONATELY CONSIDERED RIVAL SUBMISSIONS, IT IS NOTED THAT THE PRESENT APPELLANT HAS CLAIMED ADMINISTRATIVE EXPENSES OF RS50,45,342/ - AND DEPRECIATION OF RS.1,47,494/ - TREATING THE LEASE RENTAL INCOME UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION. MY LEARNEDPREDECESSORS AS WELL AS AOS HAVE BEEN CONSISTENTLY ASSESSING LEASE RENTAL INCOME FROM THE IMPUGNED HOUSE PROPERTIES AT MADHUKIRNJ UNDER THE HEAD INCOME FROM HOUSE PROPERTY' THE ISSUE OF TAXABILITY OF THE SAID LEASE RENTAL I NCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY' HAS BEEN CONSISTENTLY DECIDED AGAINST THE APPELLANT FROM A.YS.2005 - 06 TILL THIS YEAR AND IT HAS BEEN DECIDED THAT SUCH LEASE RENTAL INCOME IS CORRECTLY TAXABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. I AGREE WITH MY LEARNED PREDECESSOR'S VIEW THAT LEASE RENTAL INCOME FROM THE HOUSE PROPERTIES IS CORRECTLY ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERFY'. ONCE, THE INCOME IS ASSESSED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' COROLLARY EXPENSES ARE DEDUCTIBLE ONLY U/S.24 OF THE ACT, WHICH HAVE BEEN CORRECTLY ALLOWED BY THE ASSESSING OFFICER AND THE APPELLANT HAS NOT DISPUTED SUCH DEDUCTION U1S,24 OF THE ACT THERE IS NO PROVISION OF ALLOWING 8 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. DEPRECIATION OR ADMINISTRATIVE EXPENSES WHILE ASSESSING INCO ME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' THEREFORE. THE ASSESSI NG OFFICER'S ACTION OF DISALLOWING ADMINISTRATIVE EXPENSES AND DEPRECIATION WHILE ASSESSING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY' IS CONFIRMED. 52.2. SECONDLY, THIS ISSUE IS A LSO COVERED BY APPELLATE ORDERS FOR THE EARLIER A. YS.2005 - 06 TO 2010 - 11 AGAINST THE APPELLANT IN ITS OWN CASE. FOR READY REFERENCE, RELEVANT PARAGRAPH NO.54 OF APPEAL NO.CIT(A) - 4/ I T - 107 / AC1T2(1)/2012 - 13 DOTED 1501.2014 MAY BE REPRODUCED FROM APPEAL ORDE R OF THE APPELLANT FOR A. Y.2010 - 1 1 AS UNDER: - '5.4. GROUND NO. 5: 5 - 4 - 1 GROUND OF APPEAL NOS IS ALSO COVERED BY THE DECISION OF MY LEARNED PREDECESSOR IN THE APPELLANT'S OWN CASE FOR A. Y,2009 - L0 DECIDED VIDE APPEAL N O.CIT(A) - 4/1T - 81/ITO.2(L)(L)/2011 - 12 DATED 14.09.2012 WHEREIN HE HAS DECIDED THE GROUND NO.5 VIDE PARA NO.9 WHICH MAY BE EXTRACTED AS UNDER: - 9 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. '9. THE FACTS OF THE CASE ARE THAT ASSESSEE CLAIMED CERTAIN EXPENS ES AGAINST INCOME FROM HOUSE PRO PERTY WHICH HAVE BEEN DISALLOWED BY THE A. 0., WHICH HAS BEEN DISPUTED BY THE ASSESSEE IN THE PRESENT GROUND. THE ISSUE RELATING TO TAXABILITY OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY HAS ALREADY BEEN DECIDED AND IT HAS BEEN HELD AGAINST GROUNDS NO.1 TO 4 A ABOVE THAT THE INCOME IS TAXABLE UNDER T HE HEAD INCOMEFROM HOUSE PROPERTY, THEREFORE, THE EXPENSES ARE ALLOWABLE ONLY U/S 24, WHICH HAVE BEEN RIGHTLY ALLOWED BY THE A.O. AND, THEREFORE, ANY OTHER EXPENSES CLAIMED AGAINST THE RENTAL INCOME HAVE BEEN RIGHTLY DISALLOWED BY THE A.O. HENCE, THE G ROU ND OF APPEAL IS REJECTED' 5.4.2 SINCE THE APPELLANT AND THE DISPUTED ISSUE AND THE FACTS AND CIRCUMSTANCES ARE IDENTICAL, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF MY ID. PREDECESSOR AND UPHOLDING THE RULE OF JUDICIAL CONSISTENCY, THE MATTER IS TRE ATED AS A COVERED MATTER AND T HEREFORE, GROUND OF APPEAL NOS I S NOT ALLOWED. 10 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. 5.2.3 IN VIEW OF THE ABOVE AND ALSO IN ACCORDANCE WITH RULE OFFICIAL CONSISTENCY, GROUND OF1P PEAL NO.1 OF THE PRESENT APPEAL IS NOT ALLOWED. WE FIND THAT THE IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF HONBLE ITAT IN ITA NO. 4512/MUM/11 & OTHERS FOR AY 2001 - 2002 TO 2010 - 11 IN ASSESSEES OWN CASE. THE OPERATIVE PORTION OF THE ORDER OF HONBLE ITAT CONTAINED IN PARA NO. 6, WHICH IS REPRODUCED BELOW: - 6. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDER OF THE REVENUE AUTHORITIES AS AS WELL AS THE CITED PRECEDENTS AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, ON HEARING BOTH THE PARTIES AND THE ARGUMENTS PUT FORTH BY BOTH THE LD. REPRESENTATIVES ON BOTH THE ABOVE MENTIONED ISSUES (FIRST AND THIRD ISSUES) IN THE ASSESSEESAPAPEALS FOR THE AYS UNDER CONSIDERATION, WE ARE OF TH E OPINION THAT THE AND THE THIRD ISSUES RELATING TO THE CORRECT HEAD OF INCOME SHOULD B E REMANDED TO THE FILE OF THE AO TO D ECIDE THEM AFRESH IN THE LIGHT OF THE ABOVE MENTIONED JUDGMENT OF THE APEX COURT (SUPRA). WE ORDER ACCORDINGLY. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES 11 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. OF NATURAL JUSTICE. ACCORDINGLY, RELEVANT GROUNDS RAISED IN THE ASSESSEES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND HONBLE ITAT AS MEN TIONED ABOVE IN ASSESSEES OWN CASE , WE FIND THAT THE IDENTICAL ISSUE S HAVE ALREADY BEEN DECIDED BY THE HONBLE ITAT IN ASSESSEES OWN CASE FOR AY 2001 - 02 TO 2010 - 11 IN ITA NO. 4512/MUM/11 & OTHERS . T HEREFORE ,RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS IN THE PRESENT CASE WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE AND IN VIEW OF THE ABOVE FINDINGS, WE RESTORE BACK TO THE FILE OF THE AO FOR EXAMINING AFRESH AND THEREAFTER PASS AFRESH ORDER OF ASSESSMENT. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. GROUND NO. 2 TO 4 . 9 . SINCE WE HAVE ALREADY DECIDED GROUND NO. 1 ON MERITS, THEREFORE THESE GROUNDS BECOMES INFRUCTUOUS. GROUND NO. 5 . 10 . THIS GROUND HAS NOT BEEN PRESSED BY LD. AR, THEREFORE THIS GROUND BECOMES INFRUCTUOUS. 11 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 33/MUM/2016 FOR AY 2012 - 13 . 12 . NOW WE TAKE UP REVENUE S APPEAL FILED IN ITA NO. 33 /MUM/2016 FOR AY 2012 - 13. SINCE WE HAVE ALREADY RESTORED THE MAIN APPEAL FILED BY THE ASSESSEE IN ITA NO. 444/MUM/16 FOR AY 2012 - 13 BY SETTING ASIDE THE ORDER OF LD. CIT(A), THEREFORE IN VIEW OF OUR DECISION IN THE ASSESSEES APPEAL, WE ALSO RESTORE THE PRESENT APPEAL TO THE FILE OF AO FOR FRESH DECISION IN ACCORDANCE WITH LAW. 13 ITA NO, 444 & 33/M UM/201 6 BAKUL INVESTMENTS PVT. LTD. 13 . IN THE NET RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE AND REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES WITH NOT ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCT , 2018. SD/ - SD/ - (G. S. PANNU ) (SANDEEP GOSAIN) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED : 31 .10 .201 8 SR.PS . DHANANJAY / 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 F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI