AMENITY SOFTWARE P.LTD, MUMBAI V. ITO WD 8(1)(1), MUMBAI

ITA 4449/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1347 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 27-07-2015
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: RISHABH S HAH
• Keywords: Business income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4449/MUM /2015 ASSESSMENT YEAR-2008-09 M/S AMENITY SOFTWARE PVT. LTD 5 TH FLOOR, SUNTECK CENTRE, 37/40, SUBHASH ROAD, VILE PARLE (E), MUMBAI-400057 / VS. INCOME TAX OFFICER, WARD-8(1)(1), MUMBAI PAN NO. AAECA7051J ( / ASSESSEE) ( / REVENUE) / ASSESSEE BY SHRI RISHABH SHAH / REVENUE BY SHRI RAJESH KUMAR YADAV- DR / DATE OF HEARING : 11/04/2017 / DATE OF ORDER: 11/04/2017 ITA NO.4449/MUM/2015 M/S AMENITY SOFTWARE PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 02/02/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, CHALLENGING IMPOSITION/CONFIRMATION OF PENALTY OF RS.28,09,585/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING OF THIS APPEAL, SHRI RISHAV SHAH , LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT QUANTU M APPEAL IN THE CASE OF THE ASSESSEE WAS DECIDED IN I TS FAVOUR VIDE ORDER DATED 08/07/2015, BY THE TRIBUNAL (ITA NO.1550/MUM/2012). THE LD. COUNSEL ALSO PRODUCED TH E PHOTOCOPY OF THE ORDER OF THE TRIBUNAL. THIS FACTUA L MATRIX WAS NOT CONTROVERTED BY THE LD. DR, SHRI RAJESH KUM AR YADAV. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 08/0 7/2015 FOR READY REFERENCE AND ANALYSIS:- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2008-09. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO AL LOWABILITY OF CLAIM OF DEDUCTION U/S.80IA(4)(III) OF THE ACT IN RESPECT OF IT PARK. ITA NO.4449/MUM/2015 M/S AMENITY SOFTWARE PVT. LTD. 3 3. WE FOUND THAT IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2009-10 AND 2010-11, THE TRIBUNAL HAS HELD THAT IT PARK OF ASSESSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S.80IA(4) OF T HE ACT. THE PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER :- 13. THE UNDISPUTED FACT IS THAT THE PROPERTY IN QU ESTION IS AN I.T. PARK, WITH ALL INFRASTRUCTURE FACILITIES AND SERVICES. TH IS IS NOT A SIMPLE BUILDING. THE MINISTRY OF COMMERCE AND INDUSTRIES, NOTIFIES CERTAIN BUILDING AS I.T. PARK ONLY IF VARIOUS FACILITIES AN D INFRASTRUCTURE, AS SPECIFIED BY THE DEPARTMENT, ARE PROVIDED. IT IS AN UNDISPUTED FACT THAT ALL THE TECHNICAL REQUIREMENTS, INFRASTRUCTURES, FA CILITIES AND SERVICES ARE BEING PROVIDED IN THIS BUILDING AND IT WAS ONLY FOR THIS REASON THAT NOT ONLY THE MINISTRY OF COMMERCE & INDUSTRIES, BUT ALSO THE CBDT NOTIFIED THE SAME AS AN I.T. PARK WHICH ENTITLES TH E ASSESSEE TO EARN CERTAIN INCENTIVES. THE INTENTION OF THE ASSESSEE W HILE PURCHASING THE PROPERTY IS TO PARTICIPATE IN THE I.T. PARK AND IT CANNOT BE SAID THAT THE INTENTION IS ONLY TO INVEST IN PROPERTY. THE HON'BL E SUPREME COURT IN SHANBHU INVESTMENTS P. LTD. (SUPRA), CLEARLY LAYS D OWN THAT WHAT IS TO BE SEEN WAS THE PRIMARY OBJECT OF THE ASSESSEE WHIL E EXPLOITING THE PROPERTY. IF IT IS FOUND BY APPLYING SUCH TEST, THA T THE MAIN INTENTION IS TO LET OUT THE PROPERTY, IT MUST BE CONSIDERED AS RENT AL INCOME OR INCOME FROM PROPERTY. IN CASE IT IS FOUND THAT THE MAIN IN TENTION IS TO EXPLOIT THE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, I N THAT EVENT, IT MUST BE HELD AS BUSINESS INCOME. IN THE CASE BEFORE US, THE ASSESSEE IS OFFERING COMPLEX SERVICES BY WAY OF PROVIDING OPERA TION PLACE IN A NOTIFIED I.T. PARK, WITH ALL SERVICES AND AMENITIES SUCH AS INFRASTRUCTURE FACILITIES, WAITING ROOM, CONFERENCE ROOM, VALET PA RKING, RECEPTION, CANTEEN, 24 HOURS SECURITIES, INTERNAL FACILITIES, HIGH SPEED LIFT, POWER BACK-UP, ETC. JUST BECAUSE A SISTER CONCERN INCURRE D THIS EXPENDITURE AND CLAIMS REIMBURSEMENT FROM THE ASSESSEE, IT CANN OT BE SAID THAT THE FACILITIES ARE NOT PROVIDED BY THE ASSESSEE. WH OEVER MAINTAINS THEM, THE FACT REMAINS THAT IT IS THE ASSESSEE WHO ULTIMATELY BEARS SUCH EXPENDITURE FOR THE SERVICES AND UNDERTAKES TO PROV IDE SUCH SERVICES. THE FACILITIES ARE MADE AVAILABLE BY THE ASSESSEE T O THE PERSON OCCUPYING THE PREMISES. COMING TO THE CASE LAWS IN SAPTARSHI SERVICES TD. (SUPRA), THE HONBLE GUJARAT HIGH COUR T HELD THAT THE INCOME EARNED FROM BUSINESS CENTRE IS TO BE ASSESSE D UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. THE SPECIAL LE AVE PETITION FILED BY THE REVENUE AGAINST THIS JUDGMENT WAS REJECTED B Y THE HON'BLE SUPREME COURT WHICH IS REPORTED AS 264 ITR (ST.) 36 . COMING TO THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN HAR VINDARPAL MEHTA (SUPRA), THE TRIBUNAL, IN THIS DECISION, AFTER CONS IDERING THE JUDGMENT IN SHAMBHU INVESTMENTS P. LTD., HELD THAT THE INCOME E ARNED FROM BUSINESS CENTRE IS TO BE ASSESSED UNDER THE HEAD I NCOME FROM BUSINESS & PROFESSION. THE DECISION OF MUMBAI BENC H OF THE TRIBUNAL IN SHANAYA ENTERPRISES (SUPRA) HELD THAT WHEN THE P ROPERTY IS USED FOR SPECIFIC PURPOSES AND IN THE NATURE OF PROVIDING CO MPLEX SERVICES, THE INCOME IS TAXABLE UNDER THE HEAD INCOME FROM BUSIN ESS & PROFESSION. APPLYING THE PROPOSITIONS LAID DOWN IN THESE CASE LAWS, WE HOLD THAT THE PROPERTY CAN BE USED ONLY FOR A SP ECIFIC PURPOSE I.E., ITA NO.4449/MUM/2015 M/S AMENITY SOFTWARE PVT. LTD. 4 I.T. OPERATION AND THE ASSESSEE HAS PROVIDED COMPLE X SERVICE FACILITIES AND INFRASTRUCTURE FOR OPERATING SUCH BUSINESS AND ON THIS FACTUAL MATRIX, WE UPHOLD THE CONTENTION OF THE ASSESSEE TH AT THE INCOME IN QUESTION SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. CONSEQUENTLY, WE SET ASIDE THE ORDER PASSED BY THE COMMISSIONER (APPEALS) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 14. COMING TO GROUNDS NO.2 AND 3, THE ASSESSING OFF ICER IS DIRECTED TO ALLOW THE CLAIM OF EXPENSES AS THE DISALLOWANCE WAS MADE ONLY ON THE GROUND THAT THE INCOME IS ASSESSABLE UNDER THE HEAD HOUSE PROPERTY. CONSEQUENT TO OUR DECISION IN GROUND NO. 1, WE DIRECT THE ASSESSING OFFICER TO ALLOW BOTH THE EXPENDITURE CLA IMED AS WELL AS THE CLAIM FOR DEDUCTION UNDER SECTION 80IA(4)(III). CON SEQUENTLY, WE SET ASIDE THE ORDER PASSED BY THE COMMISSIONER (APPEALS ) AND ALLOW THE GROUND NO.2 AND 3 RAISED BY THE ASSESSEE. 5. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE PARI MATERIA, RESPECTFULLY FOLLOWING THE AFORES AID ORDER OF THE TRIBUNAL, WE CONFIRM THE ACTION OF THE CIT(A) FOR A LLOWING DEDUCTION U/S.80IA(4) IN RESPECT OF INCOME FROM IT PARK. 4. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR U NDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE T RIBUNAL, WE DO NOT FIND ANY MERIT FOR DECLINING OF ASSESSEES CLAIM OF DEDUCTION U/S.80IA(4) OF THE ACT IN RESPECT OF ITS IT PARK. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 2.2. WE FIND THAT THE TRIBUNAL, IN THE AFORESAID O RDER, ON QUANTUM ADDITION, VIDE DATED 08/07/2015 DELETED THE ADDITION ON THE BASIS OF WHICH PENALTY WAS INITIATED/CONFIRMED. IN VIEW OF THIS FACTUAL MATRIX , WE ARE OF THE VIEW THAT PENALTY IMPOSED U/S 271(1)(C) WILL NO T SURVIVE. OUR VIEW FIND SUPPORT FROM THE DECISION IN K.C. BUI LDERS VS ACIT (2004) 265 ITR 562 (SC) AND THE RATIO LAID DOW N IN CIT VS S.P. VIZ, 176 ITR 76 (PATNA). EVEN OTHERWISE, WH EN THE QUANTUM ADDITION IS DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT OR FURNISHI NG INACCURATE PARTICULARS. THE PENALTY CANNOT STAND ON ITS LEGS WHEN ADDITION ON THE BASIS OF WHICH THE PENALTY WAS ITA NO.4449/MUM/2015 M/S AMENITY SOFTWARE PVT. LTD. 5 IMPOSED REMAINS NO MORE IN EXISTENCE, THUS, THE APP EAL OF THE ASSESSEE IS ALLOWED AND THE LD. ASSESSING OFFIC ER IS DIRECTED TO DELETE THE PENALTY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRE SENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 11/04/2017. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 11/04/2017 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI