ACIT, Jaipur V. M/S URBAN IMPROVEMENT TRUST, Ajmer

ITA 47/JPR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62008 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 17-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FAZLOOR REHMAN KHAN
• Keywords: Business income; Depreciation

Judgement Text

1 IN THE INCOME TAX APPELLATE T RIBUNAL JAIPUR BENCHE S B, JAIPUR BEFORE S/SHRI R.K. GUPTA, JM AND SANJAY ARORA, AM I.T.A NOS. 47 & 48/JP/2012 ASSESSMENT YEARS: 2003-04 & 2004-05 THE ASSTT. CIT , CIRCLE-2, AJMER VS URBAN IMPROVEMENT TRUST, CIVIL LINES, AJMER [PAN: AAALS 0528D] (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SHRI SUBHASH CHANDRA, SR. DR (ADJOURNMENT APPLICATION REJECTED) ASSESSEE BY SHRI FAZLOOR REHMAN KHAN, AR-ADVOCATE DATE OF HEARING 26/04/2012 DATE OF PRONOUNCEMENT 30 /04/2012 O R D E R PER SANJAY ARORA, AM: THESE ARE A SET OF TWO APPEALS BY THE REVENUE DIRE CTED AGAINST THE ORDERS BY THE COMMISSIONER OF INCOME-TAX (APPEALS), AJMER (CIT ( A) FOR SHORT) OF EVEN DATE, I.E., 02-11-2011, DELETING THE LEVY OF PENALTY U/S. 271(1 )(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR TWO CONSECUTIVE ASSESSMENT YE ARS, BEING A.Y. 2003-04 AND AY 2004-05. THE APPEALS RAISING IDENTICAL ISSUES, WERE HEARD TOGETHER, AND ARE ACCORDINGLY BEING DISPOSED OF BY A COMMON ORDER. 2.1 OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED BY THE LD. AR, THE COUNSEL FOR THE ASSESSEE, THAT NO CASE FOR LEVY OF PENALTY IN THE INSTANT CASE IS MADE OUT; THE ASSESSEE HAVING SUCCEEDED IN QUANTUM PROCEEDINGS AT THE LEVEL OF THE TRIBUNAL, SO THAT NO ADDITION SURVIVES ON WHICH THE IMPUGNED PENALTY COULD BE LEVIED. HE 2 THEN TOOK US TO THE RELEVANT PART OF THE TRIBUNALS ORDER, PLACED AT PAPER-BOOK PAGES 7 TO 16 (IN ITA NO. 264/ JP/2009 DATED 04-4-2011) FOR TH E ASSESSMENT YEAR 2004-05. EVEN ON MERITS, AS HELD BY THE LD. CIT(A), THE ENHANCEMENT OF INCOME IN ASSESSMENT (REDUCTION IN LOSS) WAS ONLY ON ACCOUNT OF THE CHANGE IN THE HEAD OF INCOME, I.E., A MATTER ON WHICH TWO VIEWS COULD BE POSSIBLE, BEING A MATTER OF INTE RPRETATION AND, THUS, THE SUBJECT MATTER OF APPLICATION OF LAW IN THE FACTS OF THE CASE, SO THAT NO PENALTY UNDER SUCH CIRCUMSTANCES COULD BE LEVIED. RELIANCE STOOD PLACED BY HIM ON TH E DECISION IN THE CASE OF ALPHA ASSOCIATES VS. DY. CIT (2000) 66 TTJ 758 (MUMBAI). 2.2 THE LD. DR, ON THE OTHER HAND, WOULD RELY ON TH E ORDER/S LEVYING PENALTY, FURTHER STATING THAT THE ASSESSMENT FOR THE FIRST YEAR, I.E ., ASSESSMENT YEAR 2003-04, AS IT WOULD APPEAR, STANDS FINALIZED IN FAVOUR OF THE REVENUE, SO THAT THE ASSESSEES ARGUMENT IS INVALID FOR THE THAT YEAR. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, AS WELL AS THE CASE LAW CITED. 3.1 IT WOULD BE RELEVANT TO RECOUNT BRIEFLY THE FACTS OF THE CASE, WHICH ARE THE SAME FOR BOTH THE YEARS, I.E., APART FROM THE CHANGE OF AMOU NT BY WHICH THE RETURNED LOSS STOOD REDUCED ON ASSESSMENT, AND WHICH DIFFERENCE (IN AMO UNT) IS AGAIN NOMINAL. EVEN THE GROUNDS OF APPEAL BY THE REVENUE FOR BOTH THE YEARS ARE IDENTICAL. WE SHALL REFER TO THE FIGURES FOR THE FIRST YEAR FOR THE SAKE OF CONVENIE NCE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ON 10-11-200 5 AT A LOSS OF RS. 4,22,62,348/-, WHICH WAS SUBJECT TO THE VERIFICATION PROCEDURE BY THE ISSUE OF NOTICE U/S. 143(2) ON 30- 11-2005. IT WAS FOUND THAT THE ASSESSEE HAD EARNED RENT IN THE SUM OF RS. 3.22 LACS FROM ITS BUILDING BY THE NAME `JAWAHAR RANGMANCH, CLAIM ING EXPENDITURE (RS. 8.26 LACS) AND DEPRECIATION (RS. 6.51 LACS) THERE-AGAINST. THE SAM E, IN HIS VIEW, WOULD ONLY BE INCOME FROM HOUSE PROPERTY, ASSESSABLE U/S. 22 OF THE ACT, SO THAT NO SUCH EXPENDITURE, BUT ONLY STANDARD DEDUCTION U/S. 24(A) OF THE ACT @ 30% (RS. 96,579/-), WOULD BE EXIGIBLE FOR DEDUCTION THERE-AGAINST. THE CLAIMED EXPENDITURE WA S THEREFORE DISALLOWED, AND THE 3 INCOME ASSESSEED U/S. 22 ACCORDINGLY. LIKEWISE, FOR THE SUCCEEDING YEAR, I.E., THE ASSESSMENT YEAR 2004-05. THE ASSESSEE WAS UNSUCCESS FUL IN FIRST APPEAL FOR BOTH THE YEARS; THE FIRST APPELLATE AUTHORITY HOLDING THAT T HE INCOME FROM JAWAHAR RANGMANCH HAD BEEN RIGHTLY BROUGHT TO TAX BY THE ASSESSING OFFICE R (AO) UNDER THE HEAD INCOME FROM HOUSE PROPERTY, BEING ONLY IN THE NATURE OF RENTAL INCOME. IN FURTHER APPEAL FOR THE ASSESSMENT YEAR 2004-05, THE TRIBUNAL DELETED THE A DDITION, HOLDING AS UNDER:- (AT PAGE 9) 20. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED I N THIS GROUND IN PART. SO FAR AS CHARGES ARE CONCERNED IN RESPECT TO JAWAHAR RANGMANCH, WE FIND THAT ASSESSEE DESERVES TO SUCCEED. THE POSSESSION OF JAWAHAR RANGMANCH WAS NEVER PARTED WITH BY THE ASSESSEE TO THE PERSON FROM WHOM THE RENT CHARGES ARE RECEIVED. JAWAHAR RANGMANCH WAS GIVEN O N TEMPORARY BASIS FOR 3-4 HOURS AND AGREED AMOUNT WAS CHARGED FOR USI NG THE SAME, AGAINST WHICH THE ASSESSEE HAS INCURRED EXPENSES ON ACCOUNT OF MAINTENANCE ETC. ONE OF THE ACTIVITIES OF THE ASSESSEE AS PER THEIR MEMORANDUM IS COMMERCIAL EXPLOITATION OF ASSETS. THEREFORE, IN VI EW OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT A O AND LD. CIT (A) WERE NOT JUSTIFIED IN TREATING THE RECEIPTS ON ACCOUNT O F JAWAHAR RANGMANCH AS INCOME FROM HOUSE PROPERTY AGAINST BUSINESS INCOME. ACCORDINGLY, WE DIRECT THE AO TO TREAT THE RECEIPTS AS BUSINESS REC EIPTS AND ALLOW THE VARIOUS EXPENSES AND DEPRECIATION AS PER PROVISIONS OF LAW. WE ORDER ACCORDINGLY . 3.2 A PERUSAL OF THE FOREGOING WOULD REVEAL THA T THE TRIBUNAL FOUND THAT POSSESSION OF THE BUILDING WAS NEVER PARTED WITH BY THE ASSESSEE, BEING GIVEN ONLY ON TEMPORARY BASIS FOR THREE-FOUR HOURS, FOR AN AGREED AMOUNT OF CHARG ES AND, FURTHER, FOR PURPOSES WHICH WERE IN HARMONY WITH ITS BROAD OBJECTIVES, SO THAT THE SAME FORMED PART OF ITS BUSINESS RECEIPT, AGAINST WHICH THE EXPENDITURE ON MAINTENAN CE WOULD CONSTITUTE PERMISSIBLE DEDUCTION. IN OTHER WORDS, THE SAME HAS BEEN CONSID ERED AS HAVING BEEN LICENSED TO THE PERSONS HOLDING THEIR PROGRAMS AT THE SAID BUILDING FOR THE TIME BEING. THE ADDITION TO INCOME, WHICH RESULTS ON ACCOUNT OF THE SAID CHANGE IN THE HEAD UNDER WHICH THE RENTAL INCOME IS TO BE SUBJECT TO THE TAX, STOOD DELETED. AS SUCH, FIRSTLY, THERE IS NO BASIS FOR LEVY OF PENALTY, EVEN AS STATED BY THE LD. AR, FOR THE A SSESSMENT YEAR 2004-05; THE ASSESSEE HAVING SUCCEEDED IN SECOND APPEAL AND, FURTHER, ON A BASIS OF A FINDING OF FACT BY THE TRIBUNAL, THE HIGHEST FACT FINDING AUTHORITY, WHICH COULD BE DISTURBED ONLY ON BEING SHOWN 4 AS PERVERSE, WHILE NO SUCH ATTEMPT HAS BEEN MADE BY THE REVENUE, SO THAT THE SAME HAS TO CONSIDERED AS SO FINALIZED, I.E., AS DECIDED BY IT. IN RESPECT OF THE FIRST YEAR, I.E., AY 2003- 04, IT WAS CLARIFIED BY THE LD. AR, ON AN ENQUIRY B Y THE BENCH, THAT NO APPEAL BEFORE TRIBUNAL HAD BEEN PREFERRED BY IT; THERE BEING NO T AX EFFECT AS INCOME STOOD ASSESSED AT LOSS OF RS. 413.03 LACS. EVEN THOUGH THE NON-CONTES TING BY THE ASSESSEE ON A MATTER OF FACT WOULD LEAD TO A PRESUMPTION OF THE SAME AS HAV ING CRYSTALLIZED AS PER THE ORDER OF THE HIGHEST AUTHORITY WHICH IS AVAILABLE, WHICH ARE AGA INST THE ASSESSEE FOR BOTH THE YEARS, SO THAT AN ADVERSE INFERENCE COULD BE DRAWN, IT WOULD BE, AS APPARENT, NOT SO IN THE INSTANT CASE. THE CASE OF THE ASSESSEE, AS WELL AS THE REVE NUE, FOR BOTH THE YEARS, IS, WITHOUT DOUBT, THE SAME. THE TRIBUNAL, ON AN EXAMINATION OF THE FACTS HAS FOUND THAT THE RENTAL INCOME HAS BEEN RIGHTLY DISCLOSED AS BUSINESS INCOM E, AS THE SAID INCOME IS NOT ON ACCOUNT OF RENT PER SE , BUT ONLY IN THE NATURE OF A LICENSE INCOME. THE S AID FINDING WOULD BE EQUALLY APPLICABLE FOR THE FIRST YEAR, I.E., AY 2003-04, AS WELL. IN ANY CASE, IT WITHOUT DOUBT EXHIBITS THAT A DIFFERENT VIEW ON THE SAME SE T OF PRIMARY FACTS COULD BE TAKEN. ALSO, IT CANNOT BE OVERLOOKED THAT THE ASSESSEE IS A PUBL IC BODY CONSTITUTED FOR SATISFYING THE NEED OF HOUSING ACCOMMODATION, AND PLANNING AND DEV ELOPMENT OF CITIES, TOWNS AND VILLAGES, SO THAT THERE COULD BE NO TAX MOTIVATION. IN FACT, IN EITHER CASE, THE SAME RESULTS IN ONLY A MINOR CHANGE IN THE INCOME RETURNED BY TH E ASSESSEE. THE INGREDIENTS OF CLAUSE B OF EXPLANATION 1 TO SECTION 271(1)(C) WOULD STAND THUS EVEN OTHERWI SE INDEPENDENTLY SATISFIED FOR THIS YEAR, EVEN AS ALSO CLARIFIED BY THE TRIBUNAL IN THE CASE OF ALPHA ASSOCIATES VS. DY. CIT (SUPRA). AS SUCH, NO CASE FOR LEVY OF PENALTY FOR THE TWO YEARS UNDER REFERENCE IS MADE OUT. ACCORDINGLY, THE PENAL TY STANDS RIGHTLY DELETED AND THE IMPUGNED ORDERS GET UPHELD IN RESULT. WE DECIDE ACC ORDINGLY. 3.3 COMING TO THE DECISIONS RELIED UPON BY TH E REVENUE PER ITS GROUNDS OF APPEAL, WHICH WE HAVE THOUGH ALREADY CONSIDERED IN ARRIVING AT OUR DECISION, I.E., CEMENT MARKETING COMPANY OF INDIA LTD. V. ASSTT. CST (1980) 124 ITR 15 (SC) AND A.M. SHAH & CO. V. CIT , 238 ITR 415 (GUJ.). IN THE CASE OF THE FORMER, TH E HONBLE APEX COURT FOUND THAT IN TERMS OF THE APPLICABLE LAW, THE FREIGHT CH ARGED TO THE CUSTOMERS FOR THE 5 TRANSPORTATION OF GOODS SOLD IS TO BE CONSIDERED AS A PART OF THE SALE PRICE AND, THUS, THE CONSIDERATION ARISING ON SALE. THE SAME WOULD THERE FORE FORM PART OF THE ASSESSEES TURNOVER, FOR THE EXCLUSION OF WHICH NO PLAUSIBLE E XPLANATION, THUS, STOOD ADVANCED, I.E., IN VIEW OF THE PROVISION OF LAW. IN THE INSTANT CAS E, ON THE CONTRARY, THE TRIBUNAL ON THE BASIS OF THE OBTAINING FACTS HAS ITSELF INTERPRETED THE LAW IN FAVOUR OF THE ASSESSEE. IN THE CASE OF A.M. SHAH & CO. V. CIT (SUPRA), PENALTY STOOD CONFIRMED BY THE HONBLE CO URT ON THE BASIS OF UNEXPLAINED DISCREPANCIES IN THE BOOKS OF ACCOUNT, WHICH WAS THUS TREATED TO BE A CASE OF FURNISHING INACCURATE PARTICULARS OF I NCOME, WHICH STOOD CONFIRMED FOR ASSESSMENT AT A HIGHER FIGURE; THE ASSESSEES VERY BASIS FOR RETURNING INCOME HAVING BEEN FOUND TO BE INFIRM/INACCURATE, SO THAT THERE WAS SU PPRESSION OF INCOME TO THAT EXTENT. WE ARE UNABLE TO SEE AS TO HOW THESE DECISIONS RELIED UPON BY THE REVENUE ARE APPLICABLE AND, THUS, OF ASSISTANCE THERETO, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. IN THE RESULT, THE APPEALS BY THE REVENUE F OR BOTH THE YEARS UNDER REFERENCE ARE DISMISSED. SD/- SD/- (R.K. GUPTA) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: JAIPUR, DATED: APRIL 30, 2012 *MISHRA COPY TO: 1. THE ACIT, CIRCLE- 2, AJMER 2. M/S. URBAN IMPROVEMENT TRUST, AJMER 3. THE CIT (APPEALS), AJMER 4. THE CIT 5. THE D.R., I.T.A.T. 6. GUARD FILE (ITA NO.47 & 48/JP/2012) BY ORDER (ASSISTANT REGIST RAR) 6 ITAT, JAIPUR BENCHES