ACIT 10(1), MUMBAI V. AUTOMOTIVE MANUFACTURERS P. LTD, MUMBAI

ITA 4711/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4961 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MADHUK
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 4711/MUM/2012 (ASSESSMENT YEAR: 2009-10) D C I T - 10(1) M/S. AUTOMOTIVE MANUFACTURERS P. LT D. ROOM NO. 455, 4TH FLOOR 108, AUTOMOTIVE HOUSE AAYAKAR BHAVAN, M.K. ROAD VS. BASAR WARD, KURLA (W) MUMBAI 400020 MUMBAI 400070 PAN - AAIPS3352F APPELLANT RESPONDENT APPELLANT BY: SHRI S.K. MADHUK RESPONDENT BY: NONE DATE OF HEARING: 22.08.2013 DATE OF PRONOUNCEMENT: 22.08.2013 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE REVE NUE AND IT PERTAINS TO A.Y. 2009-10. 2. THE FOLLOWING GROUND WAS URGED BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF NOMINAL RENT INCOME NO NEW MATERIAL FOR FORMING AN OPINION THAT TRADING IN SHARES WAS REQUIRED TO BE T REATED AS BUSINESS INCOME. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HE ARD THE LEARNED D.R. AND CAREFULLY PERUSED THE RECORD. 4. THE FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. THE ASSESSEE IS A DEALER IN AUTOMOBILES. FOR THE YEAR U NDER CONSIDERATION ASSESSEE DECLARED TOTAL INCOME OF ` 20 CRORES. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE SHOWED INVESTMENT IN PROPERTIES AT SECUNDERABAD AND THE SA ID PROPERTIES WERE GIVEN ITA NO. 4711/MUM/2012 M/S. AUTOMOTIVE MANUFACTURERS P. LTD. 2 ON RENT TO THREE DIFFERENT COMPANIES. THE ASSESSEE WAS ASKED TO FURNISH DETAILS SUCH AS RENT AGREEMENT, IDENTIFICATION OF P ARTIES AS WELL AS ACTUAL RENT RECEIVED. THE ASSESSEE APPEARS TO HAVE NOT IDE NTIFIED THE PROPERTIES SHOWN IN THE BALANCE SHEET AND IT DECLARED INCOME A T ` 8,760/- ONLY WHEREAS ACCORDING TO THE AO THE INCOME FROM PROPERT IES, EVEN AT 7% OF THE VALUE OF THE PROPERTY, WOULD WORK OUT TO ` 40,82,569/-, WHICH IS ASSESSABLE TO TAX UNDER THE HEAD PROPERTY INCOME WHEREAS THE ASSESSEE OFFERED A SUM OF ` 8,760/- UNDER THE HEAD PROPERTY INCOME. UNDER IDE NTICAL CIRCUMSTANCES, IN THE EARLIER YEAR, THE AO BROUGHT TO TAX THE NOTIONAL RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY IN THIS YEAR ALSO HE MADE AN ADDITION OF ` 40,73,809/-. 5. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T ESTIMATION OF RENTAL INCOME IS NOT IN ACCORDANCE WITH LAW. RELIAN CE WAS PLACED UPON THE ORDER OF THE CIT(A) IN ASSESSEES OWN CASE FOR 2008 -09 WHEREIN THE FIRST APPELLATE AUTHORITY OBSERVED THAT THE IMPUGNED PROP ERTIES WERE ALREADY OCCUPIED BY OLD TENANTS WHO ARE PAYING NOMINAL RENT AND THE ASSESSEE FILED SUITS IN THE RENT CONTROL COURT AT SECUNDERABAD FOR VACATING THE PREMISES; THEREFORE, THE ACTUAL RENT RECEIVED BY THE ASSESSEE IS ASSESSABLE TO TAX AS AGAINST THE NOTIONAL RENTAL INCOME. ACCORDINGLY HE DELETED THE IMPUGNED ADDITION MADE BY THE AO. AGGRIEVED, REVENUE IS IN A PPEAL BEFORE US. 6. AT THE FIRST PLACE THE GROUND RAISED BY THE REVENUE IS NOT CLEAR SINCE IT SPEAKS OF SHARE TRADING WHEREAS THE LEARNED D.R. AD MITTED THAT THE ISSUE IS ONLY WITH REGARD TO ESTIMATION OF RENTAL INCOME. AT THE TIME OF HEARING THE LEARNED D.R. COULD NOT PLACE ANY MATERIAL ON RECORD AS TO WHETHER THE REVENUE PREFERRED ANY APPEAL AGAINST THE ORDER PASS ED BY THE CIT(A) IN ASSESSEES OWN CASE FOR A.Y. 2008-09. UNDER THESE C IRCUMSTANCES WE DO NOT FIND ANY LOGIC IN THE PLEA OF THE REVENUE THAT IN T HIS YEAR THE MATTER HAS TO BE RECONSIDERED. ON A CONSPECTUS OF THE MATTER WE A RE OF THE FIRM VIEW THAT THE APPEAL FILED BY THE REVENUE HAS NO LEGS TO STAN D. HOWEVER, THE REVENUE IS AT LIBERTY TO APPROACH THE TRIBUNAL WITH A MISCE LLANEOUS APPLICATION IF THEY ARE ABLE TO PROVE THAT THE REVENUE HAS NOT ACC EPTED THE ORDER PASSED BY THE CIT(A) IN RESPECT OF A.Y. 2008-09 AND THE MA TTER IS STILL PENDING ITA NO. 4711/MUM/2012 M/S. AUTOMOTIVE MANUFACTURERS P. LTD. 3 BEFORE THE TRIBUNAL. SUBJECT TO THE ABOVE OBSERVATI ONS THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND AUGUST, 2013. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 22 ND AUGUST, 2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 21, MUMBAI 4. THE CIT 10, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.