SILVER COMPLEX P.LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 4725/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6006 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 10-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Capital expenditure
• Section: 143(3)

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.4725/ MUM/2014 ( / ASSESSMENT YEAR : 2011 - 12) SILVER COMPLEX PRIVATE LTD. JEENA HOUSE, PLOT NO. 170, OM NAGAR, OFF PIPELINE ROAD, ANDHERI(E), MUMBAI 400099 / V. DCIT 8(3) AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020 ./ PAN : AAVCS5749L ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: MS. AARTI SATHE REVENUE BY : SHRI V JUSTIN / DATE OF HEARING : 05.07.2018 / DATE OF PRONOUNCEMENT : 12 .07.2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 4725/MUM/2014, IS DIRECTED AGAINST APPELLATE ORDER DATED 13.05.2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 18, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR (AY) 2011 - 12, THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT ORDER DATED 31.12.2013 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 196 1 (HEREINAFTER CALLED THE ACT) FOR AY 2011 - 12. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - 1 THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) - 18 HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,52,502/ - TO TAXABLE LNCOME, MADE BY THE LEARNED DY. COMMISSIONER OF INCOME TAX - 8(3). BEING INTEREST I.T.A. NO.4725/MUM/2014 2 COMPONENT OF RS.59,63,458/ - WHICH HAS BEEN CONSIDERED AS DISALLOWANCE AND ADDED BACK IN COMPUTATION OF INCOME. 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 18 HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,27,674/ - AS REGARDS DEPRECIATION ON FURNITURE & FIXTURES MADE BY LEARNED DY. COMMISSION ER OF INCOME TAX - 8(3) BEING THE AMOUNT ON 25% OF PREMISES USED FOR THE APPELLANT'S BUSINESS PURPOSES. 3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 18 HAS ERRED IN CONFIRMING THE ADDITION OF RS.6,06,650/ - MADE BY THE LEARNED DY. COMMISSIONER OF INCOME TAX - 8(3). BEING ADDITI ON MADE TO RENTAL INCOME ON THE GROUND THAT NO DETAILS WERE SUBMITTED AT THE TIME OF ASSESSMENT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND MAINTENANCE OF PROPERTY. THE ASSESSEE HAS TAKEN ON ASSIGNMENT 99% OF PREMISES DESCRIBED AS CENTRE - 1 BEING OFFICE PREMISES NO. 2 ON 9 TH FLOOR SITUATED AT BACKBAY RECLAMATION, CUFFE PARADE, MUMBAI CONSISTING OF 4259.96 SQUARE FEET SUPER BUILT - UP AREA BEING 2479.29 SQUARE FEET CARPET AREA ALONG WITH CAR PARKING S WHEREIN 1% SHARE IN THE SAID PREMIS ES WAS ALSO HELD BY M/S TRAIL BLAZER TOURS INDIA PRIVATE LIMITED , UNDER A N COMMON AGREEMENT F OR ASSIGNMENT DATED 21.05.2010 EXECUTED WITH M/S EXCELLENT EXPORTS PRIVATE LTD. . T HE SAID AGREEMENT FOR A SSIGNMENT DATED 21.05.2010 IS PLACED ON RECORD FROM PA GE NO. 29 TO 3 4 IN THE PAPER BOOK FILED WITH THE TRIBUNAL . THE ASSESSEE HAS CLAIMED THAT IT GAVE ON LEAVE AND LICENCE BASIS 75% OF THE SAID PREMISES TO JEENA & COMPANY AND TO TRAIL BL A ZER TOUR (I NDIA) PRIVATE LTD. . I T IS ALSO THE CLAIM OF THE ASSES SEE THAT AFTER TAKING THE PREMISES UNDER DEED FOR ASSIGNMENT, THE ASSESSEE INCURRED CAPITAL EXPENDITURE TOWARDS EQUIPMENT , FURNITURE AND F IXTURE ETC. TO RENOVATE THE SAID PREMISES . I T IS THE CLAIM OF THE ASSESSEE THAT 25% OF THE SAID PREMISES TAKEN UNDER AFORESAID DEED FOR ASSIGNMENT CONTINUED TO BE OCCUPIED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES . BUT BOTH THE AUTHORITIES BELOW DENIED THE DEPRECIATION ON THE 25% OF THE COST OF THE EQUIPMENT, FURNITURE & F IXTURE WHICH WAS SO CLAIMED BY THE ASSESSEE TO BE IN ITS OCCUPATION AND USER FOR BUSINESS PURPOSES , DUE TO LACK OF EVIDENCE OF OCCUPATION AND USER OF THE SAID PREMISES TO THE TUNE OF 25% BY THE ASSESSEE FOR ITS BUSINESS PURPOSES . THE ASSESSEE HAD COME BEFORE THE TRIBUNAL BY FILING SECOND A PPEAL AGAINST THE APPELLATE ORDER PASSED BY LEARNED CIT(A) . THE ASSESSEE HAS PRODUCED AGREEMENT CONSISTING OF LEAVE AND LICENCE AGREEMENT DATED 01 - I.T.A. NO.4725/MUM/2014 3 04 - 2011 , ENTERED INTO WITH EFFECT FROM 16 TH MARCH, 2011 WITH M/S TRAIL BLAZER TOURS(INDIA) PRIVATE LIMITE D FOR AREA CONSISTING OF 1549.56 SQUARE FEET CHARGEABLE BUILT UP AREA . THE ASSESSEE HAS ALSO PRODUCED ANOTHER LEAVE AND LICENSE AGREEMENT DATED 01 - 04 - 2011 WITH JEENA AND COMPANY FOR AREA CONSISTING OF 774.78 SQUARE FEET CHARGEABLE BUILT UP AREA. THE SAID AGREEMENT WITH JEENA AND COMPANY IS EFFECTIVE FROM 01 - 04 - 2011 AND IS FOR THE PERIOD COMMENCING FROM 01 - 04 - 2011 ONWARDS . BOTH THE LEAVE AND LICENSE AGREEMENT ARE PLACED IN PAPER BOOK/PAGE 35 - 47 FILED WITH THE TRIBUNAL. THE DETAILS OF FURNITURE AND FIXTURES WH ICH ARE GIVEN ON LEAVE AND LICENSE BASIS TO BOTH THESE PARTIES ARE ALSO DETAILED IN THESE AGREEMENTS AS ANNEXED THERETO . HOWEVER BOTH THESE LEAVE AND LICENSE AGREEMENTS ARE DATED 01 - 04 - 2011 WHILE THE ISSUE BEFORE US IS THE DETERMINATION OF OCCUPATION A ND USER OF 25% OF THE SAID PREMISES BY THE ASSESSEE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ITS BUSINESS FOR THE PREVIOUS YEAR 2010 - 11 RELEVANT TO AY 2011 - 12 AND HENCE RELEVANT DOCUMENTS FOR THE YEAR UNDER CONSIDERATION ARE NOT FILED BEFORE THE AUTHORI TIES BELOW AS WELL BEFORE THE TRIBUNAL . THE AUTHORITIES BELOW HAVE ALSO CONCLUDED THAT EVIDENCES WERE NOT FILED BEFORE THEM AND HENCE CONSEQUENTLY IN THE ABSENCE OF EVIDENCES RELIEF WAS NOT GRANTED TO THE ASSESSEE WHICH ASSESSEE IS CLAIMING THAT IT IS EN TITLED FOR . THE ASSESSEE DID RECEIVED INCOME FROM RENTING OF THE PREMISES FROM TRAIL BLAZER TOURS(INDIA) PRIVATE LIMITED AND JEENA AND COMPANY DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR 2011 - 12 WHICH IS EVIDENT FROM LEDGER ACCOUNTS AS WELL FORM NO. 26AS FILED IN PAPER BOOK FILED WITH TRIBUNAL . THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT ALL THE NECESSARY EVIDENCES TO PROVE THAT 25% OF THE AREA IN THE AFORESAID OFFICE PREMISES WAS RETAINED B Y THE ASSESSEE AND THE SAME WAS USED WHOLLY AND EXCLUSIVELY FOR BUSINESS OF THE ASSESSEE WILL BE PRODUCED IF AN OPPORTUNITY IS GRANTED TO WHICH LEARNED DR FAIRLY STATED THAT THE MATTER CAN BE RESTORED TO THE FILE OF THE AO FOR DENOVO FRAMING OF ASSESSMENT ON MERITS BY THE AO IN ACCORDANCE WITH LAW AFTER CONSIDERING THE EVIDENCES/EXPLANATION SUBMITTED BY THE ASSESSEE . THE ONUS IS ON THE ASSESSEE TO BRING ON RECORD NECESSARY EVIDENCES AND PROVE THAT THE SAID OFFICE PREMISES SITUATED AT CENTRE - 1 BEING OFFICE P REMISES NO. 2 ON 9 TH FLOOR SITUATED AT BACKBAY RECLAMATION, CUFFE PARADE, MUMBAI CONSISTING OF 4259.96 SQUARE FEET SUPER BUILT - UP AREA BEING 2479.29 SQUARE FEET CARPET AREA ALONG WITH CAR PARKINGS ACQUIRED BY THE ASSESSEE UNDER AN COMMON AGREEMENT FOR AS SIGNMENT DATED 21.05.2010 I.T.A. NO.4725/MUM/2014 4 FROM M/S EXCELLENT EXPORTS PRIVATE LTD. WAS OCCUPIED BY THE ASSESSEE TO THE TUNE OF 25% DURING THE RELEVANT PREVIOUS YEAR WHICH WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE WHILE THE REST WAS LET O UT AS IT IS THE ASSESSEE WHO IS AVERRING BY RAISING THAT CONTENTIONS AND THE EVIDENCES ARE ALSO IN THE POSSESSION OF THE ASSESSEE FOR WHICH ONUS IS SQUARELY ON THE ASSESSEE TO BEING ON RECORD TO JUSTIFY ITS STAND . IF NECESSARY EVIDENCES ARE NOT BROUGHT ON RECORD BY THE ASSESSEE , PRESUMPTION WILL BE DRAWN AGAINST THE ASSESSEE. I T IS ALSO THE CLAIM OF THE ASSESSEE THAT DEPRECIATION WITH RESPECT TO THE FURNITURE AND FIXTURE AT ANDHERI PREMISE S WAS ALSO DISALLOWED BY REVENU E ON THE BELIEF THAT THE SAID FURNI TURE AND FIXTURE IS SITUATED AT ITS AFORESAID OFFICE SITUATED AT OFFICE PREMISES NO. 2 ON 9 TH FLOOR SITUATED AT BACKBAY RECLAMATION, CUFFE PARADE, MUMBAI W HILE FURNITURE AND FIXTURE SITUATED AT ANDHERI HAS NO NEXUS WITH THE SAID PREMISES SITUATED AT CUFFE PARADE . IT WAS STATED THAT THIS ASPECT CAN BE SEEN BY THE AO IN SET ASIDE DE - NOVO ASSESSMENT PROCEEDINGS. THUS IT IS THE MAIN CONTENTION OF THE ASSESSEE THAT BOTH THE AUTHORITIES BELOW HAVE NOT PROPERLY APPRECIATED THE CONTENTION S OF THE ASSESSEE . THE L EARNED DR HAS ALSO FAIRLY STATED THAT THIS ISSUE CAN ALSO BE RESTORED TO THE FILE OF THE AO FOR DENOVO ADJUDICATION OF THE ISSUE TO THE FILE OF THE AO FOR FRAMING OF FRESH ASSESSMENT ON MERITS IN ACCORDANCE WITH LAW . THUS KEEPING IN VIEW FACTUAL MATRIX OF THE CASE , WE DEEM IT APPROPRIATE AND FAIR TO RENDER JUSTICE UNDER THESE CIRCUMSTANCES TO RESTORE THE ENTIRE ISSUES AS AFORESAID TO THE FILE OF THE AO FOR FRAMING OF FRESH ASSESSMENT DE - NOVO ON MERITS IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT AO SHALL GRANT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. THE AO SHALL ADMIT ALL NECESSARY EVIDENCES AND EXPLANATIONS FILED BY THE ASSESSEE IN DENOVO ASSESSMENT PROCEEDINGS AND THE SAME SHALL BE ADJUDICATED BY THE AO ON MERITS IN ACCORDANCE WITH LAW. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY 4 . THE NEXT GROUND RAISED BY THE ASSESSEE IN ITS APP EAL IS WITH RESPECT TO DIFFERENCE IN THE INCOME ON ACCOUNT OF RENT AS REPORTED IN BOOKS OF ACCOUNTS VIS - A - VIS INCOME FROM RENT AS REPORTED IN FORM NO. 26AS . AS PER AO , THE RENT RECEIPT S WHICH THE ASSESSEE DECLARED IN ITS BOOKS OF ACCOUNTS WAS RS. 35 ,29,600/ - FROM TRAIL BLAZER TOUR S (I) P. LTD. AS AGAINST RENTAL INCOME OF RS. 41,36,250/ - APPEARING IN 26AS WHICH THE ASSESSEE PURPORTEDLY RECEIVED AS I.T.A. NO.4725/MUM/2014 5 RENTAL INCOME FROM SAID TRAIL BLAZER TOURS (I) P. LTD. DURING THE IMPUGNED AY, WHICH LED TO THE ADDITION TO THE INCOME OF THE ASSESSEE TO THE TUNE OF RS. 6,06,650/ - IN AN ORDER OF ASSESSMENT FRAMED BY THE AO , AS THE ASSESSEE COULD NOT EXPLAIN THE AFORESAID DIFFERENCE IN SAID RENT AL INCOME . THE AFORESAID ADDITION S MADE BY THE AO WERE CONFIRMED LATER BY LE ARNED CIT(A) . AGGRI E VED BY THE APPELLATE ORDER PASSED BY LEARNED CIT(A) , THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. B EFORE US LD. COUNSEL FOR THE ASSESSEE MS. AARTI SETHE SUBMITTED THAT ERROR IS MADE BY THE AUTHORITIES BELOW AS THE RENTAL INCOM E FROM TRAIL BLAZER TOUR(I) P. LTD. HAS BEEN DULY DECLARED IN THE BOOKS OF ACCOUNTS AS WELL RETURN OF INCOME FILED WITH THE REVENUE AND ALL DUE TAXES PAID TO THE CREDIT OF CENTRAL GOVERNMENT W HILE FILING OF RETURN OF INCOME. IT WAS CLAIMED THAT THE INCOME TO THE TUNE OF RS. 5,69,951/ - WAS DECLARED IN THE BOOKS OF ACCOUNTS BY DEBITING TO THE HEAD PROVISIONS FOR INCOME AND CORRESPONDING CREDIT WAS GIVEN TO THE HEAD OF INCOME NAMELY LICENSE FEES - INCOME(OTHER) - RS. 5,40,210/ - AND TO LICENSE FEES INCOME( FURN ITURE) - RS. 29,741/ - MEANING THEREBY THE SAID INCOME GOT CREDITED TO PROFIT AND LOSS ACCOUNT AND CONSEQUENTLY GOT DECLARED IN THE RETURN OF INCOME FILED WITH THE REVENUE AND NO PREJUDICE IS CAUSED TO REVENUE . THE AFORESAID LEDGER ACCOUNTS ARE FILED IN PAPER BOOK FILED WITH TRIBUNAL. IT WAS SUBMITTED THAT THE BALANCE AMOUNT WAS TAKEN TO SERVICE TAX HEAD. THUS , IT WAS CLAIMED THAT ENTIRE RENTAL INCOME SUFFERED TAXATION AND THE AUTHORITIES BELOW ERRED IN HOLDING THAT THERE WAS A SHORT DECLARATION O F INCOME TO THE TUNE OF RS. 6.06.500/ - . IT WAS SUBMITTED THAT T HE WHOLE RENTAL INCOME OF RS. 41,36,250/ - SUFFERED TAXATION AND NO PRE JUDICE IS CAUSED TO THE REVENUE . THUS IT IS CLAIMED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE AO TO VERIFY THE CONTENTION S OF THE ASSESSEE VIS - A - VIS BOOKS OF ACCOUNTS AND RETURN OF INCOME THAT THE ENTIRE RENTAL INCOME EARNED FROM THE TRAIL BLAZER TOUR (I) P. LTD. TO THE TUNE OF RS. 41,36,250/ - HAD SUFFERED TAXATION AND DUE TAXES PAID TO REVENUE WHICH CAN THEN BE COMPARED WITH THE ENTRIES APPEARING IN FORM NO 26AS . THE LD. DR FAIRLY SUBMITTED THAT MATTER CAN BE RESTORED TO THE FILE OF THE AO FOR CONDUCTING NECESSARY VERIFICATION OF THE CONTENTION S OF THE ASSESSEE . AFTER HEARING BOTH THE PARTIES, W E ARE OF THE CONS IDER ED VIEW THAT THIS MATTER NEED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR NECESSARY VERIFICATION S AND DENOVO ADJUDICATION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW AFTER MAKING NECESSARY RECONCILIATION OF THE INCOME DECLARED IN THE BOOKS OF ACCOUNTS SUPPORTED BY LEAVE AND LICENSE I.T.A. NO.4725/MUM/2014 6 AGREEMENT , INCOME DECLARED IN RETURN OF INCOME FILED WITH REVENUE VIS - A - VIS INCOME REPORTED IN F ORM NO. 26AS , THEN TO COME TO THE CONCLUSION WHETHER THE ENTIRE RENTAL INCOME FROM TRAIL BLAZER TOUR (I) P. LTD. SUFFERED TAXATION OR NOT, AS CLAIMED AND CONTENDED BY THE ASSESSEE. TH E ASSESSEE IS DIRECTED TO PLACE ON RECORD NECESSARY EVIDENCES AND EXPLANATION TO SUPPORT ITS CONTENTION BEFORE THE AO IN DENOVO ASSET ASIDE PROCEEDINGS . THE ONUS TO THAT EFFECT IS ON T HE ASSESSEE. T HE AO SHALL PROVIDE PROPER AN D ADEQUATE OPPORTUNITY TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. THE AO SHALL ADMIT ALL NECESSARY EXPLANATIONS AND EVIDENCES SUBMITTED BY THE ASSESSEE IN ITS DEFENCE WHICH SHALL BE ADJUDICATED THEREAFTER ON MERITS IN ACCORDANCE WITH LAW. THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 1 2 .07.2018 1 2 .07.2018 S D / - S D / - (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 2 .07.2018 NISHANT VERMA SR . PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI