MOUNT VIEW CLUB & RESORTS P. LTD, NAVI MUMBAI V. ACIT 10(3), MUMBAI

ITA 4841/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1400 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-07-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.4841/M/2016 (AY 2009 - 2010) M/S. MOUNT VIEW CLUB & RESORTS PVT LTD., 27, MAHAVIR CENTRE SECTOR - 17, VASHI, NAVI MUMBAI - 400 705. / VS. ACIT - 10(3), MUMBAI. ./ PAN : AACCM5353M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAKASH PANDIT / RESPONDENT BY : MS. BEENA SANTOSH, DR / DATE OF HEARING : 30.03.2017 / DATE OF PRONOUNCEMENT : 07 .04.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 20.7.2016 IS AGAINST THE ORDER OF THE CIT (A) - 24, MUMBAI DATED 1.4.2016 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, ASSESSEE RAISED EIGHT GROUNDS IN TOTO AND TH E ISSUES INVOLVED IN THE GROUNDS RELATE TO (I) CONFIRMING OF THE TOTAL INCOME AT RS. 61,23,756/ - AGAINST RS. 33,64,240/ - AS SHOWN BY THE ASSESSEE; (II) CIT (A) DECISION IN CONFIRMING THE CLUB RECEIPTS OF RS. 84,60,074/ - AS RENTAL INCOME; (III) CONFIRMING THE ADDITION OF RS. 55,82,958/ - ON ACCOUNT OF EXPENSES INCURRED ON CLUB BUILDINGS; AND (IV) REJECTION OF ASSESSEES CLAIM OF DEPRECIATION OF RS. 2,60,713/ - . 3. BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS A DELAY OF 02 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL WITHIN THE PRESCRIBED TIME LIMIT. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE AFFIDAV IT DATED 29.03.2017 FILED BY THE ASSESSEE AND DEMONSTRATED THAT THE DELAY CAUSED IN FILING THE APPEAL IS NOT A DELIBE RATED ONE. IN SUPPORT OF THE SAME, LD AR READ OUT THE CONTENTS OF THE SAID AFFIDAVIT. AFTER HEARING THE LD AR AND ON PERUSAL 2 OF THE CONTE NTS OF THE SAID AFFIDAVIT (SUPRA), WE FIND, THERE IS A REASONABLE AND SUFFICIENT CAUSE FOR NOT FILING THE APPEAL BEFORE THE TRIBUNAL WITHIN THE STIPULATED TIME. CONSIDERING THE REASONABLE AND SUFFICIENT CAUSE AS WELL AS THE SMALLNESS OF THE DELAY, WE CO NDONE THE DELAY OF 2 DAY AND PROCEED TO ADJUDICATE THE APPEAL ON MERITS IN THE SUCCEEDING PARAS OF THIS ORDER. 4. IN CONNECTION WITH THE MERITS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE THE ASSESSEE EARNED RENTAL INCOME DURING THE INITIAL PERIOD VIDE THE LEASE AGREEMENT AND THE SAME WAS OFFERED TO TAX AS BUSINESS INCOME. ASSESSEE WAS ENGAGED IN THE RESORTS BUSINESS DURING THE PERIOD UNDER CONSIDERATION. CONSIDERING THE FACT THE SAID BUSINESS CEASED AND THE ASSESSEE LET OUT THE P ROPERTIES FOR RENT, THE DEPARTMENT TREATED THE SAME AS INCOME FROM HOUSE PROPERTY. THIS ISSUE WAS THE SUBJECT MATTER BEFORE THE TRIBUNAL AND THE TRIBUNAL DECIDED THE MATTER AGAINST THE ASSESSEE VIDE ITS ORDER IN APPEAL ITA NO.5451/M/2009 (AY 2005 - 06). SUBSEQUENTLY, THE RENTAL ARRANGEMENT EXPIRED AND THE ASSESSEE IS ENGAGED IN THE RESORTS BUSINESS IN THE YEAR UNDER CONSIDERATION. ASSESSEE REPORTED EARNINGS OF GROSS RECEIPTS OF RS. 84 LAKHS (ROUNDED OF) IE 20.52 LAKHS OF RENTAL INCOME IN THE PAST, AND TH E SAME CONSTITUTES BUSINESS INCOME. WITHOUT EXAMINING THE FACTS OF THE CASE AND NOT APPRECIATING THE ASSESSEES CLAIM OF EVIDENCE PLACED BEFORE THE AUTHORITIES, THE SAID INCOME WAS TREATED AS RENTAL INCOME IN TUNE WITH THE SAID DECISION OF THE TRIBUNAL FOR THE AY 2005 - 06 (SUPRA). ON THESE FACTS, BEFORE US, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE AO FOR FRESH DECISION IN THE MATTER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVEN UE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE FIND, THE FACT THAT THE ASSESSEE CONDUCTED RESORTS BUSINESS , WHICH IS EVIDENT ON THE FACE OF THE RECORDS AND THE SAME WAS NOT APPRECIATED BY THE AO. FURT HER, T HE RENTAL DEED, IF ANY, IS NO LONGER IN EXISTENCE FOR AO TO INVOKE THE SAID ORDER OF THE TRIBUNAL (SUPRA). CONSIDERING THE SAME, WE ARE OF THE OPINION, THE MATTER SHOULD BE REMANDED TO THE FILE OF THE AO FOR FRESH DECISION AND THE ASSESSEE SHOULD BE GIVEN A CHANCE TO DEMONSTRATE THAT THE INCOME EARNED BY IT IN THE YEAR 3 UNDER CONSIDERATION CONSTITUTES BUSINESS INCOME AND NOT OTHERWISE. ACCORDINGLY WE ORDER. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RES ULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 0 7 T H APRIL, 2017. S D / - S D / - ( D.T. GARASIA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 07.04.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI