ITO 2(1)(3), MUMBAI V. FANCY CORPORATION LTD, MUMBAI

ITA 552/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0634 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CIRCUMSTANCES OF CASE; FIXTURES AFTER; FACTS OF CASE ON FACTS
• Keywords: Business income
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 552 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 201 1 - 12 ) ITO - 2(1)(3) R.NO. 553, 5 TH FLOOR, AAYAKA R BHAVAN, M.K. ROAD, MUMBAI - 400020 / VS. M/S. FANCY CORPORATION LTD. 16, SIR VITHALDAS CHAMBERS 16, MUM BAI SAMACHAR MARG, FORT, MUMBAI - 400001 ./ ./ PAN/GIR NO. : AAACF 0866 C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 22 .1 1 .2017 / DATE OF PRONOUNCEMENT : 0 9 .0 2 . 2018 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 16 . 1 1 .20 1 5 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 4, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE AY.20 11 - 12 . 2 . THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: - 1. THE ORDER OF CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE RENTAL RECEIPT FROM SUBLETTING OF FACTORY PREMISES ALONG WITH FURNITURE & FIXTURES AFTER R EVENUE BY: MS. POOJA SWAROOP (DR ) ASSESSEE BY : SHRI JITENDRA SINGH AR ITA. NO. 552 /M/20 16 A.Y. 2011 - 12 2 MANUFACTURING ACTIVITIES HAVE CEASED SHOULD BE TAXED UNDER THE HEAD BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE LD. CIT(A) MAY BE SET ASI DE AND THAT OF AO RESTORED. 3 . THE BRIEF FACTS OF THE CASE , ARE THAT THE ASSESSE E F ILED ITS R ETURN OF INCOME ON 17 .09.2011 DECLARING TOTAL LOSS T O THE TUNE OF RS, 5,60,791 / - . THE RETURN WAS PROCESSED U/S 143(1) . T HE CASE WAS SELECTED FOR SCRUTINY AND NOT ICE U/S 143(2) OF THE ACT DATED 18 .0 9 .2012 WAS ISSUED AND SERVED UPON THE ASSESSEE. N OTICE U/S 142(1) OF THE ACT, ALONG WITH QUESTIONNAIRE DATED 23 .0 7 .2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY HAD SUB - LET ITS TENANTED PROPERTY AND EARNING RENTAL INCOME WHICH WAS SHOWN AS BUSINESS INCOME. ON SEEING THE INCOME OF BUSINESS , THE ASSESSING OFFICER ISSUING THE NOTICE DATED 13.12.2013 STATING THEREIN THAT WHY THE RENTAL INCOME TO THE TUNE OF RS.65,88,000/ - SHOULD NOT BE TREAT ED AS INCOME F ROM OTHER SOURCES AS DONE IN A.Y. 2007 - 08 & 2009 - 10 WHILE PASSING ORDER U/S 143(3) OF THE ACT WHICH WAS CONFIRMED BY CIT(A). THEREAFTER, THE ASSESSEE HAS FILED THE REPLY AND AFTER CONSIDERATION THE REPLY , THE INCOME OF THE ASSESSEE WAS TAXED UNDER THE HEAD OF INCOME FROM OTHER SOURCES. T HE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.60,31,330/ - . T HE ASSESSEE WAS NOT SATISFIED WITH THE FINDING OF THE AO THEREFORE FILED AN APPEAL BEFORE THE CIT (A) WHO ALLOWED THE CLAIM OF THE ASSESSEE AND TREATED T HE INCOME AS BUSINESS INCOME. FEELING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ITA. NO. 552 /M/20 16 A.Y. 2011 - 12 3 ISSUE NO 1 & 3 : - 4. ALL THE ISSUES RAISED BY THE REVENUE IS IN CONNECTION WITH TREATMENT OF THE INCOME OF ASSESSEE AS BUSINESS INCOME BY CIT(A). T HE LD. RE PRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE EARLIER TO THE PRESENT ORDER THE INCOME OF THE ASSESSEE WAS BEING TREATED AS INCOME FROM OTHER SOURCES AND THERE IS NO CHANGE OF BUSINESS, T HEREFORE, IN THE SAID CIRCUMSTANCES, THE INCOME OF THE ASSESSEE W AS RIGHTLY TREATED BY AO AS INCOME FROM OTHER SOURCES, THEREFORE, T HE FINDING OF THE CIT(A) TREATING THE INCOME OF ASSESSEE AS BUSINESS INCOME IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND THE LD. REPRESENTATIVE OF THE ASSESSEE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. BEFORE GOING FURTHER, IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD: - 5.4 I HAVE CONSIDERED ASSESSMENT ORDER, GROUND OF APPEAL, WRITTEN SUBMISSIONS AND THE ARGUMENT OF THE APPELLANTS REPRESENTATIVE. I FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE INVOLVED IN THE ASSESSMENT YEAR 2009 - 10. THE HONBLE APPELLATE TRIBU NAL VIDE ORDER IN INCOME TAX APPEAL NO. 2166 & 6083/M/2013 AN D 2010 DATED 06.06.2014 ALLOWED THE CLAIM OF THE APPELLANT AND DIRECTED THE AO TO TREAT THE BUSINESS SERVICE CENTER RECEIPT AS BUSINESS INCOME. FOLLOWING THE ORDER OF THE APPELLATE TRIBUNAL, I ALLOW THE CLAIM OF THE APPELLANT AND DIRECT THE AO TO TREAT TH E RECEIPT AS BUSINESS INCOME AS SHOWN BY THE APPELLANT 5 . ON APPRAI SAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF ITA. NO. 552 /M/20 16 A.Y. 2011 - 12 4 DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 2166/M/2 013 & 6083/M/2010 DATED 06.06.2014 IN WHICH THE INCOME OF THE ASSESSEE HAS BEEN TREATED AS BUSINESS INCOME. THE CIT(A) HAS FOLLOWED THE ORDER OF HONBLE ITAT IN ITA. NO. 2166/M/2013 & 6083/M/2010 DATED 06.06.2014 . THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE. NO DISTINGUISHABLE MATERIAL HAS BEEN PRODUCED BEFORE US FROM DEVIATING THE FINDING OF THE CIT(A) IN QUESTION. BY HONORING THE ORDER OF THE HONBLE ITAT AND FINDING THE DECISION ON THE BASIS OF ORDER OF THE HONBLE ITAT, WE ARE OF THE VIEW T HE CIT ( A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE DECIDE THESE ISSUE S IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HERE BY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 09. 02 . 2018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI; DATED : 09. 02 . 2018 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - ITA. NO. 552 /M/20 16 A.Y. 2011 - 12 5 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI