ITO 2(1)(2), MUMBAI V. DHANRAJGIR BUSINESS P.LTD, MUMBAI

ITA 5585/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7560 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FIROZE ANDHYARUJINA
• Assessee Lawyers: RAM TIWARI
• Keywords: Business income; Difference of opinion
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 5585 /MUM/20 1 6 (ASSESSMENT YEAR 20 1 0 - 11 ) ITO - 2(1)(2) 543, AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. DHANRAJ GIR BUSINES S PVT. LTD. G - 43, DHANRAJ MAHAL CSM MARG, APOLLO BUNDER, COLABA MUMBAI - 400 039. PAN : AABCD3080D ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAM TIWARI DEPARTMENT BY SHRI FIROZE ANDHYARUJINA DATE OF HEARING 5 . 4 . 201 8 DATE OF PRONOUNCEMENT 5 . 4 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 15.6.2016 PASSED BY THE LEARNED CIT(A) - 4, MUMBAI AND IT RELATES TO A.Y. 2010 - 11. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED C IT(A) IN DELETING THE PENALTY OF ` 16.93 LAKHS LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE - COMPANY WAS FORMED WITH THE OBJECT OF DEALING IN HOUSE PROPERTY INCLUDING LETTING O UT TO SOPHISTIC CUSTOMERS LIKE FOREIGNERS, CONSULTANTS AND EXPATRIATES ETC. THE COMPANY LET S OUT ITS OWN PROPERTY AND ALSO PROPERTIES TAKEN ON LEAVE AND LICENSE BASIS. THE ASSESSEE ALSO COLLECTED CONTRACT CHARGES FOR PROVIDING AMENITIES. THE ASSESSEE OFFER ED ALL THREE RECEIPTS AS ITS BUSINESS INCOME. THE ASSESSING OFFICER, HOWEVER, ASSESSE D THE INCOME RECEIVED FROM LETTING OUT PROPERT IES UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE CONTRACT CHARGES RECEIVED BY THE ASSESSEE WERE ASSESSED AS INCOME UNDER TH E HEAD INCOME FROM OTHER SOURCES. IN THE APPEAL FILED BEFORE THE LEARNED CIT(A), THE FIRST APPELLATE M/S. DHANRAJGIR BUSINESS PVT. LTD. 2 AUTHORITY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ACTION WITH REGARD TO RENTAL INCOME RECEIVED FROM OWN PROPERTY. THEREAFTER THE ASSE SSING OFFICER LEVIED PENALTY ON THE ASSESSEE U/S. 271(1)(C) OF THE ACT. THE LEARNED CIT(A), HOWEVER, DELETED THE PENALTY AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 3. LEARNED DR SUBMITTED THAT THE ASSESSEE HAS DECLARED HOUSE PROPERTY AS ITS B USINESS INCOME WITH THE MALAFIDE INTENTION OF CLAIMING VARIOUS EXPENSES AND REDUCING THE TAX. HE SUBMITTED THAT THE SAID ACTION OF THE ASSESSEE IS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD, LEARNED DR PLACED RELIANCE ON THE DECISION REND ERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION (327 ITR 510). LEARNED DR ALSO PLACED RELIANCE ON THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE (306 ITR 277) AND CONTENDED THAT THE LEARNED CIT(A) WAS NO T JUSTIFIED IN DELETING THE PENALTY. 4. ON THE CONTRARY, LEARNED AR SUBMITTED THAT THE ASSESSEE DID NOT CONCEAL ANY PARTICULARS OF INCOME OR FURNISH ANY INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS DULY DECLARED ALL ITS INCOME UNDER THE HEAD INCOM E FROM BUSINESS . THE ASSESSING OFFICER HAS MERELY CHANGED HEAD OF INCOME. HE SUBMITTED THAT AN IDENTICAL ISSUE WAS CONTESTED BEFORE THE ITAT IN A.Y. 2009 - 10 BY TAKING SUPPORT OF HON'BLE SUPREME COURT IN THE CASE OF M/S. CHENNAI PROPERTIES (CIVIL APPEAL NO . 4494/2004 DATED 9.4.2015) SINCE THE OBJECT FOR WHICH THE COMPANY WAS INCORPORATED WAS, INTER ALIA, TO LET OUT THE PROPERTY. HENCE, THE ITAT RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER IN A.Y. 2009 - 10 IN ITA NO. 2488/MUM/2013 DATED 14.8.2015. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ACCEPTED THE ORDER PASSED BY THE LEARNED CIT(A) , SINCE THE MAJORITY OF ITS RECEIPTS WAS DIRECTED TO BE ASSESS ED AS BUSINESS INCOME BY THE LEARNED CIT(A). THE LEARNED AR FURTHER SUBMITTED THAT THERE ARE PLET HORA OF JUDGMENTS WHICH LAID DOWN THE PROPOSITION THAT MERE CHANGE OF HEAD OF INCOME COULD NOT GIVE RISE PENALTY U/S. 271(1)(C) OF THE ACT . THE LEARNED AR PLACED RELIANCE ON THE ORDER PASSED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SAMBHAV MED IA LTD. (2013) 32 TAXAMNN.COM 371, M/S. DHANRAJGIR BUSINESS PVT. LTD. 3 WHEREIN IT WAS HELD THAT WHEN THERE IS BONAFIDE DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT REGARDING ALLOWABILITY OF CLAIM, IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT WAS NOT JUSTIFIED. THE LD A.R ACCORDINGLY SUBMITTED THAT THE LD CIT(A) HAS RIGHTLY HELD THAT THE ISSUE RELATING TO THE HEAD OF INCOME IS A DEBATABLE ONE AND A CCORDINGLY CONTENDED THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 5. WE NOTICED THAT THE LE ARNED CIT(A) HAS DELETED THE PENALTY WITH THE FOLLOWING OBSERVATIONS : - 3.3 I HAVE CONSIDERED THE R E ASONS OF THE ASSESSING OFFICER GIVEN IN PENALTY ORDER FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT AND RIVAL SUBMISSIONS OF THE APPELLANT, CAREF ULLY . I FIND THAT THIS IS NOT A CASE OF INTENTIONAL CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTIC U LARS OF INCOME. HERE IS THE CASE WHERE CLAIM OF THE APPELLANT AS BUSINESS INCOME B E ING RENTAL INCOME AS WELL AS SERVICE CHARGES/CONTRAC T CHARGES HA S BEEN TREATED AS 'INCOME FROM HOUSE PROPERTY' WHICH HAS BEEN CONFIRMED BY THE CIT{A) VIDE O RDER DATED 29. 10.2013. AS FAR AS RENTAL INCOME, SER VICE CHARGES FROM SUB - TENANCY CHARGES ARE CONCERNED, THE LD. ASSESSING OFFICER HAD TAXED THE SAME AS 'INCOME FROM HOUSE PROPERT Y '. H OWEVER, THE LEARNED CIT(A) HAS HELD THAT SU CH RENTAL INCOME AND CORRESPONDING SERVICE CHAR GES ARE ASSESSABLE AS 'INCOME F ROM BUSINESS & PROFESSION' U/ S. 28 OF THE I. T . ACT, 1961 CONS IDER ING THE DECISION OF HON'BLE BOMBAY HIGH COURT , IN T HE CASE OF GIT V/S. MU MBADVI CO - OWNERS CO - OPE RATIV E 143 TR 150 (BOM) AND HON'BLE SUPREME COUR T 'S DECISION IN THE CASE O F MERCANTI L E CORPORATION VS . CIT 83 I TR 700( S C). THUS , THE ISSUE UNDER APPEAL HAS BEEN DISPUTABLE ISSUE. FURTHER IT IS VERY EVIDENT THA T T HE ASSESSES HAS DISCLOSED ALL THE INFORMATION IN RETURN OF INCOME/BALANCE SHEET AND COMPUTATION OF INCOME, HENCE THERE IS NOTHING WHI CH CAN SHOW THAT THERE IS CO NCEAL MENT OF INCOME, H ENCE, MERELY IN CHANGE OF HEADS OF INCOME, PENALTY COULD NOT BE LEVIED . IT IS ALSO PERTINENT TO MENTION THAT AGAINST T HE ORDER OF LD. C I T(A) IN A.Y.20 09 - 10, THE APPELLANT HAS FILED AN APPEAL BE FORE THE ITAT IN IN C O ME - TAX ACT, 1961 NO.2488/MUM/2013 DATED 14.08.20 0 5 HAS SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH. 3.4. CONSIDE R ING THE LATEST D ECISION O F HON'BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES CIVIL A PPEA L NO. 4494 O F 2004 DATED 9.4.2015, OBVIOUSLY, ISSUE UNDER APPEAL IS HAVING DISPUTA BLE ELEMENT, MERELY ON THE GROUND THAT THE C LAIM OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE DEPARTMENT, PENALTY COULD N O T BE LEVIED, VIDE CIT V/S. RELIANCE PETRO 322 ITR 158 (SC). FURTHER, IF THERE IS A MERE CHANGE OF THE HEAD OF INCOME, NO PENALTY CAN BE LEVIED AS HELD IN THE CASE OF PR. CIT V/S. G.K. PROPERTIES 377 ITR 417 (T&.A.P.). FURTHER, WHEN SUCH ISSUE M/S. DHANRAJGIR BUSINESS PVT. LTD. 4 HAS BEEN SET ASIDE BY T H E HON'BLE ITAT, THE MATTER IS COVERED BY T H E DECISION OF HON'BLE BO MB AY HIGH COURT IN THE CASE OF CIT VS. DALMIA DIACH E M INDUST R I ES (2010) 377 ITR 133(BOM.) IN THIS CA SE, IT HAS BEEN HEL D T H AT IF A M ATTE R HAS BEEN SET ASI D E TO THE ASSESSING OFFICER THEN THE INTERPRETATION PLACED BY THE ASSESSEE OF A PROVISION O F LA W COULD NO T BE CONSI DERED AS DISHONEST, MALAFIDE H ENCE, IT COULD NO T CONSIDERED CONCEALMENT OF TAX. THEREF ORE, NO PENALTY COULD BE LEVIED . THUS, IN THE LIGHT OF THE ABOVE FACTUAL AS WELL AS LEGAL DIS C U S SION, I FIND THAT THIS IS NOT A SUITABLE CASE WHICH ATTRACT PENALTY U/S.271(1)(C) OF THE ACT. THUS, LEVY OF PENALTY OF RS. 16,93,030/ - U/S. 271(1)(C) OF THE I.T. ACT IS DELETED. 6. WE NOTICED THAT THE LEARNED CIT(A) HAS CONSIDERED THE IMPUGNED ISSUE AS DEBATABLE IN NATURE , SINCE THE RE WAS DIFFERENCE OF OPINION ABOUT THE HEAD INCOME UNDER WHICH THE INCOME RECEIVED BY THE ASSESSEE IS ASSESSABLE. WE NOTIC ED THAT THE LEARNED CIT(A) HAS PLACED RELIANCE ON THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF MUMBADEVI CO - OWNERS CO - OPERATIVE (SUPRA) AND ALSO ON THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS ( SUPRA) . BEFORE US, THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF SAMBHAV MEDIA LTD, WHEREIN IT WAS HELD THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS NOT EXIGIBLE, IF THERE IS BONAFIDE DIFFERENCE OF OPINION. SINCE THE ASSESSING OFFICER HAS ONLY CHANGED THE HEAD OF INCOME, WHICH IS DUE TO BONAFIDE DIFFERENCE OF OPINION, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ISSUE UNDER CONSIDERATION IS DEBATABLE ONE. ACCORDIN GLY, WE ARE OF THE VIEW THAT HE WAS JUSTIFIED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 5 . 4 .201 8 . SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 5 / 4 / 20 1 8 M/S. DHANRAJGIR BUSINESS PVT. LTD. 5 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. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI