ASSISTANT COMMISSIONER OF INCOME TAX-1(1)(1), MUMBAI V. AMAZIA DEVELOPERS PVT LTD, MUMBAI

ITA 5671/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5452 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR LD
• Assessee Lawyers: IRA BAHL LD
• Keywords: Business income; Business expenditure; Rule of consistency; Validity of assessment; Revised return
• Section: 143(3); 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.5671/MUM/2019 ( / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.5672/MUM/2019 ( / ASSESSMENT YEAR: 2011-12) A CIT - 1(1) (1) 579, 5 TH FLOOR AAYKAR BHAWAN, M.K.ROAD MUMBAI 400 020 / VS. M/S AMAZIA DEVELOPERS PRIVATE LTD. UNIT NO.116, 1 ST FLOOR REHAB BUILDING NO.4, AKRUTI ANNEXE ROAD NO.7,MAROL MIDC ANDHERI(E), MUMBAI 400 093 PAN NO. : AA HCA - 6934 - H ( /APPELLANT ) : ( ! / RESPONDENT ) ASSESSEE BY : MS. IRA BAHL LD. AR REVENUE BY : SHRI BRAJENDRA KUMAR LD. SR. DR / DATE OF HEARING : 06/05/2021 / DATE OF PRONOUNCEMENT : 06/05/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [AY IN SHORT] 2009-10 & 2011-12 CONTEST SEPARATE ORDERS OF LEARNE D FIRST APPELLATE AUTHORITY. HOWEVER, THE FACTS AS WELL AS ISSUES ARE IDENTICAL IN BOTH THE APPEALS. THEREFORE, THE APPEALS WERE HEARD TOGETHER AND ARE NOW BEING 2 DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE & BREVITY. FIRST, WE TAKE UP APPEAL FOR AY 2009-10 WH EREIN FOLLOWING GROUND HAS BEEN RAISED BY THE REVENUE: - WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE AND LAW, THE LD. CIT(A) WAS RIGHT IN TREATING ASSESSEES LEASED RENTAL INCOME A S BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY ? AS EVIDENT, THE REVENUE IS AGGRIEVED BY THE FACT TH AT LEASED RENTAL INCOME EARNED BY THE ASSESSEE HAS BEEN ACCEPTED IN THE IMPUGNED ORDER AS BUSINESS INCOME WHICH WAS ASSESSED BY LD . AO UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 2. THE LD. AR ADVANCED ARGUMENT IN SUPPORT OF IMPUG NED ORDER BY DRAWING ATTENTION TO THE ORDERS OF TRIBUNAL IN EARL IER YEARS WHEREAS LD. DR JUSTIFIED THE ACTION OF LD. AO. WE HAVE CAREFULL Y HEARD THE RIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD . OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN I N SUCCEEDING PARAGRAPHS. 3.1 AN ASSESSMENT WAS FRAMED AGAINST THE ASSESSEE U /S 143(3) R.W.S. 147 ON 23/12/2016. THE ASSESSEE IS A RESIDENT CORPO RATE ASSESSEE AND STATED TO BE ENGAGED AS A PROPERTY DEVELOPER. THE O RIGINAL ASSESSMENT FOR THE YEAR WAS ALREADY COMPLETED U/S 143(3) ON 29 /12/2011 ACCEPTING REVISED RETURNED LOSS OF RS.704.56 LACS. 3.2 HOWEVER, THE CASE WAS REOPENED DUE TO ASSESSMEN T ORDER FOR AY 2010-11 PASSED U/S 143(3) R.W.S. 263 WHEREIN A VIEW WAS TAKEN THAT THE LEASED RENTAL INCOME WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. TO ADOPT THE SAME VIEW IN THIS YEAR, THE CASE WAS REOPENED FOR THIS YEAR AS PER DUE PROCESS OF LAW. 3 3.3 IT TRANSPIRED THAT THE ASSESSEE WAS OWNER OF PR OPERTY WHICH WAS GIVEN ON RENT AND RECEIVED REGULAR MONTHLY INCOME. IT TRANSPIRED THAT M/S HUBTOWN CONSTRUCTED AN INDUSTRIAL PARK NAMELY AKRU TI TRADE CENTER AT ANDHERI. ANOTHER ENTITY NAMELY M/S BRAINPOINT INFOT ECH PRIVATE LTD. WAS A MUTUAL BENEFIT COMPANY WHICH WAS PROVIDING VARIOU S AMENITIES / INFRASTRUCTURAL FACILITIES FOR THE SAID INDUSTRIAL PARK BUILDING. M/S BRAINPOINT SOLD UNITS OF INDUSTRIAL PARK TO THE ASSESSEE AND A LSO TRANSFERRED OPERATION AND MAINTENANCE OF THE INDUSTRIAL PARK BU ILDING TO THE ASSESSEE. THE ASSESSEE ARISING THERE-FROM WAS OFFER ED BY THE ASSESSEE AS BUSINESS INCOME. THE ASSESSEE DEFENDED THE STA ND OF OFFERING THE RENTAL INCOME AS BUSINESS INCOME BY SUBMITTING TH AT THE ASSESSEE WAS INCORPORATED FOR RUNNING OR SELLING THE INFRASTRUCT URAL FACILITIES AND IT WAS THE ONLY BUSINESS OF THE COMPANY. 3.4 HOWEVER NOT CONVINCED WITH A ASSESSEES EXPLANA TION, THE RENTAL RECEIPTS OF RS.126.10 LACS WAS TAXED AS INCOME FRO M HOUSE PROPERTY AGAINST WHICH STATUTORY DEDUCTION U/S 24(A) WOULD B E AVAILABLE TO THE ASSESSEE. CONSEQUENTLY, THE ASSESSEE WOULD NOT BE E LIGIBLE TO CLAIM ANY BUSINESS EXPENDITURE EXCEPT INTEREST EXPENDITURE. 4.1 DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBM ITTED THAT REOPENING FOR THIS YEAR WAS BASED ON ASSESSMENT COM PLETED U/S 143(3) R.W.S. 263 FOR AY 2012-13. THE ASSESSEE CHALLENGED THE VALIDITY OF REVISION ORDER U/S 263 WHICH WAS QUASHED BY THE TRI BUNAL VIDE ITA NO.2499/MUM/2017 ORDER DATED 08/05/2019. ANOTHER PL EA RAISED BY THE ASSESSEE WAS THAT THE MATTER ALREADY STOOD EXAMINED DURING ASSESSMENT PROCEEDINGS U/S 143(3) AND THEREFORE, TH E REOPENING WAS BAD IN LAW. 4 4.2 THE LD. CIT(A) NOTED THE SIMILAR ISSUE AROSE IN AY 2012-13 WHEREIN THE RENTAL INCOME WAS ASSESSED BY LD. AO AS INCOME FROM OTHER SOURCES. HOWEVER, FIRST APPELLATE ORDER REVE RSED THE STAND OF LD. AO BY NOTING THAT SIMILAR INCOME EARNED BY THE ASSE SSEE WAS ACCEPTED AS BUSINESS INCOME FOR AYS 2010-11 & 2011-12. IT WA S FURTHER NOTED THAT THE STAND TAKEN BY LD. AO IN ORDER PASSED U/S 143(3 ) R.W.S. 263 FOR AY 2010-11 WAS ALSO REVERSED BY LD. CIT(A). SINCE THE FACTS REMAIN THE SAME FOR AYS 2009-10, 2010-11 & 2012-13, THE INCOME WAS TO BE ASSESSED AS BUSINESS INCOME. CONSEQUENTLY, THE LE GAL ISSUE ASSAILING THE VALIDITY OF ASSESSMENT PROCEEDINGS WAS NOT ADJU DICATED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. WE FIND THAT THE WHOLE BASIS OF REOPENING THE CA SE FOR THE YEAR IS THE FACT THAT AN ASSESSMENT WAS FRAMED FOR AY 2010- 11 U/S 143(3) R.W.S. 263 OF THE ACT WHEREIN A VIEW WAS TAKEN THAT THE LE ASED RENTAL INCOME WAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. TO ADOPT THE SAME VIEW, THE CASE WAS REOPENED. WE FIND THAT THE APPEALS FOR AY 2010-11 WAS SUBJECT MATTER OF ADJUDICATION BEFORE THIS TRIBUNAL VIDE ITA NOS.2498 & 5348/MUM/2017 COMMON ORDER DATED 04/09/2019, THE COPY OF WHICH IS ON RECORD. AS IT COULD BE SEEN FROM THE SAID ORDER, THE RETURNED LOS S FILED BY THE ASSESSEE WAS ACCEPTED U/S 143(3). HOWEVER, CONSEQUE NT TO REVISIONAL ORDER PASSED U/S 263, THE LD. AO ASSESSED THE RENTA L INCOME AS INCOME FROM HOUSE PROPERTY IN AN ORDER PASSED U/S 143(3) R.W.S. 263. HOWEVER, UPON FURTHER APPEAL, LD. CIT(A), FOLLOWING HIS OWN ORDER FOR AY 2012-13, HELD THAT INCOME SHOULD BE TREATED AS BUSINESS INC OME. THE REVENUE PREFERRED FURTHER APPEAL AGAINST THE SAME BEFORE TH IS TRIBUNAL WHEREIN THE BENCH, VIDE PARA-9 OF THE ORDER, DISMISSED REVE NUES APPEAL FOR THE 5 REASONS STATED THEREIN. ONE OF THE REASONS WAS APPL ICATION OF RULE OF CONSISTENCY. CONSEQUENTLY, THE ASSESSEES APPEAL AS SAILING THE INVOCATION OF JURISDICTION U/S 263 WAS NOT ADJUDICA TED. PROCEEDING FURTHER, WE FIND THAT IN AY 2012-13 ALSO , WHILE FRAMING ASSESSMENT U/S 143(3), THE RENTAL INCOME WAS ASSESS ED AS INCOME FROM OTHER SOURCES. HOWEVER, LEARNED FIRST APPELLATE AU THORITY, VIDE ORDER DATED 20/04/2016, REVERSED THE STAND OF LD. AO AND HELD THAT INCOME WAS TO BE ASSESSED AS BUSINESS INCOME. NO FURTHER A PPEAL WAS PREFERRED BY THE DEPARTMENT AGAINST THE SAID ORDER. SUBSEQUENTLY, A REVISION ORDER WAS PASSED U/S 263 ON 27/03/2017 WHI CH WAS SUBJECT MATTER OF CHALLENGE BY THE ASSESSEE BEFORE THIS TRI BUNAL VIDE ITA NO.2499/MUM/2017 ORDER DATED 08/05/2019. THE BENCH NOTED THAT SINCE THE ORDER OF LD. AO ALREADY STOOD MERGED WITH APPEL LATE ORDER, SUBSEQUENT ORDER PASSED U/S 263 WOULD NOT BE VALID AND ACCORDINGLY, QUASHED THE REVISION. 6. ON THE BASIS OF ABOVE ORDERS, IT COULD BE SEEN T HAT THE ISSUE ON MERITS IN AY 2010-11 STOOD COVERED IN ASSESSEES FA VOR WHEREIN THE RENTAL INCOME HAS FINALLY BEEN ACCEPTED AS BUSINES S INCOME. THE ISSUE IN AY 2012-13 HAS ALSO ATTAINED FINALITY SINCE NO A PPEAL WAS PREFERRED BY THE DEPARTMENT AGAINST APPELLATE ORDER FOR THAT YEA R. THE REVISIONAL ORDER PASSED U/S 263 HAS ALREADY BEEN QUASHED BY THE TRIB UNAL. FOR THE STATED REASONS, NO INFIRMITY COULD BE FOUND IN THE IMPUGNED ORDER. THEREFORE, REVENUES APPEAL STAND DISMISSED. 7. FACTS ARE PARI-MATERIA THE SAME IN AY 2011-12. T HE ASSESSEE WAS REASSESSED U/S 143(3) R.W.S. 147 ON 14/11/2017 ON S IMILAR LINES AS IN AY 2009-10. THE LD. CIT(A) ALLOWED ASSESSEES APPEAL O N SIMILAR LINES AND 6 DIRECTED LD. AO TO ASSESS THE RENTAL INCOME AS BUS INESS INCOME. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. SINCE THE FACT AS WELL AS ISSUE IS PARI-MATERIA THE SAME AS IN AY 2009- 10, OUR FINDINGS AS WELL AS ADJUDICATION AS CONTAIN ED IN THEREIN SHALL MUTATIS-MUTANDIS APPLY TO THIS YEAR ALSO. RESULTANTLY, THE APPEAL ST AND DISMISSED. 8. BOTH THE APPEALS STANDS DISMISSED. ORDER PRONOUNCED ON 06 TH MAY, 2021. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06/05/2021 SR.PS, JAISY VARGHESE !'#' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT 3. ' ( ) / THE CIT(A) 4. ' / CIT CONCERNED 5. () # * , * , / DR, ITAT, MUMBAI 6. )+,- / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.