Meghalaya Hotels Private Limited, Hyderabad, Hyderabad V. ITO, Ward-16(1), Hyderabad, Hyderabad

ITA 568/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2686 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Business income
• Section: 14A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 568/HYD/2017 ASSESSMENT YEAR: 2012-13 MEGHALAYA HOTELS PRIVATE LIMITED, HYDERABAD [PAN: AABCM3633R] VS THE INCOME TAX OFFICER, WARD-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI LAXMINIWAS SHARMA, AR FOR REVENUE : SHRI A.G.V. PRASAD, DR DATE OF HEARING : 07-08-2017 DATE OF PRONOUNCEMENT : 07-08-2017 O R D E R PER CHANDRA POOJARI, A.M. : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, GUNTUR, DATE D 06-01-2017. THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 1, GUNTUR (CIT (A)) ERRED IN FACTS AND IN LAW WHILE PASSING THE APPEAL ORDER. 2. THE LEARNED CIT (A) ERRED IN DISMISSING THE APPE AL WITHOUT GIVING PROPER OPPORTUNITY OF HEARING, THEREBY DENYING NATU RAL JUSTICE. 3. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE GROUNDS OF APPEAL GIVEN BY THE ASSESSEE AND COMING TO THE CONCLUSION THAT ASSESSEE IS NOT INTERESTED IN PURSUING THE APPEAL. ITA NO. 568/HYD/17 MEGHALAYA HOTELS PRIVATE LIMITED :- 2 - : 4. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THA T THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THE MAIN PROJECT IS LOCAT ED AT VISHAKHAPATNAM AND IT WAS BADLY AFFECTED BY HUD HUD CYCLONE IN OCT OBER 2014. AR APPEARED AND FILED BASIC INFORMATION ON 19.01.2015 WHICH WAS NOT CONSIDERED BY ASSESSING OFFICER WHILE PASSING ORDER U/S 144. 5. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THA T THE ASSESSING OFFICER ERRED IN REJECTING BOOKS OF ACCOUNTS AND PASSING TH E BEST JUDGMENT ASSESSMENT ORDER WITHOUT CONSIDERING THAT HE HAS GO T COPY OF ITR V, COMPUTATION OF TOTAL INCOME, ANNUAL REPORT, AUDITED ACCOUNTS WITH AUDIT REPORT UNDER COMPANIES ACT , AUDIT REPORT UNDER INC OME TAX ACT I.E., FORM 3CA AND 3CD, NATURE OF BUSINESS ACTIVITIES ETC. 6. THE LEARNED CIT (A) HAS NOT CONSIDERED THAT THE ASSESSING OFFICER HAS ERRED IN ESTIMATING THE NET INCOME @ 8% OF THE REVE NUE FROM OPERATIONS AND OTHER INCOME INSTEAD OF COMPUTED PROFIT BY ASSE SSEE RS.89,91,512/-. ASSESSING OFFICER SHOULD HAVE COMPARED FROM THE PRE VIOUS ASSESSMENT .OR COMPARABLE WITH .OTHERS BEFORE .COMING TO THE FINAL CONCLUSION. ASSESSEE BEING ASSESSED FOR MORE THAN 20 YEARS, EVEN THE BES T JUDGMENT MUST BE REASONABLE. 7. THE LEARNED CIT (A) HAS NOT CONSIDERED THAT THE ASSESSING OFFICER ERRED IN TREATING THE OTHER INCOME AS SEPARATE INCOME APA RT FROM ESTIMATING 8% ON REVENUE WITHOUT CONSIDERING THAT THE OTHER INCOM E IS PART OF BUSINESS RECEIPT ONLY. 8. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THA T THE ASSESSING OFFICER FAILED TO UNDERSTAND THE SHORT TERM CAPITAL LOSS AS LONG TERM CAPITAL GAIN. THE SALE CONSIDERATION CANNOT BE TAKEN AS INC OME WITHOUT DEDUCTING COST. IF THE COST IS TAKEN, THERE IS LOSS OF RS.3,4 1,533/-. AS SUCH THE ADDITION OF RS.33,60,000/- AS LONG TERM CAPITAL GAI N WITHOUT CONSIDERING THE COST IS UNJUSTIFIED. 9. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THA T NOTWITHSTANDING THE FACT THAT THE ASSESSING OFFICER HAS NOT DISALLOWED THE AMOUNT U/S 14A, HE HAS ERRED IN CALCULATING THE DISALLOWANCE U/S. 14A R.W. RULE 8D ITSELF WITHOUT APPRECIATING THE FACT THE ASSESSEE HAS NOT USED ANY FUND BEARING INTEREST FOR THE PURPOSE OF INVESTMENTS. 10. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THA T THE ASSESSING OFFICER HAS FAILED TO GIVE EFFECT OF THE SET OFF OF SHORT T ERM CAPITAL LOSS AND CARRY FORWARD OF THE SAME. 11. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE EITHER OR AT THE TI ME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY. ITA NO. 568/HYD/17 MEGHALAYA HOTELS PRIVATE LIMITED :- 3 - : 12. FOR ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT M AY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEA L BE ALLOWED. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE HAS FILED ITS RETURN OF INCOME ON 30-09-2012 ADMITTING TOTAL INCOME OF RS. 89 ,91,512/-. THE CASE WAS CONVERTED INTO SCRUTINY AND ORDER U/S. 144 OF THE INCOME TAX ACT [ACT] WAS PASSED ON 13-03-2015 BY REJ ECTING BOOKS OF ACCOUNTS AND ESTIMATING PROFIT @ 8% ON TOTAL RECEIPTS A ND ADDING OTHER INCOME. TOTAL INCOME ASSESSED U/S.L44 I S RS. L,36,68,177/- WITH CALCULATION OF TAX AT RS.41,00,454/- . FURTHER FROM THE AIR, AO HAS PICKED UP THE CONSIDERATION VALUE OF PROPERTY SOLD DURING THE YEAR AT RS.33,60,000/- AND BY CONSID ERING TOTAL CONSIDERATION AS CAPITAL GAIN, TAX OF RS.6,72,000/- W AS CALCULATED. WITH BOTH THESE TAXES A SUM OF RS.51,61,409/- IS ARRIVE D AS TOTAL TAX. DURING THE COURSE OF HEARING BEFORE CIT(A) ON 1 9-01-2015, ASSESSEE HAS SUBMITTED COPY OF INCOME TAX RETURN ALONG WITH COMPUTATION OF INCOME AND SET OF ANNUAL REPORT COMPRISI NG OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT WITH RELEVANT S CHEDULES, AUDIT REPORT U/COMPANIES ACT AND U/S.44AB OF INCOME TA X ACT I.E., FROM 3CA WITH 3CD ETC., COMPANY'S ACCOUNTS ARE AUDITED UNDER THE COMPANIES ACT AND ALSO UNDER INCOME TAX ACT U/S.44AB. BOTH AUDIT REPORTS ARE SUBMITTED WITH THE DEPA RTMENT. COMPANY HAS PROVIDED AUDITED BALANCE SHEET, PROFIT AN D LOSS ACCOUNT IN WHICH ALL THE DETAILS ARE GIVEN. WHILE AR RIVING AT THE CAPITAL GAIN FIGURE AO HAS TAKEN TOTAL CONSIDERATION AS CAPITAL GAIN. THERE CANNOT BE ANY SALE OF ASSET WITHOUT PURCHASING I T. LOSS ON SALE OF ASSET AMOUNTING TO RS.3,41,533/- WAS REFLECTED AS EXCEPTIONAL ITEM IT THE PROFIT AND LOSS ACCOUNT. FURTHER TH E AO HAS CALCULATED THE DISALLOWANCE U/S.14A R.W. RULE 8D AT RS.15,84,993/-. HOWEVER HE HAS NOT DISALLOWED THE SA ME AS THE ITA NO. 568/HYD/17 MEGHALAYA HOTELS PRIVATE LIMITED :- 4 - : INCOME IS ESTIMATED @8% COMPANY HAS NOT INVESTED ANY AMOUNT IN THE INVESTMENT OUT OF INTEREST BEARING FUNDS, AS SUCH THE RE CANNOT BE ANY DISALLOWANCE U/S.14A R.W. RULE 8D. CIT(A) P ASSED THE ORDER EX-PARTE, CONFIRMING THE ORDER OF THE AO. AGAINST THE SAID ORDE R OF THE CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE, THE ORDER OF ASSES SMENT DT. 13-03-2015 WAS PASSED U/S. 144 WITHOUT PARTICIPATIO N OF ASSESSEE AND THE ORDER OF CIT(A) IS ALSO EX-PARTE. HENCE, IN THE INTEREST OF JUSTICE, WE REMIT THE ENTIRE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION AFTER GIVING DUE OPPORTUNITY OF HE ARING TO THE ASSESSEE. 4. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2017 SD/- SD/- (P. MADHAVI DEVI) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 7 TH AUGUST, 2017 TNMM ITA NO. 568/HYD/17 MEGHALAYA HOTELS PRIVATE LIMITED :- 5 - : COPY TO : 1. MEGHALAYA HOTELS PRIVATE LIMITED, C/O. M/S. LAXMINIWAS AND JAIN, CHARTERED ACCOUNTANTS, 5-4-726 , STATION ROAD, NAMPALLY, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-16(1), HYDERABAD. 3. CIT (APPEALS)-1, GUNTUR. 4. PR.CIT-IV, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.