ITO 13(2)(1), MUMBAI V. EVERST CONSTRUCTION CO., MUMBAI

ITA 5798/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2278 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B PRUSETH
• Keywords: Capital asset; Business income; Revenue expenditure
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 5798/MUM/2014 ASSESSMENT YEAR: 2007-08 THE ITO - 13(2) - 1, MUMBAI, ROOM NO. 425, 4 TH FLOOR, AAYAKAR BHAWAN, M.K.ROAD, MUMBAI- 400 020. VS. M/S. EVEREST CONSTRUCTION CO., 318, NAVRATAN, P.D. MELLO ROAD, CARNAC BUNDER, MUMBAI- 400 009. PAN:- AAVFE0205G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. B. PRUSETH. RESPONDENT BY : NONE D ATE OF HEARING: 1 8 /10 / 2016 DATE OF PRONOUNCEMENT: 26/10/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST ORDER DATED 25/06/2014 PASSED BY THE LD. CIT(APPEALS)-24 MUMBAI FOR THE ASST. YEAR 2007-08, WHEREBY THE LD. CIT(A) ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE A.O U/S 143(3) R.W. S. 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE CASE WAS CALLED FOR HEARING, HOWEVER, NEITHE R THE APPELLANT/ASSESSEE HIMSELF NOR ANY AUTHORIZED REPRESENTATIVE APPEARED ON HIS BEHALF. AS PER THE ORDER SHEET, ON 06/04/2016 THE BENCH DID NOT FUNCTI ON, AND PARTIES WERE INFORMED ACCORDINGLY. HENCE, IT WAS DECIDED TO PROC EED EX-PARTE AGAINST THE 2 ITA NO 5798/MUM/2014 ASSESSMENT YEAR: 2007-08 APPELLANT/ASSESSEE AND DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, AFTER HEARING THE DEPARTMENTAL REPRESENT ATIVE. 3. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT/A SSESSEE, A BUILDER & DEVELOPER FILED ITS RETURN OF INCOME FOR THE RELEVANT A.Y. DE CLARING THE TOTAL LOSS OF RS. 7397/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. ASSESSMENT ORDER WAS FINALIZING U/S 143(3) OF THE ACT, DETERMINING THE T OTAL INCOME OF THE ASSESSEE AT NIL. THEREAFTER ORDER U/S 263 OF THE ACT WAS PASSED BY THE CIT-13 MUMBAI AND THE ASSESSMENT ORDER WAS SET ASIDE WITH CERTAIN DIR ECTIONS. CONSEQUENTLY, THE A.O ISSUED NOTICES U/S 142(1) & 143(2) AND AFTER HE ARING THE ASSESSEE ASSESSMENT ORDER U/S 143 R.W.S. 263 OF THE ACT WAS PASSED. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT( A). DURING THE APPELLANT PROCEEDING, THE LD. AR FOR THE ASSESSEE INFORMED TH AT THE ITAT HAS SET ASIDE THE ORIGINAL ORDER PASSED U/S 263 OF THE ACT VIDE O RDER DATED 07/06/2013. ACCORDINGLY, THE LD. CIT(A) ALLOWED THE APPEAL OF T HE ASSESSEE HOLDING THAT SINCE ORDER U/S 263 PASSED BY THE CIT(A) HAS BEEN S ET ASIDE BY THE ITAT ON THE BASIS OF WHICH ORDER U/S 143 R.W.S. 263 OF THE ACT WAS PASSED, THE APPEAL 4. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN RELYING ON THE ITATS O RDER DATED 07/06/2013 IN THE CASE OF THE ASSESSEE FOR THE SAME A.Y. AND THEREBY ERRED IN ALLOWING THE APPEAL OF THE ASSESSE E. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE, WITHOUT 3 ITA NO 5798/MUM/2014 ASSESSMENT YEAR: 2007-08 APPRECIATING THE FACT THAT DEPARTMENT IS IN APPEAL BEFORE THE HON. HIGH COURT AGAINST THE ORDER OF THE ITAT RELIED UP ON BY HIM. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY ALLOWED THE APPEAL OF THE ASSESS EE WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT IS IN APPEAL BEFORE THE HO NBLE HIGH COURT AGAINST THE ORDER OF THE ITAT RELIED UPON BY HIM. 6. ON PERUSED THE MATERIAL PLACED ON RECORD, WE NOT ICE THAT THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THE GROUND TH AT SINCE THE ORDER PASSED BY THE LD. CIT(A) U/S 263 OF THE ACT HAS BEEN SET A SIDE BY THE ITAT, THERE REMAINS NO BASIS FOR PASSING THE ASSESSMENT ORDER U /S 143(3) R.W.S. 263 OF THE ACT. THEREFORE, THE APPEAL FILED CANNOT BE ADJUDICA TED. WE ALSO NOTICE THAT THE COORDINATE BENCH OF THE TRIBUNAL HAS SET ASIDE THE ORIGINAL ORDER PASSED BY THE LD. CIT(A) HOLDING AS UNDER:- IT IS TO BE NOTED THAT IN THE ASSESSMENT OF RETIR ING PARTNER M/S. SATINDER PAL INVESTMENT P. LTD. THE ASSESSING OFFIC ER HAS ASSESSED THE AMOUNT RECEIVED FROM THE ASSESSEE FIRM AS BUSI NESS INCOME UNDER THE PROVISION OF SEC. 28(IV) WHILE PASSING TH E SCRUTINY ASSESSMENT U/S 143(3) DT. 29/12/2009. THEREFORE, ON THE ONE HAND, THE ASSESSING OFFICER HAS TREATED THE SAID PAYMENT AS REVENUE RECEIPT IN THE HAND OF THE RETIRING PARTNER AND ASS ESSED THE SAME AS BUSINESS INCOME AND AT THE SAME TIME, THE CIT HAS H ELD THAT THE PAYMENT MADE TO THE RETIRING PARTNER IS CAPITAL EXP ENDITURE AND ALSO TAXABLE U/S 45(4). IN VIEW OF THE FACT THAT THERE IS NO DISSOLUTION A ND THEREFORE THERE IS NO COMPULSORY DISTRIBUTION OF CAPITAL ASSET, THERE IS NOTHING ON 4 ITA NO 5798/MUM/2014 ASSESSMENT YEAR: 2007-08 RECORD THAT THERE IS DISTRIBUTION OF ASSET ON RETIR EMENT OF OUTGOING PARTNER AND FURTHER THE SO CALLED ASSET WHICH IN TH E FORM OF WORK-IN- PROGRESS, THE CLAIM ALLOWED BY THE ASSESSING OFFICE R IN THE ORIGINAL ASSESSMENT AS REVENUE EXPENDITURE CANT BE SAID AS ABSOLUTELY WRONG OR ILLEGAL. HENCE, THE IMPUGNED REVISION ORDE R PASSED BY THE CIT IS NOT SUSTAINABLE AND THE SAME IS SET ASIDE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7. SINCE THE LD. CIT(A) HAS ALLOWED THE APPEAL OF T HE ASSESSEE IN VIEW OF THE ORDER DATED 07/10/2013, WE DO NOT FIND ANY LEGAL IN FIRMITY IN THE ORDER OF THE LD. CIT(A). WE THEREFORE, DISMISS THE APPEAL OF THE REVENUE AS MOT MAINTAINABLE. 8. IN THE RESULT APPEAL FILED BY THE REVENUE FOR TH E ASST. YEAR 2007-08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:26/10/2016 5 ITA NO 5798/MUM/2014 ASSESSMENT YEAR: 2007-08 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA