DHARMIK EXIM P.LTD, MUMBAI V. ITO RG 9(1)(3), MUMBAI

ITA 5815/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3826 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 21-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2015
• Court: TRIBUNAL
• Keywords: Business income; Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.5815/M/2015 (ASSESSMENT YEAR: 2007 - 2008 ) DHARMIK EXIM P LTD., 106 RUBY INDL ESTATE, CHINCHPOKHALI, BUNDER, RD EXTN, OFF LINK ROAD, MALAD (W), MUMBAI 400 064. / VS. ITO, RG 9(1)(3), 5 TH FLOOR, EARNEST HOUSE, NCPA MARG, NARIMAN POINT, MUMBAI - 21. ./ PAN : AAACD3656N ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.R. SHARMA / RESPONDENT BY : SHRI SOMANATH UKKALI, JCIT / DATE OF HEARING : 21.06.2016 / DATE OF PRONOUNCEMENT : 03 .08.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 28.12.2015 IS AGAINST THE ORDER OF THE CIT (A) - 20, MUMBAI DATED 26.11.2015 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. THE LD CIT (A) HAS ERRED IN DISALLOWING GODOWN RENT INCOME AMOUNTING TO RS. 6,80,000/ - AND TREATING THE SAME AS INCOME FROM OTHER SOURCES, INSTEAD OF INCOME FROM HOUSE PROPERTY AND THUS DENYING DEDUCTION U/S 24 OF THE ACT. 2. THE LD CIT (A) HAS ERRED IN DISALLOWING CAR HIRE CHARGES INCOME AMOUNTING TO RS. 45,000/ - AND TREATING IT AS INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS INCOME. 2. IN THE ABOVE GROUNDS, ASSESSEE RAISED THE ISSUES RELATING TO THE PROPER HEAD OF INCOME FOR TAXING THE RENTAL INCOME RECEIVED FROM HINGING OF HOUSE PROPERTY AND HIRE CHARGES RECEIVED IN HIRING OF A CAR. THE RECEIPTS WERE OFFERED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND BUSINESS INCOME RESPECTIVELY. PER CONTRA , ASSESSING OFFICER TAXED BOTH THE ACCOUNTS IE RENTAL INC OME AND THE CAR HIRE CHARGES UNDER THE HEAD INCOME FROM OTHER SOURCES. THUS, THE PROPER HEAD OF INCOME FOR TAXING THE RENTAL INCOME AND THE HIRE CHARGES IS THE CORE ISSUE FOR ADJUDICATION BEFORE THE TRIBUNAL. 2 3. AT THE OUTSET, LD REPRESENTATIVES OF BOTH THE PARTIES BROUGHT MY ATTENTION TO THE APEX COURT JUDGMENT CHENNAI PROPERTIES & INVESTMENTS LTD VS. CIT IN CIVIL APPEAL NO. 4494 OF 2004 , DATED 9.4.2015, WHICH ORIGINATED FROM THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI PROPERTIES & INVESTMENTS LTD (2004) 266 ITR 685 (MAD.), WHICH IS RELEVANT FOR THE PROPOSITION THAT ASSESSEE, AS OWNER OF THE BUILDING, WAS ONLY EXPLOITING THE PROPERTY AS OWNER BY LEASING OUT THE SAME AND REALISING INCOME BY WAY OF RENT, AND THEREFORE, THE RENTAL WAS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT AS BUSINESS INCOME. IT IS PRAYED BY BOTH THE PARTIES THAT THE ISSUE MAY BE REMANDED FOR FRESH ADJUDICATION IN THE LIGHT OF ABOVE CITED JUDGMENT. 4. CONSIDERING THE AGREED POSITIO N OF LD REPRESENTATIVES OF BOTH THE PARTIES FOR REMANDING THE MATTER, I AM OF THE OPINION , THE MATTER IS REQUIRED TO BE REMANDED TO THE FILE OF THE AO FOR DECIDING BOTH THE ISSUES AFRESH IE PROPER HEAD OF INCOME FOR TAXING (I) RENTAL INCOME RECEIVED FROM T HE HOUSE PROPERTY AND (II) CAR HIRING CHARGES RECEIVED BY THE ASSESSEE, IN THE LIGHT OF THE ABOVE CITED JUDGMENT AND ON COMPARISON WITH THE FACTS OF THE PRESENT CASE. I ORDER ACCORDINGLY AND AO IS DIRECTED TO GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE PRINCIPLES OF NATURAL JUSTICE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF THE ASSESSEE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONO UNCED IN THE OPEN COURT ON 0 3 R D AUGUST, 2016. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 03.08 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 3 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI