PHOTOPHONE P.LTD, MUMBAI V. ITO 8(2)(4), MUMBAI

ITA 5816/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3960 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-08-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 16-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Retrospective amendment; Tax effect

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO 5816/MUM/ 2014 ASSESSMENT YEAR: 2011-12 PHOTOPHONE P LTD., 7 EXCOM HOUSE, SAKI VIHAR ROAD, SAKI NAKA ANDHERI (E), MUMBAI 400 072 / VS. ITO 8(2)(4) MUMBAI ( /ASSESSEE) ( ! / REVENUE) PAN NO.AAACP6792P ITA NOS. 4672/MUM/ 2014 & 586/MUM/2014 ASSESSMENT YEARS : 2007-08 & 2009-10 ITO 8(2)(4) MUMBAI / VS. PHOTOPHONE P LTD., 7 EXCOM HOUSE, SAKI VIHAR ROAD, SAKI NAKA ANDHERI (E), MUMBAI 400 072 ( /ASSESSEE) ( ! / REVENUE) PAN NO. AAACP6792P ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 2 CO NO. 130/MUM/2015 (ARISING OUT OF ITA NO 4672/MUM/ 2013 FOR ASSESSMENT YEAR: 2007-08) PHOTOPHONE P LTD., 7 EXCOM HOUSE, SAKI VIHAR ROAD, SAKI NAKA ANDHERI (E), MUMBAI 400 072 PAN AAACP6792P / VS. ITO 8(2)(4) MUMBAI ( C ROSS - OBJECTOR ) ( RESPONDENT ) PAN NO. AAACP6792P %&'( / ASSESSEE BY SHRI V C SHAH ! %&'( / REVENUE BY SHRI ABHISHEK SHARMA * !+ , - / DATE OF HEARING : 02/05/2016 ( , - / DATE OF ORDER: 17/05/2016 (/ O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL AGAINST THE RESPECTIVE ORDERS OF THE LD. FIRST APPE LLATE AUTHORITY FOR THE RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE HAS ALSO PREFERRED CROSS-OBJECTIONS FOR A.Y. 2007-0 8. 2. FIRST WE SHALL TAKE UP THE APPEAL IN ITA NO.4672/MUM/2013 FOR A.Y. 2007-08, APPEAL FILED BY THE ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 3 REVENUE, WHEREIN AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESSEE SHRI V C SHAH POINTED OUT THAT THE TAX EFF ECT IN THE IMPUGNED APPEAL IS BELOW PRESCRIBED MONETARY LIMIT. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE L EARNED DR. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD . IN VIEW OF THE ABOVE, IT IS NOTED THAT THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW PRESCRIBED LIMIT OF RS.10 LAKH FOR FILING THE APPEA L BEFORE THE TRIBUNAL, AS CONTAINED IN CBDT INSTRUCTION NO.21 OF 2015, DATED 10/12/2015 (F NO.279/MISC./142/2007-IT(PT), APPLICABLE WITH RETROSPECTIVE EFFECT, WHEREIN, THE DEPARTMENT WAS ADVISED/DIRECTED BY THE BOARD NOT TO FILE APPE AL IN THE CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE FOLL OWING MONETARY LIMIT.:- SL. NO. APPEALS IN INCOME TAX MATTERS MONETARY LIMIT (IN RS.) 1. BEFORE ITAT 10,00,000/ - 2. U/S 260 A BEFORE HONBLE HIGH COURT 20,00,000/ - 3. BEFORE HONBLE SUPREME COURT 25,00,000/ - ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 4 IN VIEW OF THE ABOVE INSTRUCTION, SINCE, THE TAX EF FECT IS LESS THAN RS.10,00,000/-, CONSEQUENTLY, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE, THEREFORE, DISMISSED. 4. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. 5. SO FAR AS THE CROSS-OBJECTION NO.130/MUM/2015 (ARISING OUT OF ITA NO.4672/MUM/2013) IS CONCERNED, IT WAS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE , THEREFORE, THE CROSS-OBJECTION OF THE ASSESSEE IS A LSO DISMISSED AS NOT PRESSED. 6. NOW WE SHALL TAKE UP THE APPEAL IN ITA NO. 586/MUM/2014 WHEREIN FIRST GROUND RAISED BY THE REV ENUE PERTAINS TO HOLDING THAT RENTAL INCOME EARNED BY TH E ASSESSEE COMPANY WAS A BUSINESS INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DID NOT CAR RY OUT ANY BUSINESS OPERATION AND LET OUT ITS PROPERTY IN THE YEAR 2000, DUE TO ADVERSE MARKET CONDITIONS. ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 5 6.1 THE CRUX OF THE ARGUMENTS ADVANCED ON BEHALF O F THE REVENUE IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDE D THAT ON IDENTICAL FACT, IN EARLIER ASSESSMENT YEAR, THE CLAIM OF THE ASSESSEE WAS ACCEPTED AND NO APPEAL WAS FILED BY TH E DEPARTMENT. THIS FACTUAL ASSERTION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE. 6.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE UNDER HAND HAS BEEN DISCUSSED IN DETAIL BY TH E LEARNED CIT(A) IN PARA 2.1.1 OF THE IMPUGNED ORDER WHEREIN THE FACTUAL MATRIX HAS BEEN DULY CONSIDERED ALONG W ITH THE OBSERVATION MADE IN THE ASSESSMENT ORDER WHEREIN TH E ASSESSING OFFICER ASSESSED THE INCOME FROM HOUSE PR OPERTY AND DISALLOWED THE EXPENDITURE. ADMITTEDLY, SIMILA R ISSUE AROSE FOR CONSIDERATION AS HAS BEEN REPRODUCED IN P ARA 2.3.1, WHEREIN THE INCOME FROM INTEREST WAS TREATED AS INCOME FROM OTHER SOURCES. SINCE NO APPEAL WAS FIL ED BY THE DEPARTMENT THEREFORE, ON THE PRINCIPLE OF PARITY AN D IN THE ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 6 ABSENCE OF CONTRARY FACTS, THIS GROUND OF THE ASSES SEE IS ALLOWED. 7. THE NEXT GROUND RAISED BY THE REVENUE PERTAINS TO ALLOWING REPAIR EXPENSES OF RS.35,57,404/-, AS B USINESS EXPENSES WITHOUT APPRECIATING THE FACT THAT RENTAL INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY AND THEREBY NO ALLOWABLE U/S. 24(A) OF THE ACT. CO NSIDERING THE TOTALITY OF FACTS AND THE FACTUAL FINDING RECOR DED IN THE IMPUGNED ORDER, WE ARE OF THE VIEW THAT SINCE THE A SSESSING OFFICER HAS NOT DOUBTED THE EXPENSES ON ACCOUNT OF REPAIR AND MAINTENANCE; THIS GROUND OF THE REVENUE IS HAVI NG NO MERIT, CONSEQUENTLY, DISMISSED. 8. NOW WE SHALL TAKE UP ITA NO.5816/MUM/2014 WHEREIN FIRST GROUND RAISED BY THE ASSESSEE PERTAIN S TO SUSTAINING THE DISALLOWANCE OF EXPENSES AMOUNTING T O RS.5,16,625/-, WHICH WERE INCURRED WHOLLY AND EXCLU SIVELY FOR BUSINESS PURPOSES. THE STAND OF THE ASSESSEE I S THAT IT IS AN ALLOWABLE DEDUCTION. IT WAS EXPLAINED THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING, SUPPLY, INSTALLATION A ND ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 7 MAINTENANCE OF THEATRE EQUIPMENTS. THE ASSESSEE IN CURRED EXPENSES OF RS.5,16,625/- AND SHOWED THE SAME IN PR OFIT & LOSS ACCOUNT (PAGE 6 OF THE PAPER-BOOK). THE CRUX OF THE ARGUMENT IS THAT THE ENTIRE EXPENSES WERE INCURRED FOR MANAGING THE AFFAIRS OF THE COMPANY AND TO MEET OUT THE OBLIGATIONS AND THE EXPENSES WERE INCURRED FOR BUSI NESS PURPOSES. IT WAS ASSERTED BY THE LEARNED COUNSEL T HAT IN A.Y. 2007-08 LIKE EXPENSES WERE ACCEPTED BY THE DEP ARTMENT FOR WHICH OUR ATTENTION WAS INVITED TO THE DETAILS OF EXPENSES MENTIONED AT PAGE 2 OF THE ASSESSMENT ORDER. IT WA S EXPLAINED THAT LEGAL EXPENSES WERE INCURRED FOR CON TESTING EXCISE AND SALES TAX CASES. THE CRUX OF THE ARGUME NT THAT FROM A.YS. 1994-95 TO 2007-08, THE DEPARTMENT HAD B EEN ACCEPTING SUCH EXPENSES. THIS FACTUAL MATRIX WAS N OT CONTROVERTED BY THE REVENUE. 8.1 CONSIDERING THE FACTUAL MATRIX AND THE SUBMISSIONS OF THE ASSESSEE THERE IS NO DISPUTE TO THE FACT THAT THE IMPUGNED EXPENSES WERE INCURRED BY THE ASS ESSEE AS LEGAL AND OF PROFESSIONAL FEES (RS.3,28,946/-), PRINTING ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 8 AND STATIONERY (RS.6,623/-), TRAVELLING AND CONVEYA NCE EXPENSES (RS.54,136/),MISCELLANEOUS EXPENSES (RS.39 ,711/- ), AUDIT FEES (RS.27,575/-) ETC., IN OUR VIEW ARE A LLOWABLE EXPENSES. EVEN OTHERWISE, AS CLAIMED BY THE ASSESS EE, THE DEPARTMENT HAD BEEN ACCEPTING SUCH EXPENSES, THEREF ORE, IN THE ABSENCE ANY CONTRARY FACTS SUCH EXPENSES HAVE T O BE ALLOWED. THIS GROUND OF THE ASSESSEE IS, THEREFORE , ALLOWED. 9. THE NEXT GROUND PERTAINS TO CONFIRMING THE INTER EST EARNED AMOUNTING TO RS.6,80,534/- AS INCOME FROM OT HER SOURCES AND NOT INCOME FROM BUSINESS. THE STAND OF THE ASSESSEE IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LEARNED DR DEFENDED CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 9.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE PROFIT & LOSS ACCOUNT, FILED BY THE ASSESSEE IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAS CRE DITED A SUM OF RS.9,51,738/- AS OTHER INCOME. OUT OF THIS IMPUGNED AMOUNT IT WAS NOTICED THAT RS.84,816/- IS RENTAL ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 9 INCOME AND THE REMAINING AMOUNT OF RS.6,54,961/- IS INTEREST FROM DEPOSITS. THE CONTENTION OF THE ASSE SSEE WAS CONSIDERED AND THE ASSESSING OFFICER TREATED THE IN COME OF RS.6,54,961/- AS INCOME FROM OTHER SOURCES. ON APPE AL, BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), THE CONTENTION OF THE ASSESSEE WAS CONSIDERED. IN PARA 2.3.2, THERE IS CONCLUSION BY THE COMMISSIONER OF INCOME T AX (APPEAL) THAT THE ASSESSEE ITSELF AGREED THE AMOUN T TO BE TAXED AS INCOME FROM OTHER SOURCES AND THUS THIS GR OUND OF THE ASSESSEE WAS DISMISSED. 9.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THE CLAIM OF THE ASSESS EE, BEFORE US, IS THAT THE ASSESSEE HAD BEEN CONSISTENTLY CARR YING ON THE ACTIVITY OF INVESTING AND EARNED INTEREST ON IN TER- CORPORATE DEPOSITS AND THUS THE INCOME WAS OFFERED AS BUSINESS INCOME AND WAS ACCEPTED AS SUCH IN EARLIER YEARS, ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 10 LIKE, ASSESSMENT YEARS 1990-91, 1992-93, 1994-95, 1 995-96 AND 2001-02. IN TURN, THE LD. DR ASSERTED FOR ASSE SSMENT YEAR 2009-10, THE ISSUE WAS NOT CONTESTED BY THE AS SESSEE BY INVITING OUR ATTENTION TO PARA 2.3.2 OF THE IMPU GNED ORDER. THE ASSESSEE EXPLAINED THAT DUE TO TAX EFFEC T, IT WAS NOT CONTESTED. CONSIDERING THE TOTALITY OF FACTS, WE REMAND THIS ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE WHETHER IDENTICALLY SUCH INCOME WAS ACCEPTED BY THE DEPARTMENT AND ALSO WHETHER THE FACTS IN EARLIER YE ARS AS WELL AS IN THE PRESENT YEAR ARE IDENTICAL AND IF FO UND TO BE IDENTICAL, WHY NOT ACCEPTED IN THE PRESENT ASSESSME NT YEAR. AFTER EXAMINING THE FACTS, THE LD. ASSESSING OFFICE R IS DIRECTED TO DECIDE IN ACCORDANCE WITH LAW. THE ASSE SSEE BE GIVEN OPPORTUNITY, THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES, CONSEQUENTLY, THIS APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. FINALLY, I. ITA NO.4672/MUM/2013, THE APPEAL OF THE REVENUE, IS DISMISSED AS NOT MAINTAINABLE ON LOW TAX EFFECT ITA NO.4672/MUM/2013 & C.O. NO.130/MUM/2015 ITA NO.5816 & 586/MUM/2014 M/S PHOTOPHONE PVT. LTD. 11 II. C.O. NO.130/MUM/2015 OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. III. ITA NO.586/MUM/2014, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. IV. ITA NO.5816/MUM/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESEN CE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 02/05/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) (,'- / ACCOUNTANT MEMBER .'- / JUDICIAL MEMBER * + MUMBAI; / DATED : 17/05/2016 F{X~{T? P.S/. .. (%/.0123(240 / COPY OF THE ORDER FORWARDED TO : 1. 1234 / THE APPELLANT 2. 5634 / THE RESPONDENT. 3. 7 7 * 8 ( 12 ) / THE CIT, MUMBAI. 4. 7 7 * 8 / CIT(A)- , MUMBAI 5. :!; 5 , 7 12- 1 < , * + / DR, ITAT, MUMBAI 6. = >+ / GUARD FILE. ( ' / BY ORDER, 6:2 5 //TRUE COPY// /' (DY./ASSTT. REGISTRAR) , * + / ITAT, MUMBAI