NARITA IVESTMENTS P. LTD, MUMBAI V. ITO 9(2)(3), MUMBAI

ITA 6282/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83714 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMBIT MISHRA
• Keywords: Capital asset; Business income; Depreciation; Business expenditure; Search and seizure; Additional evidence; Unabsorbed depreciation
• Section: 72(1); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , ! BEFORE SHRI SANJAY ARORA, AM AND DR. S. T. M. PAVA LAN, JM ' # I.T.A. NO. 6282/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) NARITA INVESTMENTS PVT. LTD. SWATI BUILDING, GROUND FLOOR, NORTH AVENUE ROAD, SANTACRUZ (W), MUMBAI-400 054 # VS. THE INCOME TAX OFFICER 9(2)(3), AAYAKAR BHAVAN, 2 ND FLOOR, 101, M. K. ROAD, MUMBAI-400 020 $ #'%' ./PAN/GIR NO. AAACN 1873 H ( $& /APPELLANT ) : ( '($& / RESPONDENT ) $&)* / APPELLANT BY : SHRI VIPUL JOSHI '($&)* / RESPONDENT BY : SHRI SAMBIT MISHRA + ,)- / DATE OF HEARING : 19.06.2014 ./0 )- / DATE OF PRONOUNCEMENT : 18.09.2014 '1# O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-20, MUMBAI (CIT(A) FOR SH ORT) DATED 21.06.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2008-09. 2. THE BACKGROUND FACTS OF THE CASE ARE THAT THE AS SESSEE-COMPANY, A REAL ESTATE DEVELOPER, RETURNED ITS INCOME FOR THE YEAR ON 26.0 9.2008, DISCLOSING INCOME FROM HOUSE 2 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO PROPERTY AT RS.38.80 LACS AND BUSINESS LOSS (AT RS. 14.95 LACS). THE ENTIRE NET INCOME WAS ADJUSTED AGAINST THE BROUGHT FORWARD UNABSORBED DEP RECIATION (RS.23.85 LACS), RETURNING NIL INCOME, AS WELL AS NIL BOOK PROFIT U/S.115JB, A DJUSTING THE ENTIRE BOOK PROFIT (RS.38.54 LACS) AGAINST BROUGHT FORWARD UNABSORBED LOSS AND D EPRECIATION (REFER COMPUTATION OF INCOME AT PB PGS. 1-3). 3. THE ASSESSING OFFICER (A.O.) IN THE ASSESSMENT P ROCEEDINGS NOTED ABSENCE OF ANY CONSTRUCTION OR BUSINESS ACTIVITY. IT WAS EXPLAINED THAT THE ASSESSEE-COMPANY HAD GOT EMBROILED IN SERIOUS LITIGATION WITH THE REVENUE DE PARTMENT, WITH THE MATTER BEING PENDING AT THE APPELLATE STAGE BEFORE THE HONBLE H IGH COURT (FOR A.Y. 1998-99) AND THE APPELLATE TRIBUNAL (FOR A.Y. 2000-01); BOTH THE OFF ICE PREMISES AS WELL AS STOCK-IN-TRADE OF THE ASSESSEE HAVING BEEN ATTACHED FOR RECOVERY, AND ALSO THE BANK ACCOUNT. THE COMPANY WAS UNDER THE CIRCUMSTANCES CONSTRAINED NOT TO UNDERTAKE ANY BUSINESS . THE BUSINESS HAD TO, IN ANY CASE OF THE MATTER, INCUR E STABLISHMENT EXPENDITURE (RS.3.21 LACS) AS WELL AS IN DEFENDING ITSELF IN THE TAX DISPUTES (RS.10.33 LACS), APART FROM OF-COURSE DEPRECIATION (RS.1.46 LACS). IT CANNOT THEREFORE BE SAID THAT NO BUSINESS ACTIVITY HAD AT ALL BEEN CARRIED ON BY THE ASSESSEE IN-AS-MUCH AS IT IS REQUIRED TO ATTEND COURT PROCEEDINGS AS WELL AS COMPLY WITH THE INCOME-TAX AND COMPANY LAW MATTERS. ACCORDINGLY, THE ENTIRE EXPENDITURE CLAIMED, I.E., WITH REFERENCE TO THE PR OFIT AND LOSS ACCOUNT, AS WELL AS DEPRECIATION, WHICH IS COMPUTED AS PER THE INCOME-T AX RULES, WAS DEDUCTIBLE AS BUSINESS EXPENDITURE FOR THE CURRENT YEAR, I.E., IN COMPUTIN G THE ASSESSABLE INCOME U/S.28 OF THE ACT. THE ASSESSEES CLAIM, HOWEVER, DID NOT FIND AC CEPTANCE BY THE A.O. THE RENTAL INCOME WAS ASSESSABLE U/S.22, I.E., AS INCOME FROM HOUSE PROPERTY, WHILE NO EXPENDITURE COULD BE ALLOWED AS NO BUSINESS HAD BEEN CARRIED OU T DURING THE RELEVANT YEAR, HAVING IN FACT CEASED TO EXIST. THE SAME FOUND FAVOUR WITH TH E LD. CIT(A), AND FOR THE SAME REASON/S. FURTHER, THE ASSESSEES CLAIM FOR UNABSOR BED DEPRECIATION AGAINST INCOME ASSESSED U/S.22 WAS ALSO NOT VALID IN-AS-MUCH AS UN ABSORBED DEPRECIATION IS, BY LEGAL FICTION OF SECTION 32(2), A PART OF THE CURRENT DEP RECIATION, AND WHICH COULD BE ALLOWED 3 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO ONLY IN THE COMPUTATION OF THE BUSINESS INCOME, I.E ., WHERE THE BUSINESS EXISTS. AGGRIEVED, THE ASSESSEE IS IN APPEAL. THE ASSESSEE RAISES THE FOLLOWING GROUNDS (GD.): I. ON FACTS & IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) 20, MUMBAI (THE CIT(A)) ERRED IN CONFIRMING DISALLOWANC E OF ENTIRE ADMINISTRATIVE AND OTHER EXPENSES OF RS.19,26,208/- . THE APPELLANT THEREFORE PRAYS THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THE AO BE DIRECTED TO DELETE THE ENTIRE DISALLO WANCE . II. ON FACTS & IN LAW, THE CIT(A) ERRED IN CONFIRMI NG ACTION OF THE AO IN NOT ALLOWING SET OFF OF BROUGHT FORWARD UNABSORB ED DEPRECIATION AGAINST THE RENTAL INCOME TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE APPELLANT THEREFORE PRAYS THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THE AO BE DIRECTED TO ALLOW SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION . IN ADDITION, IT ALSO RAISES THE FOLLOWING ADDITIONA L GROUNDS (A-GD.): I. ON FACTS & IN LAW, THE LEARNED ASSESSING OFFIC ER (AO) ERRED IN NOT CONSIDERING THE CORRECT AMOUNT OF UNABSORBED DEPREC IATION AS PER THE BOOKS OF ACCOUNTS WHILE MAKING THE ADJUSTMENT TO ARRIVE A T THE BOOK PROFIT UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 (THE ACT) . II. THE LEARNED AO ERRED IN NOT ALLOWING SET OFF O F BROUGHT FORWARD UNABSORBED LOSS AGAINST INCOME ASSESSED BY HIM. III. THE LEARNED AO FAILED TO APPRECIATE THAT THE RENTAL INCOME HAD ARISEN OUT OF OFFICE PREMISES AND STOCK IN TRADE TE MPORARILY LET OUT AND THERE BY ERRED IN NOT ALLOWING SET OFF OF BROUGHT FORWARD UNABSORBED BUSINESS LOSS. THE APPELLANT THEREFORE PRAYS THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THE AO BE DIRECTED TO ALLOW SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION . THE APPEAL THUS RAISES FOUR ISSUES, WHICH WE SHALL TAKE UP IN SERIATIM. ISSUE # 1 4. THE FIRST ISSUE, WHICH IS THE SUBJECT MATTER OF GD. I AND A-GD.III (PARTLY), IS WITH REGARD TO THE DEDUCTIBILITY OF ADMINISTRATIVE EXPEN SES AS BUSINESS EXPENDITURE. THE SAME, THOUGH CLAIMED AT RS.19.26 LACS, I.E., PER THE GROU ND OF APPEAL, IS PATENTLY INCORRECT AND INCONSISTENT WITH THE ASSESSEES OWN CLAIM PER ITS RETURN TOGETHER WITH THE UNDERLYING 4 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO DOCUMENTS IN-AS-MUCH AS THE SAME INCLUDES PROPERTY TAX (RS.10,32,697/-) AND SOCIETY MAINTENANCE CHARGES (RS.74,268/-) WHICH STAND CLAIM ED AND ALLOWED IN COMPUTING ITS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE, THEREFORE, RESTRICT THE ASSESSEES CLAIM FOR BUSINESS LOSS TO THAT PREFERRE D PER ITS RETURN OF INCOME, BASED ON ITS ACCOUNTS, I.E., AT RS.14,94,946/-, INCLUDING DEPREC IATION AT RS.1,45,818/-. THE BASIS OF THE ASSESSEES CLAIM, AS WE UNDERSTAND, IS THAT IN-AS-M UCH AS HOUSE PROPERTY HAD BEEN LET AS A TEMPORARY MEASURE, I.E., SO AS TO GENERATE REVENUE TO BE ABLE TO MEET ITS ON-GOING EXPENDITURE, BUSINESS CANNOT BE SAID TO HAVE CEASED TO EXIST. AS SUCH, THOUGH FOR TAX PURPOSES THE RENTAL INCOME IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY, IT SHOULD BE CONSIDERED TO HAVE CARRIED ON THE BUSINESS DURING T HE RELEVANT YEAR AND, CONSEQUENTLY, EXPENDITURE ALLOWED, WHICH IS ONLY TOWARDS PROTECTI NG THE BUSINESS ASSETS AS WELL AS TO MEET THE ESTABLISHMENT COSTS NECESSITATED BY THE RE GULATORY FRAMEWORK. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, GIVING OUR CAREFUL CONSIDERATION TO THE MATTER. THE QUESTION THAT IS R ELEVANT, TO OUR MIND, IS NOT AS TO WHY OR THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE HAD LET ITS HOUSE PROPERTY, OR EVEN OF THE HEAD OF INCOME UNDER WHICH THE RENTAL INCOME (FROM HOUSE PROPERTY) IS ASSESSABLE, BUT OF WHY IT IS SO, I.E., ASSESSABLE AS INCOME FROM HOUSE PR OPERTY; THE ASSESSEE ITSELF RETURNING IT AS SUCH, SO THAT TO THAT EXTENT THERE IS NO DISPUTE BE TWEEN THE PARTIES. THIS IS AS LETTING IS AN INCIDENT OF OWNERSHIP, AND THE LAW PROVIDES FOR OWN ERSHIP OF HOUSE PROPERTY AS A SEPARATE SOURCE OF INCOME, PRECLUDING ASSESSMENT OF RENTAL I NCOME AS BUSINESS INCOME, EVEN WHERE UNDERTAKEN AS A PART OF BUSINESS, I.E., IN A SYSTEMATIC OR ORGANIZED MANNER. WHY, THE ACT SEEKS TO ASSESS THE INCOME OF A HOUSE PROPE RTY, SO THAT THE FAIR RENTAL VALUE, WHICH IT DESCRIBES AS ANNUAL VALUE, IS ASSESSABLE TO TA X EVEN WHERE THERE IS NO (ACTUAL) LETTING, I.E., AT THE SUM FOR WHICH THE PROPERTY MIGHT REASO NABLY BE EXPECTED TO LET FROM YEAR TO YEAR. THE RENTAL INCOME IS, THUS, IRRESPECTIVE OF T HE CIRCUMSTANCES LEADING TO ITS LETTING, IS TO BE CONSIDERED AS SOURCED FROM THE HOUSE PROPERTY PER SE , OR STILL BETTER, ITS OWNERSHIP, AGAINST WHICH SPECIFIC DEDUCTIONS TOWARDS EXPENSES, VIZ. MUNICIPAL TAXES, REPAIRS, INTEREST, ETC. ARE MANDATED FOR BEING ALLOWED, AND WHICH HAVE BEEN INDEPENDENTLY 5 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO CLAIMED AND ALLOWED IN THE INSTANT CASE. THE ASSESS EES CLAIM FOR EXPENDITURE WOULD THEREFORE HAVE TO BE CONSIDERED AS SEPARATE AND DIS TINCT FROM THE ACT OF LETTING ITS HOUSE PROPERTY, AND WHICH WOULD AGAIN MAKE IT IRRELEVANT AS TO WHETHER THE SAME IS ITS CAPITAL ASSET OR WAS THE STOCK-IN-TRADE OF ITS BUSINESS. WH Y, AS CLAIMED, THESE HAVE IN ANY CASE TO BE INCURRED. TOWARD THIS, IN OUR VIEW, EVEN IF THE EXPENDITURE HAD TO BE NECESSARILY BORNE BY THE ASSESSEE, THE SAME WOULD NOT BY ITSELF BE RE GARDED AS A CIRCUMSTANCE FOR CONSIDERING THE SAME AS INCURRED IN THE COURSE OF C ARRYING ON OR FOR THE PURPOSE OF BUSINESS, I.E., WHERE NO BUSINESS HAD IN FACT BEEN CARRIED OUT DURING THE YEAR, I.E., AT ANY TIME DURING THE YEAR. THE REASON IS SIMPLE. HOW COULD ANY EXPENSE BE REGARDED AS HAVING BEEN INCURRED FOR ITS PURPOSE WHEN NO BUSINE SS HAD IN FACT BEEN CARRIED OUT ? THIS LEADS US TO THE QUESTION AS TO WHETHER THE ASSESSEE S ACT OF LETTING COULD BE REGARDED AS A TEMPORARY MEASURE, SO THAT THE BUSINESS COULD BE SA ID TO BE IN A STATE OF SUSPENSION AND NOT HAVING CEASED TO EXIST. TOWARD THIS, IN OUR VIE W, A FINDING AS TO A CEASURE OR OTHERWISE OF BUSINESS IS NEITHER NECESSARY NOR RELE VANT. THE ASSESSEE COULD, IN FUTURE, COMMENCE THE SAME BUSINESS, IN THE SAME OR MODIFIED MANNER, OR IN FACT EVEN A NEW BUSINESS. IF AND WHEN IT DOES SO, IT COULD CLAIM AL L THE EXPENDITURE INCURRED IN RELATION TO, AND FOR THE PURPOSE OF, THE SAID BUSINESS, AS ALSO, IN OUR VIEW, SET OFF OF BROUGHT FORWARD LOSSES, I.E., SUBJECT TO THE TIME LIMITATION STIPUL ATED FOR ITS CARRY FORWARD UNDER THE ACT. FURTHER, A FINDING AS TO THE BUSINESS HAVING BEEN O NLY TEMPORARILY SUSPENDED, SO THAT IT CONTINUES TO EXIST, COULD ONLY BE RENDERED IN THE L IGHT, AND ON THE BASIS, OF SOME MATERIAL ON RECORD EVIDENCING SOME ACTIVITY/S TOWARD THE SAM E. ITS CAPITAL IS AT A MERE RS.10.0 LACS AS AGAINST ACCUMULATED LOSSES OF RS.238.78 LACS AS ON 31.03.2007, THE BEGINNING OF THE YEAR (PB PG. 9). THE ASSESSEE CANNOT CONTEND TO BE IN BUSINESS MERELY ON THE BASIS OF HAVING INCURRED SOME EXPENDITURE OR HAVING EMPLOYED SOME PERSONS, UNLESS THE BUSINESS PURPOSE OF THEIR EMPLOYMENT IS NOT SPECIFIED OR EXH IBITED. THE SKELETAL STAFF, WHICH APPEARS TO BE THE CASE, IS STATED TO HAVE BEEN KEPT OR RETAINED, AS THE CASE MAY BE, TO ATTEND COURT PROCEEDINGS. NO EVIDENCE TOWARD THE SA ME IS ON RECORD. TWO, PROCEEDINGS UNDER THE ACT CANNOT BE SAID TO BE EITHER A PART OF THE ASSESSEES BUSINESS OR UNDERTAKEN IN THE COURSE OF CARRYING THE BUSINESS. INCOME-TAX IS A TAX ON INCOME. IT IS THUS NOT A 6 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO INCIDENT OF THE ASSESSEES BUSINESS, AND COMES INTO EFFECT ONLY ONCE INCOME IS GENERATED, AND WHICH IS BY DEFINITION THE RESIDUAL SUM, POSITIVE OR NEGATIVE, AFTER EXCLUDING OR DEDUCTING ALL EXPENSES OF THE TRADE OR BUSINESS, OR THE RELEVANT ACTIVITY QUA WHICH INCOME IS BEING DETERMINED. IT IS FOR THIS RE ASON THAT TAX UNDER THE ACT IS NOT ALLOWABLE AS EXPENDITURE U/S.37(1) IN COMPUTING BUS INESS INCOME. REFERENCE IN THIS CONTEXT MAY BE MADE TO THE DECISION IN THE CASE OF EAST INDIA PHARMACEUTICAL WORKS LTD. VS. CIT [1997] 224 ITR 627 (SC). IN FACT, TAX WOULD STAND A TTRACTED IRRESPECTIVE OF WHETHER INCOME IS FROM BUSINESS OR ANY OTHER SOURCE . LITIGATION COSTS QUA TAX LEVIED OR OTHER PROCEEDINGS UNDER THE ACT WOULD THUS NOT QUAL IFY AS BUSINESS EXPENDITURE. SIMILARLY, COMPLIANCES UNDER THE COMPANIES ACT FORM PART OF THE REGULATORY FRAMEWORK, TO WHICH IT IS SUBJECT AS A CORPORATE ENTITY, AND W HICH THE ASSESSEE UNDERTAKES NOT FOR THE REASON THAT IT IS IN, AND IN FACT INDEPENDENT OF, I TS BUSINESS. THE IMPUGNED EXPENDITURE STANDS ACCORDINGLY RIGHTLY DISALLOWED AS EXPENDITUR E OF THE BUSINESS OR AS BUSINESS EXPENDITURE. WE DECIDE ACCORDINGLY. ISSUE # 2 6. THE SECOND ISSUE, RAISED PER GD. II, IS TOWARD S ET OFF OF UNABSORBED DEPRECIATION ALLOWANCE AGAINST THE ASSESSEES INCOME ASSESSABLE FOR THE CURRENT YEAR, BEING INCOME FROM HOUSE PROPERTY. THE ISSUE IS NO LONGER RES INTEGRA , HAVING BEEN ANSWERED IN CLEAR TERMS BY THE APEX COURT VIDE ITS DECISION IN CIT VS. VIRMANI INDUSTRIES PVT. LTD. [1995] 216 ITR 607 (SC), FOLLOWING THE DECISIONS BY ITS LA RGER BENCH IN THE CASE OF CIT VS. JAIPURIA CHINA CLAY MINES (P.) LTD. [1966] 59 ITR 555 (SC) AND RAJAPALAYAM MILLS LTD. VS. CIT [1978] 115 ITR 777 (SC). THOUGH THE HONBLE ALLAHAB AD HIGH COURT, WHOSE DECISION (REPORTED AT [1974] 97 ITR 461), IT AFFIRM S THEREIN, HAD OPINED OF THE NECESSITY FOR A BUSINESS BEING CARRIED ON DURING THE RELEVANT (FOLLOWING) YEAR, THE APEX COURT HAS CLEARLY STATED OF IT BEING NOT SO. THE BASIS THEREO F IS THAT THE UNABSORBED DEPRECIATION IS DEEMED AS A PART OF THE CURRENT YEARS DEPRECIATION , SO THAT IT WOULD BE ALLOWABLE AGAINST INCOME UNDER ANY OTHER HEAD. FURTHER, THE WORDS PR OFITS OR GAINS CHARGEABLE FOR THAT PREVIOUS YEAR IN SECTION 32(2) ARE NOT CONFINED TO PROFIT AND GAINS FROM BUSINESS WHOSE 7 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO INCOME IS BEING COMPUTED, BUT REFER TO THE TOTALITY OF THE PROFITS AND GAINS COMPUTED UNDER THE VARIOUS HEADS AND CHARGEABLE TO TAX. THE REVENUES CASE, ON THE OTHER HAND, IS THAT SECT ION 32(1), ENTITLING THE CLAIM FOR DEPRECIATION ALLOWANCE, COMES INTO PLAY ONLY IN COM PUTING BUSINESS INCOME UNDER SECTION 28, WHICH IN TERMS OF SECTION 29 HAS TO BE IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 30 TO 43D. AS SUCH, IN THE ABSENCE OF ANY BUSINESS, THERE WOULD BE NO OCCASION TO COMPUTE BUSINESS INCOME AND, THUS, GIVE EFFECT T O SECTION 32(1), ALLOWANCE WHERE- UNDER INCLUDES THE BROUGHT FORWARD UNABSORBED ALLOW ANCE U/S.32(2). FURTHER, TRUE, SECTION 32(2) EMPLOYS THE WORDS WHERE, IN THE ASSESSMENT O F THE ASSESSEE. HOWEVER, ASSESSMENT IN THIS CONTEXT WOULD IMPLY COMPUTATION OF INCOME CHARGEABLE TO TAX (FOR THE RELEVANT YEAR) IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND, ACCORDINGLY, DETERMINING THE ASSESSEES LIABILITY TO TAX AS WELL AS, CORRESP ONDINGLY, LOSSES/ALLOWANCES WHICH IT IS ENTITLED TO CARRY FORWARD. THUS THE SAID WORDS, EVE N IF TAKEN AS INDICATIVE OF THE STAGE OF AGGREGATION OF INCOME, MAY NOT BE DETERMINATIVE OF THE MATTER, I.E., OF ANY BUSINESS BEING REQUIRED TO BE CARRIED ON OR NOT NECESSARILY SO IN THE FOLLOWING YEAR, I.E., WHEREAT EFFECT IS SOUGHT TO BE GIVEN TO S.32(2) R/W S.32(1). THE SAID VIEW IS, AS SHALL BE APPARENT FROM THE FOREGOING, IN AGREEMENT WITH THAT EXPRESSED BY THE HONBLE ALLAHABAD HIGH COURT IN VIRMANI INDUSTRIES (SUPRA), HOLDING THE CARRYING ON OF ANY BUSINESS DU RING THE FOLLOWING YEAR AS A CONDITION FOR THE SET OFF OF CARRY FORWAR D UNABSORBED BUSINESS LOSS. HOWEVER, THERE IS NO DOUBT WHATSOEVER THAT IN-SO-FA R AS THE APEX COURT HAS IN VIRMANI INDUSTRIES PVT. LTD. (SUPRA) CLARIFIED THAT CARRYING ANY BUSINESS DURING THE RELEVANT (FOLLOWING) YEAR IS NOT A CONDITION FOR AL LOWING SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION, IT HAS DEPARTED FROM AND M ODIFIED THE DECISION BY THE HONBLE ALLAHABAD HIGH COURT. THE DECISION BY THE APEX COUR T IS DECLARATORY OF THE LAW OF THE LAND AND BINDING ON ALL THE COURTS AND TRIBUNALS. THE DE CISION BY THE REVENUE AUTHORITIES IN THE INSTANT CASE HAS BEEN TAKEN DE HORS AND WITHOUT TAKING INTO CONSIDERATION THE SAID DECISION. FURTHER, THE HONBLE COURT IN MALABAR AGRICULTURAL CO. LTD. VS. CIT [1998] 229 ITR 548 (KER), RELIED UPON BY THE REVENUE, SAYS NOT HING THAT DIGRESSES FROM OR CONTRADICTS OUR UNDERSTANDING OF THE DECISION BY TH E APEX COURT IN VIRMANI INDUSTRIES PVT. 8 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO LTD. (SUPRA), WHICH IS IN FACT EXPLICIT AND ON THE POINT , AND TOWARD WHICH WE MAY REFER TO SUB-PARA 2 AT PG. 618, PLACITUM C TO F OF THE REPOR TS. TRUE, THE HONBLE HIGH COURT DISTINGUISHES THE ASSESSEES RELIANCE ON THE SAID D ECISION BY STATING THAT IT IS NOT CALLED UPON TO EXPRESS ANYTHING AS TO WHETHER SUSPENSION ( OF BUSINESS) WAS TEMPORARY OR OTHERWISE (PG. 554, PLACITUM B TO H OF THE REPORTS) . HOWEVER, HOW WE WONDER IS THE SAME RELEVANT WHEN THE APEX COURT HAS UNEQUIVOCALLY HELD THE CARRYING OF ANY BUSINESS DURING THE CURRENT YEAR AS NOT AN INGREDIENT FOR AL LOWANCE OF CLAIM FOR BROUGHT FORWARD UNABSORBED DEPRECIATION, EVEN AS THE HONBLE HIGH C OURT ITSELF NOTES IN THE EARLIER PART OF THE SAME PARA. A DECISION, IT IS TRITE LAW, IS ONLY AN AUTHORITY ON WHAT IT ACTUALLY DECIDES, AND NOT WHAT MAY REMOTELY OR EVEN LOGICALLY FLOW FR OM IT (REFER: GOODYEAR INDIA LTD. V. STATE OF HARYANA [1991] 188 ITR 402 (SC)). ACCORDINGLY, WE DO NOT C ONSIDER, IN WHATEVER MANNER ONE MAY LOOK AT IT, THE SAID DECISI ON AS CARRYING THE REVENUES CAUSE ANY FURTHER. THE ASSESSEE SHALL, ACCORDINGLY, BE ENTITLED TO SET OFF ITS UNABSORBED BROUGHT FORWARD DEPRECIATION AGAINST THE RENTAL INCOME. WE DECIDE ACCORDINGLY, AND THE ASSESSEE SUCCEEDS ON ITS GD.III. ISSUE # 3 7. THE NEXT ISSUE, RAISED PER A-GD. II AND III (PAR TLY), IS IN RESPECT OF SET OFF OF UNABSORBED BROUGHT FORWARD BUSINESS LOSS AGAINST IN COME FROM HOUSE PROPERTY. THE SAID SET OFF IS CLAIMED U/S. 72(1) OF THE ACT, WHICH REA DS AS UNDER: CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. 72. (1) WHERE FOR ANY ASSESSMENT YEAR, THE NET RESU LT OF THE COMPUTATION UNDER THE HEAD PROFITS AND GAINS OF BU SINESS OR PROFESSION IS A LOSS TO THE ASSESSEE, NOT BEING A LOSS SUSTAINED IN A SPECULATION BUSINESS, AND SUCH LOSS CANNOT BE OR IS NOT WHOLLY SET OFF AG AINST INCOME UNDER ANY HEAD OF INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 71, SO MUCH OF THE LOSS AS HAS NOT BEEN SO SET OFF OR, WHERE HE HA S NO INCOME UNDER ANY OTHER HEAD, THE WHOLE LOSS SHALL, SUBJECT TO THE OT HER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESS MENT YEAR, AND (I) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAI NS, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMENT YEAR; 9 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO (II) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE A MOUNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSES SMENT YEAR AND SO ON: PROVIDED . IN-AS-MUCH AS THE WORDS EMPLOYED IN CLAUSE (I) SUB- SECTION (1) OF SECTION 72 ARE AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR P ROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMENT YEAR, IT IS CONTEND ED THAT IT WOULD TAKE WITHIN ITS AMBIT ALL SUCH ACTIVITIES UNDERTAKEN BY THE ASSESSEE WHICH AR E DICTATED BY BUSINESS OR COMMERCIAL CONSIDERATIONS, SO THAT THEY WEAR THE BADGES OF TRA DE. THE SET OFF OF LOSS UNDER THE HEAD OF INCOME PROFITS AND GAINS OF BUSINESS OR PROFESSION IS NOT RESTRICTED, IN VIEW OF THE LANGUAGE OF SECTION 72(1)(I), TO INCOME ASSESSED UN DER THE SAID HEAD, BUT TO ANY INCOME THAT COULD BE SAID TO REPRESENT BUSINESS INCOME, I. E., JUDGED BY THE APPLICATION OF COMMERCIAL PRINCIPLES. RELIANCE FOR THE PURPOSE IS PLACED ON THE DECISION IN LAVISH APARTMENT (P.) LTD. VS. ASST. CIT [2012] 210 TAXMAN 9 (DEL) (23 TAXMANN.COM 414). THE LETTING OF THE ASSESSEES OFFICE PREMISES AND ONE F LAT, WHICH REPRESENTED THE STOCK-IN-TRADE OF ITS BUSINESS, IS FOR THE REASON THAT THEY STAND PROSCRIBED BY THE HONBLE JURISDICTIONAL HIGH COURT FOR BEING DEALT WITH IN ANY MANNER WHATS OEVER DURING THE PENDENCY OF THE APPEAL WITH IT (VIDE NOTICE OF MOTION NO. 424 OF 20 04 IN ITA NO. 84 OF 2004 DATED 26.02.2004/PGS. 1-4 OF THE ADDITIONAL EVIDENCE). TH E ASSESSEE ON THAT BASIS CLAIMS TO BE OBLIGED TO FOLLOW THE SAID COURSE (LETTING), WHICH THUS ASSUMES THE CHARACTER OF BUSINESS INCOME, THOUGH ASSESSABLE AS INCOME FROM HOUSE PROP ERTY, EVEN AS RETURNED BY THE ASSESSEE ITSELF. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE ARE AFRAID, WE ARE UNABLE TO ACCEPT THE ASSESSE ES PLEA, WHICH WE HAVE EXAMINED BOTH ON FACTS AND IN LAW. ON FACTS, WE HAV E ALREADY CLARIFIED THE LEVY OF INCOME TAX AS NOT AN INCIDENT OF THE TRADE OR BUSINESS, BU T ON THE INCOME EARNED (OR THE LOSS SUSTAINED) AS THE RESULT THEREOF, OR ANY OTHER ACTI VITY FOR THAT MATTER (ALSO REFER PARA 5). IF THE TAX UNDER THE ACT ON BUSINESS INCOME IS LIABLE TO BE CONSIDERED, AND FOR THAT REASON, AS BUSINESS EXPENDITURE, IT COULD WITH EQUAL FELICITY OR INGENUITY BE ARGUED TO BE AN EXPENSE 10 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO IN RELATION TO ANY OTHER ACTIVITY YIELDING INCOME A SSESSABLE UNDER OTHER HEADS OF INCOME, VIZ., SALARY, HOUSE PROPERTY, CAPITAL GAINS, OTHER SOURCE, I.E., WHERE TAX IS LIABLE ON THE INCOME ASSESSABLE UNDER THE SAID HEADS. BY ALL COUN TS, IT IS ONLY AN APPROPRIATION OF THE PROFIT OR INCOME ARISING TO THE ASSESSEE FROM WHATE VER SOURCE, WITH IN FACT ADJUSTMENTS BY WAY OF SET OFF BEING ALLOWED FOR LOSS SUSTAINED UND ER ONE HEAD OF INCOME AGAINST INCOME UNDER ANOTHER. THE ARGUMENT IS THUS WITHOUT BASIS I N LAW, AS ALSO SOUGHT TO BE ANSWERED EARLIER WITH REFERENCE TO THE DECISION IN EAST INDIA PHARMACEUTICAL WORKS LTD. (SUPRA). FURTHER, THE DIRECTION BY THE HONBLE COURT VIDE IT S ORDER DATED 26.02.2004 (SUPRA) (WHICH WE ADMIT IN-AS-MUCH AS THE REVENUE ITSELF IS A PART Y THERETO), BEING IN PROCEEDINGS UNDER THE ACT WOULD NOT THEREFORE BE REGARDED AS PROCEEDI NGS ARISING OUT OF OR INCIDENTAL TO THE ASSESSEES TRADE OR BUSINESS, EVEN IF THEY MAY IMPI NGE THEREON. IN FACT, AS WE SHALL PRESENTLY SEE, THEY DO NOT. WHAT THE HONBLE COURT HAS RESTRAINED THE ASSESSEE IS TO DEAL WITH ITS SAID TWO PROPERTIES, BEING OFFICE PREMISES (AT SWATI BUILDING, SANTACRUZ (W), MUMBAI) AND ONE FLAT (AT FLAMINGO, KHAR, MUMBAI), I N ANY MANNER DURING THE PENDENCY OF ITS CAPTIONED APPEAL BEFORE IT, SO AS TO PROTECT THE INTEREST OF THE REVENUE. THE ASSESSEE COULD THUS CONTINUE TO USE ITS OFFICE PREMISES FOR ITS BUSINESS . RATHER, THE ASSESSEE HAS BY LETTING THE SAID PROPERTIES, CREATED THIRD PARTY IN TEREST THEREIN, HOWSOEVER LIMITED, SO THAT IT HAS IN FACT DEALT THEREWITH, VIOLATING THE DIR ECTION BY THE HONBLE COURT. FURTHER, EVEN CONSTRUING THE SAME BROADLY, SO THAT IT ADMITS OF L ETTING AS WITHIN THE CONSTRAINTS LAID DOWN BY THE HONBLE COURT, THE SAME CANNOT BE SAID TO BE A CONSTRAINT ARISING OUT OF THE ASSESSEES BUSINESS ACTIVITY AND, THEREFORE, THE LE TTING TO BE FOR THE PURPOSES OF ITS BUSINESS. TRUE, THE SECOND PROPERTY REPRESENTED THE ASSESSEES STOCK-IN-TRADE, I.E., TILL THE TIME IT WAS CARRYING ITS BUSINESS OF REAL ESTATE DE VELOPMENT. HOWEVER, THE MOOT QUESTION IS: COULD IT BE SAID TO SO REPRESENT EVEN AFTER THE ASS ESSEE COMPLETELY STOPS ALL ITS CONSTRUCTION ACTIVITY ? FURTHER, EVEN AS POINTED OUT BY THE BENCH DURING HEARING, COULD IT POSSIBLY CARRY ON THE SAME WITH ONE FLAT? THAT IS, COULD A RESTRAINT ON ONE FLAT OF A BUILDER-DEVELOPER BE CONSIDERED AS A JEOPARDIZING I TS BUSINESS. RATHER, IN OUR VIEW, THE VERY FACT THAT IT HAS LET ITS OFFICE PREMISES AT A MONTHLY RENT OF RS.5 LACS EXHIBITS THE ASSESSEES CLEAR INTENTION NOT TO PURSUE ITS BUSINE SS, AT LEAST FOR THE TIME BEING - IN-AS- 11 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO MUCH AS WE CANNOT PLACE ANY DEFINITE TIME FRAME THE RETO. NO POSITIVE DEVELOPMENT IN THIS REGARD HAS BEEN REPORTED TO US, I.E., EVEN SIX YEAR S AFTER THE END OF THE RELEVANT ACCOUNTING YEAR, OR 10 YEARS AFTER THE PLACEMENT OF THE EMBARG O BY THE HONBLE COURT. IN FACT, IT IS DOUBTFUL IF BOTH THESE PROPERTIES COULD BE OR CONTI NUE TO BE REGARDED AS BUSINESS ASSETS OF THE ASSESSEE-COMPANY. THE ASSESSEE COULD COMMENCE B USINESS IN FUTURE, EMPLOYING THESE ASSETS, IN WHICH CASE THE SAME SHALL AGAIN ASSUME T HE CHARACTER OF BUSINESS ASSETS. AS EXPLAINED BY THE HONBLE APEX COURT IN SULTAN BROTHERS VS. CIT [1964] 51 ITR 353 (SC), ON THE ARGUMENT OF THE ASSET BEING A COMMERCIAL ASS ET ADVANCED BEFORE IT, THAT A THING IS NOT BY ITS VERY NATURE A COMMERCIAL ASSET. A COMMER CIAL ASSET IS ONLY AN ASSET USED IN BUSINESS AND NOTHING ELSE, AND BUSINESS MAY BE CARR IED ON WITH PRACTICALLY ALL THINGS. IN THE FACTS OF THE CASE IN LAVISH APARTMENT (P.) LTD. (SUPRA), ON THE OTHER HAND, AS ITS READING WOULD SHOW, THE ASSESSEE WAS CARRYING O N THE BUSINESS OF SALE AND PURCHASE OF PROPERTIES AND ALSO EARNING RENTAL AND OTHER INCOME , BEING IN FACT INCORPORATED FOR CARRYING ON THOSE ACTIVITIES; ITS OBJECTS INCLUDING LEASING, SELLING AND RENTING OF REAL ESTATE PROPERTIES, SO THAT RENTING OF PROPERTY WAS AMONG I TS MAIN OBJECTS AS PER THE MEMORANDUM OF ASSOCIATION, AS WAS ALSO FOUND TO BE THE CASE IN RESPECT OF HIRE CHARGES AND COMMISSION INCOME. IT WAS IN THIS CONTEXT THAT THE HONBLE COURT, INTERPRETING THE PROVISION OF SECTION 72(1)(I), HELD THAT EVEN THOUG H THE RENT INCOME WOULD PER FORCE THE SPECIFIC PROVISION OF LAW BE ASSESSABLE U/S.22, THE SAME ARISES OUT OF AND IS A PART OF THE ASSESSEES TRADE AND WOULD THEREFORE STAND TO BE RE GARDED AS PROFITS AND GAINS OF ITS BUSINESS. ANOTHER STRIKING EXAMPLE WOULD BE OF DIVI DEND INCOME ON SHARES HELD AS STOCK- IN-TRADE. THOUGH ASSESSABLE AS INCOME FROM OTHER SO URCES U/S.56, AGAIN, IN VIEW OF THE SPECIFIC PROVISION OF THE ACT, THE INCOME IS DECIDE DLY IN THE NATURE OF THE BUSINESS INCOME, I.E., ON COMMERCIAL PRINCIPLES, AS INDEED F OUND BY THE HONBLE COURT IN CIT VS. COCANADA RADHASWAMI BANK LTD. [1965] 57 ITR 306 (SC), WHICH DECISION STANDS REFERRED TO AND FOLLOWED BY THE HONBLE COURT IN LAVISH APARTMENT (P.) LTD. (SUPRA). THE FACTS OF THE PRESENT CASE ARE CLEARLY AND DECIDEDLY DIFFERENT, SO THAT THE RENTAL INCOME CAN BY NO STRETCH BE CONSIDERED AS FORMING PART OF THE ASSESSEES BUSINESS, WITH WE ON THE CONTRARY, OBSERVING IT TO BE PERHAPS WITHIN THE SCO PE OF THE RESTRAINT PLACED ON THE 12 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO RELEVANT PROPERTIES BY THE HONBLE COURT. THE SAID DECISION IS THUS DISTINGUISHABLE ON FACTS. WE MAY EXAMINE THE LEGAL ASPECT OF THE MATTER, WHIC H THOUGH STANDS RENDERED AS ACADEMIC IN VIEW OF OUR FINDING OF THE ASSESSEES I NCOME, AGAINST WHICH SET OFF IS BEING CLAIMED, AS NOT OF BUSINESS NATURE, I.E., ON COMMER CIAL PRINCIPLES. WE CONSIDER IT INCUMBENT TO DO SO INASMUCH AS OUR ORDER IS APPEALA BLE. WITH RESPECT, WE ARE NOT IN AGREEMENT WITH THE DECISION BY THE HONBLE COURT IN LAVISH APARTMENT (SUPRA). THE SAID DECISION, IN CONTRADISTINCTION TO THAT BY THE APEX COURT OR THE BY THE HONBLE JURISDICTIONAL HIGH COURT IS NOT BINDING ON US (REFER: CIT V. THANE ELECTRICITY SUPPLY LTD . [1994] 206 ITR 727 (BOM.)). THE DECISION IN COCANADA RADHASWAMI BANK LTD. (SUPRA), AS WELL AS OTHERS BY THE APEX COURT, REFERRED TO IN LAVISH APARTMENT (SUPRA), STANDS RENDERED UNDER THE 1922 ACT, SECTION 6 OF WHICH IS WORDED DIFFEREN TLY FROM SECTION 14 OF THE ACT, WHICH REQUIRES ALL INCOME, FROM WHATEVER SOURCE, TO BE, F OR THE PURPOSES OF ITS ASSESSMENT UNDER THE ACT, CLASSIFIED UNDER ANY OF THE SIX (FIVE W.E. F. 01.04.1989) HEADS OF INCOME PRESCRIBED THEREIN. THE ACT, THUS, PRESCRIBES A SCH EDULAR SYSTEM OF TAXATION FOR THE LEVY OF TAX, WHICH IS ONE TAX ON THE TOTAL INCOME (FROM ALL SOURCES) CHARGEABLE TO TAX FOR ANY YEAR. THE SAME IS TO OBTAIN SAVE AS PROVIDED OTHERWISE BY THE ACT . CHAPTER VI, WHICH INCLUDES INTER ALIA PROVISIONS AS TO AGGREGATION OF INCOME (SS. 66 TO 69D) AND SET OFF, OR CARRY FORWARD AND SET OFF (SS. 70 TO 80) FORMS PART OF AN D TOWARD DETERMINING THIS INCOME, I.E., CHARGEABLE TO TAX FOR ANY YEAR. THE SAME NOWHERE BR EAKS AWAY OR DEPARTS FROM THE SCHEDULAR MANNER OR CLASSIFICATION, WITH SEPARATE P ROVISIONS FOR AGGREGATION AND CARRY FORWARD AND SET OFF OF LOSSES SUSTAINED UNDER DIFFE RENT HEADS OF INCOME, VIZ. 70, 71, 71A, 71B, 72 ET. AL. THE SUB HEADS TO DIFFERENT SECTIONS ITSELF INDICATE THE NATURE OF THE PROVISION, WHICH FALL UNDER TWO BROAD CATEGORIES, I .E., INTRA HEAD AND INTER HEAD ADJUSTMENTS. IN OTHER WORDS, EACH INCOME CONTINUES TO BE ASSESSABLE UNDER A PARTICULAR HEAD OF INCOME AND ITS CHARACTER IS POSTULATED FOR BEING RETAINED FROM YEAR TO YEAR, WITH ITS CARRY FORWARD REGULATED PER SPECIFIC PROVISION/ S FOR THAT HEAD OF INCOME. CONTINUING FURTHER, AS A RESULT, THE GROSS TOTAL INCOME (GTI), WHICH IS THE AGGREGATE OF ALL INCOMES FALLING UNDER THE DIFFERENT HEADS OF INCOME PRIOR T O ALLOWING ANY DEDUCTION UNDER CHAPTER 13 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO VI-A OF THE ACT, I.E., BY DEFINITION, CAN BE KNOWN OR PROFILED IN TERMS OF ITS VARIOUS CONSTITUENTS, I.E., THE SAID INCOMES. IN FACT, MANY A DEDUCTION UNDER CHAPTER VI-A IS WITH REFERENCE TO THE INCOME COMPUTED UNDER A PARTICULAR HEAD OF INCOME AS INCLUDED IN THE GTI, SO THAT THE ACT CONTEMPLATES THE SAID BREAK-UP , BEING AS AFORE-STATED, ONLY THE AGGREGATION OF SUCH INCOMES, I.E., ASSESSABLE UNDER THE DIFFERENT HEADS OF INCOME. THE INTERPRETATION ADVANCED BY THE HONBLE COURT, WHERE BY THE SAID CLASSIFICATION IS GIVEN A GO BY AT THE STAGE OF THE AGGREGATION, IS THUS IN OUR HUMBLE VIEW, WITH RESPECT, NOT CONSISTENT WITH THE SCHEME OF THE ACT. A DEPARTURE, EVEN IF ON LY QUA LOSS UNDER THE HEAD BUSINESS INCOME, CANNOT BE LIGHTLY INFERRED. IT MAY IN FACT NOT BE POSSIBLE TO DETERMINE THE INCOME ASSESSABLE OR CARRIED FORWARD UNDER A PARTICULAR HE AD FOR ANY YEAR ONCE THE SCHEDULER SYSTEM IS DILUTED. IN FACT, ONCE THE INCOME IS CLAS SIFIED UNDER A PARTICULAR HEAD OF INCOME, WHICH ARE NON-OVERLAPPING, SO THAT A PARTICULAR INC OME STANDS TO BE CLASSIFIED UNDER A PARTICULAR HEAD OF INCOME, THERE IS NO OCCASION FOR THE A.O. TO REVISIT THE NATURE OF THE INCOME; THE CLASSIFICATION ITSELF BEING ON THAT BAS IS, SO THAT IT DETERMINES ITS NATURE FOR THE PURPOSES OF THE ACT. THAT THE ACT IS TO BE READ AS ONE, COMPOSITE WHOLE, IS TRITE LAW. CONTINUING FURTHER, IN OUR HUMBLE VIEW, THE PROVISI ON OF SECTION 72(1)(I) ALSO DOES NOT LEND ITSELF TO THE INTERPRETATION SOUGHT TO BE PLACED THEREON BY THE HONBLE COURT. TRUE, CLAUSE (I) OF SECTION 72(1) DOES NOT SPEAK OF SET O FF AGAINST INCOME ASSESSABLE UNDER CHAPTER IV-D, I.E., UNDER THE HEAD PROFITS AND GAI NS OF BUSINESS OR PROFESSION BUT AGAINST PROFITS AND GAINS, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE AND ASSESSABLE FOR THAT YEAR. THAT, HOWEVER IS PRECISELY WHAT BUSINESS (OR PROFESSIONAL) INCOME IS, I.E., BY DEFINITION, FOR WHICH WE MAY RE PRODUCE SECTION 28(I), AS UNDER : PROFITS AND GAINS OF BUSINESS OR PROFESSION. 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME- TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, (I) THE PROFITS AND GAINS OF ANY BUSINESS OR PROFESSION WHICH WAS CARRIED ON BY THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR ; (II) .. [EMPHASIS, OURS] 14 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO THE WORDS EMPLOYED BY THE STATUTE IN BOTH THE PROVI SIONS ARE IDENTICAL. HOW, ONE MAY ASK, COULD THE TWO BE THEN INTERPRETED DIFFERENTLY? THIS IS PARTICULARLY SO CONSIDERING THAT THE SAME ARE USED IN THE SAME CONTEXT, I.E., ARE PARI MATERIA . PLACING THE SAME OR A UNIFORM INTERPRETATION ON BOTH THE IDENTICALLY WORD ED PROVISIONS, AN INCOME WOULD THUS EITHER FALL UNDER BOTH, I.E., SECTION 28(I) AND SEC TION 72(1)(I), OR NOT SO, I.E., IN BOTH, AND IT CANNOT BE THAT AN INCOME FALLS U/S.72(1)(I) (SO THA T IT IS AVAILABLE FOR SET OFF) BUT NOT U/S.28(I) (SO THAT IT IS NOT ASSESSABLE UNDER CHAPT ER IV-D). FOR THESE REASONS, WE ARE, WITH RESPECT, UNABLE TO SUBSCRIBE TO THE VIEW CANVASSED BY THE HONBLE COURT IN LAVISH APARTMENT (SUPRA), WHICH WE HAVE ALREADY FOUND AS DISTINGUISHABLE ON FACTS, SO THAT, EITHER WAY, THE SAID DECISION IS OF NO ASSISTANCE TO THE ASSESSEE. THE DECISIONS BY THE APEX COURT DISCUSSED THEREIN, AS CLARIFIED EARLIER, WHICH UNDER THE 1922 ACT, SECTION 6 OF WHICH DID NOT OBLI GE OR ENVISAGE A CLASSIFICATION OF INCOME. A HEAD OF INCOME, IT IS AGAIN SETTLED IS NO T THE SAME AS CLASS OF INCOME, AS CLARIFIED BY THE HONBLE COURT IN CIT VS. BOMBAY STATE CO-OPERATIVE BANK LTD. [1966] 59 ITR 31 (BOM) (AFFIRMED IN [1968] 70 ITR 86 (SC)). T HE ASSESSEE THUS FAILS ON ITS RELEVANT GROUND. WE DECIDE ACCORDINGLY. ISSUE # 4 9. THE FOURTH AND THE LAST ISSUE, RAISED PER A-GD. I, IS WITH REGARD TO THE CORRECT AMOUNT OF THE UNABSORBED DEPRECIATION AS PER THE BO OKS OF ACCOUNTS WHICH IS TO BE TAKEN INTO ACCOUNT WHILE MAKING THE ADJUSTMENT TO ARRIVE AT THE BOOK PROFIT U/S.115JB OF THE ACT. THE LD. COUNSEL WOULD DURING HEARING SUBMIT TH AT THE SAID ISSUE, LEGAL IN NATURE, THOUGH ARISING OUT OF THE ASSESSMENT ORDER, REMAINE D TO BE ASSUMED BEFORE THE FIRST APPELLATE AUTHORITY. THE SAME WAS ACCORDINGLY PRAYE D FOR BEING ADMITTED, AND A RESTORATION BACK TO THE FILE OF THE LD. CIT(A) FOR ADJUDICATION IN ACCORDANCE WITH LAW. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) DID NOT RAISE ANY OBJECTION. WE, ACCORDINGLY, HAVE NO HESITATION IN, ADMITTING THE SAID GROUND, RESTOR ING THE SAME TO THE FILE OF THE LD. CIT(A) FOR THE PURPOSE. WE DECIDE ACCORDINGLY. 15 ITA NO. 6282/MUM/2011 (A.Y. 2008-09) NARITA INVESTMENTS PVT. LTD. VS. ITO 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 20 -34 52-) '61 7 -) -89! ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 18, 2014 SD/- SD/- (DR. S. T. M. PAVALAN) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + :, MUMBAI; ; DATED : 18.09.2014 # ROSHANI , SR. PS ! ' #$%& ' &$ # COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. '' + <- = > / THE CIT(A) 4. '' + <- / CIT - CONCERNED 5. ?@ A'-B4 ' B40 + :, / DR, ITAT, MUMBAI 6. A 5C , # GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , + :, / ITAT, MUMBAI