DCIT CIR 2(2), MUMBAI V. INTERNAITONAL TRANSPORT & TRD. SYSTEMS. P. LTD, MUMBAI

ITA 6437/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9131 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 10-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI B. RAMAKOTAIAH (A.M.) ITA NO. 6437/MUM /2010 ASSESSMENT YEAR : 2007-08 THE ASSTT. COMMISSIONER OF INCOME-TAX- CIRCLE 2(2), AAYAKAR BHAVAN, ROOM NO. 545, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 020. VS. INTERMODAL TRANSPORT & TRADING SYSTEMS PVT. LTD., ITTS HOUSE, 6 TH FLOOR, 28, K. DUBHASH MARG, FORT, , MUMBAI 400 023. PAN AAACI2685Q (APPELLANT) (RESPONDENT) REVENUE BY : SHRI MANOJ KUMAR ASSESSEE BY : NONE DATE OF HEARING 10-12-2012 DATE OF PRONOUNCEMENT 14.12.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30-6-2010 PASSED BY THE LD. CIT(A)- 5, MUMBAI FOR THE ASSESSMENT YEAR 2007-08. 2. DESPITE SERVICE OF NOTICE, AT THE TIME OF HEARIN G, NONE ATTENDED ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FO R THE ADJOURNMENT OF THE CASE, THEREFORE, IT WAS DECIDED TO DISPOSE OF T HE APPEAL EX PARTE QUA THE ASSESSEE, ON MERITS, AFTER HEARING THE LD. D.R. ITA NO. 6437/MUM/2010 2 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN COOLANT AND A LSO RUNNING A BUSINESS SERVICE CENTRE. THE RETURN WAS FILED DEC LARING LOSS OF RS. 20,49,185/-. DURING THE COURSE OF ASSESSMENT PROCE EDING IT WAS, INTER ALIA, OBSERVED BY THE A.O. THAT THE ASSESSEE HAS SH OWN OTHER INCOME COMPRISED OF AN AMOUNT OF RS. 21,60,000/- RECEIVED BY THE ASSESSEE @ RS. 1,80,000/- PER MONTH FROM TOWER CAPITAL AND SEC URITIES PVT. LTD. TO WHOM THE ASSESSEES PREMISES HAS BEEN LET OUT AS A BUSINESS CENTRE. THE A.O. AFTER CONSIDERING THE COPY OF THE AGREEMEN T DTD. 25-1-2005 BETWEEN THE ASSESSEE AND M/S TOWER CAPITAL OBSERVED THAT WHAT WAS RECEIVED BY THE ASSESSEE WAS ONLY RENT IN RETURN FO R USE OF PREMISES BY TOWER CAPITAL. HE FURTHER OBSERVED THAT PROVISION OF AIR-CONDITIONERS, TELEPHONE ETC. UNDER THE AGREEMENT COULD NOT BE VIS UALISED AS AN INDEPENDENT ACTIVITY TO QUALIFY AS A BUSINESS U/S 2(13) OF THE INCOME-TAX ACT, 1961 (THE ACT). HE FURTHER OBSERVED THAT THE ASSESSEE HAS OBTAINED AN INTEREST FREE SECURITY DEPOSIT OF RS. 17 LAKHS F ROM TOWER CAPITAL AS PART OF THE AGREEMENT UNDER WHICH THE PREMISES HAS BEEN USED BY THE ASSESSEE, THIS FEATURE GOES TO LEND SUPPORT TO THE INFERENCE THAT THE AGREEMENT REALLY PURPORTS ONLY TO THE USE OF PREMIS ES BY TOWER CAPITAL. ON BEING ASKED, IT WAS SUBMITTED BY THE ASSESSEE TH AT THE SAID RECEIPT HAS ALL ALONG BEEN ACCEPTED AS PART OF BUSINESS INC OME AND THAT NO DEPARTURE SHOULD BE MADE THIS YEAR. HOWEVER, THE A .O. DID NOT ACCEPT THE ASSESSEES EXPLANATION AND HELD THAT THE ASSESS EE IS NOT IN THE ITA NO. 6437/MUM/2010 3 BUSINESS OF LETTING OUT PREMISES ON RENT, REPLETE W ITH ALL THE ATTENDANT INFRASTRUCTURAL FACILITIES, HENCE, THE A.O. ASSESSE D THE INCOME OF RS. 21,60,000/- AS INCOME FROM HOUSE PROPERTY, SUBJEC T TO THE STATUTORY DEDUCTIONS U/S 24(A). THE A.O. ALSO MADE PROPORTIO NATE DISALLOWANCE OF EXPENSES. ON APPEAL, THE LD. CIT(A) HELD THAT SINC E THE ASSESSEE HAS BEEN TREATING THE INCOME FROM BUSINESS SERVICE CENT RE AS BUSINESS INCOME AND THE SAME HAS BEEN ACCEPTED OVER THE YEAR S AND FACTS OF THE CASE REMAIN THE SAME FOR THE YEAR UNDER CONSIDERATI ON, HENCE, HE TREATED THE INCOME FROM BUSINESS SERVICE CENTRE AS BUSINESS INCOME. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL :- 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND F ACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT IN THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR, I.E. 2006-07, THE A.O. ACCEPTED TH E INCOME FROM PROPERTY AS BUSINESS INCOME. THE LD. CIT(A) FAILED TO APPRECIATE THAT IN A.Y. 2006-07, THE ASSESSMENT U/S 143(3) WAS LIMITED TO THE ISSUES RELATED TO INFORMATION FROM AIR ONLY AND IN VIEW OF THE INSTRUCTIONS OF CBDT NO OTHER ISSUE INCLUDING ASSESSABILITY OF INCO ME FROM PROPERTY WAS SUBJECT MATTER OF THE ASSESSMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT DECIDING THE ISSUE ON T HE MERITS. THE LD. CIT(A) SHOULD HAVE EXAMINED WHETHER THE INCOME RECE IVED FROM THE PROPERTY WAS ASSESSABLE AS INCOME FROM HOUSE PROPE RTY U/S 22 OF THE I.T. ACT SINCE POWER OF THE LD. CIT(A) IS CO-TERMIN US WITH THOSE OF THE ASSESSING OFFICER AS HELD BY HONBLE SUPREME COURT IN THE CASES OF CIT VS. KANPUR COAL SYNDICATE, 53 ITR 225 AND IN CIT VS . NIRBHERAM DAULATRAM 224 ITR 610. 5. AT THE TIME OF HEARING THE LD. D.R. SUBMITS THAT FO R THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER, THE LD. CIT(A) WAS NOT JUSTIFIED IN ITA NO. 6437/MUM/2010 4 TREATING THE INCOME FROM BUSINESS SERVICE CENTRE AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE PROPERTY. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE A.O. BE RESTOR ED. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. D.R. AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT AFTER CONSIDERING THE AGREEMENT DTD. 25-1-2005 BETWEEN THE ASSESSEE AND T OWER CAPITAL AND SECURITIES PVT. LTD. THE INCOME FROM BUSINESS SERVI CE CENTRE HAS ALWAYS BEEN ACCEPTED BY THE REVENUE AS INCOME FROM BUSINE SS. HOWEVER, IN THE YEAR UNDER CONSIDERATION THE A.O. WITHOUT POINT ING OUT ANY DISTINGUISHING FEATURE, HAS TREATED THE SAME AS IN COME FROM HOUSE PROPERTY. ON APPEAL, THE LD. CIT(A) AFTER CONSIDE RING THE FACTS AND THE VARIOUS CASE LAWS ON THE RULE OF CONSISTENCY HELD T HAT INCOME FROM BUSINESS SERVICE CENTRE IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. 7. IN RADHASOAMI SATSANG V. CIT (1992) 193 ITR 321 (SC) IT HAS BEEN HELD AS UNDER (HEADNOTE) : (II) THAT, IN THE ABSENCE OF ANY MATERIAL CHANGE J USTIFYING THE DEPARTMENT TO TAKE A DIFFERENT VIEW FROM THAT TAKEN IN EARLIER PROCEEDINGS, THE QUESTION OF THE EXEMPTION OF THE A SSESSEE APPELLANT SHOULD NOT HAVE BEEN REOPENED. STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO I NCOME-TAX PROCEEDINGS. THOUGH, EACH ASSESSMENT YEAR BEING A UNIT, WHAT WAS DECIDED IN ONE YEAR MIGHT NOT APPLY IN THE FOLLOWING YEAR; WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS H AS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE ITA NO. 6437/MUM/2010 5 SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NO T BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 8. IN CIT VS. GOPAL PUROHIT (2011) 336 ITR 287 (BOM ) IT HAS BEEN HELD AS UNDER (HEADNOTE) : (II) THAT THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY WHEN FACTS AND CIRCUMSTANCES FOR DIFFERENT YEARS WE RE IDENTICAL PARTICULARLY IN THE CASE OF THE SAME ASSESSEE. 9. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BRO UGHT ON RECORD BY THE REVENUE TO SHOW THAT THERE IS ANY CHANGE IN THE FACTS WARRANTING A DIFFERENT VIEW AND KEEPING IN VIEW THE RULE OF CONS ISTENCY, PARTICULARLY IN ASSESSEES OWN CASE, WE ARE INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN HOLDING THAT THE INCOME FROM BUSINESS SER VICE CENTRE HAS TO BE TREATED AS BUSINESS INCOME. THE GROUNDS TAKEN BY T HE REVENUE ARE, THEREFORE, REJECTED. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED ON 14.12.2012 SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 14 TH DECEMBER, 2012 RK ITA NO. 6437/MUM/2010 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (OSD)-I, C.R. 7, M UMBAI 4. CIT- CONCERNED, MUMBAI. 5. DEPARTMENTAL REPRESENTATIVE, BENCH I, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI