ARVIND YARNS P. LTD, MUMBAI V. ITO 4(1)(2), MUMBAI

ITA 6465/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3444 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 22-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI .. , ! , '# ' $ BEFORE SHRI I. P. BANSAL, JM AND SHRI SANJAY ARORA , AM ./ I.T.A. NO. 6465/MUM/2011 ( & ' (' & ' (' & ' (' & ' (' / / / / ASSESSMENT YEAR: 2008-09) ARVIND YARNS PVT. LTD. 510/511, KAKAD MARKET, 306, KALBADEVI ROAD, KALBADEVI, MUMBAI-400 002 & & & & / VS. ITO, 4(1)(2), MUMBAI ) '# ./ * ./ PAN/GIR NO. AAACA 3395 D ( )+ / APPELLANT ) : ( ,-)+ / RESPONDENT ) )+ . ' / APPELLANT BY : DR. K. SHIVARAM ,-)+ / . ' / RESPONDENT BY : SHRI MANOJ KUMAR & / 01# / // / DATE OF HEARING : 19.06.2013 2 ( / 01# / DATE OF PRONOUNCEMENT : 19.06.2013 '3 / 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)-8, MUMBAI (CIT(A) FOR SHO RT) DATED 01.08.2011, DISALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2007-08 VIDE ORDER DATED 08.12.2010. 2 ITA NO.6465/MUM/2011 (A.Y. 2008-09) ARVIND YARNS PVT. LTD. VS. ITO 2. THE PRINCIPAL ISSUE ARISING IN THIS APPEAL, BEIN G AGITATED PER ITS GROUNDS 1 AND 2 OF THE ASSESSEES APPEAL, IS THE HEAD OF INCOME UNDER WHICH THE INCOME TO THE ASSESSEE FROM THE LETTING OF ITS FACTORY PREMISES (SITUATE AT TS- II, MIDC, PHASE-1, ROAD NO.6, DOMBIVLI (E), DIST. THANE) IS TO BE ASSESSED. WHILE THE REVE NUE CONTENDS IT TO BE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THE ASSESSEE CLAIMS I T TO BE ASSESSABLE AS BUSINESS INCOME. THE BASIS OF THE ASSESSEES CLAIM IS THAT THE SAID LEASE, GIVEN TO ITS SISTER CONCERN, M/S. SHRI MAHABIR DYEING AND PRINTING MILL S PVT. LTD., FOR THE FIRST TIME DURING THE FINANCIAL YEAR (F.Y.) 2003-04, IS ON A SHORT BA SIS, I.E., TILL THE TIME THE ASSESSEE REVIVED ITS BUSINESS, I.E., THE MANUFACTURING SECTOR CAME G OOD, SO THAT THE VIABILITY OF THE MANUFACTURING OPERATIONS CARRIED OUT IS RESTORED. A S SUCH, THE SAME ONLY AMOUNTS TO A TEMPORARY EXPLOITATION BY THE ASSESSEE OF ITS COMM ERCIAL ASSETS AND, ACCORDINGLY, ONLY BUSINESS INCOME. THE REVENUE HAS FOUND THE ASSESSEE S CONTENTIONS AS NOT VALID. THE LEASE, WHICH STOOD INITIALLY GRANTED UP TO 31/03/20 05, STOOD EXTENDED FOR ANOTHER PERIOD OF 33 MONTHS. THE ASSESSEE HAD NOT BEEN ABLE TO PRO DUCE ANY MATERIAL TO SUBSTANTIATE ITS CLAIM OF THE CEASURE OF ITS BUSINESS AS BEING TEMPO RARY, SO THAT IT WAS IN A POSITION TO REVIVE THE SAME. THE ASSESSING AUTHORITY, EVEN AS NOTED BY THE LD. CIT(A), HAS RETURNED A FINDING THAT THE ASSESSEES SISTER CONCERN, THE LEASEE, IS RUNNING ITS MANUFACTURING OPERATIONS FROM THE SAID PREMISES, EARNING HANDSOME PROFITS. THIS I S EVEN OTHERWISE EVIDENT FROM THE FACT THAT IT, FIRSTLY, CONTRACTED FOR THE SAID LEASE, ON A MONTHLY RENT OF RS. 1.80 LACS AND AN INTEREST FREE DEPOSIT OF RS. 50 LACS AND, SECONDLY, SOUGHT EXTENSION THEREOF FROM TIME TO TIME, INCREASING THE RENT TO NO MEAN AMOUNT OF RS.2 ,25,000/- PER MONTH. IMPLICIT THEREIN IS THE CONDITION OF IT RUNNING A SUCCESSFUL BUSINES S THEREFROM, AND WOULD HAVE PRESUMABLY ALSO CARRIED OUT INVESTMENTS QUA THE SAID PREMISES. THE ASSESSEES CLAIM OF THE SAID RENTAL AS BEING A TEMPORARY ARRANGEMENT IS , APART FROM BEING SANS ANY MATERIAL ON RECORD, IN FACT CONTRARY THERETO. DURING THE HEA RING, THE LD. AR CONFIRMED THAT THE LEASE SUBSISTS TO DATE, SO THAT THE ASSESSEE CONTINUES TO EARN RENTAL INCOME EVEN TEN YEARS AFTER LETTING ITS PREMISES FOR THE FIRST TIME AND, RATHER , IN A HIGHER SUM. INFERABLY, THE COMMENCEMENT OF ITS BUSINESS OR MANUFACTURING FROM THE SAID LEASED PREMISES IS 3 ITA NO.6465/MUM/2011 (A.Y. 2008-09) ARVIND YARNS PVT. LTD. VS. ITO NOWHERE IN SIGHT. IN ANY CASE OF THE MATTER, THE LE ASE COULD BY NO STRETCH OF IMAGINATION BE CALLED A TEMPORARY ARRANGEMENT, WHICH COULD BE S O INFERRED ONLY ON THE BASIS OF THE EXPRESS TERMS OF THE AGREEMENT, OR WITH REFERENCE T O A DEFINITE EVENT IN IMMEDIATE OR EVEN NOT SO IMMEDIATE FUTURE, AND NOT ON SOME INDEFINITE OR AMBIGUOUS TERMS, AS BEING STATED. ACCORDINGLY, WE FIND NO MERIT IN THE ASSESSEES CLA IM, EVEN AS THE REVENUES CASE IS IN CONSONANCE WITH THE SETTLED LAW IN THE MATTER . WE DECIDE ACCORDINGLY, DISMISSING THE ASSESSEES RELEVANT GROUNDS. 3. THE ONLY OTHER ISSUE, RAISED BY THE ASSESSEE PER ITS GROUNDS 3 & 4, IS IN RESPECT OF DEPRECATION ALLOWANCE ON ITS SAID FACTORY BUILDING AND THE PLANT AND MACHINERY THEREAT. THE SAME, EVEN AS CONCEDED TO DURING HEARING, IS ON LY CONSEQUENTIAL TO THE LEASE INCOME BEING ASSESSED AS FROM HOUSE PROPERTY, SO THAT THE CLAIM FOR DEPRECATION EITHER ON THE FACTORY BUILDING OR ON PLANT AND MACHINERY AND FURN ITURE AND FIXTURE, ETC. THEREAT U/S. 32(1) OF THE ACT WOULD NOT SURVIVE. THE ASSESSEE, N EEDLESS TO ADD, WOULD, HOWEVER, BE ENTITLED TO DEDUCTION EXIGIBLE U/S. 24(1) OF THE AC T IN RESPECT OF THE ASSESSED ANNUAL VALUE. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 4 05 & '40 / #4 / 0 67 ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 19, 2013 '3 / 2 ( #' 8&5 9& 19 , 2013 / > SD/- SD /- (I. P. BANSAL) (SANJAY ARORA) / JUDICIAL MEMBER '# / ACCOUNTANT MEMBER MUMBAI; 8& DATED : 19.06.2013 .&../ ROSHANI , SR. PS 4 ITA NO.6465/MUM/2011 (A.Y. 2008-09) ARVIND YARNS PVT. LTD. VS. ITO '3 / ,0? @'?(0 '3 / ,0? @'?(0 '3 / ,0? @'?(0 '3 / ,0? @'?(0/ COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT 3. A ( ) / THE CIT(A) 4. A / CIT - CONCERNED 5. ?D> ,0& , , / DR, ITAT, MUMBAI 6. >E' F / GUARD FILE '3& '3& '3& '3& / BY ORDER, G GG G/ // /6 6 6 6 (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI