DCIT,Ccircle-11, Kolkata, Kolkata V. M/s BKJ Abasan & Metals Pvt. Ltd., Kolkata

ITA 648/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99773 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 19-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2012
• Court: TRIBUNAL
• Department Lawyers: NILOY BARON SOM JCITSR
• Keywords: Additional evidence; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HON BLE SRI N.V.VASUDEVAN , J M & HON BLE SRI WASEEM AHMED, AM] ITA NO.64 8 KOL/2012 ASSESSMENT YEAR : 2005 - 06 D.C.I.T., CIRCLE - 11, - VS - M/S BKJ ABASAN & METALS PVT.LTD. KOLKAT A KOLKATA ( A PPELLANT ) (PAN AACCB 0640 A) (RESPONDENT) C.O.NO.56/KOL/2012 ITA NO.648KOL/2012 ASSESSMENT YEAR : 2005 - 06 M/S. BKJ ABASAN & METALS PVT.LTD. , . . - VS - D.C.I.T., CIRCLE - 11, KOLKATA KOLKATA (PAN: AACCB 0640 A) ( CROSS OBJECTOR ) (RESPONDENT) FOR THE DEPARTMENT : SHRI NILOY BARON SOM ,JCIT,SR.DR FOR THE ASSESSEE : NONE DATE OF HEARING : 08 .09.2015 DATE OF PRONOUNCEMENT : 11.09.2015. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN AP PEAL BY THE REVENUE AGAINST THE ORDER DATED 2.1.2012 OF CIT(A) - XII, KOLKATA, RELATING TO AY 2005 - 06. THE ASSESSEE HAS ALSO FILED A CROSS - OBJECTION AGAINST THE VERY SAME ORDER OF THE CIT(A). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF PROFIT OF SALE OF TWO FLATS BY ADMITTING FRESH EVIDENCES IN VIOLATION OF RULE 46A. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION TOWARDS LICENSE FEES BY ADMITTING FRESH EVIDENCES IN VIOLATION OF RULE 46A. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION ON A CCOUNT OF MISCELLANEOUS FEES BY ADMITTING FRESH EVIDENCES IN VIOLATION OF RULE 46A. ITA.NO. 648/KOL/2012 & CO.56/KOL/2012 M/S. BKJ ABASAN & METALS PVT. LTD. A.YR. 2005 - 06 2 FIRST ISSUE : 3. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPER I.E., BUILDER AND DEVELOPER. THE ASSESSEE FILED RETURN OF INCOME FOR AY 2005 - 06 DECLARING LOSS OF RS.21,21,196. THE AO ON SCRUTINY OF THE PROFIT AND LOSS ACCOUNT NOTICED THAT THE SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR WAS SALE PROCEEDS OF TWO FLATS AT RS.56,06,000, LICENCE FEE OF RS.13,16,000 AND MISCELLAN EOUS INCOME OF RS.60,000. 3.1. THE AO FIRSTLY NOTICED THAT THE PROFIT ON SALE OF TWO FLATS WAS DECLARED BY THE ASSESSEE AT RS.1,16,025, WHICH WAS ARRIVED AT BY THE ASSESSEE AS FOLLOWS: SALE VALUE OF TWO FLATS RS.56,06,000 LESS: COST OF CONSTRUCT ION OF 2 FLATS SOLD AS PER VALUATION REPORT RS.47,86,775 RS.8,19,225 LESS: AMOUNT PAYABLE TO THE LAND OWNERS AS PER AGREEMENT FOR 3120 SQ.FT. @ RS.110 RS.3,43,200 FOR 2880 SQ.FT. @ RS.,125 RS.3,60,000 RS.7,03,200 RS.1,16,025 THE AO DID NOT ALLOW THE CLAIM FOR DEDUCTION OF RS.7,03,200 WHICH WAS PAYMENT MADE TO THE LAND OWNER AND HE DETERMINED THE PROFIT FROM SALE OF TWO FLATS AT RS.8,19,225. 4. BEFORE CIT(A) THE ASSESSEE POINTED OUT THAT THE TWO FLATS SOLD BY THE ASSESSEE DURING T HE PREVIOUS YEAR WERE CONSTRUCTED ON A LAND BELONGING TO BINOD KUMAR JHUNJHUNWALA AND 4 OTHERS. AS PER THE JOINT DEVELOPMENT AGREEMENT BETWEEN THE ASSESSEE AND THE LAND OWNERS DATED 24.11.2004, THE ASSESSEE HAD TO PAY RS.110 PER SQ.FT. OF FLAT AREA SOLD W HICH WAS SUBSEQUENTLY ENHANCED BY MUTUAL AGREEMENT BETWEEN THE PARTIES TO RS.125 PER SQ.FT. ACCORDINGLY, WHEN THE TWO FLATS WERE SOLD PROPORTIONATE CONSIDERATION WAS PAID TO THE LAND OWNERS AS PER AGREEMENT. THIS SUM HAD TO BE ALLOWED AS DEDUCTION WHILE COMPUTING THE PROFIT ON SALE OF TWO FLATS. COPY OF THE AGREEMENT IS AT PAGE 6 TO 26 OF THE ASSESSEE S PAPER BOOK FILED BEFORE US. ON A CONSIDERATION OF THE DOCUMENT EVIDENCE BEFORE HIM, THE CIT(A) DELETED THE ADDITION MADE BY THE AO BY HOLDING THAT PROFI T ON SALE OF TWO FLATS HAD TO BE CONSIDERED AT RS.1,16,025. ITA.NO. 648/KOL/2012 & CO.56/KOL/2012 M/S. BKJ ABASAN & METALS PVT. LTD. A.YR. 2005 - 06 3 SECOND ISSUE : 5. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD LET OUT 9600 SQ.FT. PARTLY FINISHED BUILDING ON THE VERY SAME LAND ON WHICH THE TWO FLATS WERE CONSTRUCTED AND SOLD, TO M/S.APOLLO G LENEAGLES HOSPITAL LTD., FOR BEING USED AS TEMPORARY RESIDENCE OF THEIR NURSES. T HE ASSESSEE RECEIVED A LICENSE FEE OF RS.13,16,000 BY SUCH LETTING. A COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND M/S.APOLLO GLENEAGLES DATED 20.1.2004 IS PLACED AT PAGE S 29 TO 34 OF PAPER BOOK. THERE WAS ALSO AN AGREEMENT BEWEEN THE ASSESSEE AND THE LAND OWNERS DATED 18.1.2004, COPY OF WHICH IS PLACED AT PAGE 38 TO 41 OF THE ASSESSEE S PAPER BOOK, WHEREBY THE LAND OWNERS GAVE PERMISSION TO THE DEVELOPER TO LET OUT THE P ARTLY CONSTRUCTED BUILDING TO APOLLO GLENEAGLES H OSP ITAL LTD., SUBJECT TO THE CONDITION THAT 25% OF THE LICENSE FEE RECEIVED FROM THE LICENCEE/TENANT SHOULD BE GIVEN TO THE LANDOWNERS. THE ASSESSEE WHILE DECLARING INCOME FROM LETTING OUT THE PARTLY CONSTR UCTED BUILDING TO THE HOSPITAL DECLARED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE ASSESSEE REDUCED FROM THE LICENSEE FEE OF RS.13,16,000 RECEIVED FROM THE HOSPITAL MUNICIPAL TAXES OF RS.29,032, 30% OF THE RENTAL INCOME AS DEDUCTION U/S.24 OF THE INCOME TAX AC, 1961 (ACT) OF RS.3,89,090 AND FURTHER REDUCED 25% OF THE LICENSE FEE PAID TO THE LAND OWNERS OF RS.2,26,970 AND DECLARED INCOME OF RS.6,80,908. THE AO ASSESSED THE INCOME IN QUESTION UNDER THE HEAD INCOME FROM BUSINESS AND DID NOT AL LOW AS DEDUCTION THE PAYMENT MADE TO THE LAND OWNERS OF RS.2,26,970 AND 30% U/S.24 OF THE ACT. HE DETERMINED INCOME FROM LETTING AT A SUM OF RS.12,96,968. 5.1. ON APPEAL BY THE ASSESSEE, THE CIT(A) FIRSTLY HELD THAT THE INCOME IN QUESTION HAS TO BE TAX ED UNDER THE HEAD INCOME FROM BUSINESS . HE ALSO TOOK NOTE OF THE DOCUMENTARY EVIDENCE AND HELD THAT THE PAYMENT MADE TO THE LAND OWNERS SHOULD BE ALLOWED AS DEDUCTION AND MUNICIPAL TAXES WERE NOT ALLOWABLE DEDUCTION. THIRD ISSUE : 6. THE AO NOTICED TH AT T HE ASSESSEE RECEIVED A SUM OF RS .60,000/ - FROM APOLLO GLENEAGLES HOSP ITAL LTD., AS LABOUR CHARGES AND SHOWN IT AS MISCELLANEOUS RECEIPT IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE CONTENDED BEFORE THE AO THAT THE SAID SUM WAS ACTUALLY REIMBURSEMENT O F EXPENSES INCURRED BY THE ASSESSEE ON ACCOUNT OF ITA.NO. 648/KOL/2012 & CO.56/KOL/2012 M/S. BKJ ABASAN & METALS PVT. LTD. A.YR. 2005 - 06 4 ADDITION AND ALTERATION TO THE PREMISES LET OUT AND THEREFORE THE SAME SHOULD NOT BE TREATED AS INCOME. THE AO ASSESSED THE SAID SUM UNDER THE HEAD INCOME FROM OTHER SOURCES AND HELD THAT THE ASSESSEE DI D NOT FURNISH EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE SUM IN QUESTION WAS REIMBURSEMENT OF EXPENSES AND THEREFORE NOT ITS INCOME. 6.1. ON APPEAL BY THE ASSESSEE THE CIT(A) TOOK NOTE OF EXCHANGE OF CORRESPONDENCE BETWEEN THE ASSESSEE AND THE HOSPITAL, COPIES OF WHICH ARE PLACED AT PAGES 42 TO 44 OF THE ASSESSEE S PAPER BOOK AND HELD THAT THE SUM IN QUESTION WAS REIMBURSEMENT OF EXPENSES AND THEREFORE NOT INCOME OF THE ASSESSEE. THE ADDITION MADE BY THE AO WAS ACCORDINGLY DELETED BY THE CIT(A). 7. AGGR IEVED BY THE ORDERS OF THE CIT(A) ON THE AFORESAID THREE ISSUES, THE REVENUE HAS PREFERRED APPEAL BEFORE THE TRIBUNAL, RAISING GROUNDS SET OUT IN THE EARLIER PART OF THIS ORDER. 8. A PERUSAL OF THE GROUNDS OF APPEAL WOULD REVEAL THAT THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) DELETED THE ADDITION BASED ON ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A) AND THAT THE ADDITIONAL EVIDENCE WAS ADMITTED IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 (RULES). THE LEARNED DR RELIED ON THE GROUNDS RAI SED BEFORE THE TRIBUNAL. IN THIS REGARD THE FIRST ASPECT TO BE NOTICED, AS POINTED OUT BY THE LEARNED AR AND AS CONTENDED IN GROUNDS NO.1 TO 3 OF THE ASSESSEE S CROSS - OBJECTION, IS THAT THESE DOCUMENTS WERE IN FACT PRODUCED BEFORE THE AO. THE AO IN PA RA - 3 AT PAGE - 1 OF THE ASSESSMENT ORDER OBSERVED THAT THE ASSESSEE HAS SUBMITTED VARIOUS DETAILS, LISTS AND XEROX COPIES OF DOCUMENTS AND AFTER EXAMINING THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT ALONG WITH SCHEDULES AND OTHER DETAILS AND DOCUMENTS SUBMITT ED DURING THE COURSE OF HEARING, FOLLOWING POINTS OF DISCUSSIONS WERE REVEALED. IN THIS REGARD, WE FIND THAT THE CIT(A) UNDER RULE 46A(2) HAS INHERENT POWERS TO CONSIDER ANY EVIDENCE FOR THE PURPOSE OF ADJUDICATING ISSUES BEFORE HIM. IT IS NOT THE COMPLA INT OF THE REVENUE IN THE GROUNDS OF APPEAL THAT THE AO DID NOT HAVE OPPORTUNITY OF EXAMINING EVIDENCE BASED ON WHICH THE CIT(A) HAD ALLOWED RELIEFS TO THE ASSESSEE. THE EMPHASIS IS ONLY ON THE ADMISSION OF ADDITIONAL EVIDENCE CONTRARY ITA.NO. 648/KOL/2012 & CO.56/KOL/2012 M/S. BKJ ABASAN & METALS PVT. LTD. A.YR. 2005 - 06 5 TO RULE 46A OF THE RULES. WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THIS APPEAL BY THE REVENUE. THE DOCUMENTARY EVIDENCE ON RECORD CLEARLY JUSTIFIES THE CONCLUSIONS ARRIVED AT BY THE CIT(A). WE THEREFORE DISMISS THE APPEAL BY THE REVENUE. 9. THE GROUNDS RAISED IN THE CROSS OBJECTION (GROUND NO.1 TO 3) IS ONLY SUPPORTIVE T O THE ORDER OF THE CIT(A). AS FAR AS GROUND NO.4 OF THE CROSS - OBJECTION IS CONCERNED, THE SAME RELATES TO SET OFF OF LOSS OF AY 2003 - 04 AND 2004 - 05 AGAINST THE INCOME OF AY 2005 - 05 IN ACCORDANCE WIT H LAW. WE ARE OF THE VIEW THAT IT WOULD BE JUST AND APPROPRIATE TO DIRECT THE AO TO CONSIDER AND ALLOW THE CLAIM OF THE ASSESSEE, IF IT IS FOUND TO BE IN ACCORDANCE WITH LAW. 10. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISMISSED, WHILE THE C.O. BY T HE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCE D IN THE COURT ON 1 1.09.2015. SD/ - SD/ - [WASEEM AHMED] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 11.09.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . M/S. BKJ ABASAN & METALS PVT. LTD., 862, JESSORE ROAD, KOLKATA - 700055. 2 D.C.I.T., CIRCLE - 11, KOLKATA. 3 . CIT(A ) - XIX , KOLKATA 4. CIT IV, KOLKATA. 5 . CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES