JOLLY HIGHRISE CO-OP HSG. SOC.LTD, MUMBAI V. ITO WD 19(3(2), MUMBAI

ITA 6521/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0946 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2001-2002
• Appeal Filed On: 21-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: S V NAVALKAR
• Section: 271(1)(c)

Judgement Text

1 ITA NO.6521/MUM/2009 JOLLY HIGHRISE CO-OP HSG SOC LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI R S PADVEKAR, JM & SHRI RAJENDRA SINGH, AM ITA NO.6521/MUM/2009 (ASST YEAR 2001-02) JOLLY HIGHRISE CO-OP HSG SOC LTD 241A PALIMALA ROAD BANDRA (W) MUMBAI 50 VS THE INCOME TA OFFICER WARD 19(3)(2) MUMBAI (APPELLANT) (RESPONDENT) PAN AABFJ6559S ASSESSEE BY: SHRI S V NAVALKAR REVENUE BY: SHRI SUMEET KUMAR O R D E R PER R S PADVEKAR: IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IM PUGNED ORDER OF THE CIT(A)-30, MUMBAI FOR THE ASSESSMENT YEAR 2001-02 DATED 9.11.2009 IN WHICH THE PENALTY LEVIED BY THE A.O U/S 271(1)(C) O F THE ACT HAS BEEN CONFIRMED. 2 THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS; BUT THE ONLY ISSUE ARISING FOR OUR CONSIDERATION IS WHETHER THE A.O WAS JUSTIF IED IN LEVYING THE PENALTY U/S 271(1) (C) OF THE ACT OF RS. 3,52,413/-. 3 THE ASSESSEE IS A CO-OPERATIVE HOUSING SOCIETY. T HE RETURN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY IN WHICH THE ASSESSEE HAS DECLARED LOSS OF RS.25,024/-. THE ASSESSEE HAS DECLARED RS. 13,70,576/- WHICH WAS 2 ITA NO.6521/MUM/2009 JOLLY HIGHRISE CO-OP HSG SOC LTD IN RESPECT OF COMPENSATION RECEIVED FROM THE FOLLOW ING COMPANIES FOR ALLOWING THEM TO USE CERTAIN PORTION OF THE TERRACE OF THE SOCIETY BUILDING: SL.NO. NAME OF THE PARTIES AMOUNT 1 PAGE POINT SERVICES (I) LTD RS. 1,95,680/- 2 PAGE POINT SERVICES RS.2,54,900/- 3 GATE WAY SYSTEM (I) LTD RS.4,60,000/- 4 BPL MOBILE COMMUNICATION LTD R. 4,59,996/- 3.1 THE ASSESSEE HAS SHOWN THE ABOVE INCOMES AS MA INTENANCE RECEIPTS FROM THE SAID COMPANIES. AS NOTED BY THE A.O, ALL THE ABOVE PARTIES WERE LICENSEE OF THE ASSESSEE COMPANY AND HAD AGREED TO PAY ELECTRICITY CHARGES, ALL EXISTING AND FUTURE MUNICIPAL TAX ETC. 3.2 THE A.O REJECTED THE CLAIM OF THE ASSESSEE THAT THE INCOME RECEIVED FROM THE ABOVE COMPANIES IS TO BE ASSESSED AS INCOM E FROM HOUSE PROPERTY ON THE REASON THAT THE ASSESSEE HAS NOT LET OUT ANY HOUSE PROPERTY BUT THE PORTION OF THE TERRACE OF THE PROPERTY WAS GIVEN ON LEASE TO THE ABOVE COMPANIES FOR INSTALLATION OF MOBILE TOWERS. THE A.O, THEREFORE, ASSESSED THE ENTIRE RECEIPTS FROM THE ABOVE COMPANIES UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE CHALLENGED THE ASSESS MENT ORDER BEFORE THE LD CIT(A). THE LD CIT(A) HELD THAT TERRACE IS VERY M UCH PART OF THE BUILDING AND HENCE, THE RENT RECEIVED FROM LETTING OUT THE TERRA CE IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE LD CIT(A ) DIRECTED THE A.O TO TREAT THE RENTAL INCOME RECEIVED OF RS.8,54,900/- A S INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND COMPUTE THE INCOME ACCORDINGLY AND FOR THE REMAINING MAINTENANCE AND SERVICE CHARGES OF RS . 5,15,676/-, THE LD CIT(A) DIRECTED THE A.O TO ALLOW THE EXPENDITURE TO THE EXTENT OF RS. 25,000/- BY GIVING THE REASONS THAT OTHER EXPEN SES CLAIMED AS ATTRIBUTABLE TO THE BUILDING WOULD BE COVERED IN TH E DEDUCTION U/S 24 WHILE ASSESSING THE RENTAL INCOME. 3 ITA NO.6521/MUM/2009 JOLLY HIGHRISE CO-OP HSG SOC LTD 3.3 AFTER GIVING THE EFFECT TO THE CIT(A) S ORDER, THE TOTAL INCOME WAS REVISED AT RS.13,70,576/-. WHEN THE ISSUE OF QUANT UM WAS CHALLENGED BEFORE THE TRIBUNAL, THE ASSESSEE GOT FURTHER RELIE F AND THEREAFTER, THE INCOME WAS RE-DETERMINED AT RS. 8,99,013/-. THE A.O LEVIED THE PENALTY OF RS. 3,52,413/- U/S 271(1)(C) OF THE ACT FOR CONCEAL ING THE PARTICULARS OF INCOME. THE ASSESSEE CHALLENGED THE PENALTY ORDER B EFORE THE LD CIT(A) BUT WITHOUT SUCCESS. NOW, THE ASSESSEE IS IN APPEAL HER E BEFORE US. 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERU SED THE RELEVANT RECORDS BEFORE US. THERE IS NO DISPUTE ABOUT THE FA CT THAT THE ENTIRE RENT/LICENSE FEE RECEIVED BY THE ASSESSEE SOCIETY F ROM THE ABOVE FOUR COMPANIES WAS DECLARED AND RECORDED IN THE BOOKS OF ACCOUNT. THERE IS ALSO NO DISPUTE ON FACT THAT BOGUS EXPENDITURE WAS CLAI MED GENUINE. THE ASSESSEE DECLARED THE RETURN OF LOSS BUT FINALLY AF TER THE DECISION OF THE TRIBUNAL, THE INCOME WAS DETERMINED AT RS. 8,99,013 /-. 4.1 IT APPEARS THAT THE RENT RECEIVED FROM THE ABOV E FOUR COMPANIES WERE TREATED THE INCOME AS INCOME FROM HOUSE PROPERTY AN D AGAIN VARIOUS EXPENSES WERE CLAIMED AND THE NET LOSS OF RS. 25,02 4/- WAS DECLARED. THE A.O ASSESSED THE ENTIRE INCOME RECEIVED FROM THE FO UR COMPANIES, FOR THE USE OF TERRACE OF THE BUILDING, UNDER THE HEAD INC OME FROM HOUSE PROPERTY. THE ASSESSEES CLAIM OF LOSS OF RS. 25,024/- WAS DI SALLOWED ON THE GROUND THAT IF THE CONTRIBUTIONS FROM THE MEMBERS ARE EXCE ED THE EXPENSES THEN IT DOES NOT ATTRACT THE PROVISIONS OF INCOME TAX ACT. IT APPEARS THAT THOUGH THE ASSESSEE HAS DECLARED THE RENTAL INCOME RECEIVE D FROM THE ABOVE FOUR COMPANIES AS INCOME FROM HOUSE PROPERTY; BUT THE SA ME WAS CLAIMED AS EXEMPT ON THE PRINCIPLES OF MUTUALITY. 4 ITA NO.6521/MUM/2009 JOLLY HIGHRISE CO-OP HSG SOC LTD 5 THE LD COUNSEL FOR THE ASSESSEE ARGUES THAT EACH AND EVERY PARTICULARS WERE FURNISHED BY THE ASSESSEE. MERELY BECAUSE THE CLAIM OF THE ASSESSEE IS REJECTED THAT CANNOT BE THE GROUND FOR LEVY OF PENALTY. THE LD COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD - 322 ITR 158(S.C) 4.2 PER CONTRA, THE LD DR VEHEMENTLY ARGUED THAT TH E ASSESSEE FILED WRONG PARTICULARS CLAIMING RENTAL INCOME RECEIVED FROM TH E ABOVE FOUR COMPANIES AS EXEMPT UNDER THE CONCEPT OF MUTUALITY. HE, THE REFORE, PLEADED THAT IT IS A FIT CASE WHERE THE PENALTY IS REQUIRED TO BE LEVI ED. 5 IN OUR OPINION, NOTHING HAS BEEN WITHHELD BY THE ASSESSEE IN RESPECT OF THE PARTICULARS. AT THE FIRST INSTANT, THE ASSE SSEE TRIED TO MAKE OUT A CLAIM THAT THE ENTIRE RENTAL INCOME IS EXEMPT ON TH E CONCEPT OF MUTUALITY. THEREAFTER, HE MADE OUT A CLAIM THAT THE ENTIRE INC OME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. BUT BOTH THE CLAIMS OF THE ASSESSEE HAVE BEEN NEGATED. THE A.O BROUGHT TO TAX THE ENTIRE RENTAL INCOME/LICENSE FEE UNDER THE HEAD INCOME FROM OTHER SOURCES. AS PER THE F ACTS BEFORE US ONLY CONTROVERSY WAS IN RESPECT OF THE HEAD OF INCOME UN DER WHICH THE INCOME IS TO BE ASSESSED. WE DO NOT FIND THAT ANY CONSCIOUS A CT ON THE PART OF THE ASSESSEE FOR CONCEALING THE PARTICULARS OF INCOME. IN OUR OPINION, THERE IS NO JUSTIFICATION TO SUPPORT THE PENALTY ORDER PASSE D BY THE A.O U/S 271(1)(C) OF THE ACT LEVYING PENALTY UPON THE ASSESSEE. ACCO RDINGLY, THE PENALTY ORDER IS CANCELLED AND THE PENALTY IS DELETED. 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. 5 ITA NO.6521/MUM/2009 JOLLY HIGHRISE CO-OP HSG SOC LTD ORDER PRONOUNCED ON THE 30 TH , DAY OF JULY 2010. SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER (R S PADVEKAR ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH ,JULY 2010 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI