DCIT, Ernakulam V. PTL Enterprises Ltd, Cochin

ITA 659/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61347 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2010
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: RADHESH BHAT
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 659/COCH/2010 ASSESSMENT YEAR : 2007-08 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), ERNAKULAM M/S. PTL ENTERPRISES LTD., 6 TH FLOOR, CHERUPUSHPAM BLDG., KOCHI-31.[PAN:AABCP 3839N] (REVENUE-APPELLANT) (ASSESSEE- RESPONDENT) REVENUE BY SMT. VIJAYAPRABHA, JR. DR ASSESSEE BY SHRI RADHESH BHAT, CA DATE OF HEARING 02/04/2012 DATE OF PRONOUNCEMENT 3/04/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 06-09-2010 PASSED BY THE LD. CIT(A)-II, KOCHI AND IT RELATES T O THE ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE URGED FOR OUR CONSIDERATION IS WH ETHER THE LD. CIT(A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS HAVING INTENTION TO RE VIVE THE BUSINESS ACTIVITIES AND CONSEQUENTLY, THE INCOME FROM LEASE RENT IS ASSESSA BLE UNDER THE HEAD INCOME FROM BUSINESS. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION D ECLARING A TOTAL INCOME OF RS.12,43,74,513/-. THE ASSESSEE-COMPANY HAD LEASED OUT ITS PLANT AND MACHINERY TO M/S APOLLO TYRES LTD IN APRIL 1995 AND THE SAID LEASE A GREEMENT IS RENEWED FROM TIME TO ITA NO. 659/COCH/ 2010 2 TIME. THE ASSESSEE CLAIMED THE INCOME FROM LEASE R ENT AS ITS BUSINESS INCOME. HOWEVER, THE ASSESSING OFFICER ASSESSED THE SAME UNDER THE H EAD INCOME FROM OTHER SOURCES. 4. IN APPEAL FILED BY THE ASSESSEE, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF ITAT IN ASSESSEE'S OWN CASE IN EARLIER YEARS. AGGRIEVED, THE REVENUE IS IN APPEAL. 5. THE LD. DR SUBMITTED THAT THE TRIBUNAL ALLOWED T HE CLAIM OF THE ASSESSEE IN THE EARLIER YEARS ON THE GROUND THAT THE ASSESSEE HAD I NTENTION TO CONTINUE THE BUSINESS OF MANUFACTURING THE TYRES, WHERE AS THE ASSESSEE HAD NOT COMMENCED THE BUSINESS TILL DATE SINCE 1995. HENCE THE ASSESSING OFFICER WAS RIGHT I N TREATING THE INCOME FROM LEASE RENT UNDER THE HEAD INCOME FROM OTHER SOURCES. ON THE CONTRARY, THE LD. AR SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE DECISI ON OF THE HONBLE ITAT IN ASSESSEE'S OWN CASE WHICH WAS REFERRED TO BY THE LD. CIT(A). HE FURTHER SUBMITTED THAT THE VERY SAME VIEW WAS FOLLOWED BY THIS BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2003-04 IN I.T.A. NO. 315/COCH/2006. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL ON RECORD. THERE CANNOT BE ANY DISPUTE THAT THE QUESTION WHETH ER THE ASSESSEE IS HAVING AN INTENTION TO REVIVE ITS BUSINESS ACTIVITY IS A QUESTION OF FA CT AND THE SAME IS REQUIRED TO BE CONSIDERED EVERY YEAR ON THE BASIS OF THE FACTS AND CIRCUMSTANCES PREVAILING IN THAT YEAR. ACCORDINGLY, WE ARE OF THE VIEW THAT THE DECISION R ENDERED BY THE TRIBUNAL IN THE EARLIER YEARS CANNOT HAVE BINDING EFFECT IN SUBSEQUENT YEAR S. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS LEASED OUT ITS PLANT AND MACHINERY IN THE YEAR 1995. HENCE, WHILE CONSIDERING THE CLAIM OF THE ASSESSEE FOR THE YEARS ENDING 31.3.1996 AND 31.3.97, THE TRIBUNAL HELD THAT THERE IS NOTHING ON RECORD TO SH OW THAT THE ASSESSEE HAD NO PRESENT INTENTION TO REVIVE ITS BUSINESS AT APPROPRIATE TIM E, AS THE GAP BETWEEN THE YEAR OF CLOSURE AND THE YEARS UNDER CONSIDERATION AT THAT POINT OF TIME WAS VERY NARROW. HOWEVER, WE ARE CONCERNED WITH THE ASSESSMENT YEAR 2007-08 AND WE HAVE TO CONSIDER THE FACTS AND CIRCUMSTANCES PREVAILING AS ON 31-03-2007. BY THAT DATE, ABOUT 12 YEARS HAVE PASSED AND ITA NO. 659/COCH/ 2010 3 HENCE WE ARE IN AGREEMENT WITH LD D.R THAT THE ASSE SSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT IT HAS INTENTION TO REVIVE IT S BUSINESS ACTIVITIES. THOUGH THE LD. AR SUBMITTED THAT STEPS ARE BEING TAKEN TO REVIVE THE BUSINESS, YET WE ARE UNABLE TO ACCEPT HIS CONTENTION FOR WANT OF SUPPORTING MATERIALS. ACCOR DINGLY, IN OUR VIEW, THE LD. CIT(A) WAS NOT CORRECT IN PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL WITHOUT APPRECIATING THE FACTS PREVAILING IN THE YEAR UNDER CONSIDERATIO N. ACCORDINGLY, WE REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORE THE VIEW OF THE ASSESSIN G OFFICER. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED PRONOUNCED ACCORDINGLY ON 3-04-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 3RD APRIL, 2012 GJ COPY TO: 1.M/S. PTL ENTGERPRISES LTD., 6 TH FLOOR, CHERUPUSHPAM BLDG., KOCHI-31. 2.THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4(1 ), ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI 4. THE COMMISSIONER OF INCOME-TAX, KOCHI. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN ITA NO. 659/COCH/ 2010 4