IOTO 2(1)(1), MUMBAI V. BAKUL INVESTMENT P.LTD, MUMBAI

ITA 672/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8681 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 30-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUKESH KOTHARI
• Assessee Lawyers: T A KHAN
• Keywords: Business income; Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 27

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. 650 / MUM/201 5 ( / ASSESSMENT YEAR: 20 11 - 12 ) M/S BAKUL INVEST MENT P VT.LTD., 63, SONAWALA BUILDING, BOMBAY SAMACHAR MARG, FORT, MUMBAI - 400001 / VS. I NCOME TAX OFFICER, WARD 2( 1 )(1), ROOM NO.5 61 , 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APP LICANT ) : ( / RESPONDENT ) ./ I.T.A. 672/MUM/2015 ( / ASSESSMENT YEAR: 20 11 - 12 ) I NCOME TAX OFFICER, WARD 2(1)(1), M K ROAD, MUMBAI - 400020 / VS. M/S BAKUL INVESTMENT PVT.LTD., 63, SONAWALA BUILDING, BOMBAY SAMACHAR MARG, FORT, MUMBAI - 400001 ./ ./ PAN : AAACB2438C ( / APP LICANT ) : ( / RESPONDENT ) / APP LICANT BY : SHRI KIRIT KAMDAR AND SHRI SUKESH KOTHARI /RESPONDENT BY : SHRI T A KHAN / DATE OF HEARIN G : 24.1.2017 / DATE OF PRONOUNCEMENT : 27. 1.2017 2 ITA NO. 650/MUM/2015 AND 672/MUM/20 15 / O R D E R PER RAJESH KUMAR, A. M: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 18.11.2014 PASSED BY THE LD.CIT(A) - 4 , MUMBAI. THESE APPEALS, FOR THE SAKE OF CONVE NIENCE, ARE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF IN THIS CONSOLIDATED ORDER. 2. IN THE FIRST GROUND OF APPEAL, THE ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO CONFIRMING THE RECLASSIFICATION OF LEAVE AND LICENSE FEES EARNED BY TH E ASSESSEE AS INCOME CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY INSTEAD OF PROFIT AND GAINS OF BUSINESS OR PROFESSIONS AS REPORTED BY THE ASSESSEE IN ITS RETURN OF INCOME AND THE ISSUE RAISED IN GROUND OF APPEAL NO.2 IS REGARDING DISALLOWANC E OF ADMINISTRATIVE EXPENSES OF RS.5,045,342/ - AND DEPRECIATION EXPENSES OF RS.147,494/ - INCURRED IN RELATION TO THE BUSINESS OF THE ASSESSEE . WHEREAS T HE ISSUE RAISED BY THE REVENUE IN ITS APPEAL IS AGAINST THE LD.CIT(A)S DIRECTION TO THE AO TO CONSIDE R THE ACTUAL RENT RECEIVED FOR THE PURPOSE OF CALCULATION OF ANNUAL LETTING VALUE OF THE PROPERTIES . 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT THE ISSUE INVOLVED IN THESE APPEALS IS COVERED IN ASSESSEES OWN CASE BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN I.T.A.NO.4512/M/2011 (ASSESSMENT YEAR:2001 - 2002 ) AND OTHERS ORDER DATED 02.12.2015 , WHEREIN THE ISSUE HAS BEEN DECIDED BY REMITTING THE 3 ITA NO. 650/MUM/2015 AND 672/MUM/20 15 ISSUE BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD VS. CIT [2015] 373 ITR 673 (SC), DATED 9TH APRIL, 2015 . THE LD. DR ALSO FAIRLY APPEAR ED TO BE AGREED WITH THE SUBMISSIONS OF THE LD.AR. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED BEFORE US DURING THE COURSE OF HEARING INCLUDING THE DECISION S OF AUTHORITIES BELOW AS ALSO THE DECISIONS RELIED UPON BY THE LD. AR. WE FIND THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS D ECIDED THE IDENTICAL ISSUE IN ASSESSEES OWN CASE IN I.T.A. NO.4512/M/2011 (SUPRA) IN WHICH THE MATTER HAS BEEN REMITTED BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD (SUPRA) . FOR THE SAKE OF BREVITY, WE REPRODUCE THE RELEVANT PART OF THE DECISION AS UNDER: 5. DURING THE PROCEEDINGS BEFORE US, RELYING ON THE RECENTLY PRONOUNCED JUDGMENT OF THE HO NBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD VS. CIT [2015] 373 ITR 673 (SC), DATED 9TH APRIL, 2015, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THE COMPANY IS INCORPORATED FOR THE PURPOSE OF EARNING BUSINESS INCOME OUT OF THE PROPERTIES, THE SAME WOULD BE TAXABLE UNDER THE HEAD PROFITS AND GAINS FROM THE BUSINESS OR PROFESSION AND NOT UNDER THE HEAD INCOME FROM THE HOUSE PROPERTY. HE FURTHER SUBMITTED THAT THE HONBLE SUPREME COURT REVERSED THE JUDGMENT OF THE HONBLE HIGH COURT IN THE SAID CASE. FURTHER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID JUDGMENT BEING PRONOUNCED RECENTLY WAS NOT AVAILABLE TO THE AUTHORITIES BELOW AT THE RELEVANT POINT OF TIME. IN THESE CIRCUMSTANCES, LD COUNSEL FOR THE ASSESSEE PLE ADED FOR REMANDING THE FIRST ISSUE IE THE PROPER HEAD OF INCOME FOR TAXING THE INCOME EARNED FROM LEAVE AND LICENSE FEES, WHICH IS RAISED IN ALL THE AYS UNDER CONSIDERATION, TO THE FILE OF THE AO FOR APPLYING THE SAID JUDGMENT OF THE HONBLE SUPREME COURT 4 ITA NO. 650/MUM/2015 AND 672/MUM/20 15 (SUPRA) TO THE FACTS OF THE PRESENT CASE. FURTHER, EXPLAINING THE SAME REASONING, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE THIRD ISSUE, WHICH RELATES TO THE PROPER HEAD OF INCOME FOR TAXING THE INCOME EARNED FROM PURE LEASING TO PTI CREDIT RISK CONS ULTANCY PRIVATE LIMITED, RAISED IN THE ASSESSEES APPEALS FOR THE AYS 2005 - 06 TO 2008 - 2009 SHOULD ALSO BE REMANDED TO THE FILE OF THE AO FOR COORDINATED ADJUDICATION OF THE ISSUE IN THE LIGHT OF THE RATIO LAID DOWN BY THE APEX COURT IN THE ABOVE MENTIONED JUDGMENT IN THE CASE OF PROPERTIES AND INVESTMENTS LTD (SUPRA). THE ONLY DIFFERENCE, ON FACTS, BETWEEN THE FIRST AND THE THIRD ISSUE RELATES TO EARNING OF RENTAL / LEASE INCOME OUT OF LEASED FURNITURE / HOME APPLIANCES ETC., TO PTI CREDIT RISK CONSULTANCY SERVICES PVT LTD. ASSESSEE PROVIDED THE ABOVE FURNITURE AT FLAT C OF MADHU KUNJ, WHICH BELONGS TO A LESSEE, WHO IS ALSO NOT A OWNER. 6. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED PRECED ENTS AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND THE ARGUMENTS PUT FORTH BY BOTH THE LD REPRESENTATIVES ON BOTH THE ABOVE MENTIONED ISSUES (FIRST AND THIRD ISSUES) IN THE ASSESSEES APPEALS FOR THE AYS UNDER CONSIDER ATION, WE ARE OF THE OPINION THAT THE FIRST AND THE THIRD ISSUES RELATING TO THE CORRECT HEAD OF INCOME SHOULD BE REMANDED TO THE FILE OF THE AO TO DECIDE THEM AFRESH IN THE LIGHT OF THE ABOVE MENTIONED JUDGMENT OF THE APEX COURT (SUPRA). WE ORDER ACCORDIN GLY. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, RELEVANT GROUNDS RAISED IN THE ASSESSEES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. RESPECTFULLY FOLLOWING THE ORD ER OF THE COORDINATE BENCH OF THE TRIBUNAL ON THIS ISSUE, WE ARE INCLINED TO REM IT BACK THIS ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE ABOVE DECISION OF HONBLE APEX COU RT (SUPRA) AFTER ALLOWING FAIR AND R EASONABLE OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE AS PER PRINCIPLE OF NATURAL JUSTICE. 5 ITA NO. 650/MUM/2015 AND 672/MUM/20 15 5. GROUND NO.2 OF ASSESSEES APPEAL IS CONSEQUENTIAL IN NATURE, THEREFORE, DISMISSED. 6 . THE ONLY GROUND RAISED BY THE REVENUE IN ITS APPEAL PERTAINS TO THE CALC ULATION OF ANNUAL LETTING VALUE OF THE PROPERTY AND SINCE THE SIMILAR ISSUE HAS BEEN DECIDED BY US BY REST ORING THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION , THEREFORE, THIS ISSUE BECOMES INFRUCTUOUS AND A CCORDINGLY, DISMISSED AS INFRUCT UOUS. 7. I N THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THAT OF REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 .1.2017 . S D SD ( MAHAVIR SINGH ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 27. 1. 201 7 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI