RNA CORPORATE PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(4), MUMBAI

ITA 6903/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6624 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 06-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Set aside
• Section: 142(1); 143(1); 201; 143(2); 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO S . 6903 /M/ 20 1 7 & 6904 /M/201 7 ( ASSESSMENT YEAR S : 2013 - 14 & 201 4 - 1 5 ) RNA CORP PVT. LTD. 3 RD FLOOR, RNA CORPORATE PARK NEXT TO COLLECTORS OFFICE KALANAGAR, BANDRA EAST, MUMBAI - 400051 . VS. DY. CIT CENTRAL CIRCLE - 3(3), AIR INDIA BLDG 19 TH FLOOR R. NO.1923, NARIMAN POINT MUMBAI - 4000 21 ./ ./ PAN/GIR NO. : AAECR 7699 K ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 29 .0 1 .201 9 DATE OF PRONOUNCEMENT : 27. 0 2 . 2019 O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEA LS AGAINST THE DIFFERENT ORDER PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 51 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR S 2013 - 14 & 2014 - 15 . ITA NO.6903 / M/201 7 : - 2. THE ASSESSEE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 05 . 09 .201 7 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 51 , ASSESSEE BY: SHRI J.P. BAIRAGRA DEPARTMENT BY: SHRI DURGA DUTT (SR AR) ITA NOS. 6903 /MUM/201 7 6904/MUM/2017 A.Y. 2013 - 14 & 2014 - 15 2 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVAN T TO THE ASSESSMENT YEAR 2013 - 14 . 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF COMPUTING DEEMED INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF UNSOLD FLATS IN T HE PROJECT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT DEEMED INCOME FROM HOUSE PROPERTY IS LO BE COMPUTED U/S 22 EVEN WHEN THESE ARE UNSOLD FLATS LYING AS STOCK - IN - TRADE OF COMPLETED PROJECTS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE GROSS ANNUAL VALUE OF RS.12,44,400/ - IN RESPECT OF UN SOLD FLATS OF TOTAL AREA OF 5365 SQ. FEET IN THE PROJECT RNA LIBERTY AT MIRA ROAD, MUMBAI AT THE RATE OF RS.20 PER SQ FEET PER MONTH. 4. THE APPELLANT CRAVES TO ADD TO, ALTER OR AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER, AT THE TIME OF HEARING. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2013 - 14 DECLARING LOSS TO THE TUNE OF RS.15,19,392/ - ON 30 .09 .20 13. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 ACCEPTING THE RETURNED INCOME. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSU ED AND SERVED UPON THE ASSESSEE. THE ASSESSEE ENGAGED IN THE BUSINESS OF BUILDERS & DEVELOPERS AND FOLLOWS PROJECT COMPLETION METHOD OF ACCOUNTING . ON VERIFICATION, IT WAS FOUND THAT THE ASSESSEE ITA NOS. 6903 /MUM/201 7 6904/MUM/2017 A.Y. 2013 - 14 & 2014 - 15 3 WAS HAVING UNSOLD STOCK AND TOTAL AREA COMES TO 5365 SQ. FT. AO ASSESSED THE NOTIONAL INCOME @ RS.20 PER SQUARE FEET PER MONTH WHICH COMES TO RS.103,700/ - PER MONTH AND ANNUAL RENT DETERMINED TO THE TUNE OF RS.12,44,400/ - (RS.103,700 X 12). AFTER THE ALLOWING STATUTORY DEDUCTION @ 30% WHICH COMES TO RS.373,320/ - , T HE NET TAXABLE INCOME WAS ASSESSED TO THE TUNE OF RS.871,080/ - . THE LOSS OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.6,48,312/ - AND THE BOOK PROFIT WAS ASSESSED TO THE TUNE OF RS.70,468/ - , THEREFORE, THE BOOK PROFIT WAS BROUGHT TO TAX . FEELING AGGRIEVED , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE , THEREFORE , THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO S . 1 TO 3 : - 5. ALL THE ISSUES ARE IN CONNECTION WITH THE CONFIRMATION OF NOTIONAL INCOME ASSESSED @ RS. 20 PER SQ. FT. UPON AREA OF 5 365 SQ. FT. IN THE PROJECT RNA LIBERTY AT MIRA ROAD, THANE. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ISSUE OF THE ASSESSEE HAS SQUARELY BEEN COVERED BY THE DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y.2012 - 13 IN ITA. NO.4419/M/2017 DATED 05.11.2018, THEREFORE, THE CLAIM OF THE ASSESSEE IS LIABLE TO BE ALLOWED ACCORDINGLY. BEFORE GOING F URTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE HONBLE ITAT ON THIS ISSUE WHICH IS HEREBY REPRODUCED AS UNDER.: - ITA NOS. 6903 /MUM/201 7 6904/MUM/2017 A.Y. 2013 - 14 & 2014 - 15 4 THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF THE AO IN COMPUTING THE DEEMED INCOME UNDER THE HEAD OF INCOME OF HOUSE PROPERTY IN RESPECT OF UNSOLD FLATS IN THE PROJECT BY TAKING ALV. FOR THIS ASSESSEE HAS RAISED THE FOLLOWING FOUR GROUNDS: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF TH E ASSESSING OFFICER COMPUTING DEEMED INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF UNSOLD FIATS IN THE PROJECT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT DEEMED INCOME FROM HOUSE PROPERTY IS TO BE COMPUTED U/S 22 EVEN WHEN THESE ARE UNSOLD FLATS LYING AS STOCK - IN - TRADE OF COMPLETED PROJECTS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE GROSS ANNUAL VALUE OF RS. 12,44,400/ - IN RESPECT OF UNSOLD FLATS OF TOTAL AREA 5185 SQ. FEET IN THE PROJECT RNA LIBERTY AT MIRA ROAD, MUMBAI AT THE RATE OF RS. 20 PER SQ. FEET PER MONTH. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ALLOWING DEDUCTION U/S 24 OF THE INCOME TAX ACT, 1961 OF 30% OF THE GROSS ANNUAL VALUE COMPUTED. 3. BRIEFLY STATED FACTS ARE THAT THE AO HAS TAKEN THE DEEMED INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF UNSOLD FLATS IN THE PROJECT RNA LIBERTY AT MIRA ROAD, THANE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT ASSES SEE HAS INVENTORY OF UNSOLD FLATS IN RNA LIBERTY AT MIRA ROAD, THANE AND ASSESSEE HAS NOT DECLARED ANY INCOME AS PER THE PROVISIONS OF SECTION 22 AND 23 OF THE ACT. THE AO AS WELL AS CIT(A) RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL HOUSING FINANCE & LEASING CO. LTD. (2013) 354 ITR 180 (DEL) MADE ADDITION OF DEEMED INCOME UNDER HEAD OF INCOME FROM HOUSE PROPERTY IN RESPECT OF UNSOLD FLATS IN THE PROJECT. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE TRIBUNAL. 4. WE HAVE HE ARD THE LEARNED SR. DEPARTMENTAL REPRESENTATIVE AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT SEEMS THAT THIS ISSUE IS COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NEHA BUILDERS PVT. LTD. (2008) 296 ITR 661 (G UJ), WHEREIN IT IS HELD THAT IF THE PROPERTY IS USED AS STOCK - IN - TRADE THE SAID PROPERTY WOULD BECOME OR PARTAKE THE ITA NOS. 6903 /MUM/201 7 6904/MUM/2017 A.Y. 2013 - 14 & 2014 - 15 5 CHARACTER OF STOCK AND ANY INCOME DERIVED FROM STOCK WOULD BE INCOME FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY. FURTHER, HONBLE DEL HI HIGH COURT IN THE CASE OF ANSAL HOUSING FINANCE & LEASING CO. LTD. (SUPRA) HAS TAKEN A VIEW THAT THE INCOME FROM UNSOLD STOCK IN THE CASE OF BUILDER, THE INCOME WILL BE DEEMED AS INCOME FROM HOUSE PROPERTY BY TAKING ALV. SINCE, THERE ARE CONTRARY VIEW O F TWO HIGH COURT I.E. HONBLE DELHI HIGH COURT AND HONBLE GUJARAT HIGH COURT, RESPECTFULLY FOLLOWING HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192 (SC), THE DECISION FAVOURABLE TO THE ASSESSEE HAS TO BE FOLLOWED AS THERE IS NO JURISDICTIONAL HIGH COURT JUDGMENT ON THIS ISSUE BROUGHT BEFORE US BY THE 4 ITA NOS. 4419/MUM/2017 REVENUE. RESPECTFULLY FOLLOWING HONBLE GUJARAT HIGH COURT, WE DELETE THE ADDITION AND ALLOW THE APPEAL OF THE ASSESSEE. 6 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE FIND THAT THE MATTER OF CONTROVERSY HAS ALREADY BEEN ADJUDICATED BEFORE THE HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 2012 - 13 IN ITA. NO.4419/M/2017 DATED 05.11.2018 , THEREFORE, BY HONORING THE ORDER OF THE ITAT IN TH E ASSESSEES OWN CASE (SUPRA), W E SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUES AND ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, T HESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. I TA NO . 6904 /M/201 7 : - 7 . THE ASSESSEE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 05 . 09 .201 7 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 51 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2014 - 15 . ITA NOS. 6903 /MUM/201 7 6904/MUM/2017 A.Y. 2013 - 14 & 2014 - 15 6 8 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF COMPUTING DEEMED INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF UNSOLD FLATS IN THE PROJECT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT DEEMED INCOME FROM HOUSE PROPERTY IS LO BE COMPUTED U/S 22 EVEN WHEN THESE ARE UNSOLD FLATS LYING AS STOCK - IN -- TRADE OF COMPLETED PROJECTS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE GROSS ANNUAL VALUE OF RS.12,44,400/ - IN RESPECT OF UNSOLD FLATS OF TOTAL AREA OF 5185 SQ. FEET IN THE PROJECT RNA LIBERTY AT MIRA ROAD, MUMBAI AT THE RATE OF RS.20 PER SQ FEET PER MONTH. 4. THE APPELLANT CRAVES TO ADD TO, ALTER OR AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER, AT THE TIME OF HEARING. 9 . THE F ACTS OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTS OF THE CASE AS NARRATED ABOVE IN ITA. NO.6903 /M/201 7 , H OWEVER, THE FIGURE IS DIFFERENT , T HERE FORE, THERE IS NO NEED TO REPEAT THE SAME . THE MATTER OF CONTROVERSY IN THIS APPEAL IS ALSO THE SAME . THE DECISION OF ITA. NO.6903 /M/201 7 IS APPLICABLE TO THE FACTS OF THE PRESENT CASE AS MUTATIS MUTANDIS . ACCORDINGLY, T HE PRESENT APPEAL IS ALSO BEING HEREBY ALLOWED. ITA NOS. 6903 /MUM/201 7 6904/MUM/2017 A.Y. 2013 - 14 & 2014 - 15 7 10 . IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 27. 0 2 .2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 27. 0 2 .2019 . V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PRIVATE SECRETARY ) , / ITAT, MUMBAI