PEEJAY SILK MILLS, MUMBAI V. ITO 20(2)(1), MUMBAI

ITA 7044/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2221 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 19-11-2014
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLKAR
• Assessee Lawyers: R K BOTHRA
• Keywords: Business income; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 7044 /MUM/ 2014 (ASSESSMENT YEAR 200 8 - 0 9 ) M/S. PEEJAY SILK MILLS PAL HOUSE, 41 ANDHERI KURLA ROAD SAKINAKA, ANDHERI EAST MUMBAI - 400 0 59. VS. ITO 20(2)(1) PIRAMAL CHAMBERS LOWER PAREL MUMBAI. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAAFP6034H ASSESSEE BY SHRI R.K. BOTHRA DEPARTMENT BY SHRI C.W. ANGOLKAR DATE OF HEARING 31 .10 . 201 6 DATE OF PRONOUNCEMENT 31 .10. 201 6 O R D E R PER B.R. BASKARAN (AM) : - THE APP E AL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1.10.2014 PASSED BY THE LEARNED CIT(A) - 31, MUMBAI AND IT RELATES TO A.Y. 2008 - 09. 2. AT THE TIME OF HEARING ASSESSEE DID NOT PRESS GROUND NO. 5 AND HENCE TH E SAME IS DISMISSED AS NOT PRESSED. 3. GROUND NO. 6 IS GENERAL IN NATURE. REMAINING GROUNDS GIVE RISE TO FOLLOWING ISSUES : - A) DEDUCTION CLAIMED AGAINST HOUSE PROPERTY INCOME. B) INTEREST ON HOUSING LOAN CLAIMED AGAINST HOUSE PROPERTY INCOME. C) DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED AGAINST INTEREST INCOME. 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS RUNNING A BUSINESS CENTRE AND ALSO CARRYING ON M/S. PEEJAY SILK MILLS 2 BUSINESS SUCH AS PROVIDING COMPUTING ACCOUNTING SERVICES, T RADING IN TEXTILE S, INVESTMENT ACTIVITIES ETC. THE ASSESSEE CLAIMED RENTAL INCOME AS WELL AS OTHER RECEIPTS AS ITS BUSINESS INCOME. IN A.Y. 2005 - 06 RENTAL INCOME WAS ASSESSED AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY , DURING THE YEAR UNDER CONSIDERATION ALSO, THE ASSESSING OFFICER ASSESSED RENT RECEIVED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE RECEIVED INTEREST INCOME OF ` 9.65,015/ - AND HE ASSESSED THE SAME AS INCOME FROM OTHER SOUR CES. REMAINING RECEIPTS WERE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AGAINST WHICH EXPENSES RELATING TO INCOME FROM HOUSE PROPERTY ETC. WERE DISALLOWED. 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE FURNISHED A STATEMENT OF ALLOCATI ON OF VARIOUS EXPEN SES BETWEEN RENTAL INCOME AND OTHER RECEIPTS. THE SAID STATEMENT WAS CONFRONTED TO THE ASSESSING OFFICER AND IN THE REMAND REPORT FILED, THE ASSESSING OFFICER OBSERVED THAT ALLOCATION WAS FAIR AND REASONABLE. 6. WHILE COMPUTING INCOME FROM HOUSE PROPERT Y, THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION TOW ARDS MUNICIPAL TAX & OTHER CHARGES AND ALSO INTEREST PAYABLE ON HOUSING LOAN. THE LD CIT(A) ALSO CONFIRMED THE SAME BY OBSERVING THAT THE ASSESSEE DID NOT FURNISH ANY SUPPORTING EVIDENCE IN RELATION TO TA X AND OTHER CHARGES AND ALSO WITH REGARD TO PAYMENT OF INTEREST ON HOUSING LOAN. THE LEARNED CIT(A) UPHELD THE ASSESSMENT OF INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. WITH REGARD TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF INTEREST EXPE NDITURE OF ` 6,41,862/ - AGAINST INTEREST INCOME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT SHOWN THAT IT WAS ENGAGED IN INVESTMENT BUSINESS AND ALSO HE DID NOT BROUGHT ON RECO RD ANY MATERIAL TO ESTABLISH THAT INTEREST EXPENDITURE OF ` 6,41,8 62/ - WAS SPENT DIRECTLY FOR EARNING THE INTEREST INCOME . THE ASSESSEE IS AGGRIEVED BY THE ABOVE SAID DECISION OF THE LEARNED CIT(A). M/S. PEEJAY SILK MILLS 3 7. THE FIRST ISSUE RELATES TO COMPUTATION OF INCOME FROM HOUSE PROPERTY , WHEREIN DEDUCTION FOR TAX & OTHER CHARGES AND I NTEREST ON HOUSING LOAN WERE NOT ALLOWED. WE NOTICED THAT THE LEARNED CIT(A) DID NOT ALLOW ABOVE EXPENDITURE ON THE REASONING THAT THE ASSESSEE DID NOT FURNISH RELEVANT MATERIAL. 8. LEARNED AR SUBMITTED THAT THE ASSESSEE DID FURNISH RELEVANT MATERIAL S BE FORE THE TAX AUTHORITIES BUT THEY WERE NOT CONSIDERED BY THEM. LEARNED AR, BY PLACING RELIANCE ON THE DECISION DATED 3.2.2016 PASSED BY THE COORDINATE BENCH IN THE CASE OF SHRI KANWALJIT SINGH P. KOHLI (ITA NO. 839/MUM/2014) AND ALSO DECISION RENDERED BY T HE SMC BENCH IN THE CASE OF MRS. AMARJIT KAUR KOHLI (ITA NO. 588/MUM/2010 DATED 28.5.2010) , SUBMITTED THAT THE SOCIETY CHARGES HAVE TO BE DEDUCTED FROM GROSS RENTAL INCOME AND NET RENTAL INCOME SHOULD BE TAKEN INTO CONSIDERATION FOR COMPUTING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 9. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER SINCE THE ASSESSEE DID CONTEND THAT IT HAS FURNISHED ALL THE EVIDENCES BEFORE THE TAX AUTHORITIES. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO COMPUTE INCOME UNDER HEAD INCOME FROM HOUSE PROPERTY BY CONSIDERING THE EVIDENCE FU RNISHED BY THE ASSESSEE AND ALSO BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCHES (REFERRED SUPRA). 10. NEXT ISSUE RELATES TO NON - DEDUCTION OF INTEREST EXPENDITURE AGAINST INTEREST INCOME. LEARNED AR SUBMITTED THAT THE ASSESSEE HAS BEEN RECEIV ING INTEREST INCOME FOR THE PAST SEVERAL YEARS AND THAT HAVE BEEN ASSESSED AS BUSINESS INCOME ONLY. HE SUBMITTED THAT THERE IS NO CHANGE IN THE FACTUAL POSITION DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY HE SUBMITTED THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN ASSESSING INTEREST INCOME AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THE ALTERNATIVE HE SUBMITTED M/S. PEEJAY SILK MILLS 4 THAT THE INTEREST EXPENDITURE SHOULD HAVE BEEN DEDUCTED AGAINST INTEREST INCOME. 11. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATI VE ON THIS ISSUE. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THIS ISSUE ALSO REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER , SINCE THE ASSESSEE CLAIMS THAT THE IDENTICAL RECEIPTS HAVE BEEN ACCEPTED HAS BUSINESS RECEIPTS IN THE E ARLIER YEARS, WHICH PROVES THE CLAIM OF THE ASSESSEE THAT WAS CARRYING ON THE INVESTMENT ACTIVITIES ALSO AS PART OF ITS BUSINESS OPERATIONS . ACCORDINGLY WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION BY DULY CONSIDERING THE PAS T RECORDS AND THE MANNER OF ASSESSMENT OF INTEREST RECEIPTS. IF THE AO ACCEPTS THE SAME AS BUSINESS RECEIPTS, THEN THE INTEREST EXPENDITURE IS REQUIRED TO BE ALLOWED AGAINST THE SAME. IF HE DOES NOT ACCEPT THE CLAIM OF THE ASSESSEE, THEN THE AO SHOULD ALS O CONSIDER ALTERNATIVE CONTENTIONS AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 31 .10 .2016 SD/ - SD/ - (PAWAN SINGH) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 31 / 10 / 20 1 6 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// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS