SHIOM BUILD- CON P. LTD, MUMBAI V. ITO 7(2)(3),

ITA 7079/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1572 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 13-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN SABHE
• Assessee Lawyers: RAJNEESH ARVIND
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V.D. RAO, J. M ITA NO.7079/MUM ./2008 (ASSESSMENT YEAR : 2005-06 ) DATE OF HEARING : 13.4.2010 SHIVOM BUILD-CON PVT. LTD. MAZANING FLOOR, TRAPINEX HOUSE, SHOLAPUR STREET, MUMBAI 400 009 PAN AAACS9143D VS ITO, WARD 7(2)(3), MUMBAI APPELLANT RESPONDENT FOR REVENUE : SHRI ARUN SABHE FOR ASSESSEE : SHRI RAJNEESH ARVIND O R D E R PER V.D. RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16 TH OCTOBER 2008, PASSED BY THE LEARNED CIT(A)VII, MUMBAI , FOR A.Y. 2005-06. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE INVOLVED IN GROUND N O.1 OF APPEAL RAISED BY THE ASSESSEE IS THAT, WHETHER THE INCOME RECEIVED BY T HE ASSESSEE AS INCOME FROM HOUSE PROPERTY OR BUSINESS INCOME. THIS ISSUE WA S ALREADY DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.6 15/MUM./2006 AND ITA NO.2554/MUM./2006, FOR ASSESSMENT YEAR 2002-03 AND 1998-99 AGAINST THE ASSESSEE, BY ORDER DATED 17 TH OCTOBER 2008. THE TRIBUNAL HAS CONSIDERED THE ISSUE AND HELD AS UNDER:- 6.5 IN VIEW OF THE AFORESAID DISCUSSION, WE FIND THAT T HE ASSESSEE IS DEEMED OWNER U/S 27(IIIB) FOR THE PURPOSE OF SE CTION 22 OF THE ACT AS THE PROPERTY WAS TAKEN ON LONG LEASE O F 90 YEARS. THE ASSESSEE LET OUT PROPERTY TO EARN RENT. THUS A LL THE CONDITIONS STIPULATED UNDER SECTION 22 ARE SATISFIED. THE RENTAL SHIVOM BUILD-CON PVT. LTD. ITA NO.7079/MUM./2008 2 INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE LEARNED CIT(A) HAS ERRED IN TREATING THE INCOME FROM HOUSE PROPERTY. THE LEARNED CIT(A) HAS ERRED IN TREATING THE INCOME FROM PREMISES AS BUSINESS INCOME AND DIRECTED T HE ASSESSING OFFICER TO ALLOW THE VARIOUS EXPENSES INCURRED AND , THEREFORE, WE SET ASIDE THE ORDER OF THE LEARNED CIT( A) AND THAT THE ORDER OF THE ASSESSING OFFICER IS RESTORED WHO IS TREA TED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. 3. WE, RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, DECIDE THE ISSUE AGAINST THE ASSESSEE AND DI SMISS THE GROUND OF APPEAL BY THE ASSESSEE. 4. THE ISSUE INVOLVED IN GROUND NO.2 IS THAT, WHETHER TH E LOAN TAKEN FROM THE BANK WAS NOT UTILIZED FOR THE PURPOSE OF THE CONSTRUCTION OF PREMISES AT BANDRA OR NOT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER HAS OBSERVED THAT THE ASSESSEE DEBITED IN THE P&L A/C RS.23 ,98,504/- ON ACCOUNT OF INTEREST EXPENDITURE ON THE TWO LOANS TAKEN FROM THE BANK THAT THE MONEY RECEIVED FROM THE BANK WAS FOUND TO HAVE BE EN UTILIZED FOR THE PURPOSE OF OTHER THAN FOR THE CONSTRUCTION OF SAID PREMI SES, THEREFORE, INTEREST EXPENDITURE CLAIMED ON THESE LOANS ARE NOT ALL OWABLE WHILE COMPUTING THE COMPENSATION RECEIVED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE ASSESSING OFFICER HAD COMPUTED RS.21,09,000/- AS ALV FOR COMPUTING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY . DURING THE COURSE OF APPEAL PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THAT HE WAS A BUILDER AND DEVELOPER AND THE SECURED LOAN FROM THE B ANK AND USED FOR THE CONSTRUCTION OF THE BUILDING WHICH WAS, IN TURN, GIVEN O N SUB-LEASE TO BHARAT CO-OPERATIVE BANK LTD., ALONG WITH VARIOUS OTHER SERV ICES. ACCORDING TO THE ASSESSEE, AMOUNT BORROWED FROM THE BANK IS USED FOR THE CONSTRUCTION OF THE HOUSE AND THE INTEREST EXPENDITURE SHOULD BE ALLOWED. HOWEVER, THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND O BSERVED THAT THERE SHIVOM BUILD-CON PVT. LTD. ITA NO.7079/MUM./2008 3 IS NO NEXUS BETWEEN LOANS RECEIVED FROM THE BANK AND I TS UTILIZATION IN CONSTRUCTION OF PREMISES LET OUT TO THE SAME TENANT I.E., THE BANK. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEF ORE THE TRIBUNAL. 6. LEARNED COUNSEL FOR THE ASSESSEE FILED PAPER BOOK CONTAIN ING PAGES FROM 1 TO 64 AND SUBMITTED THAT THE AMOUNT BORROWED FROM THE BANK UTILIZED FOR THE PURPOSE OF CONSTRUCTION, THEREFORE, THE INTERE ST SHOULD BE ALLOWED. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTAT IVE, STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN VIEW OF THE SPECIFIC FINDINGS OF THE ASSESSING OFFICER AS WELL AS BY THE LEARNED CIT(A), WE REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR DE-NOVO ADJUDICATION IN ACCORDANCE WITH LAW. WE ALSO DIRECT THE ASSESSEE TO SATISFY T HE ASSESSING OFFICER THAT THE FUNDS BORROWED OR UTILIZED FOR THE P URPOSE OF CONSTRUCTION OF THE HOUSE. 8. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 4 TH JUNE 2010. SD/- P.M. JAGTAP ACCOUNTANT MEMBER SD/- V. DURGA RAO JUDICIAL MEMBER MUMBAI, DATED : 4 TH JUNE 2010 SHIVOM BUILD-CON PVT. LTD. ITA NO.7079/MUM./2008 4 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT, MUMBAI (4) CIT(A), MUMBAI (5) DR, I BENCH (6) GUARD FILE TRUE COPY BY ORDER, ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PRADEEP J. CHOWDHURY MUMBAI BENCHES SR. PRIVATE SECRETARY SHIVOM BUILD-CON PVT. LTD. ITA NO.7079/MUM./2008 5 DATE INITIAL 1. DRAFT DICTATED ON 2.6.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 3.6.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 3.6.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 3.6.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 3.6.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 4.6.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 4.6.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER