DCIT 1(1)(1), MUMBAI V. BOMBAY GAS COMPANY LTD, MUMBAI

ITA 781/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9549 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEELIMA V NADKARNI LD
• Assessee Lawyers: MANISH V SHAH; FORAM BHANUSHALI LD ARS
• Keywords: Business income; Depreciation; Additional evidence
• Section: 143(3)

Judgement Text

ITA NOS.112 /MUM/2016 & 781/MUM/2016 M/S. BOMBAY GAS COMPANY LTD. ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.112/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) BOMBAY GAS CO. LTD. EMPIRE HOUSE, A.K. NAIK MARG FORT, MUMBAI-400 001. / VS. DY. COMMISSIONER OF INCOME TAX -1 (1) AAYKAR BHAVAN, MUMBAI. ! ./ ./PAN/GIR NO. AAACB-5863-D ( !# /APPELLANT ) : ( $!# / RESPONDENT ) & ./ I.T.A. NO.781/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) DY. COMMISSIONER OF INCOME TAX -1 (1) AAYKAR BHAVAN, MUMBAI. / VS. BOMBAY GA S CO. LTD. EMPIRE HOUSE,A.K. NAIK MARG FORT, MUMBAI-400 001 ! ./ ./PAN/GIR NO. AAACB-5863-D ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : MANISH V. SHAH & MS. FORAM BHANUSHALI- LD. ARS REVENUE BY : MRS. NEELIMA V. NADKARNI - LD.DR / DATE OF HEARING : 13/12/2018 / DATE OF PRONOUNCEMENT : 20/12/2018 ITA NOS.112 /MUM/2016 & 781/MUM/2016 M/S. BOMBAY GAS COMPANY LTD. ASSESSMENT YEAR :2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE CROSS APPEALS FOR ASSESSMENT YEAR [AY] 201 1-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEAL S)-2, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-2/IT/13/DCIT-1(1)/2014-15 D ATED 20/11/2015 ON SEPARATE GROUNDS OF APPEAL. 2. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY HAS BEEN ASSESSED U/S 143(3) ON 10/03/2014 AT RS.12.82 CRORES AFTER C ERTAIN ADDITIONS / ADJUSTMENTS / DISALLOWANCES AS AGAINST RETURNED INC OME OF RS.12.11 CRORES E-FILED BY THE ASSESSEE ON 29/09/2011. 3.1 THE ASSESSEE IS AGGRIEVED BY THE FACT THAT INCO ME RECEIVED BY THE ASSESSEE BY WAY OF RENT & SERVICE CHARGES OFFERED AS BUSINESS INCOME HAS BEEN ASSESSED AS INCOME FROM HOUSE PROPERTY. BOTH THE REPRESENTATIVES CONVERGE ON THE POINT THAT THIS ISS UE WAS TO BE RESTORED BACK TO THE FILE OF LD. ASSESSING OFFICER [AO] IN L INE WITH THE DIRECTIONS GIVEN BY TRIBUNAL IN ASSESSEES OWN CASE FOR AYS. 2 008-09 TO 2010-11. UPON PERUSAL, WE CONCUR WITH THE SAME. 3.2 IN VIEW OF THE ADMITTED POSITION, THE MATTER ST AND REMITTED BACK TO THE FILE OF LD. AO FOR RE-ADJUDICATION ON SIMILAR L INES AS DIRECTED BY THE TRIBUNAL IN EARLIER AYS. FOR EASE OF REFERENCE, THE RELEVANT PORTION OF THE ORDER OF TRIBUNAL IN ITA NO.3907/MUM/2016 FOR AY 2010-11 DATED 29/08/2018 COULD BE EXTRACTED AS FOLLOWS: - 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT FROM FACTS ON RECORD THAT THE ISSUE WHETHER THE RENT, COMMISSION AND SERVICE CHARGES RECEIVED FROM SUBLETTING THE PREMISES IS A RECURRING DISPUTE BETWEEN THE PARTIES FROM THE PAST YEARS. IT IS ALSO A FACT ON R ECORD THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200304, 200405 AND 200708, T HE TRIBUNAL HAS DECIDED THIS ITA NOS.112 /MUM/2016 & 781/MUM/2016 M/S. BOMBAY GAS COMPANY LTD. ASSESSMENT YEAR :2011-12 3 PARTICULAR ISSUE IN FAVOUR OF THE DEPARTMENT, AGAIN ST WHICH THE ASSESSEE HAS PREFERRED APPEALS BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WHICH ARE STILL PENDING. HOWEVER, WHEN IDENTICAL DISPUTE CAME UP FO R CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200809 AND 200910 IN ITA NO.6212/MUM./ 2011 AND OTHERS DATED 7TH MARCH 2018, THE TRIBUNAL AFTER TAKING COGNIZANCE OF THE ORDERS OF THE CITY CIVIL COURT, T HE HON'BLE JURISDICTIONAL HIGH COURT AND ESTATE OFFICER FILED BY WAY OF ADDITIONAL EVIDE NCE, RESTORED THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION KEEPING IN VIEW THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. IN THE IMPUGNED ASSESSMENT Y EAR ALSO IN COURSE OF HEARING BEFORE THE LEARNED COMMISSIONER (APPEALS) THE ASSES SEE HAD SUBMITTED SIMILAR ADDITIONAL EVIDENCES FOR CONSIDERATION OF THE LEARN ED COMMISSIONER (APPEALS) AND TO IMPRESS UPON THE FACT THAT BY VIRTUE OF THESE AD DITIONAL EVIDENCES HOLDING THE ASSESSEE AS A MONTHLY TENANT, THE DECISION OF THE T RIBUNAL IN EARLIER ASSESSMENT YEARS CANNOT BE FOLLOWED. IT IS APPARENT ON RECORD, LEARNED COMMISSIONER (APPEALS) HAS TOTALLY IGNORED SUCH EVIDENCES FILED BY THE ASS ESSEE. THEREFORE, KEEPING IN VIEW THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200809 AND 200910 AS REFERRED TO ABOVE, WE RESTORE THE IS SUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. IT IS MADE CLEAR, THE ASSESSING OFFICER M UST CONSIDER ALL THE EVIDENCES INCLUDING THE ORDERS OF THE CITY CIVIL COURT, THE H ON'BLE JURISDICTIONAL HIGH COURT AND THE ESTATE OFFICER ON MERIT AND DECIDE THE ISSUE AC CORDINGLY. GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWED F OR STATISTICAL PURPOSES. 4. SO FAR AS THE GROUND NUMBER-1 OF REVENUES APPEAL IS CONCERNED, IT IS ALSO AN ADMITTED POSITION THAT THIS ISSUE STOOD SQUARELY COVERED IN ASSESSEES FAVOR BY THE ORDER OF THIS TRIBUNAL IN A SSESSEES OWN CASE VIDE COMMON ORDER ITA NO.6212/MUM/2011 FOR AY 2008-09 & ITA NO.1187/MUM/2013 FOR AY 2009-10 DATED 07/03/2018 WHEREIN SIMILAR GROUND WAS RAISED BY THE REVENUE. THE ASSESSEE HAS BEEN SADDLED WITH ADDITION OF RS.12.50 LACS, BEING 5% INTEREST ON OPTIONALLY CONVERTIBLE DEBENTURES OF RS.250 LACS ISSUED BY AN ENTITY NAMELY ULTRA POWER EQUIPMENT PRIVATE LIMITED. THE ASSESSEE DID NOT CREDIT THE SAME TO PROFIT & LOSS ACCOUNT IN VIEW OF THE FACT THAT THE ISSUER HAD REQUESTED FOR ITA NOS.112 /MUM/2016 & 781/MUM/2016 M/S. BOMBAY GAS COMPANY LTD. ASSESSMENT YEAR :2011-12 4 WAIVER OF INTEREST. THE FIRST APPELLATE AUTHORITY D ELETED THE SAME BY RELYING UPON THE ORDER OF ITS PREDECESSOR FOR AYS 2 008-09 & 2009-10. THE PERUSAL OF THE CITED ORDER OF THE TRIBUNAL REVE ALS THAT THE STAND OF FIRST APPELLATE AUTHORITY FOR AYS 2008-09 & 2009-10 HAS BEEN CONFIRMED. SINCE NO DISTINGUISHING FEATURES COULD BE NOTED IN THIS AY, RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THIS GROUND OF APPEA L. 5.1 THE ONLY GROUND LEFT IN REVENUES APPEAL IS REL ATED WITH NATURE OF CERTAIN CAPITAL GAINS EARNED BY THE ASSESSEE DURING IMPUGNED AY AND APPLICABLE TAX RATE THEREUPON. 5.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE SOLD A FLAT SITUATED AT HARIBHAWAN FOR SALE CONSIDERATION OF RS.11 CRORES. THE FLAT WAS STATED TO BE PURCHASED IN THE YEAR 199 1-92. THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN OF RS.10.32 CRORES AND OFFERED THE SAME @20% AFTER ADJUSTING BROUGHT FORWARD LOSSES. T HE LD. AO OPINED THAT THE GAIN WAS TO BE TREATED AS SHORT TERM CAPITAL GAIN IN TERMS OF SECTION 50 SINCE THE SAID FLAT FORMED BLOCK OF ASSET IN THE BALANCE SHEET . RESULTANTLY, THE GAINS WERE RECOMPUTED AS RS.10.96 CRORES AND THE SAME WERE TREATED AS SHORT TERM IN NATURE WHICH ATTRACTED NORMAL RATE OF INCOME TAX. 5.3 BEFORE LD. CIT(A), IT WAS POINTED OUT THAT THE ASSESSEE NEVER CLAIMED DEPRECIATION AGAINST THE SAME UNDER THE INC OME TAX ACT ALTHOUGH THE DEPRECIATION AS PER THE COMPANIES ACT WAS CLAIMED IN THE BOOKS OF ACCOUNTS AND THEREFORE, THE RESULTANT GAIN S WERE TO BE TREATED AS LONG TERM CAPITAL GAINS ONLY. IT WAS ALSO POINTED OUT THAT NO BUSINESS ACTIVITY WAS BEING CARRIED OUT BY THE ASSE SSEE IN THE SAID FLAT ITA NOS.112 /MUM/2016 & 781/MUM/2016 M/S. BOMBAY GAS COMPANY LTD. ASSESSMENT YEAR :2011-12 5 AND IT WAS EXCLUSIVELY A RESIDENTIAL FLAT AND NOT A COMMERCIAL ASSET. THE FIRST APPELLATE AUTHORITY CONCURRED WITH THE STAND OF THE ASSESSEE BY OBSERVING THAT PROVISIONS OF SECTION 50 WERE NOT AP PLICABLE AND THE RESULTANT GAINS WERE LONG TERM GAINS ONLY. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5.4 ALTHOUGH LD. DEPARTMENTAL REPRESENTATIVE [DR] S UPPORTED THE STAND OF LD. AO, HOWEVER, THE FACTUAL MATRIX THAT D EPRECIATION UNDER THE INCOME TAX ACT WAS NEVER CLAIMED BY THE ASSESSEE AG AINST THE FLAT AND THE SAID FLAT WAS NEVER USED AS A COMMERCIAL ASSET REMAINED UNREBUTTED. THE REVENUE COULD NOT BRING ON RECORD A NY MATERIAL TO CONTROVERT THE SAME WHEREAS LD. AR, DRAWING OUR ATT ENTION TO THE COMPUTATION OF INCOME FOR PAST SEVERAL YEARS, DEMON STRATED THAT THE DEPRECIATION WAS NEVER CLAIMED BY THE ASSESSEE UNDE R INCOME TAX ACT AGAINST THE SAID FLAT. THIS BEING THE CASE, NO FAUL T COULD BE FOUND WITH THE CONCLUSIONS OF FIRST APPELLATE AUTHORITY. THIS GROU ND STANDS DISMISSED. 6. RESULTANTLY, THE ASSESSEES APPEAL STAND ALLOWED FOR STATISTICAL PURPOSE WHEREAS THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2018. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20/12/2018 SR.PS, JAISY VARGHESE ITA NOS.112 /MUM/2016 & 781/MUM/2016 M/S. BOMBAY GAS COMPANY LTD. ASSESSMENT YEAR :2011-12 6 ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,- & . , . , / DR, ITAT, MUMBAI 6. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.