ACIT 10(1), MUMBAI V. REGUS BUSINESS CENTRE (DELHI) P. LTD, MUMBAI

ITA 7836/MUM/2011

• Counselvise Citation: 783619914 RSA 2011
• Duration Of Justice: 3 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: K K VED
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI D. MANMOHAN , VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO. 7836/MUM/2011 ASSESSMENT YEAR: 200 8 - 09 ACIT - 10(1) 455, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 4 00 020 VS. REGUS BUSINESS CENTRE (DELHI) PVT. LTD. LEVEL 2 RAHEJA CENTRE POINT, 2 ND CST ROAD, SANTACRUZ (E), MUMBAI 98 PAN: - AADCR 7781 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. VED REVENUE BY : SHRI LOVE KUMAR DATE OF HEARING : 01.06.2015 DATE OF ORDER : 31 . 0 8 .201 5 O R D E R P ER SANJAY ARORA, A M: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 21 MUMBAI, ( CIT(A) FOR SHORT) DATED 10.08.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S 143(3) (II) OF THE INCOME TAX ACT 1961 (T HE ACT HEREINAFTER ) FOR THE A.Y. 2008 - 09, VIDE ORDER DATED 14.12.2010. 2. UPON THE ARGUMENTS FOR ON BEHALF OF THE ASSESSEE, SUBMITTED IT WAS BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, TAKING LEAVE OF THE COURT TO PROCEED ON AN OUT OF TURN BASIS , THAT IT WAS NECESSARY TO HIGH LIGHT AN AS PECT OF THE MATTER, DRAWING OUR ATTENTION TO THE ASSESSEES LETTER TO THE ASSESSING OFFICER (AO) DATED 04.11.2010 , I.E., THAT THE ASSESSEE COMPANY WAS INCORPORATED ONLY ON 15.11.2007, AS CLEARLY EVIDENCE D BY THE CERTIFICATE OF INCORPORATION OF EVEN DATE ISSUED BY THE ASSISTANT REGISTRAR OF COMPAN IES , AND WHICH SHOU LD ALSO ENCLOSED ALONG ITA NO. 7836/MUM/2011 (A.Y. 2008 - 09) ACIT VS. REGUS BUSINESS CENTRE (DELHI) PVT. LTD. 2 WITH SAID LETTER AS ANNEXURE 4 THERETO. THE SOLE ISSUE, HE WOULD CONTINUE, ARISING IN THE INSTANT CASE IS A S TO THE DATE OF COMMENCEMENT OF BUSINESS BY THE ASSESSEE COMPANY, WHICH IS TO ESTABLISH AND OPERATE OR OTHERWISE DEAL IN BUSI NESS CENTRE AND ACTIVITIES RELATED THERETO. WHILE THE ASSESSING OFFICER, ON THE BASIS OF THE MATERIAL FURNISHED, CAME TO THE CONCLUSION THAT THE ASSESSEE S BUSINESS COMMENCE D ONLY ON 15.10.2007, THE L D. CIT(A), A S THE FIRST APPELLATE AUTHORITY, WAS OF THE VIEW THAT THE SAID DATE WAS 15.08.2007. ALL THE RELEVANT EXPENDITURE (INCLUDING DEPRECIATION) AND INCOME UP TO THE SAID DATE, I.E., THE DATE OF THE COMMENCEMENT OF BUSINESS , WAS AGREEABLY TO BE CAPITALIZED. THE COMPANY HAVING ITSELF INCORPORATED ONLY ON 15 .1 1 .2007, THE IMPUGNED ORDER COULD NOT BE, HE FAIRLY CON CEDED, BE APPROVED OF , AND WHIC H INFIRMITY, THOUGH TO A DIFFERENT EXTENT , INFLICTS THE ASSESSMENT ORDER AS WELL. THIS ASPECTS SEEMS TO HAVE ESCAPE THE ATTENTION OF BOTH THE AUTHORITIES BELOW. THE MATT ER ACCORDINGLY WOULD REQUIRED TO BE RESTORED BACK TO THE FILE OF THE AO. THE L D. DR CONFIRMED THE SAME, SO THAT THE FORGOING REPRESENT S THE COMMON CONTENTION OF BOTH THE PARTIES. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE INFOR MATION OF THE DATE OF INCORPORATION OF THE COMPANY , I.E., 15.11.2007 , THOUGH NOT IRRELEVANT, CANNOT BE SAID TO BE DETERMINATIVE OF THE MATTER. THIS IS AS BUSINESS REQUIRES HUMAN AGENCY FOR ITS SETTING UP AND WHICH COULD , THEREFORE, BE WITHOUT THE COMPANY B EING INCORPORATED. WHAT IS RELEVANT IS WHETHER THE SAID HUMAN AGENCY WAS WORKING FOR AN ON BEHALF OF THE PROPOSE COMPANY, OR FOR ANOTHER. AS IT APPEARS, THIS BEING NOT AN ISSUE, IN - AS - MUCH AS THE WORKING FROM A DATE PRIOR TO THE DATE OF REGISTRATION, BE IT 15.08.2007 OR 15.10.2007 , OR ANY OTHER DATE FOR THAT MATTER, WAS ONLY FOR THE PROPOSED COMPANY. THIS WOULD IN FACT REQUIRE RATI FICATION AND ADOPTION BY THE COMPANY ON BEING INCORPORATED, I.E., WHERE I T CLAIMS TO HAVE SET UP THE BUSINESS. ELSE , IN THE ALTE RNATIVE, IT COULD ONLY BE SAID TO HAVE ASSUMED OR TAKEN OVER A RUNNING BUSINESS. WHAT WOULD RATH ER , THEREFORE, IN OUR VIEW, BE MATERIAL IS THE TREATMENT OF THE INCO ME DURING THE PRE - COMMENCEMENT ( OF BUSINESS ) PERIOD. THE SAME COULD BE CAPITALIZED ONLY WHER E THE SAME ARISES FROM AN ACTIVITY WHICH IS NECESSARY AND INCIDENT TO THE SETTING UP OF THE BUSINESS, ELSE NOT. REFERENCE IN THIS CONTEXT MAY BE MADE TO THE DECISION IN THE CASE OF TUTICORIN ALKALI CHEMICALS V S. CIT [ 1997 ] 227 ITR (SC); ITA NO. 7836/MUM/2011 (A.Y. 2008 - 09) ACIT VS. REGUS BUSINESS CENTRE (DELHI) PVT. LTD. 3 BOKARO STEEL LTD. [ 1999 ] 236 ITR 315 (SC). AGAIN, THE DATE OF INCORPORATION MAY ALSO BE RELEVANT WHERE SOME NECESSARY APPROVALS, SANCTIONS, PERMISSIONS , ETC. HAVE TO BE TAKEN IN THE NAME OF THE COMPANY. THE MATTER IS ACCORDINGLY SET ASIDE AND RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A DE NOVO ADJUDICATION , BY, INTER ALIA , DETERMINING THE DATE OF COMMENCEMENT OF BUSINESS AS WELL AS THE TREATMENT OF THE EXPENDITURE RELATABLE TO THE INCOME UP TO THE SAID DATE . T HE ASSESSING OFFICER, APART FROM ALLO W ING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO STATE ITS CASE BEFORE HIM, SHALL ALSO SEEK TO ADDRESS ASPECTS THAT FOUND FAVOUR WITH THE L D. CIT(A), ISSU ING DEFINITE FINDING OF FACT BY DRAWING PROPER INFERENCES. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN CO URT ON 31.08. 2 015 . SD/ - SD/ - D. M ANMOHAN S ANJAY ARORA (VICE PRESIDENT) ( A CCOUNTANT MEMBER) MUMBAI, DATED: 31 .08 . 2015 * S RIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.