PERMESHWAR TRADING & INVESTMENTS PVT LTD., MUMBAI V. ITO 5(2)(4), MUMBAI

ITA 795/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8331 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO. 795/M/2011 ( AY: 2007 - 200 8 ) M/S. PARMESHWAR TRADING & INVESTMENT PVT LTD., 413, ARUN CHAMBERS, TARDEO, MUMBAI 400 004. / VS. ITO 5(2)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AACCP 18 59 P ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SMT. PARMINDER / DATE OF HEARING :13 .8.2014 / DATE OF PRONOUNCEMENT :22 .8.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 28.1.2011 IS AGAINST THE ORDER OF THE CIT (A) - 9, MUMBAI DATED 3.11.2010 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN CONFIRMING THE ASSESSMENT OF BUSINESS RECEIPTS OF RS. 4,86,250/ - AS INCOME FROM HOUSE PROPERTY AND RS. 9,545/ - AS INCOME FROM OTHER SOURCES. 2. IN DOING SO, THE LD CIT (A) HAS ERRED IN NOT APPRECIATING THE UNDISPUTED FACT THAT THE BUSINESS SERVICE CENTRE INCOME OF RS. 2,70,250/ - RECEIVED FROM CERC INFORMATION TECHNOLOGY LTD WAS FOR THE COMPOSITE CONSIDERATION TO PROVIDE OFFICE PREMISES AND OFFICE AMENITIES INCLUDING PROVIDING OFFICE ASSISTANTS, CLEANING SERVICES, PROVISION FOR WATER & SECURITY. THE LD CIT (A) HAS ERRED IN HOLDING THE VIEW THAT THE TRANSACTION IS SIMPLE LETTING OUT OF THE PROPERTY. 3. THE LD CIT (A) HAS ERRED IN NOT FINDING OUT WHE THER THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY WAS OF COMMERCIAL NATURE OR NOT. 4. THE LD CIT (A) HAS ERRED IN FORMING AN OPINION BASED ON THE AREA OF PREMISES. 5. THE LD CIT (A) HAS ERRED IN FORMING HIS OPINION PRIMARILY BASED ON TH E SHAMBU INVESTMENT CASE DECIDED IN 2003 AND NOT RELYING ON THE CANTENA OF DECISIONS HELD BY THE COURTS FROM TIME TO TIME SUBSEQUENTLY. 6. THE APPELLANT THEREFORE, PRAYS THAT THE ASSESSING OFFICER BE DIRECTED TO ASSESS THE TOTAL RECEIPTS OF RS. 4,95,795/ - UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. 2 3. DURING THE PROCEEDINGS BEFORE US, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT ITS CASE. FROM THE RECORD, WE FIND THAT HEARING OF THE CASE WAS ADJOURNED ON THREE OCCASIONS I.E., 15.1.2014; 1.5.2014 AND 11.6.2014 ON LY FOR THE REASON THAT NONE APPEARED ON BEHALF OF THE ASSESSEE. THIS APPEAL WAS FIXED FOR HEARING ON 13.8.2014 BUT NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE THE DATE OF HEARING WAS INFORMED TO THE ASSESSEE THROUGH RPAD. THE NOTICE WAS DULY SERVED ON THE ASSESSEE ON 21.6.2014 AT THE ADDRESS MENTIONED AGAINST ITEM NO.10 OF FORM 36 AND THE ACKNOWLEDGE MENT WAS ALSO PLACED ON RECORD. HOWEVER, ON THE DATE OF HEARING I.E., 13.8.2014 , WHEN THE APPEAL WAS CALLED UP ON FOR HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE. THERE IS ALSO NO APPLICATION OR REQUEST FOR ADJOURNMENT. IT THEREFORE, APPEARS TO US THAT THE ASSESSEE IS NOT SERIOUS ABOUT PURS U ING THIS APPEAL. THEREFORE, WITH THE H ELP OF THE LD DR, WE PROCEED TO A DJUDICATE THE APPEAL ON MERITS. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND INVESTMENTS AND FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 12,717/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF RS. 3,38,737/ - . DURING THE ASSESSMENT, AO N OTICED THAT THE ASSESSEE HAS EARNED INCOME AND CLAIMED THE SAME UNDER THE HEAD BUSINESS INCOME. IN THIS REGARD, IT WAS EXPLAINED BEFORE THE AO THAT THE INCOME EA RNED IS OUT OF THE INVESTMENTS IN THE NATURAL AND USUAL COURSE OF BUSINESS AND THEREFORE, THE INCOME EARNED SHOULD BE TREATED AS BUSINESS INCOME. NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, AO CAME TO THE CONCLUSION THAT THE PROPERTY IN QUESTION IS NOT OCCUPIED BY THE ASSESSEE FOR ITS OWN BUSINESS PURPOSES AND THEREFORE, THE CLAIM OF TH E ASSESSEE CANNOT BE ACCEPTED. IN THIS REGARD, AO RELIED ON THE VARIOUS DECISIONS INCLUDING THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SHAMBU INVESTMENT (P) LIMITED (2003) 263 ITR 143 FOR THE PROPOSITION THAT THE RENT RECEIVED FROM T HE LETTING OUT OF BUILDING WITH VARIOUS AMENITIES TO VARIOUS USERS IS TO BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY, AO HELD THAT THE TOTAL INCOME QUESTION IS TAXABLE AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME AND THE BUSINESS INCOME OF RS. 9,545/ - HAS BEEN TREATED AS INCOME FROM OTHER SOURCES AS THE SAME DOES NOT PERTAIN TO BUSINESS OF THE 3 ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFOR E THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE APPEAL BY HOLDING THAT THE ASSESSEE HAS FAILED TO PROVE WITH CONCLUSIVE AND ACCEPTABLE EVIDENCE THAT THE PROPERTY IN QUESTION IS A COMMERCIAL CENTRE A ND THE FACTS OF THE CASE ARE FULLY COVERED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SHAMBU INVESTMENTS (SUPRA). PARAS 2.5 AND 2.6 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD. AGAIN AGGRIEVED WITH THE DECISION OF THE CIT (A), ASS ESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 6. DURING THE PROCEEDINGS BEFORE US, LD DR EXPLAINED THE ABOVE FACTS AND HEAVILY RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 7. ON THE OTHER HAND, NONE APPEARED TO REPRESENT THE CASE OF THE ASSESSEE. 8. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING THE LD D R AND ON PERUSAL OF THE CIT (A)S ORDER IN GENERAL AND PARAS 2.5 AND 2.6 IN PARTICULAR, WE FIND THE SAME ARE RELEVANT IN THIS REGARD, WHICH READ AS UNDER: 2.5. AFTER CONSIDERING THE AFORESAID EXPLANATION AND WRITTEN STATEMENTS, FURTHER DETAILS WERE CALLED FOR FROM THE APPELLANT. HE WAS ASKED TO FURNISH THE DETAILS OF SERVICES GIVEN BY IT TO THE TENANTS. DETAILS OF EXPENDITURE INCURRED FOR EMPLOYEES ETC. IT WAS ASKED TO EXPLAIN WHO IS RESPONSIBLE FOR THE PAYMENT OF MUNICIPAL TAXES AND REPAIRS ETC. IT WA S FURTHER ASKED TO EXPLAIN AS TO HOW MUCH FURNITURE HAS BEEN PROVIDED BY THE APPELLANT TO THE TENANTS. 2.6. IN RESPONSE TO THIS, A FEW DETAILS WERE FURNISHED. QUERY RAISED WERE NOT ANSWERED TO THE POINTS. PHOTOCOPIES OF CERTAIN SELF MADE VOUCHERS WERE FU RNISHED OUR OF WHICH 50% VOUCHERS ARE NOT SIGNED BY THE RECEIVERS. MUNICIPAL TAXES ARE BEING PAID BY THE APPELLANT ITSELF. THE AREA OF THE PREMISES IS ONLY 800 SQ. FT. IT WAS NOT EXPLAINED AS TO WHY SEVERAL VOUCHERS ARE UNSIGNED. THE AUTHORIZED REPRESE NTATIVE EXPLAINED THAT THE PROPERTY IS A COMMERCIAL PROPERTY. HENCE, THE INCOME SHOULD BE ASSESSED AS BUSINESS INCOME. AFTER CONSIDERING THE AFORESAID FACTS AND VARIOUS DETAILS, I DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF THE APPELLANT BECAUSE THIS IS NOTHING BUT SIMPLE LETTING OUT OF PROPERTY WHICH IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. THE APPELLANT HAS FAILED TO PROVE WITH CONCLUSIVE AND ACCEPTABLE EVIDENCE THAT THE PROPERTY IN QUESTION IS A COMMERCIAL CENTRE. THE FACTS OF THE PRESENT CASE AR E FULLY COVERED BY THE DECISION OF THE SUPREME COURT IN THE CASE OF SHAMBU INVESTMENTS 263 ITR 143. SO FAR AS THE ACCEPTANCE OF BUSINESS INCOME IN EARLIER YEARS IS CONCERNED, THE SIX ASSESSMENTS MIGHT HAVE BEEN COMPLETED UNDER SECTION 143(1). OTHERWISE A LSO IN INCOME TAX, EVERY ASS ESSMENT IS SEPARATE AND PRINCIPLE OF RESJUDICATA DOES NOT APPLY TO INCOME TAX . BY DEPUTING A LIFTMAN AND PEON, ONE PREMISES DOES NOT BECOME A SERVICE CENTRE OR COMMERCIAL PROPERTY. THIS IS A SIMPLE LETTING OUT OF THE PREMISES WHICH HAS BEEN RIGHTLY TAXED AS INCOME FROM 4 HOUSE PROPERTY. THE OTHER INCOME OF RS. 9545/ - IS ALSO RIGHTLY ASSESSED AS INCOME FROM OTHER SOURCES. I FI ND NO REASON TO INTERFERE WITH THE ORDER OF ASSESSING OFFICE R. THEREFORE, ALL GROUNDS OF APPEAL ARE DISMISSED . 9. FROM THE ABOVE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE UNDER CONSIDERATION BY DISMISSING THE APPEAL OF T HE ASSESSEE AS THE FACTS OF THE ASSESSEES CASE ARE COVERED BY THE JUDGMENT OF THE APEX COURT IN THE CASE OF SHAMBU INVESTMENTS (SUPRA) AND ASSESSEES FAILURE TO SUBSTANTIATE ITS CLAIM. THEREFORE, CONSIDERING THE SAME IN OUR VIEW THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 2 N D AUGUST, 2014. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 2 2 /08/2014 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI