M/s Merlin Projects Ltd., Kolkata V. The DCIT, CIR-7(1), KOLKATA, Kolkata

ITA 800/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1055 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEAN HANGSHING
• Assessee Lawyers: RAKESH JAIN
• Keywords: Business income; Tax effect; Condonation of delay
• Section: 80IB

Judgement Text

1 ITA NO.800/KOL/2015 MERLIN PROJECTS LTD., AY, 2009-10 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 800/KOL/2015 ASSESSMENT YEAR: 2009-10 M/S. MERLIN PROJECTS LTD. (PAN: AACCM0505B) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-XXVIII, KOLKATA APPELLANT RESPONDENT DATE OF HEARING 05.10.2017 DATE OF PRONOUNCEMENT 22.11.2017 FOR THE APPELLANT SHRI RAKESH JAIN, AR FOR THE RESPONDENT SHRI GOULEAN HANGSHING, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), CENTRAL-1, KOLKATA DATED 16.07.2014 FOR AY 2009-10. 2. AT THE OUTSET ITSELF, IT HAS BEEN BROUGHT TO OUR NOTICE THAT WHILE FILING THE APPEAL THERE HAS BEEN A DELAY OF 237 DAYS. THE DELAY HAS BEEN E XPLAINED BY THE ASSESSEE IN AN APPLICATION FOR CONDONATION OF DELAY AS OWING TO TH E DEATH OF FATHER OF THE DIRECTOR OF THE ASSESSEE SHRI S. K. MOHTA, AS WELL AS THERE WAS A D ELAY IN THE OFFICE OF THE CHARTERED ACCOUNTANT SHRI B. C. JAIN WHO WAS ASSIGNED THE TAS K OF FILING THE APPEAL BEFORE THE TRIBUNAL. TAKING NOTE OF THE SAID FACTS IN THE CAS E OF ASSESSEES SISTER CONCERN M/S. MERLYN RECREATION (P) LTD. VS. DCIT, AY 2008-09 THE COORDI NATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 31.08.2017 IN ITA NO. 802/KOL/2015 WAS PLEASE D TO CONDONE THE DELAY FOR 237 DAYS. TAKING NOTE OF THE COORDINATE BENCH DECISION, WE AR E INCLINED TO CONDONE THE DELAY AND PROCEED WITH THE ADJUDICATION OF THE MATTER ON MERI TS. 3. THE SOLE GROUND OF APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE AOS ACTION IN ASSESSING THE INCOME FROM INTEREST A MOUNTING TO RS.11,84,781/- AS INCOME FROM OTHER SOURCES AND NOT TREATING THE SAME AS BUS INESS INCOME. AT THE OUTSET ITSELF, IT WAS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL THAT ASSES SEE IS ENGAGED IN THE BUSINESS OF 2 ITA NO.800/KOL/2015 MERLIN PROJECTS LTD., AY, 2009-10 CONSTRUCTION AND DEVELOPMENT OF RESIDENTIAL AND COM MERCIAL BUILDING AND HAD RECEIVED ADVANCES FROM PROPERTY BOOKING FROM ITS CUSTOMERS I N THE ORDINARY COURSE OF CONSTRUCTION AND THE SAME WERE USED IN THE BUSINESS. ACCORDING T O ASSESSEE, THESE ADVANCES FROM THE CUSTOMERS WHICH ARE NOT UTILIZED TEMPORARILY IN TH E BUSINESS AND LYING IDLE WITH THE COMPANY WAS PARKED FOR A SHORT DURATION IN FIXED D EPOSIT OR GIVEN AS UNSECURED LOANS WHICH YIELDED INTEREST INCOME. ACCORDING TO THE LD . AR, THE INTEREST INCOME HAS BEEN OFFERED AS BUSINESS INCOME BY THE ASSESSEE THROUGHO UT FROM AY 2005-06 TO 2014-15. IN AY 2005-06, THE AO HAS ASSESSED THE INTEREST INCOME AS INCOME FROM BUSINESS AND DREW OUR ATTENTION TO THE ASSESSMENT ORDER OF AY 2005-06 WHEREIN WE NOTE THAT THERE IS NO INCOME UNDER THE HEAD FROM OTHER SOURCES, SO WE CAN PRESUME THAT INTEREST INCOME WAS ACCEPTED AS BUSINESS INCOME BY THE AO. THEREAFTER, THE LD. AR DREW OUR ATTENTION TO THE ASSESSMENT ORDER PASSED IN AY 2012-13 WHEREIN ALSO THE AO HAS NOT TREATED THE INTEREST INCOME FROM OTHER SOURCES. ON A QUERY FROM THE BEN CH AS TO HOW THE AO TREATED THE ASSESSEES INTEREST INCOME IN OTHER ASSESSMENT YEAR S, THE LD. AR BROUGHT TO OUR KNOWLEDGE THAT IN AY 2006-07, THE AO TREATED IT AS INCOME FRO M OTHER SOURCES, BUT SINCE THERE WAS NO TAX IMPACT THE ASSESSEE DID NOT CONTEST SUCH A TREA TMENT. LIKEWISE, IN AY 2007-08, THERE WAS 143(1) ONLY AND SO, THERE WAS NO GRIEVANCE FOR THE ASSESSEE. LIKEWISE, IN AY 2008-09 THOUGH THE AO TREATED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES, SINCE THERE WAS NO TAX EFFECT BECAUSE THE ASSESSEE CLAIMED DEDUCTION U /S. 80IB OF THE ACT WHICH WAS FULLY ALLOWED SO THERE WAS NO IMPACT EVEN THOUGH THE TREA TMENT WAS GIVEN DIFFERENTLY. THEN, THE LD. AR DREW OUR ATTENTION TO THE FACT THAT IN AY 20 10-11, THOUGH THE AO TREATED INTEREST INCOME AS INCOME FROM OTHER SOURCES, HOWEVER, NO TA X EFFECT WAS THERE BECAUSE FULL DEDUCTION U/S. 80IB OF THE ACT WAS ALLOWED. IN AY 2011-12, NO SCRUTINY WAS DONE SO THE AO ACCEPTED THE ROI AS SUCH; AND IN AY 2012-13 TO A Y 2014-15 THE AO HAS ACCEPTED THE TREATMENT GIVEN BY THE ASSESSEE THAT INTEREST INCOM E IS TO BE TREATED AS BUSINESS INCOME AND DREW OUR ATTENTION TO THE ASSESSMENT ORDER FOR AY 2 012-13 AND WE FIND THAT THE AO HAS NOT TREATED THE INTEREST INCOME AS INCOME FROM OTHER SO URCES. IN THE LIGHT OF THE AFORESAID FACTUAL MATRIX THE CONTENTION OF THE LD. AR IS THAT SINCE IN AY 2005-06 AND AYS 2012-13 TO 2014-15 THE AO HAS ACCEPTED THE TREATMENT GIVEN BY THE ASSESSEE IN RESPECT TO THE INTEREST INCOME YIELDED FROM THE ADVANCES COLLECTED FROM THE CUSTOMERS FOR THE PROPERTY WHICH THE ASSESSEE HAD UNDERTAKEN CONSTRUCTION FOR THE CUSTOM ERS, AND IN THE PROCESS WHEN IDLE FUND IS PARKED FOR SHORT DURATION IN THE FIXED DEPOSIT, IT NEEDS TO BE TREATED AS INCOME INCIDENTAL TO 3 ITA NO.800/KOL/2015 MERLIN PROJECTS LTD., AY, 2009-10 THE ACTIVITIES OF BUSINESS OF THE ASSESSEE AND NEED TO BE UPHELD ON THE PRINCIPLES OF CONSISTENCY AS LAID BY THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS CIT REPORTED IN 193 ITR 321 (SC), WHEN THE ISSUES PERMEATING IN THE ASSESSMENT YEARS ARE THE SAME AND THE FACTS AND LAW HAS NOT CHANGED THEN THE CONSISTENT VIEW NEED TO BE TAKEN. SO, TAKING NOTE OF THE FACTS NARRATED ABOVE AND THE AO ACCEPTING THE VIEW OF THE ASSESSEE IN ASSESSMENT YEARS AS STATED ABOVE, A CONSISTENT VIEW NEED TO HAVE BEEN TAKEN BY THE AO AND, THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE AO TO TREAT THE INTEREST INCOME TEMPORARILY PARKED IN THE BANKS AND GIVEN AS UNSECU RED LOAN WHICH YIELDED INCOME AND WHICH HAS BEEN OFFERED TO TAX BY THE ASSESSEE SHOUL D BE TREATED AS INCOME FROM BUSINESS AND NOT FROM OTHER SOURCES. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 22ND N OVEMBER, 2017 SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22ND NOVEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. MERLIN PROJECTS LTD., 79, SHAMB HUNATH PANDIT STREET, KOLKATA-20. 2 RESPONDENT DCIT, CENTRAL CIRCLE-XXVIII, KOLKATA . 3. THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BE NCHES, KOLKATA / TRUE COPY, BY ORDER, SR. PVT. 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