PRANIK LANDMARK ASSOCIATES ( SINCE SUCCEDED), MUMBAI V. ASST CIT RG 19(2), MUMBAI

ITA 826/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2474 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 24-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-02-2012
• Court: TRIBUNAL
• Department Lawyers: SOMNATH UKKALDR
• Keywords: Business income
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.826/MUM/2012 ASSESSMENT YEAR: 2008-09 SYN CHEM INVESTMENTS PVT. LTD. (ERSTWHILE PRANIK LANDMARK ASSOCIATES), 159 CST ROAD, KALINA, MUMBAI -400098 / VS. ACIT RG 19 ( 2 ) PIRAMAL CHAMBERS, MUMBAI- ( ASSESSEE ) ( REVENUE ) P.A. NO. AAAFP2410K !' / ASSESSEE BY MS. VASANTI PATEL (AR) / REVENUE BY SHRI SOMNATH UKKAL ( D R) # $ % & / DATE OF HEARING : 4/11/2015 % & / DATE OF ORDER: 18/11/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - 30, MUMBAI {(IN SHORT LD. CIT(A)} DATED 24.11.2011 FOR THE SYNCHEM INVESTMENTS PVT 2 ASSESSMENT YEAR 2008-09, DECIDED AGAINST THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT. THE ASSESSEE HAS RAISED FOLLOWING GROUN DS OF APPEAL: 1. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT INCOME FROM HOARDINGS SHOULD BE CHARGEABLE TO TAX UNDER THE HEAD BUSINESS INCOME AND NOT UNDER OTHER SOURCES IN CASE THE ASSESSEE IS R UNNING A MALL AND WHOLE OF HIS INCOME IS TAXABLE UNDER BUS INESS INCOME. 2. THE APPELLANT RESERVES THE RIGHT TO ADD, ALTER O R AMEND TO THE ABOVE GROUNDS OF APPEAL. 2 . DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY MS. VASANTI PATEL (LD COUNSEL), ON BEHALF OF THE AS SESSEE AND SHRI SOMNATH UKKAL, DEPARTMENTAL REPRESENTATIVE (LD . DR), ON BEHALF OF THE REVENUE. 3. THE ONLY GROUND IN THIS APPEAL IS WITH REGARD TO TH E ACTION OF LOWER AUTHORITIES IN MAKING TREATMENT OF INCOME FROM HOARDINGS AS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST BUSINESS/PROFESSION. 4. IT HAS BEEN ARGUED BY THE LD. COUNSEL OF THE ASSES SEE THAT DURING THE YEAR, ASSESSEE EARNED ITS INCOME FROM RUNNING/OPERATING MALL AND ITS INCOME HAS BEEN ASSE SSED BY THE AO UNDER THE HEAD INCOME FROM BUSINESS, BUT T HE INCOME RECEIVED FROM PROMOTION OF HUB AND LETTING O UT OF HOARDING HAS BEEN HELD TO BE INCOME FROM OTHER SOU RCES. IT HAS BEEN SUBMITTED BY HER THAT INCOME FROM HOARDING IS VERY SYNCHEM INVESTMENTS PVT 3 MUCH PART AND PARCEL OF THE OVERALL BUSINESS ACTIVI TIES OF THE ASSESSEE. IT HAS BEEN DONE ON REGULAR BASIS, AND NO T AS ISOLATED ACTIVITY, IT IS INTEGRAL PART OF OTHER REG ULAR ACTIVITIES OF THE ASSESSEE, AND THAT IN EARLIER ALSO ALSO SIMILAR INCOME WAS EARNED WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT AS INCOME FROM BUSINESS. IN VIEW OF THESE CIRCUMSTAN CES, THERE WAS NO REASON TO GIVE DIFFERENT TREATMENT TO THE SA ME IN THIS YEAR. 5 . ON THE OTHER HAND, LD. DR HAS SUPPORTED THE ORDER S OF LOWER AUTHORITIES AND HAS ALSO RELIED UPON THE JUDG MENT OF CALCUTTA HIGH COURT IN THE CASE OF MUKHARJEE ESTATE PVT. LTD. VS. CIT 244 ITR 1 AND REQUESTED FOR UPHOLDING THE O RDERS OF LOWER AUTHORITIES. IN RESPONSE TO THE SUBMISSION OF LD COUNSEL FOR FOLLOWING A CONSISTENT VIEW EVERY YEAR, IT WAS SUBMITTED BY LD DR THAT EACH YEAR IS A SEPARATE YEAR, AND THEREF ORE AO WAS FREE TO TAKE A DIFFERENT VIEW IN THIS YEAR. HOWEVER , HE WAS NOT ABLE TO SHOW ANY CHANGE IN FACTS OR LAW. 6. IN REPLY LD. COUNSEL HAS DISTINGUISHED THE JUDGMEN T OF MUKHARJEE ESTATE PVT. LTD. (SUPRA) ON THE GROUND TH AT IN THE SAID JUDGMENT, HONBLE COURT WAS CALLED UPON TO RES OLVE THE DISPUTE OF DECIDING THE HEAD OF INCOME BETWEEN INC OME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCE AND IN THAT BACKGROUND ONLY, THE INCOME FROM HOARDING WAS HELD TO BE INCOME FROM OTHER SOURCES. THE ASSESSEE, IN THE A FORESAID CASE, NEVER CLAIMED IT AS PART OF ITS ACTIVITIES, T O BE ASSESSED AS INCOME FROM BUSINESS. THUS, THE ISSUE OF TREATMEN T OF THIS INCOME AS PART OF OVERALL BUSINESS ACTIVITIES OF TH E ASSESSEE SYNCHEM INVESTMENTS PVT 4 AND ACCORDINGLY ITS ASSESSMENT AS PER LAW AS INCOM E FROM BUSINESS, WAS NOT THERE BEFORE THE HONBLE HIGH CO URT, AND THEREFORE, THE AFORESAID DECISION IS NOT APPLICABLE ON THE CASE BEFORE US, BEING DISTINGUISHABLE ON FACTS AS WELL A S LAW. SHE HAS ALSO RELIED UPON THE FEW JUDGMENTS IN SUPPORT O F HER CLAIM THAT PRINCIPAL OF CONSISTENCY SHOULD BE FOLLOWED, A ND THUS, IF THE INCOME HAS BEEN TAXED UNDER THE HEAD BUSINESS I N EARLIER YEARS, THEN THE SAME TREATMENT SHOULD BE APPLIED IN THIS YEAR ALSO BY THE AO. LASTLY, SHE SUBMITTED THAT THERE IS NO SUCH CONCEPT THAT EACH YEAR IS A SEPARATE YEAR, AND TH E REVENUE IS NOT FREE TO TAKE A DIFFERENT VIEW EVERY YEAR. 7 . WE HAVE GONE THROUGH THE FACTS OF THE CASE AS WEL L AS ORDERS OF LOWER AUTHORITIES. IT IS NOTED BY US THAT THE AO HAS ASSESSED THE ENTIRE INCOME OF THE ASSESSEE AS INCOME FROM B USINESS AS WAS CLAIMED BY THE ASSESSEE IN ITS RETURN. BUT, ONL Y THE AMOUNT RECEIVED WITH REGARD TO HUB PROMOTION AND HO ARDING LETTING OUT INCOME WAS CATEGORIZED UNDER THE HEAD INCOME FROM OTHER SOURCES. OUR ATTENTION WAS DRAWN UPON T HE RETURN OF INCOME, THE ANNUAL ACCOUNTS AND ASSESSMEN T ORDER PASSED U/S 143(3) FOR A.Y.2007-08, SHOWING THAT SIM ILAR INCOME HAS BEEN ASSESSED BY THE AO AS INCOME FROM BUSINESS. WE FIND THAT IN THE ASSESSMENT ORDER OF THIS YEAR, NO PROPER REASONING HAS BEEN GIVEN BY THE AO, JUSTI FYING AS TO HOW AND WHY THIS INCOME IS NOT PART OF THE BUSINESS INCOME OF THE ASSESSEE. NO PROPER JUSTIFICATION HAS BEEN GIVE N BY THE AO TO TAKE THIS INCOME OUT OF THE MAIN STREAM AND GIVE IT A DIFFERENT TREATMENT. THE AO HAS MERELY RELIED UPON THE SYNCHEM INVESTMENTS PVT 5 JUDGMENT OF MUKHARJEE ESTATE PVT. LTD. (SUPRA). IN OUR CONSIDERED VIEW, THE FACTS OF THE CASE RELIED UPON BY THE AO WERE DIFFERENT, AND NATURE OF DISPUTE INVOLVED IN T HE SAID CASE WAS ALSO DIFFERENT. IT HAS BEEN SUBMITTED BY THE LD . COUNSEL THAT LOCATION OF THE HOARDING WAS ON THE PILLARS AN D ON THE WALLS INSIDE THE MALL. THESE FACTS REMAIN UNDISPUTE D. THUS, WE CAN HOLD, FROM THE FACTS GATHERED THAT THE ASSES SEE HAS DERIVED THIS INCOME AS PART OF ITS SYSTEMATIC AND O RGANIZED BUSINESS ACTIVITIES, CARRIED OUT IN THE NORMAL COUR SE OF ITS BUSINESS. 7.1. THUS, IN VIEW OF THE AFORESAID FACTS, WE FIND NO R EASON UNDER THE LAW TO GIVE THIS INCOME, A DIFFERENTIAL T REATMENT, AND PUT THE ASSESSEE UNDER AVOIDABLE HARDSHIPS. IN OUR CONSIDERED VIEW, THIS KIND OF LITIGATION YIELDS NO PRODUCTIVE RESULTS AND IS INDEED NOT HELPFUL TO THE REVENUE IN AUGMENTING MOR E COLLECTION OF TAX. 7.2. FURTHER, IT IS FURTHER WORTH NOTING THAT SIMILAR I NCOME HAS BEEN FOUND ASSESSABLE AS BUSINESS INCOME BY THE AO HIMSELF IN THE ASSESSMENT ORDER PASSED U/S 143(3), DATED 24 .12.09. IN THIS ORDER IT HAS BEEN CLEARLY MENTIONED BY THE AO THAT NATURE OF THE BUSINESS OF THE ASSESSEE WAS, REAL ESTATE DE VELOPMENT, LEASE OF PREMISE AND LETTING OF SPACE FOR HOARDING, ADVERTISEMENT AS WELL AS PROMOTION. THUS, WHEN IN A PARTICULAR YEAR, THE INCOME FROM HOARDING HAS BEEN FOUND TO BE INCOME FROM BUSINESS, THEN THERE WAS NO REASON TO TAKE A DIFFERENT VIEW IN ANOTHER YEAR, UNLESS OF COURSE WH EN THERE IS CHANGE IN SOME MATERIAL FACTS OR APPLICABLE LAW. WE FIND SYNCHEM INVESTMENTS PVT 6 SUPPORT FROM THE ORDER OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295 . ITS RELEVANT PARA IS REPRODUCED HEREIN: IT APPEARS FROM THE RECORD THAT IN SEVERAL ASSESSM ENT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUN AL IN FAVOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTE R ANY FURTHER BUT IN RESPECT OF SOME ASSESSMENT YEARS THE MATTER WAS TAKEN UP IN APPEAL BEFORE THE BOMBAY HIGH COURT BUT WITHOUT ANY SUCCESS. THAT BEING SO, THE REVENUE CANNOT BE ALLOWED TO FLIP-FLOP ON THE ISSUE AND IT OUGHT L ET THE MATTER REST RATHER THAN SPEND THE TAXPAYERS MONEY IN PURSUING LITIGATION FOR THE SAKE OF IT. 7.3. THUS, FROM THE ABOVE, IT IS CLEAR THAT LAW DOES NO T PERMIT THE REVENUE TO TAKE SHIFTING STANDS EVERY YEAR. LD. DR HAS ARGUED THAT EACH YEAR IS A SEPARATE YEAR, AND THE REFORE AO WAS WELL WITHIN HIS POWERS TO TAKE A DIFFERENT VIEW IN THIS YEAR. THIS KIND OF ARGUMENT IS MADE ON BEHALF OF THE REVE NUE, QUITE FREQUENTLY. WE FIND THAT, WHILE MAKING ASSESSMENTS, THIS CONCEPT HAS BEEN, LARGELY, MIS-UNDERSTOOD AND MIS-A PPLIED BY THE REVENUE. IF UNDER THE LAW, THE AO IS ALLOWED TO TAKE A DIFFERENT VIEW EVERY YEAR, DEPENDING UPON HIS SWEET WILL OR MOOD SWINGS, WITHOUT THERE BEING ANY CHANGE IN MATE RIAL FACTS OR LAW APPLICABLE, THEN THERE WOULD BE CHAOS AND UNCERTAINTIES, ALL AROUND. SWORD OF LITIGATION SHAL L KEEP HANGING ON THE HEADS OF THE TAXPAYERS. FINALITY OF LITIGATION WOULD BE DIFFICULT TO BE ATTAINED. NO TAXPAYERS OR A BUSINESS ORGANIZATION WOULD BE ABLE TO PROPERLY PLAN ITS FIN ANCIAL AFFAIRS, BECAUSE OF UNCERTAIN AND INDETERMINABLE TA X LIABILITIES. SUCH A SITUATION CAN DISCOURAGE VOLUNTARY TAX COMPL IANCE IN SYNCHEM INVESTMENTS PVT 7 THE COUNTRY, THUS LEADING TO LOWER TAX COLLECTION, AND THEREFORE SUCH A SCENARIO WOULD NOT BE GOOD FOR REVENUE ALSO, WHICH CAN NEVER BE INTENTION OF THE LAW. THEREFORE, IN OU R CONSIDERED VIEW, EACH YEAR IS NOT A SEPARATE YEAR, SO AS TO ENABLE THE AO TO APPLY DIFFERENT YARDSTICK OR RULE EVERY YEAR, EV EN WHILE FACTUAL AND LEGAL POSITION REMAIN UNALTERED. THIS C ONCEPT HAS BEEN WRONGLY UNDERSTOOD BY THE REVENUE. EACH YEAR I S SEPARATE YEAR, ONLY FOR THE LIMITED PURPOSE FOR COM PUTING TAXABLE INCOME OF AN ASSESSEE TAKING INTO ACCOUNT F ACTS AND FIGURES OF EACH RELEVANT YEAR SEPARATELY, AND CERTA INLY NOT FOR CHANGING THE PARAMETERS FOR COMPUTING A SIMILAR INC OME OR ALLOWING AN IDENTICAL CLAIM. THE RULE OF TAXATION, PERMEATING THROUGH DIFFERENT YEARS, SHOULD REMAIN THE SAME, AS LONG AS FACTUAL/LEGAL POSITION REMAINS UNCHANGED. THE AO IS NOT PERMITTED UNDER THE LAW TO CHANGE HIS EARLIER VIEW, FOR INCREASING TAX BURDEN UPON THE TAXPAYER, WITHOUT TH ERE BEING CHANGE IN MATERIAL FACTS OR APPLICABLE LAW. 7.4. THUS, WE ALLOW THE GROUND OF THE ASSESSEE AND DIRE CT THE AO TO ASSESSEE THE IMPUGNED INCOME AS PART OF INCO ME FROM BUSINESS, AS WAS ASSESSED BY HIM IN AY 2007-08. SYNCHEM INVESTMENTS PVT 8 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2015. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER # $ MUMBAI; ( DATED ;18/11/2015 CTX? P.S/. .. %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / # 0 ( * ) / THE CIT, MUMBAI. 4. / / # 0 / CIT(A)- , MUMBAI 5. 34 - , / *& 5 , # $ / DR, ITAT, MUMBAI 6. 6! 7$ / GUARD FILE. / BY ORDER, .3* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI