DCIT 3(3), MUMBAI V. SHAH SPINNERS P. LTD, MUMBAI

ITA 8412/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79171 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 18-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 03-12-2010
• Court: TRIBUNAL
• Department Lawyers: NISHITH GANDHI
• Assessee Lawyers: NEERJA PRADHAN
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 8411, 8412 AND 8413/MUM/2010 (ASSESSMENT YEAR: 2003-04, 2004-05 & 2005-06) DCIT C IRCLE - 3(3) ROOM NO.609 6 TH FLOOR, AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. SHAH SPINNERS PVT. LTD. 8 TH FLOOR, REGENT CHAMBERS NARIMAN POINT MUMBAI-400 021. (APPELLANT) (RESPONDENT) P ERMANENT ACCOUNT N O. : AAFCS 3007 D ASSESSEE BY : MS. NEERJA PRADHAN REVENUE BY : SHRI NISHITH GANDHI DATE OF HEARING : 18/06/2014 DATE OF PRONOUNCEMENT : 18/06/2014 O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: ALL THESE APPEALS ARE FILED BY THE REVENUE AND THEY ARE DIRECTED AGAINST SEPARATE ORDERS PASSED BY THE LD. CIT(A) AL L DATED 16.09.2010 FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 . GROUNDS OF APPEAL IN ALL THE APPEALS ARE IDENTICAL AND READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING AO TO ALLOW EXPEN DITURE CLAIMED IN THE PROFIT & LOSS A/C AND 50% OF DEPRECIATION ON PR OPERTY. WHILE DOING SO, THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESSEE DID NOT CARRY OUT ANY BUSINESS ACTIVITY DURING THE YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DECIDING THE ISSUE ON ITS OWN DECISION ITA NO. 8411, 8412 & 8413/MUM/2010 AY: 2003-04, 2004-05 & 2005-06 2 FOR ASSESSMENT YEAR 2002-03, WHICH IS NOT ACCEPTED BY THE REVENUE AND IS PENDING BEFORE THE ITAT. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF AO BE RESTOR ED. 2. AT THE OUTSET IT WAS SUBMITTED BY THE LD. AUTHOR IZED REPRESENTATIVE THAT ORDER PASSED BY THE LD. CIT(A) IN RESPECT OF A SSESSMENT YEAR 2002-03 ON THE BASIS OF WHICH PRESENT APPEALS HAVE BEEN ALL OWED BY CIT(A) HAS BEEN CONFIRMED BY THE TRIBUNAL BY DISMISSING THE DE PARTMENTAL APPEAL. THEREFORE, IT WAS PLEADED BY THE LD. AUTHORIZED RE PRESENTATIVE THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS COVERED IN F AVOUR OF ASSESSEE. REFERENCE WAS MADE TO THE ORDER OF THE TRIBUNAL DAT ED 30/03/2011 PASSED IN ITA NO.4326/M/2009. COPY OF THE ORDER WAS PLACED ON OUR RECORD AND WAS ALSO GIVEN TO THE LD. AUTHORIZED REP RESENTATIVE. 2.1 LD. DR DID NOT CONTROVERT TO THE AFOREMENTIONED FACTUAL POSITION MENTIONED BY THE LD. AUTHORIZED REPRESENTATIVE. 3. IN THIS VIEW OF THE SITUATION, HAVING HEARD BOTH THE PARTIES, WE DISMISS THE DEPARTMENTAL APPEAL RESPECTFULLY FOLLOW ING THE AFOREMENTIONED ORDER OF THE CO-ORDINATE BENCH IN TH E CASE OF THE ASSESSEE ITSELF. THE RELEVANT OBSERVATION OF THE TR IBUNAL WHILE CONFIRMING THE ORDER OF THE LD. CIT(A) ARE REPRODUCED BELOW:- 11. IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) WAS PERFECTLY JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION AS WELL AS DEDUCTION TOWARDS EXPENDITURE. AS COULD BE NOTICED FROM THE ORDER PASSED BY THE LD. CIT(A, THE ASSESSEE HAS MADE A SPECIFIC CLAIM THAT THE COMPANY HAD USED THE PREMIS ES FOR ITS BUSINESS PURPOSE AND HAD EARNED BUSINESS CONDUCTING CHARGES UNDER THE HEAD INCOME FROM HOUSE PROPERTY THE NAT URE OF THE SAID INCOME DOES NOT CEASE TO BE BUSINESS ACTIVITY. BY VIRTUE OF A SPECIFIC PROVISION CONTAINED IN SECTION 22 OF THE A CT, INCOME EARNED THEREFORE MAY BE ASSESSABLE TO TAX UNDER THE HEAD PROPERTY INCOME BUT THE FACT REMAINS THAT THE ASS ESSEE WAS ENGAGED IN A BUSINESS ACTIVITY. PLACING RELIANCE UP ON SEVERAL DECISIONS LISTED OUT IN PARA 4.2 OF THE ORDER OF TH E LD. CIT(A) IT WAS ITA NO. 8411, 8412 & 8413/MUM/2010 AY: 2003-04, 2004-05 & 2005-06 3 CONTENTED BY THE ASSESSEE THAT THE CLAIM OF DEDUCTI ON TOWARDS DEPRECIATION AS WELL AS EXPENDITURE IS DIRECTLY LIN KED TO THE EARNING OF INCOME UNDER THE HEAD BUSINESS. NO EVI DENCE WHATSOEVER WAS FURNISHED BY THE LD. DR TO CONTROVER T THE FINDINGS OF THE LD. CIT(A). 12. IT IS EQUALLY RELEVANT TO NOTICE HERE THAT WHEN AN APPEAL IS LISTED FOR HEARING BEFORE THE COMMISSIONER OF INCOM E TAX(APPEALS) A NOTICE IS SENT TO THE AO CONCERNED AND GOING BY T HE PAST PRACTICE THE AO IS DUTY BOUND TO APPEAR BEFORE THE CIT(A) SO AS TO APPRECIATE THE ARGUMENTS OF ASSESSEE, ON THE OTHER SIDE, SO AS TO CONTRADICT OR COUNTER THE SAME. IT IS EVIDENT FROM THE NARRATION IN THE CAUSE TITLE OF THE ORDER PASSED BY THE CIT(A) T HAT NONE WAS PRESENT FOR THE DEPARTMENT. OUR EXPERIENCE SHOWS TH AT THE GOVERNMENT IS STILL FORTUNATE TO HAVE SOME DILIGENT OFFICERS WHO CONSIDER THAT IT IS THEIR RESPONSIBILITY AND DUTY T O RESPOND TO THE NOTICES ISSUED BY THE COMMISSIONER (APPEALS) AND TH EY MAY EITHER APPEAR IN PERSON OR ATLEAST FURNISH THEIR WRITTEN S UBMISSIONS. UNFORTUNATELY, IN THE INSTANT CASE, THOUGH AO IS AL SO FROM MUMBAI, HE CHOSE NOT TO APPEAR, AS IS THE USUAL PRA CTICE IN NUMBER OF CASES. THIS, COUPLED WITH THE FACT THAT E VEN BEFORE US THOUGH AN APPEAL IS FILED FORMALLY IN 2009 EVEN TIL L THE YEAR 2011 NO MATERIAL COULD BE FURNISHED TO ENABLE THE TRIBUN AL TO UNDERSTAND THE CONTENTION OF THE REVENUE IN ITS PRO PER PERSPECTIVE, COMPELS US TO DISPOSE OF THE APPEAL O THE BASIS OF MATERIAL AVAILABLE ON RECORD. 13. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LEARN ED CIT(A) AND THEREFORE, DISMISS THE APPEAL FILED BY THE REVENUE. 4. ACCORDINGLY ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2014. SD/- SD/- (RAJENDRA) ACCOUNTANT MEMBER (I.P. BANSAL ) JUDICIAL MEMBER MUMBAI, DATED: 18/06/2014. JV. ITA NO. 8411, 8412 & 8413/MUM/2010 AY: 2003-04, 2004-05 & 2005-06 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.