RAMKURPA PROPERTIES P. L TD, MUMBAI V. ITO 8(3)(3), MUMBAI

ITA 8715/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8672 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 14-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIA B KOLI
• Assessee Lawyers: SITARAM PAREEK
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI D.MANMOHAN,VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.8715/MUM/2010 ASSESSMENT YEAR-2005-06 M/S. RAMKRUPA PROPERTIES PVT. LTD., A/104, GOKUL ARCADE, SUBHASH ROAD, VILE PARLE (E), MUMBAI-400 057 PAN-AACCR 0335A VS. THE ITO 8(3)(3), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SITARAM PAREEK RESPONDENT BY: SHRIA.B. KOLI DATE OF HEARING : 09.10.2012 DATE OF PRONOUNCEMENT: 12.10.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-18, MUMBAI DT.15.11.2010 PERTAINING TO ASSE SSMENT YEAR 2005-06. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) OUGHT NOT HAVE CONFIRMED THE ORDER OF THE ASSESSING OFFICER F OR LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. 3. THE ROOT FOR THE LEVY OF PENALTY LIE IN THE ASSE SSMENT ORDER DT. 28.2.2007 PASSED U/S. 143(3) OF THE ACT. WHILE FRA MING THE ASSESSMENT ORDER, THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN INCOME FROM RENT UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSIO N. THE TOTAL RECEIPTS WERE ITA NO. 8715/M/2010 2 SHOWN AT RS. 7,21,120/-. THE ASSESSEE ALSO CLAIMED EXPENSES TOTALING TO RS. 5,08,924/-. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO SOUGHT EXPLANATION FROM THE ASSESSEE FOR TREATING THE RENT AL INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION TO WHIC H THE ASSESSEE REPLIED THAT THE MAIN OBJECT OF THE COMPANY IS TO BUY, SELL, TAK E OR GIVE ON LEASE, DEVELOP, RECLAIM, EXCHANGE OR ACQUIRE LAND OR ANY INTEREST I N LAND . THE ASSESSEE FURTHER CONTENDED THAT THE RENTAL INCOME HAS BEEN E ARNED IN FURTHERANCE OF THE MAIN OBJECT OF THE COMPANY AND THEREFORE IT HAS BEEN RIGHTLY SHOWN UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PRO FESSION. HOWEVER, THE SAID SUBMISSION WAS REJECTED BY THE AO WHO WAS OF T HE OPINION THAT WHEN SPECIFIC HEAD OF INCOME IS PROVIDED UNDER THE ACT, THE SAME SHOULD BE APPLIED AND ACCORDINGLY WENT ON TO TAX THE RENTAL INCOME UN DER THE HEAD INCOME FROM HOUSE PROPERTY AND DISALLOWED ALL THE EXPENSE S CHARGED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE MATTER WAS CARRIED OVER BEFORE TH E ITAT. THE ITAT IN ITA NO. 1648/MUM/2008 CONFIRMED THE ORDER OF THE LD. CI T(A). HOWEVER, AT THE SAME TIME, THE TRIBUNAL DIRECTED TO ALLOW A DEDUCTI ON OF RS. 13,000/- ON THE GROUND OF MINIMUM EXPENSES FOR SUSTAINING THE COMPA NY. 6. BASED ON THE ABOVE FINDING OF THE TRIBUNAL, THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. THE AO ISSU ED SHOW CAUSE NOTICE GIVING AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN WH Y AN ORDER IMPOSING A PENALTY SHOULD NOT BE MADE U/S. 271(1)(C) OF THE AC T. THE ASSESSEE FILED A DETAILED REPLY DT. 9.3.2009 AND CLAIMED THAT THE AS SESSEE COMPANYS MAIN OBJECT WAS TO DEAL IN IMMOVEABLE PROPERTIES AND REA L ESTATE AND IN PURSUANCE OF THE MAIN OBJECT, THE ASSESSEE RECEIVED RENT TO T HE TUNE OF RS. 7,21,120/- AND ACCORDINGLY SHOWED IT UNDER THE HEAD PROFITS AN D GAINS OF BUSINESS OR PROFESSION AFTER CLAIMING EXPENSES TOTALING TO RS. 5,08,924/-. TO SUBSTANTIATE ITA NO. 8715/M/2010 3 ITS CLAIM, THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE ORISSA HIGH COURT IN THE CASE OF CIT VS. BAZAR (M.P) 200 ITR 13 1. HOWEVER, THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT ACCEPTED BY THE AO WHO WAS OF THE OPINION THAT THE INCOME HAS TO BE TAXED STRICTL Y ACCORDING TO THE PROVISIONS OF I.T. ACT AND THEREFORE INCOME FROM HOU SE PROPERTY HAS TO BE TAXED UNDER THE HEAD HOUSE PROPERTY INCOME AND WEN T ON TO LEVY MINIMUM PENALTY AT RS. 79,478/- U/S. 271(1)(C) OF THE ACT. 7. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 8. AGGRIEVED, THE ASSESSEE IS BEFORE US. THE LD. C OUNSEL FOR THE ASSESSEE REITERATED HIS STAND THAT THE ASSESSEE IS IN THE BU SINESS OF REAL ESTATE AS PER THE MAIN OBJECT OF THE COMPANY AND THEREFORE THE RE NTAL INCOME HAS BEEN RIGHTLY SHOWN UNDER THE HEAD PROFITS AND GAINS OF B USINESS OR PROFESSION. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN THE POSSIBLE VIEW GIVEN BY THE HONBLE HIGH COURT OF ORISSA IN THE CA SE OF BAZAR(MP) (SUPRA). 9. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUPP ORTED THE FINDINGS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE RENTAL INCOME HAS NOT BEEN DISPUTED AT ANY STAGE. THE ONLY DISPUTE RELATES TO THE HEAD OF INCOME UNDE R WHICH IT HAS TO BE TAXED. THE ASSESSEE COMPUTED IT UNDER THE HEAD PRO FITS AND GAINS OF BUSINESS OR PROFESSION WHEREAS THE REVENUE AUTHORIT IES TOOK IT AS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT IS NOT A CASE WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FILED INACCURA TE PARTICULARS RELATING TO ITS INCOME. IN OUR CONSIDERATE VIEW, THE STAND TAKEN BY THE ASSESSEE FOLLOWING THE DECISION OF THE HONBLE ORISSA HIGH COURT (SUPR A) IS ALSO A POSSIBLE VIEW, IT MAY NOT BE THE CORRECT VIEW BUT STILL IT IS A POSSI BLE VIEW. WHEN TWO VIEWS ARE POSSIBLE FOR THE SAME SET OF FACTS, IT CANNOT B E A CASE OF FILING INACCURATE ITA NO. 8715/M/2010 4 PARTICULARS. CONSIDERING THE FACTS OF THE CASE, IN OUR HUMBLE OPINION, NO PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT. THE AO IS DIRECTED TO CANCEL THE PENALTY SO LEVIED. THE FINDING OF THE LD. CIT(A) I S REVERSED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 12 TH DAY OF OCTOBER, 2012 SD/- SD/- (D.MANMOHAN) (N.K. BILLAIYA ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 12 TH OCTOBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI