DCIT 3(3), MUMBAI V. R.T EXPORTS P. LTD, MUMBAI

ITA 8973/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3439 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-05-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 8973 /MUM/2010 ASSESSMENT YEAR: 2006-07 DCIT 3(3) MUMBAI VS. M/S. R.T. EXPORTS P. LTD. 508, DALAMAL HOUSE, J.B. ROAD NARIMAN POINT MUMBAI 400 021 PAN: AAACR 3524 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJARSHI DWIVEDY RESPONDENT BY : SHRI GYANESHWAR KATARAM DATE OF HEARING : 07.05.2013 DATE OF PRONOUNCEMENT : 12.06.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -7, MUMBAI DATED 08.10.2010 FOR THE ASSESSMENT YEAR 20 06-07. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO TREAT THE INCOM E EARNED FROM LETTING OUT OF WAREHOUSE AND ALSO FURNITURE AND FIXTURES AMOUNTING TO RS.73,49,191/- AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES AS A SSESSED BY THE AO. 2. WHILE DO SO, THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE IS NOT IN THE BUSINESS OF LETTING OUT WAREHOUSE, FU RNITURE ETC. AND HAD LET OUT THE UNUSED ASSETS AND HENCE THE AO HAS RIGHTLY TREATED THE SAME AS INCOME FROM OTHER SOURCES WITHIN THE MEANING OF PROVISIONS SEC . 56(2)(I) OF THE INCOME TAX ACT. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO. 8973 /MUM/2010 M/S. R.T. EXPORTS P. LTD ASSESSMENT YEAR: 2006-07 2 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE, A COMP ANY IN THE ACCOUNTS HAD SHOWN A RENTAL INCOME OF RS.73,49,191/- BEING THE RENT RECE IVED FOR LETTING OUT FURNITURE AND FIXTURE (FROM M/S. IRANIAN OFFSHORE ENGINEERING AN D CONSTRUCTION) (RS.30,66,576/-), M/S RED HAT INDIA PVT. LTD. (RS.27,49,344/-) AND M/S ER ICSSON INDIA PVT. LTD. (RS.10,84,800/-) AND ALSO AN INCOME LET OUT OF WAREHOUSES FROM CENTR AL WAREHOUSING CORPORATION (RS.4,48,471/-). THE ASSESSEE, IN ITS RETURN OF INC OME HAD SHOWN THESE RECEIPTS AS BUSINESS INCOME. HOWEVER, IN THE ASSESSMENT FRAMED U/S 143(3), THE AO, BY CALCULATING A PRO-RATA BASIS RS.1,06,714/- AS DEPRECIATION IN RES PECT OF FURNITURE & FIXTURES LET OUT AND RS.5000/- AS DEPRECIATION IN RESPECT OF WAREHOUSE T HEREBY ALLOWING RS.1,11,714/- ADDED BOTH BACK TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD BUSINESS AND PROFESSION, TREATED THE REST, AN AMOUNT OF RS.72,37,477/- UNDER THE HEAD INCOME FROM OTHER SOURCES AS THE ASSESSEE WAS NOT IN THE BUSINESS OF LETTING OUT ON HIRE ITS PLANT AND MACHINERY. ON APPEAL, THE LD.CIT (A) DIRECTED THE A O TO VERIFY AND TREAT THE INCOME AS BUSINESS INCOME ONLY IF IN THE PRECEDING YEAR IT WA S ACCEPTED AS BUSINESS INCOME. AGGRIEVED BY THE IMPUGNED ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD THE RIVAL SUBMISSION AND PERUSED TH E MATERIAL ON RECORD, IT APPEARS THAT THE ASSESSEE, IN THE PAST HAS BEEN SHOWING THE INCOME FROM FURNITURE HIRE AND WAREHOUSING UNDER THE HEAD BUSINESS INCOME ALL ALON G IN THE EARLIER YEARS AND THE AO HAS MADE THE VARIATION IN TREATING THE SAID INCOME AS I NCOME FROM OTHER SOURCES ONLY DURING THE YEAR UNDER CONSIDERATION. CONSIDERING THE FACTS AND CIRCUMSTANCES IN TOTO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) DI RECTING THE AO TO VERIFY AND TREAT THE INCOME AS BUSINESS INCOME ONLY IF IN THE PRECEDING YEAR THE SAME HAS BEEN ACCEPTED AS BUSINESS INCOME. THUS THE ORDER OF THE LD.CIT(A) IS UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JUNE 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.06.2013. *SRIVASTAVA ITA NO. 8973 /MUM/2010 M/S. R.T. EXPORTS P. LTD ASSESSMENT YEAR: 2006-07 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.