DCIT, Jaipur V. MAHIMA REAL ESTATE PVT. LTD., Jaipur

ITA 902/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5245 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Assessee Lawyers: G G MUNDRA C A DHK
• Keywords: Business income
• Section: 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 902/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE-2, JAIPUR. CUKE VS. M/S. MAHIMA REAL ESTATE PVT LTD., 8, NIKHIL APARTMENT, 670, ADARSH NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACC M 4491 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : MS. ROSHANTA MEENA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11.05.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 31/05/2016. VKNS'K@ ORDER PER SHRI KUL BHART, JM. THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDE R OF LD. CIT (APPEALS), CENTRAL, JAIPUR DATED 09.09.2013 PERTAINING TO ASSE SSMENT YEAR 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A), CENTRAL, JAIPUR HAS ERRED IN ALLOWING DEDUCTION OF RS. 1,43,96,740/- U/S 24(A), WRONGLY RELYING ON HONBLE ITAT ORDER FO R AY 2006-07 AND 2007-08 WHICH WAS ON THE QUESTION WHETHER RENTA L INCOME CONSTITUTES BUSINESS INCOME OR NOT, WHEREAS THE ISS UE UNDER CONSIDERATION IS WHETHER INCOME FROM HOUSE PROPER TY SHOWN BY THE ASSESSEE IS ACTUALLY INCOME FROM OTHER SOURCES . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A), CENTRAL JAIPUR HAS ERRED IN ALLOWING RELIEF OF RS. 38,785/- DISALLOWED BY THE AO FOR LATE PAYMENT OF CONTRIBUTION OF EMPLO YEES TO PF U/S 36(VA) WHICH CANNOT BE TREATED AT PAR WITH SECTION 43B. 2 ITA NO. 902/JP/2013 DCIT VS. MAHIMA REAL ESTATE PVT. LTD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A), CENTRAL, JAIPUR HAS ERRED IN DELETING ADDITION OF R S. 8,72,421/- [WRONGLY TYPED AS RS. 12,19,042/-] BEING PRIOR PERI OD EXPENSES DEBITED IN THE YEAR UNDER CONSIDERATION. 2. BRIEFLY STATED THE FACTS ARE THAT CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT UNDER SECTION 14 3(3) OF THE IT ACT, 1961 WAS FRAMED VIDE ORDER DATED 15 TH JUNE, 2012. WHILE FRAMING THE ASSESSMENT, THE AO DECLINED THE DEDUCTION CLAIMED UNDER SECTION 24(A) OF THE ACT ON THE GROUND THAT THE MAIN BUSINESS OF THE ASSESSEE IS CONSTRUCTION O F RESIDENTIAL/COMMERCIAL SPACES/FLATS AND SALE OF THE SAME. A FEW FLATS/SPA CES WHICH WERE NOT SOLD, WERE RENTED OUT. THE INCOME SO EARNED IS INCIDENTAL TO MAIN BUSINESS, BECAUSE ASSESSEES INTENTION WAS NOT FOR EARNING HOUSE PROP ERTY INCOME. THE AO TREATING THE SAME AS INCOME FROM OTHER SOURCES, DECLINED THE DED UCTION OF RS. 1,43,96,740/-. ASSESSEE BEING AGGRIEVED BY THE ORDER OF AO, PREFER RED APPEAL BEFORE LD. CIT (A) WHO AFTER CONSIDERING THE SUBMISSIONS ALLOWED THE A PPEAL ON THE GROUND THAT THE FACTS OF THE CASE OF THE APPELLANT ARE COVERED BY T HE FINDING OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 181/JP/2011. 3. THE AO, APART FROM DECLINING THE DEDUCTION UNDER SECTION 24(A), ALSO MADE DISALLOWANCE OF CONTRIBUTION OF EMPLOYEE TO PF OF R S. 38,785/- AND PRIOR PERIOD EXPENSES OF RS. 8,72,421/-. ON APPEAL, THE LD. CIT (A) DELETED BOTH THESE DISALLOWANCES. 4. NOW THE REVENUE IS IN PRESENT APPEAL CHALLENGING THE DELETION OF DISALLOWANCES AND ALLOWING DEDUCTION UNDER SECTION 24(A) OF THE ACT. 4.1. THE FIRST GROUND IS AGAINST ALLOWANCE OF DEDUC TION UNDER SECTION 24(A) OF THE ACT. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) 3 ITA NO. 902/JP/2013 DCIT VS. MAHIMA REAL ESTATE PVT. LTD. WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. TH E LD. D/R SUBMITTED THAT THE INCOME EARNED FROM SPACES WOULD NOT CONSTITUTE INCO ME EARNED FROM THE HOUSE PROPERTY. 4.2. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT (A) AND REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITTEN SUBMISSIONS. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE AO IN THE ASSESSMENT ORDER HAS OBSERVE D THAT THE MAIN BUSINESS OF THE ASSESSEE IS CONSTRUCTION OF RESIDENTIAL/COMMERCIAL SPACES/FLATS. A FEW FLATS, WHICH WERE NOT SOLD, WERE RENTED OUT. THE INCOME SO EARNE D IS INCIDENTAL TO MAIN BUSINESS BECAUSE THE ASSESSEES INTENTION WAS NOT TO LET THE SPACE/FLATS SO CONSTRUCTED FOR EARNING HOUSE PROPERTY INCOME. THEREFORE, THE AO WA S OF THE VIEW THAT SUCH INCOME IS NEITHER COVERED UNDER BUSINESS INCOME NOR UNDER INCOME FROM HOUSE PROPERTY. IN SUCH CIRCUMSTANCES, SUCH INCOME CAN BE CLASSIFIED UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER, LD. CIT (A) AL LOWED THE DEDUCTION ON THE GROUND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE C OORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO. 313/JP/2011 AND ALSO FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO. 181/JP/2011. THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 313/JP/2011 HAS DI RECTED THE AO TO TREAT THE INCOME AS INCOME FROM HOUSE PROPERTY AGAINST BUSINE SS INCOME AS HELD BY THE AO. THE ASSESSEE WAS FURTHER ALLOWED STATUTORY DEDUCTIO N AS PER PROVISIONS OF LAW. IN THE YEAR UNDER APPEAL, FACTS ARE IDENTICAL EXCEPT T HAT IN PLACE OF BUSINESS INCOME, THE AO HAS TREATED INCOME FROM OTHER SOURCES. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE REVENUE THAT THE ISSUE BEFORE THE TRIBUNAL IN A.Y. 2006-07 AND 2007-08 WAS NOT RELATED TO THE AVAILABILITY OF DEDU CTION UNDER SECTION 24(A) OF THE 4 ITA NO. 902/JP/2013 DCIT VS. MAHIMA REAL ESTATE PVT. LTD. ACT. THEREFORE, WE DO NOT SEE ANY REASON TO INTERF ERE WITH THE FINDINGS OF LD. CIT (A). THIS GROUND OF THE REVENUES APPEAL IS REJECT ED. 5. GROUND NO. 2 IS AGAINST DELETION OF DISALLOWANCE OF RS. 38,785/- AS MADE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION T O PF. 5.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. 5.2. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE HAS SUPPORTED THE ORDER OF LD. CIT (A) AND REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITTEN SUBMISSIONS. HE FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. VINAY CEMENT LTD. 313 ITR (ST) 1 (SC), CIT VS. AIMIL LTD. 321 ITR 508 (DE L.) AND THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SABRI E NTERPRISES, 298 ITR 141 (KAR.). 5.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT (A) HAS FOLLOWED T HE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SABRI EN TERPRISES (SUPRA). THE REVENUE HAS NOT POINTED OUT HOW THE JUDGMENT OF HONBLE KAR NATAKA HIGH COURT IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. THE A O HAS MADE DISALLOWANCE ON THE BASIS THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION TO WARDS PF WAS MADE AFTER THE DUE DATE AS PRESCRIBED UNDER THE PF ACT. HOWEVER, THE ASSESSEE HAS DEMONSTRATED THAT PAYMENT WAS MADE BEFORE THE DUE DATE OF FILING OF THE RETURN U/S 139(1) OF THE IT ACT. THEREFORE, RESPECTFULLY FOLLOWING THE RATI O LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SABRI E NTERPRISES (SUPRA), WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT ( A). THE SAME IS HEREBY UPHELD. THIS GROUND OF THE REVENUES APPEAL IS REJECTED. 5 ITA NO. 902/JP/2013 DCIT VS. MAHIMA REAL ESTATE PVT. LTD. 6. GROUND NO. 3 IS AGAINST DELETION OF ADDITION OF RS. 8,72,421/- MADE ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES. 6.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. TH E LD. D/R SUBMITTED THAT THE ASSESSEE HAD DEBITED EXPENSES OF RS. 8,72,421/- REL ATING TO PRIOR PERIOD TO THE PROFIT & LOSS ACCOUNT. SUCH EXPENSES DO NOT RELATE TO THE RELEVANT PERIOD UNDER CONSIDERATION. THEREFORE, THE SAME WAS RIGHTLY DISA LLOWED BY THE AO. 6.2. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITTEN SUBMISSIONS. THE LD. COUNSE L CONTENDED THAT THE AO HAD ERRED IN NOT CONSIDERING THE CLAIM OF THE ASSESSEE MADE IN THE ASSESSMENT PROCEEDINGS FOR ALLOWING THE EXPENSES AMOUNTING TO RS. 12,19,042/- PERTAINING TO THIS FINANCIAL YEAR DEBITED IN ACCOUNTS IN ACCOUNTS IN NEXT FINANCIAL YEAR AS PRIOR PERIOD EXPENSES WHILE DISALLOWING THE PRIOR PERIOD EXPENSES DEBITED IN ACCOUNTS FOR THIS FINANCIAL YEAR. THIS WAS VERIFIABLE FROM THE AUDITED ACCOUNTS FOR F.Y. 2010-11. THEREFORE, THE AO WHILE DISALLOWING PRIOR PERIOD EX PENSES I.E. EXPENSES FOR F.Y. 2009-10 DEBITED IN ACCOUNTS FOR F.Y. 2010-11 SHOULD HAVE ALLOWED EXPENSES OF THIS YEAR I.E. F.Y. 2010-11 DEBITED IN ACCOUNTS FOR F.Y. 2011-12 AS PRIOR PERIOD EXPENSES. THE LD. COUNSEL HAS RELIED ON THE JUDGMENT OF HONB LE SUPREME COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES, 358 ITR 295 (SC). 6.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) HAS GIVEN A FINDING OF FAC T IN PARA 6.3 OF HIS ORDER AS UNDER :- 6.3. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO , SUBMISSIONS OF THE AR AND FIND THAT THE APPELLANT HAS CONSISTENTLY BEE N CLAIMING EXPENDITURE OF THE PREVIOUS A.Y. IN THE SUBSEQUENT A.Y. DEPENDING 6 ITA NO. 902/JP/2013 DCIT VS. MAHIMA REAL ESTATE PVT. LTD. UPON WHEN THEY ARE BOOKED. THEREFORE DISALLOWING PR EVIOUS YEARS EXPENSES DURING THIS A.Y. WOULD GENERATE A SEQUENCE OF ACCOUNTING EXERCISE WHEREBY THE EXPENSES PERTAINING TO THIS A. Y. CLAIMED IN NEXT A.Y. WOULD HAVE TO BE ALLOWED IN THIS A.Y. DISTURB ING THIS CONSISTENT ACCOUNTING METHOD WOULD NOT RESULT IN ANY OVERALL T AX IMPLICATION. THEREFORE, THE EXPENSES OF RS. 12,19,042/- DISALLOW ED ARE DELETED. THE ABOVE FINDING OF FACT IS NOT CONTROVERTED BY TH E REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, IN VIEW OF THE JUDG MENT OF APEX COURT RENDERED IN THE CASE OF CIT VS. EXCEL INDUSTRIES (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT (A). THE SAME IS HEREBY U PHELD. THIS GROUND RAISED BY THE REVENUE IS REJECTED. 7. GROUND NO. 4 IS GENERAL IN NATURE AND NEEDS NO A DJUDICATION. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/201 6. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHART ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 31/05/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CENTRAL CIRCLE-2, JAIP UR. 2. THE RESPONDENT- M/S. MAHIMA REAL ESTATE PVT. LTD ., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 902/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 902/JP/2013 DCIT VS. MAHIMA REAL ESTATE PVT. LTD.