The ACIT, Circle-4, Surat V. M/s Vardhman Infrastructure Pvt. Ltd, Surat

ITA 976/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60217 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 02-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TIRKEY
• Keywords: Business income

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ %&'( %&'( %&'( %&'(, , , , )* + ) )* + ) )* + ) )* + ) # # # # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.976/AHD/2009 WITH CO.NO.92/AHD/2009 [ASSTT.YEAR : 2005-2006] ACIT, CIR.4 SURAT. /VS. M/S.VARDHMAN INFRASTRUCTURE P. LTD. 724, BELGIUM TOWER, RING ROAD SURAT. PAN : AABCV 1128 L ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 )/ REVENUE BY : SHRI A. TIRKEY, SR.DR 4& 1 2 )/ ASSESSEE BY : SHRI TUSHAR P. HEMANI 5 1 &(*/ DATE OF HEARING : 7 TH MARCH, 2012 678 1 &(*/ DATE OF PRONOUNCEMENT : 4-4-2012 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS IS REVENUES APPEAL AND ASSESSEES CO DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, SURAT DAT ED 12.1.2009 FOR ITA NO.976/AHD/2009 WITH CO.NO.92/AHD/2009 -2- ASSESSMENT YEAR 2005-2006. THEY ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.976/AHD/2009 (REVENUES APPEAL) 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.8,29,326/- MADE BY THE AO ON ACCOUNT OF BUSINES S INCOME TREATED AS INCOME FROM HOUSE PROPERTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER O F THE AO. 3. THE LEARNED DR HAS RELIED ON THE ORDER OF THE AO . HE SUBMITTED THAT THE DECISION OF THE HONBLE APEX COU RT IN THE CASE OF SHAMBHU INVESTMENT P. LTD., 263 ITR 143 SUPPORTS TH E CASE OF THE REVENUE. HE REFERRED TO THE RELEVANT PARTS OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS THE FIRST YEAR OF THE ASSESSMENT IN WHICH THE ISSUE OF ASSESSABILITY OF INCOME UNDER THE HEAD BUSINESS INCOME OR INCOME FROM HOUSE PROPERTY HAS ARISEN. HE SUB MITTED THAT THE ASSESSEE IS IN THE BUSINESS OF DEVELOPING, OPERATIN G AND MAINTAINING INFRASTRUCTURE FOR INDUSTRIES AND INSTALLATION OF T HE MACHINES TO TAKE CARE OF THE MANUFACTURING PROCESS, AND HAS PROVIDED SERVICES ALONG WITH PREMISES TO FIVE PARTIES. HE SUBMITTED THAT N UMBER OF FACILITIES SUCH AS, AIR CONDITIONING, HOUSEKEEPING, CONFERENCE ROOMS, TRAINING ROOMS, DATA ENTRY AND ASSET MANAGEMENT SYSTEMS, LIF T, ELECTRIC INSTALLATIONS, SECURITY, SAFE CUSTODY OF ROUGH DIAM ONDS AND POLISHED DIAMONDS BY PROVIDING SAFES, CANTEEN FACILITY AND R EGISTRATION WITH PF, ESI AND REGISTRATION WITH VARIOUS AUTHORITIES UNDER VARIOUS ITA NO.976/AHD/2009 WITH CO.NO.92/AHD/2009 -3- STATUTES WERE PROVIDED BY THE ASSESSEE. HE REFERRE D TO THE COPY OF JOINT BUSINESS AGREEMENT BETWEEN THE ASSESSEE-COMPA NY AND POONAM DIAMOND ONE OF THE PARTIES WITH WHOM THE ASSESSEE H AS ENTERED INTO JOINT BUSINESS. HE SUBMITTED THAT AS PER THE DECIS ION OF HONBLE SUPREME COURT IN SHAMBHU INVESTMENT (SUPRA) INCOME WAS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. HE RELIED O N THE ORDER OF THE CIT(A). 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). W HAVE ALSO PERUSED THE COP Y OF THE JOINT BUSINESS AGREEMENT BETWEEN THE ASSESSEE AND THE POO NAM DIAMOND, ENGLISH TRANSACTION WHEREOF HAS BEEN FILED IN THE C OMPILATION BY THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS AGREED TO PROVIDE SPACE FOR DIAMOND BUSINESS AND ALSO PROVIDED INFRASTRUCTURE F ACILITIES LIKE ELECTRICAL INSTALLATION, CANTEENS, HOUSE KEEPING, S ECURITY ETC. CLAUSE-3 OF THE AGREEMENT PROVIDES CERTAIN AMOUNT PAYABLE TO THE ASSESSEE- COMPANY AS SECURED AMOUNT OR RE.1/- PER INWARD CARA T, WHICHEVER IS HIGHER. THUS, THE AMOUNT PAYABLE TO THE ASSESSEE C OMPANY WAS ALSO DEPENDED ON QUANTITY OF INWARD CARAT OF DIAMONDS. THE ASSESSEE HAS CONVERTED ITS PREMISES IN SUCH A WAY AS TO PROVIDE BASIC INFRASTRUCTURE FACILITY FOR THE BUSINESS AND HAS PROVIDED THESE SE RVICES IN AN ORGANIZED AND CONTINUOUS BUSINESS. IT IS NOT A CAS E WHERE THE ASSESSEE HAS LET OUT ITS PREMISES AND HAS EARNED RENTAL INCO ME SIMPLICITOR WITHOUT PROVIDING ANY INFRASTRUCTURE FACILITIES ON COMMERCIAL BASIS. THE INTENTION OF THE ASSESSEE OF EXPLOITING ITS INF RASTRUCTURE FACILITIES PROVIDED BY IT IN A COMMERCIAL MANNER CAN BE BORNE OUT IN THE FACTS OF THE CASE OF THE ASSESSEE. IN THESE FACTS AND CIRCU MSTANCES OF THE CASE, WE HOLD THAT THERE IS NO MISTAKE IN THE ORDER OF TH E LEARNED CIT(A) IN ITA NO.976/AHD/2009 WITH CO.NO.92/AHD/2009 -4- HOLDING THAT EVEN APPLYING RATIO OF SHAMBHU INVESTM ENT (SUPRA) THE INCOME OF THE APPELLANT IS TO BE ASSESSED AS BUSINE SS INCOME SINCE THE INTENTION OF THE APPELLANT IS TO EXPLOIT PROPERTY C OMMERCIALLY. ACCORDINGLY, THE ORDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUNDS OF THE REVENUE ARE DISMISSED. CO. NO.92/AHD/2009 (ASSESSEES CO) 5. THE ONLY GROUND RAISED IN THE CO READS AS UNDER: 1. THE DEPARTMENT HAS ERRED IN PREFERRING THE SUBJ ECT APPEAL ON THE GROUND THAT LD.CIT9A) HAS ERRED IN DE LETING THE ADDITION OF RS.8,30,141/- ON ACCOUNT OF BUSINESS I NCOME TREATED AS INCOME FROM HOUSE PROPERTY. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE GROUND OF THE APPEAL IS MERELY SUPPORTIVE IN NATURE. ACCO RDINGLY, THE GROUND OF THE CO RAISED BY THE ASSESSEE IS NOT MAINTAINABL E AND IS DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND THE CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT.