ROLTA HOLDING AND FINANCE CORPORATION LTD, V. DCIT CEN CIR 1,

MA 10/MUM/2014

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2180 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2000-2001
• Appeal Filed On: 13-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: FINANCE CORPORATION LTD; ADAGIRI ROLTA HOLDING
• Keywords: Business income; Depreciation; Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , , BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / M.A . NO. 9 / MUM./20 14 ( . / ITA NO. 300 / MUM./ 201 3 ) ( / ASSESSMENT YEAR : 1999 2000 ) . / M.A . NO. 10/ MUM./20 14 ( . / ITA NO. 301 / MUM./ 2013 ) ( / ASSESSMENT YEAR : 2000 2001 ) . / M.A . NO. 11/ MUM./20 14 ( . / ITA NO. 302 / MUM./ 2013 ) ( / ASSESSMENT YEAR : 2001 2002 ) . / M.A . NO. 12/ MUM./20 14 ( . / ITA NO. 303 / MUM./ 2013 ) ( / ASSESSMENT YEAR : 2002 03 ) . / M.A . NO. 13/ MUM./20 14 ( . / ITA NO. 304 / MUM./ 2013 ) ( / ASSESSMENT YEAR : 2003 04 ) . / M.A . NO. 14/ MUM./20 14 ( . / ITA NO. 305 / MUM./ 2013 ) ( / ASSESSMENT YEAR : 2004 05 ) ROLTA HOL DING & FINAN CE CORPORATION LTD. 19 TH FLOOR, MAKER TOWER F CUFFE PARADE, MUMBAI 400 005 .. / APPLICANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1, MUMBAI .... / RESPONDENT ./ PERMANENT A CCOUNT NUMBER AAACR3157L / ASSESSEE BY : SHRI SHEKHAR GUPTA / REV E NUE BY : SHRI B. YADAGIRI ROLTA HOLDING & FINANCE CORPORATION LTD. 2 / DATE OF HEARING 25.07.2014 / DATE OF ORDE R 31.07.2014 / ORDER , / PER AMIT SHUKLA , J.M. BY WAY OF TH ESE MISCELLANEOUS APPLICATION S , THE ASSESSEE SEEKS RECTIFICATION / RECALL OF THE IMPUGNED ORDER DATED 5 TH JULY 2013 , PASSED BY THE TRIBUNAL FOR PASSING APPROPRIATE ORDER IN TERMS OF SECTIO N 254(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2 . IN THE APPLICATION, T HE ASSESSEE HAD CONTENDED AS UNDER: T HE APPLICANT SUBMITS THAT DURING THE COURSE OF THE HEARING BEFORE THE HON'BLE BENCH IN PARA 6 HAS HELD THAT THE RENTAL INCOME SHOULD BE CONSIDERED AS 'INCOME FROM HOUSE PROPERTY' AND NOT AS ' BUSINESS INCOME' AND NO DEDUCTION FOR DEPRECIATION ALLOWANCE OR OTHER ADMINISTRATIVE EXPENSES SHOULD BE ALLOWED. THE APPLICANT WITH DUE RESPECT TO THE HON ' BLE BENCH SUBMITS THAT BESIDES EARNING BUSI NESS INCOME, THE APPLICANT IS CARRYING ON LEASING BUSINESS NAMELY , LEASING OF EQUIPMENTS/VEHICLES. A PORTION OF THE PROPERTY WAS USED BY THE APPLICANT FOR ITS OFFICE USE AND THE SAID FACT WAS MENTIONED BEFORE THE CIT (APPEALS) AND THE CIT (APPEALS) HAS CON FIRMED THE SAME IN PARA 4.2 OF HIS ORDER. THE HON ' BLE BENCH HAS NOT CONSIDERED THE SAID ISSUE WHILE ALLOWING THE DEPARTMENT ' S APPEAL WITH REGARD TO DEPRECIATION. THE APPLICANT FURTHER SUBMITS THAT THE DIRECTION GIVEN BY YOUR HONOUR FOR DISALLOWANCE OF ADMI NISTRATIVE EXPENSES IS NOT CORRECT SINCE THERE IS NO SUCH GROUND IN THE APPEAL FILED BY THE DEPARTMENT' 3 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE ON THE ISSUE RAISED IN THE IMPUGNED APPLICATION SUBMITTED THAT BESIDES TAKING THE PLEA BEFORE THE LEARN ED COMMISSIONER (APPEALS) THAT ITS ENTIRE LEASE INCOME FROM THE PROPERTY SHOULD BE ASSESSED AS BUSINESS INCOME, IT ROLTA HOLDING & FINANCE CORPORATION LTD. 3 HAD ALSO TAKEN A PLEA THAT A PORTION OF THE PROPERTY USED BY THE ASSESSEE FOR ITS OFFICE USE SHOULD BE ENTITLED FOR DEPRECIATION. THE ASSESSI NG OFFICER HAS DISALLOWED THE ENTIRE DEPRECIATION CLAIMED ON THE SAID PROPERTY ON THE GROUND THAT INCOME FROM THE SAID PROPERTY IS ASSESSABLE UNDER THE HEAD HOUSE PROPERTY . THE ASSESSING OFFICER HAD REJECTED THE ASSESSEES CONTENTION THAT THE DEPRECIATIO N ON THE PORTION OF THE PROPERTY IN WHICH THE ASSESSEE HA D AN OFFICE SHOULD BE DIS ALLOWED. INSOFAR AS THE ADMINISTRATIVE EXPENSES ARE CONCERNED, THE ASSESSING OFFICER ALLOCATED THE SAID EXPENDITURE ON THE RATIO OF RECEIPT FROM THE PROPERTY TO THE TOTAL REC EIPTS DURING THE YEAR. HE NOTED THAT THE TOTAL RECEIPTS OF THE ASSESSEE INCLUDING OTHER BUSINESS OF THE ASSESSEE WAS AT ` 84,42,734, OUT OF WHICH INCOME FROM PROPERTY IS ` 14,10,000, WHICH IS 16% OF THE TOTAL RECEIPTS. ACCORDINGLY, HE HAD ALLOCATED THE ADM INISTRATIVE EXPENDITURE TOWARDS INCOME FROM HOUSE PROPERTY @ 16%. THIS RATIO HAS BEEN FOLLOWED IN ALL THE YEARS FOR ALLOCATION OF EXPENSES . THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) HAD ALLOWED THE ENTIRE EXPENDITURE INC LUDING ADMINISTRATIVE EXPENDITURE BY HOLDING THAT THE INCOME FROM LEASE PROPERTY IS TO BE ASSESSED AS BUSINESS INCOME . IN THE GROUND OF APPEAL, THE REVENUE HAS NOT RAISED THE ISSUE OF ADMINISTRATIVE EXPENSES BEFORE THE TRIBUNAL. THE TRIBUNAL, WHILE DECID ING THIS ISSUE, HELD THAT LEASING INCOME FROM THE PROPERTY I.E., RENTAL INCOME SHOULD BE TAXED AS INCOME FROM HOUSE PROPERTY FOLLOWING THE TRIBUNAL ORDER ROLTA HOLDING & FINANCE CORPORATION LTD. 4 IN ROLTA PROPERTIES PVT. LTD., ITA NO.4260 4270/MUM./2007, ORDER DATED 4 TH MARCH 2009. THEREAFTER, THE TRIBUNAL FURTHER OBSERVED THAT NO DEDUCTION FOR DEPRECIATION ALLOWANCE OR OTHER ADMINISTRATIVE EXPENDITURE SHOULD BE ALLOWED. ON THIS DIRECTION OF THE TRIBUNAL , HE SUBMITTED THAT FIRST OF ALL , NO GROUND ON ADMINISTRATIVE EXPENDITURE WAS TAKEN BY THE REVEN UE AND SECONDLY, DEPRECIATION ALLOWANCE ALSO INCLUDED DEPRECIATION ON SELF OCCUPIED FOR BUSINESS PURPOSE WHICH SHOULD HAVE BEEN DIRECTED TO BE ALLOWED . HENCE , THE TRIBUNAL HAS NOT DECIDED THIS ISSUE CORRECTLY AND THE SAME SHOULD BE RECTIFIED UNDER SECTION 254(2). 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT FIRST OF ALL, ONCE THE LEARNED COMMISSIONER (APPEALS) HAS HELD THAT DEPRECIATION AND ADMINISTRATIVE EXPENDITURE ARE ALLOWABLE BECAUSE THE LEASING INCOME FROM THE PROPERTY I S TO BE ASSESSED AS BUSINESS INCOME AND O NCE THE TRIBUNAL HAS REVERSED TH IS FINDING , BY HOLDING THAT INCOME I S TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY, THEN, AS A NATURAL COROLLARY, THE DEPRECIATION AND THE OTHER ADMINISTRATIVE EXPENSES GETS AUTOMATIC ALLY DISALLOWED. THERE IS NO GROUND TAKEN BY THE ASSESSEE BEFORE THE TRIBUNAL THAT DEPRECIATION SHOULD BE ALLOWED ON THE PORTION OF THE PROPERTY WHICH WAS OCCUPIED AS OFFICE PREMISE BY THE ASSESSEE. HENCE, ANY TINKERING WITH THE TRIBUNAL ORDER WOULD AMOUNT TO REVIEW WHICH IS NOT PERMISSIBLE WITHIN THE SCOPE OF SECTION 254(2). ROLTA HOLDING & FINANCE CORPORATION LTD. 5 5 . WE HAVE HEARD THE RIVAL CONTENTIONS. THE MAIN GRIEVANCE OF THE ASSESSEE BEFORE US IN THE MISCELLANEOUS APPLICATION IS THAT, FIRSTLY, THE ADMINISTRATIVE EXPENSES HAS BEEN DIRECTED BY T HE TRIBUNAL TO BE DISALLOWED EVEN WHEN , THERE WAS NO SPECIFIC GROUND TAKEN BY THE REVENUE AND, SECONDLY, THE DEPRECIATION HAS BEEN DISALLOWED EVEN ON THE PORTION OF THE PREMISE, ON WHICH THE ASSESSEE WAS USING IT FOR ITS OWN BUSINESS PURPOSE I.E., IT WAS H AVING ITS OFFICE IN THE SAID PREMISE. IN THIS CASE, THE MAIN ISSUE INVOLVED WAS , WHETHER THE INCOME FROM BUSINESS CENTRE SHOULD BE TREATED AS BUSINESS INCOME OR INCOME FROM HOUSE PROPERTY . THE ASSESSING OFFICER HELD THAT THE RENT RECEIVED FROM LEASING OF THE PROPERTY FOR BUSINESS CENTRE HAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY AND ONLY DEDUCTION PERMISSIBLE UNDER SECTION 24(A) SHOULD BE ALLOWED. HE HAS REJECTED THE ASSESSEES PLEA WITH REGARD TO THE DEPRECIATION ON OFFICE PREMISE GIVEN ON RENT, F URNITURE AND FIXTURE AND AIR CONDITION INSTALLED IN THE BUILDING GIVEN ON RENT ON THE GROUND THAT THE DEDUCTION FOR REPAIRS IS ALREADY ALLOWED AGAINST INCOME FROM HOUSE PROPERTY AND , THEREFORE, DEPRECIATION CANNOT BE ALLOWED AGAIN AS BUSINESS EXPENDITURE. REGARDING ADMINISTRATIVE EXPENDITURE, HE HAS ALLOCATED THE EXPENDITURE ON THE BASIS OF RATIO OF RECEIPT FROM THE PROPERTY TO THE TOTAL RECEIPTS DURING THE YEAR , WHICH WAS ARRIVED AT 16% AND, ACCORDINGLY, 16% OF THE ADMINISTRATIVE EXPENDITURE WAS DISALLOWED WHICH WAS ALLOCABLE TO INCOME FROM HOUSE PROPERTY. IN THE FIRST APPEAL, T HE LEARNED ROLTA HOLDING & FINANCE CORPORATION LTD. 6 COMMISSIONER (APPEALS) HELD THAT THE ENTIRE RECEIPT FROM THE LEASING OF THE PROPERTY IS BUSINESS INCOME AND ACCORDINGLY, HE ALLOWED DEPRECIATION AND ALSO HELD THAT DEPRECI ATION WHICH IS ON THE PROPERTY USED BY THE ASSESSEE FOR ITS OFFICE PURPOSE WOULD ALSO BE ENTITLED FOR DEPRECIATION. THE TRIBUNAL HAS REVERSED SUCH A FINDING OF THE LEARNED COMMISSIONER (APPEALS) FOLLOWING THE SIMILAR ISSUE INVOLVED IN OTHER GROUP CASES DEC IDED BY THE TRIBUNAL AND HELD THAT LEASING INCOME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AND NOT AS BUSINESS INCOME. IN THIS MANNER, THE DEPRECIATION AND ADMINISTRATIVE EXPENDITURE WE RE DIRECTED TO BE DISALLOWED. INSOFAR AS THE ADMINISTRATIVE EXPE NDITURES ARE CONCERNED, THE ASSESSING OFFICER HIMSELF HAS WORKED OUT THE DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE AFTER ALLOCATING ON THE BASIS OF THE RECEIPTS O F THE HOUSE PROPERTY FROM THE TOTAL RECEIPTS. THIS WAS A VERY REASONABLE BASIS FOR ALLOCATING ADMINISTRATIVE EXPENDITURE AND ONCE THE INCOME HAS BEEN ASSESSED AS INCOME FROM HOUSE PROPERTY, THEN WHATEVER ADMINISTRATIVE EXPENDITURE IS PERTAINING TO INCOME FROM HOUSE PROPERTY GET S DISALLOWED. THERE IS NO MISTAKE APPARENT FROM RECORD INSOFAR AS THE D IRECTION OF DISALLOWANCE OF ADMINISTRATIVE EXPENDITURES ARE CONCERNED BECAUSE WHAT IS DISALLOWABLE IS ONLY 16% OF THE ADMINISTRATIVE EXPENSES . AS REGARDS THE SECOND PLEA OF DEPRECIATION THAT , AT LEAST IT SHOULD HAVE BEEN ALLOWED ON THE PORTION OF THE PROPE RTY USED BY THE ASSESSEE FOR ITS OFFICE USE, WE FIND THAT NO SUCH GROUND HAS BEEN ROLTA HOLDING & FINANCE CORPORATION LTD. 7 RAISED BY THE ASSESSEE NOR ANY SPECIFIC PLEA WAS MADE. BESIDES THIS, THE TRIBUNAL HAS DIRECTED TO DISALLOW THE DEPRECATION , WHICH WAS A LOGICAL COROLLARY WHEN THE LEASING INC OME HAS BEEN HELD TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THUS, THERE IS NO MISTAKE APPARENT FROM RECORD WHICH CAN BE SAID TO BE RECTIFI ABLE WITHIN THE AMBIT OF SECTION 254(2). THE ASSESSEES MISCELLANEOUS APPLICATION IS THUS DISMISSED. 6 . SINCE THIS ISSUE IS INVOLVED IN ALL THE MISCELLANEOUS APPLICATIONS, THEREFORE, IN VIEW OF OUR ABOVE FINDINGS, ALL THE MISCELLANEOUS APPLICATIONS ARE TREATED AS DISMISSED. 7 . 7 . IN THE RESULT, ASSESSEES MISC. APPLICATION IS DISMISSED. 31 ST JULY 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 31 ST JULY 2014 SD/ - . . P .M. JAGTAP ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 31 ST JULY 2014 ROLTA HOLDING & FINANCE CORPORATION LTD. 8 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI