ASSISTANT COMMISSIONER OF INCOME TAX 31(3), MUMBAI V. SEA PRINCESS REALTY, MUMBAI

MA 169/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6329 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 27-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Business income; Rule of consistency; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER M .A. NO. 169 / MUM./2017 ( ARISING OUT OF ITA NO. 5169 /M UM. /201 4 ) ( ASSESSMENT YEAR : 20 1 0 11 ) ASSTT. COMMISSIONER OF IN COME TAX CIRCLE 24(3), MUMBAI . APPLICANT V/S M/S. SEA PRINCESS REALTY H WING, ASHOKRAJ S.V. ROAD, GOREGAON (W) MUMBAI 400 062 PAN AAFFM0605C . RESPONDENT REVENUE BY : SHRI RAJAT MITTAL ASSESSEE BY : SHRI VIMAL PUNMIYA DATE OF HEARING 02 . 0 2 .201 8 DATE OF ORDER 01.03.2018 O R D E R PER SAKTIJIT DEY, J.M. THE DEPARTMENT HAS FILED THE PRESENT APPLICATION SEEKING RECALL OF THE APPEAL ORDER ON THE GROUND OF NON CONSIDERATION OF DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S SWANI SPICE MILLS PVT. LTD., [2011] 12 TAXMAN 432 (BOM.). 2 . T HE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, IN CASE OF SWANI SPICE MILLS PVT. LTD. (SUPRA), IT WAS HELD THAT INTEREST EARNED ON M/S. SEA PRINCESS REALTY 2 FIXED DEPOSITS MADE OUT OF SURPLUS FUND AVAILABLE W ITH THE ASSESSEE IS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT AS BUSINESS INCOME. THEREFORE, APPLYING THE RATIO LAID DOWN IN THE SAID DECISION, THE INTEREST INCOME EARNED BY THE ASSESSEE CANNOT BE TREATED AS BUSINESS INCOME. 3 . LEARNED AUT HORISED REPRESENTATIVE SUBMITTED, IN THE DECISION CITED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE ISSUE WAS WHETHER THE INTEREST EARNED ON FIXED DEPOSIT CAN BE CONSIDERED AS PROFIT ARISING OUT OF EXPORT BUSINESS FOR CLAIMING DEDUCTION UNDER SECTION 8 0HHC OF THE ACT. HE SUBMITTED THAT THIS IS NOT THE ISSUE IN ASSESSEES CASE. HE SUBMITTED, LIKE THE CASE OF CIT V/S LOK HOLDINGS, 308 ITR 356, THE ASSESSEE IS A BUILDER ENGAGED IN REAL ESTATE DEVELOPMENT AND THE MONEY RECEIVED IN THE COURSE OF BUSINESS WAS DEPOSITED AND INTEREST WAS EARNED ON THAT. HE SUBMITTED, IN ASSESSEES CASE IN EARLIER YEARS , THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND IN THE COURSE OF HEARING BOTH THE PARTIES HAVE AGREED TO THE SAID FACTUAL AND LEGAL POSITION. HE SUBMITTED, AGAINST THE ORDERS PASSED BY THE TRIBUNAL IN EARLIER YEARS , THOUGH , THE DEPARTMENT HAS FILED APPEALS BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT, THEY WERE DISMIS SED ON THE GROUND OF TAX EFFECT. T HEREFORE, THE ORDERS OF THE TRIBUNAL HAVE ATTAI NED FINALITY. HE SUBMITTED, EVEN IN THE SUBSEQUENT ASSESSMENT YEAR S ALSO, THE ASSESSING OFFICER HIMSELF HAS TREATED THE INTEREST INCOME AS INCOME UNDER THE HEAD BUSINESS OR M/S. SEA PRINCESS REALTY 3 PROFESSION. THEREFORE, HE SUBMITTED, THE PRESENT APPLICATION FILED BY THE DEPARTMEN T IS WHOLY MISCONCEIVED AS THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE. 4 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE DEPARTMENT IS SEEKING RECALL OF O RDER ONLY ON THE GROUND THAT AS PER THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN SWANI SPICE MILLS PVT. LTD. (SUPRA), THE INTEREST INCOME IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT BUSINESS. ON A PERUSAL OF THE JUDGMENT RELI ED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IT IS NOTICED THAT THE ISSUE ARISING FOR CONSIDERATION BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT IS WHETHER INTEREST EARNED ON FIXED DEPOSIT CAN BE CONSIDERED TO BE A PART OF PROFITS DERIVED FROM EXPORT OF GOODS FOR CLAIMING DEDUCTION UNDER SECTION 80HHC. WHILE CONSIDERING TH IS ISSUE, THE COURT HELD THAT SINCE THE ACTIVITY RELATING TO EARNING OF INTEREST INCOME HAS NO DIRECT OR PROXIMATE NEXUS WITH THE EXPORT ACTIVITY, IT CANNOT BE TREATED AS INCOME FROM BUSINESS OR PROFESSION FOR CLAIMING DEDUCTION UNDER SECTION 80HHC. HOWEVER, THE FACTS OF THE ASSESSEES CASE ARE COMPLETELY DIFFERENT. THE ASSESSEE IS A BUILDER AND DEVELOPER OF REAL ESTATE AND IN THE COURSE OF CARRYING ON THE SAID BUSINESS ACTIVITY THE A SSESSEE PARKED SOME FUND WHICH ARE NOT IMMEDIATELY REQUIRED FOR BUSINESS IN FIXED DEPOSIT AND EARNED INTERESTS. THEREFORE, RELYING UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN LOK HOLDINGS M/S. SEA PRINCESS REALTY 4 (SUPRA), IT WAS HELD THAT THE INTEREST INCOME EARN ED IS TO BE TREATED AS INCOME FROM BUSINESS. IT IS TO BE FURTHER NOTED THAT IN ASSESSEES OWN CASE FOR PRECEDING ASSESSMENT YEARS, THE TRIBUNAL HAS CONSISTENTLY HELD THAT THE INTEREST INCOME EARNED BY THE ASSESSEE IS ASSESSABLE AS INCOME FROM BUSINESS AND AS STATED BY THE LEARNED AUTHORISED REPRESENTATIVE , THE AFORESAID DECISION OF THE TRIBUNAL HAVE ATTAINED FINALITY AFTER DISMISSAL OF THE DEPARTMENTS APPEALS BY THE HON'BLE JURISDICTIONAL HIGH COURT. IT IS TO BE NOTED , IN THE COURSE OF HEARING OF APPEAL, B OTH THE PARTIES HAVE AGREED TO THE AFORESAID FACTUAL AND LEGAL POSITION THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH REGARD TO THE APPROPRIATE HEAD UNDER WHICH INTEREST INCOME IS TO BE ASSESSED. AS BROUGHT TO OUR NOTICE BY THE LEA RNED AUTHORISED REPRESENTATIVE , EVEN IN THE SUBSEQUENT ASSESSMENT YEAR ALSO, THE ASSESSING OFFICER HAS ASSESSED THE INTEREST INCOME AS INCOME FROM BUSINESS. THEREFORE, EVEN APPLYING THE RULE OF CONSISTENCY, THE DECISION OF THE TRIBUNAL CANNOT BE FAULTED. I N ANY CASE OF THE MATTER, AS POINTED OUT BY THE LEARNED AUTHORISED REPRESENTATIVE ULTIMATE EFFECT ON REVENUE WILL BE TAX NEUTRAL AS THE RATE AT WHICH THE INCOME IS CHARGEABLE , WHETHER AS BUSINESS INCOME OR INCOME FROM OTHER SOURCES IS @ 30%. THEREFORE , WE ARE OF THE VIEW THAT THERE BEING NO MISTAKE APPARENT ON THE FACE OF RECORD AS ENVISAGED UNDER SECTION 254(2) OF THE ACT, THE APPEAL ORDER PASSED BY T HE TRIBUNAL CANNOT BE RECALLED. M/S. SEA PRINCESS REALTY 5 5 . IN THE RESULT, REVENUES MISC. APPLICATION STANDS DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 01.03.2018 SD/ - RAMIT KOCHAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED : 01.03.2018 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, MUMBA I; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI