PROCTER & GAMBLE HOME PRODUCTS P.LTD, V. DCIT 8(2),

MA 369/MUM/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5736 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2004-2005
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: HARESH G BUCH
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM M A NO. 369 / MUM/20 1 6 (ARISING OUT OF ITA NO.3531/MUM/2014) ( ASSESSMENT YEAR : 2004 - 05 ) M/S. PROCTER & GAMBLE HOME PRODUCTS LIMITED (ERSTWHILE PROCTER & GAMBLE DISTRIBUTION COMPANY LIMITED), P & G PLAZA, CARDINAL GRACIAS ROAD, CHAKALA, ANDHERI (E), MUMBAI 400 009 VS. DCIT, CIRCLE 8(2), MUMBAI PAN/GIR NO. AAACP4072C APPELLANT ) .. RESPONDENT ) M A NO. 209/ MUM/20 17 (ARIS ING OUT OF ITA NO.3531/MUM/2014) ( ASSESSMENT YEAR : 2004 - 05 ) PRINCIPAL COMMISSIONER OF INCOME TAX - 10, MUMBAI VS. M/S. PROCTER & GAMBLE HOME PRODUCTS LIMITED (ERSTWHILE PROCTER & GAMBLE DISTRIBUTION COMPANY LIMITED), P & G PLAZA, CARDINAL GRACIAS ROAD, CHAK ALA, ANDHERI (E), MUMBAI 400 009 PAN/GIR NO. AAACP4072C APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI HARESH G BUCH REVENUE BY SHRI N.K. CHAND DATE OF HEARING 12 / 05 /201 7 DATE OF PRONOUNCEME NT 28 / 07 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS MA FILED BY THE ASSESSEE AND REVENUE AGAINS T THE ORDER OF TRIBUNAL DATED 06/06/2016 IN ITA NO.3531/MUM/2014. M.A.NO.369/MUM/2016 M.A.NO.209/MUM/2017 M/S. PROCTER AND GAMBLE HOME PRODUCTS PVT. LTD., 2 2. IT WAS ARGUED BY LEARNED AR THAT THERE IS A MISTAKE APPARENT IN THE ORDER OF THE TRIBUNAL IN SO FAR AS THERE IS NO REAL INCOME TO THE ASSESSEE, NOTHING CAN BE BROUGHT TO TAX NET UNDER THE HEAD INCOME FROM HOUSE PROPERTY BASED ON REAL INCOME THEORY. IT WAS ALSO POINTED OUT BY LEARNED AR THAT THE TRIBUNAL DECISION RELIED ON BY THE BENCH WAS NOT PERTAINING TO THE ASSESSEES OWN CASE BUT TO THE ASSESSEES SISTER CONCERNS CASE. IT WAS FURTHER SUBMITTED THAT THERE IS TYPOGRAPHICAL ERROR IN SO FAR AS DR HAS BEEN TYPED AS AR IN PARA 4 WHILE QUOTING THE DECISIONS RELIED BY LEARNED DR . 3. IT WA S ALSO SUBMITTED THAT THE ISSUE WITH REGARD TO DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENSES OF THE BUILDING, DEPRECIATION OF BUILDING, ADMINISTRATIVE AND SERVICE CHARGES AND MUNICIPAL TAX HAVE N OT BEEN DECIDED BY THE TRIBUNAL. 4. IT WAS THEREFORE, PRAYE D THAT HONBLE TRIBUNAL MAY BE PLEASED TO RECALL AND AMEND ITS ORDER. 5. IN THE MA FILED BY THE REVENUE, IT WAS ARGUED BY LEARNED DR THAT CONTENTION RECORDED AT PARA 4 WAS ARGUED BY LEARNED DR AND NOT BY THE LEARNED AR WHICH AMOUNTS TO MISTAKE APPARENT FRO M RECORD. 6 . LEARNED DR FURTHER SUBMITTED THAT O N PERUSAL OF THE TRIBUNAL'S ORDER IN THE CASE OF SISTER CONCERN OF ASSESSEE I.E. PGHH FOR A.Y. 1995 - 96 IN ITA NO.845/M/2003, IT IS CLEAR THAT TRIBUNAL DID NOT DECIDE THE RENTAL INCOME TO BE ASSESSED UNDER THE HEAD ' INCOME FROM OTHER SOURCES'. HOWEVER, THE TRIBUNAL, WHILE DECIDING THE APPEALS IN THE CASE OF PGHH (SISTER CONCERN M.A.NO.369/MUM/2016 M.A.NO.209/MUM/2017 M/S. PROCTER AND GAMBLE HOME PRODUCTS PVT. LTD., 3 OF THE ASSESSEE) FOR SUBSEQUENT A.YRS., I.E. A.Y. 1996 - 97, 1997 - 98 AND 1998 - 99 (IN ITA NO.3036, 5423, 5424/M/2004) WHEREIN AO HAD ASSES SED THE RENTAL INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', ERRONEOUSLY FOLLOWED THE TRIBUNALS ORDER IN A.Y.1995 - 96, ASSUMING IT TO HAVE DECIDED THE ISSUE THAT RENTAL INCOME WAS TO BE ASSESSED UNDER THE HEAD 'OTHER SOURCES' WHICH IS NOT THE CORREC T FACTUAL POSITION. IT IS THUS SUBMITTED THAT THERE WAS NO INDEPENDENT FINDING BY THE TRIBUNAL IN THE CASE OF PGHH FOR ASSESSING THE IMPUGNED INCOME UNDER THE HEAD 'OTHER SOURCES'. THEREFORE, THE SAME COULD NOT BE CONSIDERED AS A PRECEDENT, MUCH LESS A GOOD PRECEDENT. 7. FOR THE PURPOSE OF RECTIFYING THE APPARENT MISTAKE, LEARNED DR RELIED ON THE JUDICIAL PRONOUNCEMENTS CITED AT 69 ITD 1, 359 ITR 371, 235 ITR 663 AND 305 ITR 227/173. IN VIEW OF THE ABOVE MISTAKES, IT WAS CONTENDED BY LEARNED DR THAT ORDER OF THE TRIBUNAL BE RECALLED FOR DECIDING THE ISSUE AFRESH. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS SOME TYPOGRAPHICAL MISTAKE IN THE ORDER OF THE TRIBUNAL IN SO FAR AS IN PARA 4 OF THE ORDER, CONTENTIONS WERE MADE BY THE LEARNED DR, HOWEVER, IN PLACE OF LEARNED DR DUE TO TYPOGRAPHI CAL ERROR IT WAS TYPED AS R. FURTHER, WE FOUND THAT THE ENTIRE DECISION OF THE TRIBUNAL IN THE PRESENT APPEAL IS BASED ON THE TRIBUNAL DECISION OF THE SISTE R CONCERN IN CASE OF PGHH. THE TRIBUNAL IN PARA 7 OBSERVED AS UNDER: - M.A.NO.369/MUM/2016 M.A.NO.209/MUM/2017 M/S. PROCTER AND GAMBLE HOME PRODUCTS PVT. LTD., 4 7. WE FOUND THAT IN A.Y.1997 - 98, 1998 - 99, 1999 - 2000 & 2000 - 2001, SIMILAR VIEW HAS BEEN TAKEN BY TRIBUNAL IN ASSESSEES OWN CASE. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONS IDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE, WE DIRECT THE AO TO TREAT THE INCOME SO RECEIVED AS INCOME FROM OTHER SOURCES AND TO ALLOW THE CLAIM OF DEDUCTION IN RESPECT OF EXPENDITURE INCURRED FOR EARNING THE S AME. THE AO IS TO RECOMPUTE THE INCOME BY TREATING THE INCOME SO RECEIVED AS INCOME FROM OTHER SOURCES. WE DIRECT ACCORDINGLY. 9. FROM THE RECORD WE FOUND THAT WHILE DECIDING THE APPEAL IN ITA NO.1241/MUM/2005 FOR THE A.Y.2001 - 02, THE TRIBUNAL OBSERVED AS UNDER: - 13. THE ARGUMENTS DID NOT FIND FAVOUR WITH THE AO. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. IT IS NOT IN DISPUTE BEFORE US THAT IDENTICAL ISSUE HAD COME UP FOR CONSIDERATION IN ASSESSEE'S OWN CASE IN ITA NO.845/MUM/03 FOR AY 95 - 96 AND THIS TRIBUNAL HELD AS FOLLOWS: '6.3 AS REGARDS THE RENTAL INCOME, THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HAD LET OUT THE BUILDING TO PROCTER AND GAMBLE DISTRIBUTION CO. LTD. FOR EFFECTIVE AND SMOOTH DISTRIBUTION OF PRODUCTS AND SUCH LETTING OUT HAD ADVANCED THE BUSINESS INTEREST. MOREOVER, LETTING OUT THE PROPERTY WAS ALSO ONE OF THE OBJECTS OF THE ASSESSEE COMPANY AND ACCORDINGLY IT HAS BEEN CLAIMED THAT THE RENTAL INCOME SHOULD BE ASSESSED AS BUSINESS INCOME. 6.4 WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED THE MATERIAL CAREFULLY. THERE IS NO MATERIAL TO SHOW THAT BUILDING HAS BEEN LET OUT BY THE ASSESSEE AS PART OF ANY BUSINESS ARRANGEMENT SO THAT THE RENTAL INCOME COULD BE CONSIDERED AS INCIDENTAL BUSINESS INCOME. MERELY BECAUSE THE BUILDING HAS BEEN LET OUT T O THE DISTRIBUTOR OF THE ASSESSEE, THE RENTAL INCOME CANNOT BE TREATED AS BUSINESS INCOME IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT LETTING OUT WAS NECESSARY FOR THE PURPOSE OF BUSINESS. SIMILARLY, MERELY BECAUSE ONE OF THE OBJECTS OF THE ASSESSEE WAS LETTING OUT OF THE PROPERTY, IT CANNOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT THE ASSESSEE WAS ACTUALLY DOING BUSINESS IN LETTING OUT BUILDINGS. THERE IS NO MATERIAL TO SHOW THAT THE ASSESSEE WAS DOING ANY ORGANIZED ACTIVITY OF LETTING OUT BUILDINGS. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE RENTAL INCOME SHOULD BE ASSESSED AS BUSINESS INCOME CANNOT BE ACCEPTED AND THE ORDER OF THE CIT (A) IS UPHELD.' M.A.NO.369/MUM/2016 M.A.NO.209/MUM/2017 M/S. PROCTER AND GAMBLE HOME PRODUCTS PVT. LTD., 5 14. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL WE HO LD THAT THE INCOME IN QUESTION HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES . 10. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL FOR THE A.Y.1995 - 96 IN ITA NO .845/MUM/2003 THAT TRIBUNAL HAS NOWHERE DECIDED THE ISSUE WITH REGARD TO RENTAL INCOME OF ASSESSEE TO BE ASSESSED AS INCOME FROM OTHER SOURCE . THE TRIBUNAL HAS MERELY REJECTED THE ASSESSEES CONTENTION FOR ASSESSING THE INCOME AS INCOME FROM BUSINESS . THE TRIBUNAL HAS MERELY UPHELD THE ORDER OF THE CIT(A) DISMISSING ASSESSEES PLEA OF TREATING THE I NCOME AS INCOME FROM BUSINESS. THE TRIBUNAL WHILE DECIDING THE ASSESSEES APPEAL FOR A.Y.2001 - 02 HAS HELD THAT INCOME HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES JUST BY FOLLOWING THE ORDER OF THE TRIBUNAL IN A.Y.1995 - 96 AS QUOTED ABOVE. THUS, IT IS CL EAR THAT THERE IS NO DISCUSSION NOR ANY REASONING GIVEN BY TRIBUNAL FOR TREATING THE INCOME AS INCOME FROM OTHER SOURCES N EITHER IN THE A.Y.1995 - 96 NOR IN THE A.Y. 2001 - 02. IN ALL OTHER ASSESSMENT YEARS I.E., A.Y. 1996 - 97, 1997 - 98 AND 1998 - 99, TRI BUNAL IN ITS ORDER DATED 19 /06/2010 HAD FOLLOWED THE DECISION OF THE TRIBUNAL IN A.Y.1995 - 96. HOWEVER, WHILE DECIDING THE ASSESSEES PRESENT APPEAL IN ITA NO.3531/MUM/2014 FOR A.Y.2004 - 05 VIDE ORDER DATED 06/06/2016, THE TRIBUNAL HAVE JUST FOLLOWED THE ORDER FOR A. Y. 1997 - 98 TO 2000 - 01 AND HELD THAT INCOME SHOULD BE ASSESSED AS INCOME FROM OTHER SOURCES. S INCE THERE WAS NO DECISION OF THE TRIBUNAL IN THE A.Y. 1995 - 96 FOR TREATMENT OF INCOME OF ASSESSEE AS INCOME FROM OTHER SOURCES , H OWEVER, WHILE DECIDING THE APPE AL FOR THE A.Y.1997 - 98 TO 2000 - M.A.NO.369/MUM/2016 M.A.NO.209/MUM/2017 M/S. PROCTER AND GAMBLE HOME PRODUCTS PVT. LTD., 6 01, THE TRIBUNAL HAS JUST FOLLOWED THE DECISION OF THE TRIBUNAL IN THE A.Y. 1995 - 96 FOR TREATING THE RENTAL INCOME AS INCOME FROM OTHER SOURCES . H OWEVER, IN THE ORDER PASSED BY THE TRIBUNAL IN THE A.Y.199 5 - 96 , NOWHERE INCOM E FROM HOUSE PROPERTY WAS TREATED AS INCOME FROM OTHER SOURCES , BUT ON THE OTHER HAND TRIBUNAL HAVE DISMISSED ASSESSEES PLEA FOR TREATING THE RENTAL INCOME AS INCOME FROM BUSINESS. 11. IN VIEW OF THE ABOVE, THERE IS AN APPARENT MISTAKE IN THE ORDER PASS ED BY THE T RIBUNAL DATED 06/06/2016 BY FOLLOWING THE ORDER OF THE TRIBUNAL IN A.Y. 1997 - 98 TO 2000 - 01 FOR HOLDING THAT INCOME SHOULD BE ASSESSED AS INCOME FROM OTHER SOURCES . ACCORDINGLY, WE RECALL THE ORDER AND DIRECT THE REGISTRY TO REFIX THE SAME FOR PASSING ORDER DENOVO AFTER CONSIDERING THE CONTENTION RAISED BY LEARNED AR AND DR AND ALSO THE DECISION OF TRIBUNAL IN EARLIER YEARS. WE DIRECT ACCORDINGLY. 12. IN THE RESULT, MA FILED BY BOTH ASSESSEE AND REVENUE ARE ALLOWED IN TERMS INDICATED HEREINABOVE . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 28 / 07 /2017 SD/ - ( RAVISH SOOD ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 28 / 07 /201 7 KARUNA SR. PS M.A.NO.369/MUM/2016 M.A.NO.209/MUM/2017 M/S. PROCTER AND GAMBLE HOME PRODUCTS PVT. LTD., 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//