Dy. CIT, Cir.-3 Pune, Pune V. M/s B. B. Associates, Pune

MA 56/PUN/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1006 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 19-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Business income; Rectification of order
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER MA NO. 40/PN/2012 (ARISING OUT OF ITA NO.1073/PN/2009) (ASSESSMENT YEAR : 2005-06) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3, PUNE . APPELLANT VS. M/S. B.B. ASSOCIATES 242/1 NILGIRI, BHANDARKAR INSTITUTE ROAD, PUNE 411 004 PAN : AACFB5231C . RESPONDENT MA NO. 56/PN/2012 (ARISING OUT OF ITA NO.64/PN/2007) (ASSESSMENT YEAR : 2003-04) DY. COMMISSIONER OF INCOME TAX CIRCLE 3, PUNE . APPELLANT VS. M/S. B.B. ASSOCIATES 242/1 NILGIRI, BHANDARKAR INSTITUTE ROAD, PUNE 411 004 PAN : AACFB5231C . RESPONDENT APPELLANT BY : MS. ANN KAPTHUAMA RESPONDENT BY : MR. C.H. NANIWADEKAR ORDER PER G. S. PANNU, AM THE CAPTIONED MISCELLANEOUS APPLICATIONS HAVE BEEN PREFERRED BY THE REVENUE UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) SEEKING RECTIFICATION OF MISTAKE IN THE ORDERS OF T HE TRIBUNAL DATED 31.01.2011 AND 03.10.2008 RESPECTIVELY. MA NO. 40/PN/2012 MA NO. 56/PN/2012 2. BOTH THE MISCELLANEOUS APPLICATIONS STAND ON SIM ILAR FOOTING AND THEREFORE, MISCELLANEOUS APPLICATION NO.56/PN/2012 PERTAINING TO THE ASSESSMENT YEAR 2003-04 IS TAKEN AS A LEAD CASE. 3. THE AFORESAID CAPTIONED MISCELLANEOUS APPLICATIO N HAS BEEN PREFERRED BY THE REVENUE PURPORTEDLY AS ADVISED BY THE HONBLE HIGH COURT . IN BRIEF, THE FACTS ARE THAT ASSESSEE IS A FIRM CARRYING ON B USINESS OF BUILDERS, DEVELOPERS AND PROMOTERS. IT CONSTRUCTED A COMMERCI AL BUILDING AND GAVE SOME FLOORS OF IT TO VARIOUS PARTIES ON RENT AND TH E RENTAL INCOME WAS DECLARED AS INCOME FROM HOUSE PROPERTY. THE ASSES SING OFFICER HELD THAT THE LEASING OUT OF VARIOUS FLOORS OF THE BUILDING WAS I NTEGRAL PART OF ASSESSEES BUSINESS WITH INTENTION TO EARN INCOME AND THE SAME WAS TO BE ASSESSED AS BUSINESS INCOME. IN APPEAL, CIT(A) ACCEPTED THE A SSESSEES CONTENTION AND DIRECTED THE ASSESSING OFFICER TO TREAT THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. WHEN THE REVENUES APPEAL TRAVELLE D TO THE TRIBUNAL, THE SAME WAS DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 03.10.2008 IN ITA NO. 64/PN/2007 FOR ASSESSMENT YEAR 2003-04 PRIM ARILY BY OBSERVING THAT THE CASE WAS COVERED IN FAVOUR OF THE ASSESSEE IN T ERMS OF THE DECISION OF THE LARGER BENCH OF THE TRIBUNAL IN THE CASE OF ATMA RA M PROPERTIES P. LTD. VS. JCIT, (2006) 8 SOT 741 (DEL) (SB). THE TRIBUNAL AFF IRMED THE ORDER OF THE CIT(A) HOLDING THAT THE INCOME EARNED BY THE ASSESS EE FROM RENTING WAS INCOME FROM HOUSE PROPERTY AND NOT AS INCOME FRO M BUSINESS OR PROFESSION. 4. SUBSEQUENTLY, THE MATTER WAS CARRIED IN APPEAL B Y THE REVENUE BEFORE THE HONBLE BOMBAY HIGH COURT VIDE INCOME TAX APPEA L NO. 2313/2009 WHICH WAS DECIDED BY THE HONBLE HIGH COURT VIDE ITS ORDE R DATED 06.01.2009. THE HONBLE HIGH COURT DISPOSED OF THE APPEAL OF THE RE VENUE ALONG WITH ANOTHER BUNCH OF APPEALS IN INCOME TAX APPEAL NOS. 3160 & 3 161 OF 2009, THE CASES OF ONE PRAVIN KAUR H. MEHTA. THE ORDER OF THE HONB LE HIGH COURT READS AS UNDER :- MA NO. 40/PN/2012 MA NO. 56/PN/2012 THE DISPUTE IN THE PRESENT CASE RELATES TO THE ASS ESSMENT YEARS 2001-02, 2002-03 AND 2003-04. THE ASSESSEE, AS NOTE D BY THE TRIBUNAL, OWNED CERTAIN PREMISES WHEREIN A BUSINESS CENTRE WA S BEING RUN BY THE ASSESSEE. THE ASSESSING OFFICER TREATED THE INCOME IN QUESTION, AS FALLING UNDER THE HEAD OF INCOME FROM HOUSE PROPERTY. THE ORDER WAS AFFIRMED IN APPEAL BY THE CIT(A), THE TRIBUNAL HAS, IN ITS JUDG EMENT DATED 28 TH NOVEMBER, 2008, OBSERVED THAT ITS ATTENTION WAS DRAWN TO THE FACT THAT IN THE CASE OF THE HUSBAND OF THE ASSESSEE, A SIMILAR ISSUE WAS CONSID ERED BY THE TRIBUNAL IN A.Y.2002-03 AND THE TRIBUNAL HELD THAT THE INCOME I N QUESTION HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. THE TRIBUNAL OBSERVED THAT IT IS NOT IN DISPUTE THAT THE FACTS AND CIRCUMSTA NCES AS THEY PREVAIL IN THE CASE OF THE ASSESSEE AND IN THE EARLIER CASE DECIDE D BY THE TRIBUNAL ARE IDENTICAL AND THE REASONING OF LEARNED CIT(A) AND T HE ASSESSING OFFICER ARE ALSO IDENTICAL. IN VIEW OF THE AFORESAID OBSERVATI ON, IT WOULD APPEAR THAT IT WAS COMMON GROUND BEFORE THE TRIBUNAL THAT THE CASE OF THE ASSESSEE WAS IDENTICAL TO THE EARLIER CASE PERTAINING TO THE HUS BAND OF THE ASSESSEE. THE EARLIER DECISION APPEARS TO HAVE BEEN ACCEPTED BY T HE REVENUE. HOWEVER, DURING THE COURSE OF THE HEARING, COUNSEL FOR THE REVENUE URGED THAT THE CASE PERTAINING TO THE ASSESSEE WAS DISTINGUISHABLE. IT WOULD NOT BE OPEN TO THE REVENUE TO URGE SUCH A CONTENTIO N BEFORE THE COURT FOR THE FIRST TIME, PARTICULARLY HAVING REGARD TO WHAT IS R ECORDED BY THE TRIBUNAL IN PARAGRAPH 5 OF ITS JUDGEMENT AS NOTED EARLIER. IN T HE CIRCUMSTANCES, WE ARE INCLINED TO DISPOSE OF THESE APPEALS LEAVING IT OPE N TO THE REVENUE TO MOVE A MISCELLANEOUS APPLICATION IF IT IS SO ADVISED FOR A PPROPRIATE RELIEF BEFORE THE TRIBUNAL. THE APPEALS ARE ACCORDINGLY DISPOSED OF. [UNDERLINED FOR EMPHASIS BY US] 5. NOW AS PER THE REVENUE, THE OBSERVATIONS OF THE HONBLE HIGH COURT, WHICH HAVE BEEN UNDERLINED BY US, PROMPTED IT TO FI LE THE MISCELLANEOUS APPLICATIONS. IN THIS BACKGROUND, WE MAY NOW REPROD UCE HEREINAFTER THE MISCELLANEOUS APPLICATION MOVED BY THE REVENUE I.E. MA NO. 56/PN/2012 FOR ASSESSMENT YEAR 2003-04 : - KIND REFERENCE IS INVITED TO THE ORDER OF THE HON BLE BOMBAY HIGH COURT FOR THE A.Y. 2003-04 IN INCOME-TAX APPEAL 231 3/2009 (COPY ENCLOSED). AS ADVISED BY THE HONBLE COURT, THIS MISCELLANEOUS APPLICATION IS BEING FILED FOR SEEKING APPROPRIATE RELIEF. 2. THE FACTS OF THE CASE ARE US UNDER :- 2.1 THE ASSESSEE CARRIES ON BUSINESS OF BUILDERS, DEVELOPERS AND PROMOTERS. THE ASSESSING OFFICER, DURING THE COURSE OF THE ASSESSMENT MA NO. 40/PN/2012 MA NO. 56/PN/2012 PROCEEDINGS, OBSERVED THAT THE ASSESSEE HAD CONSTRU CTED A COMMERCIAL BUILDING CALLED MILLENIUM TOWER AND HAD GIVEN SOM E FLOORS OF IT TO VARIOUS PARTIES ON RENT. THE RENT INCOME SO EARNED HAD BEEN SHOWN AS INCOME FROM HOUSE PROPERTY WHEREAS LOSS INCURRED ON SALE OF R ESIDENTIAL BUILDINGS WAS SHOWN UNDER THE HEAD INCOME FROM BUSINESS & PROFES SION. THE ASSESSING OFFICER HELD THAT THE SAID BUILDING WAS A COMMERCIA L ASSET OWNED BY THE ASSESSEE, AND LEASING OUT OF VARIOUS FLOORS OF THE BUILDING BEING INTEGRAL PART OF THE BUSINESS, WITH THE INTENTION TO EARN INCOME, THE SAME WAS TANTAMOUNT TO BUSINESS INCOME. HE, THEREFORE, TREATED THE SAID INCOME AS BUSINESS INCOME WITHIN THE MEANING OF SEC. 28 OF THE INCOME- TAX ACT, 1961. 3. THE CIT(APPEALS) ACCEPTED THE ASSESSEES CONTENT ION AND ALLOWED THE ASSESSEES GROUND OF APPEAL BY TREATING THE SAID INCOME AS INCOME FROM HOUSE PROPERTY. 4. THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE HO NBLE TRIBUNAL AGAINST THE ORDER OF THE CIT(APPEALS). THE HONBLE TRIBUNAL, RELYING ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ATMA RAM PROPERTIES PVT. LTD., 8 SOT 741 (DEL) (SB) (2006), DISMISSED THE DE PARTMENTS APPEAL. 5. THE DEPARTMENT FILED FURTHER APPEAL U/S. 260A BE FORE THE HONBLE BOMBAY HIGH COURT UNDER ITXA 2313/2009 WHIC H HAS BEEN DECIDED BY THE HONBLE COURT, VIDE THE IMPUGNED ORDER DT. 0 6.01.2009. THE RELEVANT PART OF THE ORDER OF THE HONBLE COURT IS REPRODUCE D AS UNDER :- INCOME TAX APPEAL NOS. 3160 & 3161 OF 2009 THE COMMISSIONER OF INCOME-TAX 20 APPELLANT VS. PRAVIN KAUR H. MEHTA RESPONDENT THE DISPUTE IN THE PRESENT CASE RELATES TO THE A SSESSMENT YEARS 2001-02, 2002-03 AND 2003-04. THE ASSESSEE, AS NOTE D BY THE TRIBUNAL, OWNED CERTAIN PREMISES WHEREIN A BUSINESS CENTRE WAS BEING RUN BY THE ASSESSEE. THE ASSESSING OFFICER TR EATED THE INCOME IN QUESTION, AS FALLING UNDER THE HEAD OF I NCOME FROM HOUSE PROPERTY. THE ORDER WAS AFFIRMED IN APPEAL B Y THE CIT(A), THE TRIBUNAL HAS, IN ITS JUDGEMENT DATED 28 TH NOVEMBER, 2008, OBSERVED THAT ITS ATTENTION WAS DRAWN TO THE FACT T HAT IN THE CASE OF THE HUSBAND OF THE ASSESSEE, A SIMILAR ISSUE WAS CO NSIDERED BY THE TRIBUNAL IN A.Y.2002-03 AND THE TRIBUNAL HELD T HAT THE INCOME IN QUESTION HAS TO BE ASSESSED UNDER THE HEAD INCO ME FROM BUSINESS. THE TRIBUNAL OBSERVED THAT IT IS NOT IN DISPUTE THAT THE FACTS AND CIRCUMSTANCES AS THEY PREVAIL IN THE CASE OF THE ASSESSEE AND IN THE EARLIER CASE DECIDED BY THE TRI BUNAL ARE IDENTICAL AND THE REASONING OF LEARNED CIT(A) AND T HE ASSESSING OFFICER ARE ALSO IDENTICAL. IN VIEW OF THE AFORESA ID OBSERVATION, IT WOULD APPEAR THAT IT WAS COMMON GROUND BEFORE THE T RIBUNAL THAT THE CASE OF THE ASSESSEE WAS IDENTICAL TO THE EARLI ER CASE MA NO. 40/PN/2012 MA NO. 56/PN/2012 PERTAINING TO THE HUSBAND OF THE ASSESSEE. THE EARL IER DECISION APPEARS TO HAVE BEEN ACCEPTED BY THE REVENUE. HOWEVER, DURING THE COURSE OF THE HEARING, COUNSEL FOR THE REVENUE URGED THAT THE CASE PERTAINING TO THE ASSES SEE WAS DISTINGUISHABLE. IT WOULD NOT BE OPEN TO THE REVENU E TO URGE SUCH A CONTENTION BEFORE THE COURT FOR THE FIRST TIME, P ARTICULARLY HAVING REGARD TO WHAT IS RECORDED BY THE TRIBUNAL IN PARAG RAPH 5 OF ITS JUDGEMENT AS NOTED EARLIER. IN THE CIRCUMSTANCES, W E ARE INCLINED TO DISPOSE OF THESE APPEALS LEAVING IT OPEN TO THE REVENUE TO MOVE A MISCELLANEOUS APPLICATION IF IT IS SO ADVISE D FOR APPROPRIATE RELIEF BEFORE THE TRIBUNAL. THE APPEALS ARE ACCORDI NGLY DISPOSED OF. 6. IN THE LIGHT OF THE ABOVE, IT IS HUMBLY REQUESTE D THAT THE SUBJECT ORDER MAY KINDLY BE RECALLED AND THE GROUNDS OF APP EAL BE DECIDED AFRESH TAKING INTO CONSIDERATION THE ABOVE ORDER OF THE HO NBLE BOMBAY HIGH COURT AND THE ORDERS OF THE HONBLE TRIBUNAL, MUMBAI CITE D ABOVE SINCE THE FACTS PREVAILING IN THESE CASES ARE IDENTICAL TO THE FACT S OF THE ASSESSEES CASE. 6. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPLICATIONS HAVE BEEN PREFERRED B Y THE REVENUE ON A MISCONCEIVED NOTION. THE CASE SET-UP BY THE ASSESSE E IS THAT THE OBSERVATIONS OF THE HONBLE BOMBAY HIGH COURT EMANA TE FROM THE FACTS OF THE CASE WHICH WERE BEFORE THE HONBLE HIGH COURT IN TH E CASE OF OTHER ASSESSEE. SINCE THE COMMON ORDER HAS BEEN PASSED, THE SAID OB SERVATIONS HAVE TO BE READ IN THE CONTEXT OF THE MATTER BEFORE THE HONBL E HIGH COURT. THE LEARNED COUNSEL POINTED OUT THAT THE HONBLE HIGH COURT WAS REFERRING TO THE FACTS PERTAINING TO THE HUSBAND OF THE ASSESSEE WHICH W AS OSTENSIBLY A REFERENCE TO THE FACTS IN THE CASE OF OTHER ASSESSEE BEFORE T HE HONBLE HIGH COURT NAMELY PRAVIN KAUR H. MEHTA. SUCH FACTS COULD NOT B E WITH REFERENCE TO ASSESSEES CASE AS THE ASSESSEE IS A PARTNERSHIP FI RM. LEARNED COUNSEL FOR THE ASSESSEE TABULATED THE FOLLOWING DISTINGUISHING FEATURES OF THE CASE OF THE ASSESSEE AND THAT OF PRAVIN KAUR H. MEHTA, WHO WAS THE OTHER ASSESSEE BEFORE THE HONBLE HIGH COURT WHEREBY BOTH THE CASE S HAVE BEEN DISPOSED-OFF BY WAY OF A COMMON ORDER. THE TABULATED DIFFERENCES ARE AS FOLLOWS : - MA NO. 40/PN/2012 MA NO. 56/PN/2012 SR. PRAVIN KAUR MEHTA B B ASSOCIATES 1 ASSESSEE WAS AN INDIVIDUAL HAVING HUSBAND ASSESSEE IS A PARTNERSHIP FIRM 2 ASSESSEE WAS RUNNING A BUSINESS CENTRE NO SUCH ACTIVITY BY THE ASSESSEE 3 THE ISSUE WAS DECIDED BY THE TRIBUNAL IN ASSESSEES HUSBANDS CASE NO SUCH PRECEDENCE. THE ISSUE WAS DECIDED BY THE TRIBUNAL FOR THE FIRST TIME. 4 THE ONLY PRECEDENCE WAS ASSESSEES HUSBANDS CASE THE ASSESSEES CASE WAS DECIDED ON THE BASIS OF SPECIAL BENCH DECISION IN ATMARAM PROPERTYS CASE [8 SOT 741 (DEL-SB)] 5 HC REFERS TO PARA 5 OF THE TRIBUNAL ORDER, WHEREIN TRIBUNAL REFERS TO HUSBANDS CASE PARA 5 REFERS TO ATMARAM PROPERTYS CASE IN ITA NO. 64/PN/2007. NO PARA 5 IN ITA NO. 1073/PN/2009 7. ON THIS, IT IS SOUGHT TO BE MADE THAT IN THE PRE SENT CASE THE MISCELLANEOUS APPLICATIONS CANNOT BE JUSTIFIED ON T HE BASIS OF THE OBSERVATION OF THE HONBLE HIGH COURT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARIN G FOR THE REVENUE HAS PRIMARILY REITERATED THE CONTENTS OF THE MISCEL LANEOUS APPLICATION PREFERRED BY THE REVENUE WHICH WAS ALREADY EXTRACTED IN THE E ARLIER PART OF THIS ORDER. 9. IN OUR CONSIDERED OPINION, THE PRESENT MISCELLAN EOUS APPLICATION FILED BY THE REVENUE IS MISCONCEIVED. THE OBSERVATIONS OF THE HONBLE HIGH COURT WHICH HAVE PRESSED INTO SERVICE BY THE REVENUE TO M AKE THE PRESENT APPLICATION HAVE BEEN UNDERLINED BY US IN THE EARLI ER PART OF THIS ORDER. BEFORE THAT; THE HONBLE HIGH COURT NOTED THAT IT WAS A CO MMON GROUND BETWEEN THE PARTIES BEFORE THE TRIBUNAL THAT CASE OF ASSESSEE W AS IDENTICAL TO THE EARLIER CASE PERTAINING TO HUSBAND OF THE ASSESSEE. IN THIS BACKGROUND, THE HONBLE HIGH COURT NOTED THE PRAYER OF THE COUNSEL FOR THE REVENUE THAT CASE PERTAINING TO THE ASSESSEE WAS DISTINGUISHABLE AND OBSERVED THAT IT WAS NOT OPEN TO THE REVENUE TO URGE SUCH A CONTENTION BEFOR E THE COURT FOR THE FIRST TIME. IN THIS BACKGROUND, THE HONBLE HIGH COURT DISMISSED T HE APPEAL OF THE REVENUE AND LEFT IT OPEN TO THE REVENUE TO MOVE A M ISCELLANEOUS APPLICATION, IF IT IS SO ADVISED FOR SEEKING APPROPRIATE RELIEF BEFORE THE TRIBUNAL. OSTENSIBLY, SUCH OBSERVATIONS ARE NOT IN THE CONTEX T OF THE ASSESSEE-FIRM BEFORE US, AS RIGHTLY ASSERTED BY THE LEARNED COUNS EL FOR THE ASSESSEE. MA NO. 40/PN/2012 MA NO. 56/PN/2012 10. QUITE CLEARLY, EVEN IF WE CONSIDER THAT OBSERVA TIONS ARE IN THE CONTEXT OF THE CASE OF THE ASSESSEE, YET THE PRESENT MISCELLAN EOUS APPLICATION DOES NOT POINT OUT AS TO IN WHAT MANNER THE CASE OF THE ASSE SSEE WAS DISTINGUISHABLE FROM THE DECISION OF THE LARGER BENCH OF THE TRIBUN AL IN THE CASE OF ATMA RAM PROPERTIES P. LTD. (SUPRA) FOLLOWED BY THE TRIBUNAL WHILE DISMISSING THE APPEAL OF THE REVENUE VIDE ORDER DATED 03.10.2008 (SUPRA). THEREFORE, WE FIND NO JUSTIFICATION TO INTERFERE IN THE ORDER OF THE TRIB UNAL DATED 03.10.2008 (SUPRA) IN TERMS OF THE PRESENT MISCELLANEOUS APPLICATION. FOR THE SAID REASONS, WE FIND NO MERIT IN THE MISCELLANEOUS APPLICATION I.E. MA N O. 56/PN/2012 PREFERRED BY THE REVENUE. ACCORDINGLY, THE SAME IS HEREBY DISMIS SED. 11. SIMILARLY, THE MA NO. 40/PN/2012 FOR ASSESSMENT YEAR 2005-06 IS ALSO DISMISSED, SINCE THE ISSUE RAISED IS SIMILAR TO THA T CONSIDERED BY US IN THE FOREGOING PARAGRAPHS WHILE DEALING WITH MA NO.56/PN /2012 FOR ASSESSMENT YEAR 2003-04.. 12. IN THE RESULT, BOTH THE MISCELLANEOUS APPLICATI ONS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 23 RD SEPTEMBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE