Millennium Park Holdings Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-4(4), Ahmedabad

MA 7/AHD/2010

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9901 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 27-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: S N SOPARKAR
• Keywords: Capital asset; Revenue expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , .!' # , $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER MA NO.7/AHD/2010 (IN ./ IN I.T.A. NOS.180/AHD/07 & CO NO.155 /AHD/2007) ( ' ' (' / ASSESSMENT YEAR : 2004-05) MILLENNIUM PARK HOLDING PVT.LTD. 901, SHAPATH-I OPP.RAJPATH CLUB S.G.HIGHWAY, AHMEDABAD (ORIGINAL RESPONDENT) ' / VS. THE INCOME TAX OFFICER WARD-4(4) AHMEDABAD (ORIGINAL APPELLANT) ./ ./ PAN/GIR NO. : AACCM9648 R ( / APPLICANT ) .. ( / RESPONDENT ) / APPLICANT BY : SHRI S.N.SOPARKAR, SR.ADV. / RESPONDENT BY : SHRI T.SHANKAR, SR.D.R. / DATE OF HEARING : 15/02/2013 !'# / DATE OF PRONOUNCEMENT : 15/03/13 $% / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS MISCELLANEOUS PETITION HAS BEEN FILED BY THE A SSESSEE ON 27.01.2010 ARISING FROM THE ORDER OF THE TRIBUNAL A S MENTIONED IN THE NOMENCLATURE HEREINABOVE DATED 14.9.2007. IN SUPPO RT OF THIS PETITION, LD.AR MR.S.N.SOPARKAR APPEARED AND PARTICULARLY REF ERRED THE FOLLOWING PARAGRAPHS:- MA NO.7/AHD/2007 (IN ITA NO.1803/AHD/2007 & CO NO.155/AHD/2007 MILLENNIUM PARK HOLDING PVT.LTD. VS. ITO ASST.YEAR 2004-05 - 2 - 2. IT IS RESPECTFULLY SUBMITTED THAT THE AFORESAI D ORDER OF THE HONBLE TRIBUNAL REQUIRES APPROPRIATE AMENDMENT AS THERE IS A MISTAKE APPARENT FROM RECORD AS ENVISAGED U/S.254(2 ) OF THE INCOME-TAX ACT. THE HONBLE JUDICIAL MEMBER HAS OB SERVED THAT THE RIVAL SUBMISSIONS WERE HEARD AND THE MATERIAL A VAILABLE ON RECORD WAS PERUSED. HOWEVER, THERE IS NO DISCUSSIO N IN THE ORDER REGARDING THE ARGUMENTS SUBMITTED ON BEHALF OF THE ASSESSEE COMPANY OR TO THE RELEVANT DOCUMENTS COMPILED IN TH E PAPER BOOK FRILLED BEFORE THE TRIBUNAL. THE DEPARTMENTAL APPE AL WAS ALLOWED FOR THE FOLLOWING REASONS AS GIVEN IN PARA 5 OF THE ORDER REPRODUCED ABOVE. (A) NO BUSINESS ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE SO AS TO GENERATE REVENUE. (B) THE GOLF COURSE WAS NOT READY NOR ANY MEMBERSHIP WA S ENROLLED; (C) THE ASSESSEE WAS AT A VERY EARLY STAGE OF COMPLETIO N OF GOLF COURSES; (D) IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD., BUSINESS WAS ALREADY COMMENCED WIT H THE ACTIVITY OF EXTRACTION OF LIMESTONE; (E) IN THE CASE OF CLUB RESORTS PVT.LTD., BUSINESS ACTI VITY BY WAY OF SALE OF COTTAGE COMMENCED. (F) THEREFORE, THE AFORESAID CASES RELIED UPON BY THE APPELLANT COMPANY WERE NOT APPLICABLE. 3. IT IS RESPECTFULLY SUBMITTED THAT THE APPLICANT COMPANY WAS ADMITTEDLY ENGAGED IN TWIN ACTIVITIES OF DEVELOPMEN T OF GOLD COURSE AND ALSO DEVELOPMENT OF A TOWNSHIP INVOLVING PURCHASES AND SALES OF LAND. WHILE THE LAND PURCHASED FOR DE VELOPMENT OF GOLD COURSE WAS IN THE NATURE OF CAPITAL ASSET, THE LAND PURCHASED FOR DEVELOPMENT OF TOWNSHIP WAS IN THE NATURE OF ST OCK-IN-TRADE. THE APPLICANT COMPANY WAS INCORPORATED ON 15 TH DECEMBER, 2000 AND DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2001- 02 COMPREHENSIVE SURVEY WAS STARTED FOR ACQUISITION OF LAND FOR THE ABOVE MENTIONED TWO PURPOSES. PURCHASE OF LAND COM MENCED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2002-03. THUS, THE MA NO.7/AHD/2007 (IN ITA NO.1803/AHD/2007 & CO NO.155/AHD/2007 MILLENNIUM PARK HOLDING PVT.LTD. VS. ITO ASST.YEAR 2004-05 - 3 - ACTIVITY OF ACQUIRING STOCK-IN-TRADE COMMENCED IN A .Y. 2001-02 AND ACTUAL PURCHASE STARTED IN THE YEAR 2002-03. I NSOFAR AS THE ASSESSMENT YEAR 2004-05 IS CONCERNED, SUBSTANTIAL L AND HAD ALREADY BEEN ACQUIRED AND THUS THE BUSINESS WAS COM PLETELY SET UP AND COMMENCED. THESE FACTS WERE PLACED BEFORE THE HONBLE TRIBUNAL DURING THE COURSE OF THE ARGUMENTS SUBMITT ED BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE AND FURTH ER, A PAPER BOOK WAS FILED COMPILING THEREIN ALL RELEVANT DOCUM ENTS. A COPY OF THE PAPER BOOK ORIGINALLY FILED AND WHICH FORMS PART OF THE HONBLE TRIBUNALS RECORD, IS ONCE AGAIN ENCLOSED HEREWITH FOR READY REFERENCE. THE PAPER BOOK IS DULY INDEXED AN D AT PAGES A AND B IS PLACED A COPY OF THE WRITTEN SUBMISSIONS F ILED BEFORE THE LEARNED CIT(A). AT NOTE NO.2 OF THIS SUBMISSION IT WAS CLEARLY STATED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND NEAR AHMEDABAD AND TO BUILD, DE VELOP AND RUN 18 NOTE CHAMPIONSHIP GOLF COURSES AND COUNTRY C LUB ALONG WITH A RESIDENTIAL TOWNSHIP OVER AN AREA OF APPROXI MATELY 570 ACRES OF LAND. IT WAS FURTHER STATED THAT THE COMP ANY IS ALSO DOING THE BUSINESS OF MAKING INVESTMENT OF FUNDS IN GOVER NMENT, SEMI- GOVERNMENT SECURITIES OR IN COMPANIES, FIRMS ETC. AT NOTE NO.3 IT WAS STATED THAT SINCE THE DATE OF INCORPORATION ON 15 TH DECEMBER, 2000 THE WORK OF ACQUISITION OF LAND HAD STARTED. AT NO.NO.4 IT WAS STATED THAT THE ASSESSEE COMPANY HAD CAPITALIZE D TOTAL DIRECT EXPENDITURE OF RS.1,33,70,580 UPTO 31 ST MARCH, 2004 AS PER NOTE NO.9 SCHEDULE 12 OF THE AUDITED ACCOUNTS, AND FURTH ER, THAT REVENUE EXPENDITURE BEING MAINLY ADMINISTRATIVE EXP ENSES AS PER SCHEDULE 10 AND 11 WERE CLAIMED. AT NO.5 IT WAS ST ATED THAT THE COMPANY HAD EARNED INCOME OF RS.2,48,714 AS PER SCH EDULE 9 FROM BUSINESS INVESTMENTS. AT THE END OF THIS SUBM ISSION, THE ASSESSEE COMPANY RELIED ON THE FOLLOWING CASES: (1) CIT V. SAURASHTRA CEMENT AND CHEMICAL INDUSTR IES LTD. (91 ITR 170) (GUJ) (2) CIT V. CLUB RESORTS P.LTD. (287 ITR 552)(MAD) MA NO.7/AHD/2007 (IN ITA NO.1803/AHD/2007 & CO NO.155/AHD/2007 MILLENNIUM PARK HOLDING PVT.LTD. VS. ITO ASST.YEAR 2004-05 - 4 - 3. THE AR HAS ALSO INFORMED THAT IN A LATEST DECISION, THE SPECIAL BENCH AHMEDABAD IN THE CASE OF SARDAR SAROVAR NARMA DA NIGAM 19 ITR (TRIB) 133 (AHD) (SB) HAS TAKEN A VIEW THAT FOR THE PURPOSE OF COMMENCEMENT OF BUSINESS, IT IS NOT NECESSARY THAT ALL THE CATEGORIES OF ITS BUSINESS ACTIVITIES MUST START SIMULTANEOUSLY. IT HAS ALSO BEEN HELD THAT THE FLOW OF REVENUE FROM THE SAID ACTIVITY MUS T START AND IT IS NOT RELEVANT TO CONCLUDE THAT BUSINESS OF ASSESSEE HAD BEEN SET UP ONLY WHEN CORRESPONDING REVENUE HAS BEEN GENERATED. HE HAS T HEREFORE PLEADED THAT IT WAS AN APPARENT MISTAKE ON THE PART OF THE RESPECTED BENCH TO HOLD THAT NO BUSINESS ACTIVITY WAS UNDERTAKEN BY TH E ASSESSEE, THEREFORE BUSINESS ACTIVITY HAD NOT COMMENCED. 4. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR. T.SANKAR APPEARED. HE HAS ARGUED THAT WHILE DECIDING THE ISSUE OF COMM ENCEMENT OF BUSINESS, THE TRIBUNAL HAS TAKEN A CONSCIENTIOUS D ECISION AFTER DULY CONSIDERING THE FACTS AS WELL AS THE LAW APPLICABLE ON THE ISSUE AND DECIDED THE MATTER IN THE FOLLOWING MANNER:- 5. I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MA TERIAL AVAILABLE ON RECORD. IT IS CLEAR THAT NO BUSINESS ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE SO AS TO GENERATE REVENU E INASMUCH AS NEITHER GOLF COURSE WAS READY NOR ANY MEMBERSHIP WA S ENROLLED NOR ANY BUSINESS ACTIVITY WAS UNDERTAKEN. ASSESSEE WAS A VERY EARLY STAGE OF COMPLETION OF GOLF COURSES, THEREFOR E, IT CANNOT BE HELD THAT ASSESSEES BUSINESS ACTIVITY HAD COMMENCE D. IN THE CASE OF SAURASHTRA CEMENT & CHEM.INDU. LTD. (SUPRA) ALSO ASSESSEE WAS IN THE BUSINESS OF MINING ON LEASE FOR QUARRY L IME STONE AND MA NO.7/AHD/2007 (IN ITA NO.1803/AHD/2007 & CO NO.155/AHD/2007 MILLENNIUM PARK HOLDING PVT.LTD. VS. ITO ASST.YEAR 2004-05 - 5 - THE BUSINESS HAS COMMENCED BY ACTIVITY OF EXTRACTIO N OF LIME STONE, SO ALSO IN THE CASE OF CLUB RESORTS P.LTD. (SUPRA), BUSINESS ACTIVITY BY WAY OF SALE OF COTTAGE HAS COMMENCED, THEREFORE, THESE CASE LAWS ARE NOT APPLICABLE TO THE ASSESSEES CASE. IN VIEW THEREOF, I FIND MERIT IN THE ARGUMENTS OF THE LEARNED DR THAT EXPENSES CONNECTED WITH OFFICE, PERSONAL, ADMINISTRATIVE EXP ENSES CANNOT BE ALLOWED TO THE ASSESSEE, THEY ARE TO BE CAPITALIZED . REVENUES APPEAL IS ALLOWED. 4.1. FROM THE SIDE OF THE REVENUE, THE LD.DR HAS CITED FOLLOWING DECISIONS:- 1. IN THE CASE OF CIT VS. KAMAL BHAI ISMILJI [2005] 288 ITR 297 (ALLAHABAD HC) 2. IN THE CASE OF CIT VS. RAMESH ELECTRIC & TRADIN G CO 203 ITR 497 (BOM HC) 3. IN THE CASE OF HOMI MEHTA & SONS P.LTD. VS. DCI T 63 ITD 15 (ITAT MUMBAI) 5. AFTER HEARING THE SUBMISSIONS OF BOTH THE S IDES, WE ARE OF THE CONSIDERED OPINION THAT THE RESPECTED CO-ORDINATE B ENCH HAS CONSIDERED, BOTH, LEGAL AS WELL AS FACTUAL ASPECT OF THE ISSUE. ON THE FACTS OF THE CASE, THE REVENUE HAS RAISED AN OBJECTION IN RESPECT OF T HE COMMENCEMENT OF THE BUSINESS ACTIVITY OF THE ASSESSEE. ON DUE APPR ECIATION OF THOSE FACTS, AS WELL AS AFTER CONSIDERING THE CASE LAW CITED FRO M BOTH THE SIDES, THE TRIBUNAL HAS TAKEN A CONSCIENTIOUS VIEW THAT THOSE CASE LAWS; WHERE COMMENCEMENT OF BUSINESS ACTIVITY WAS UPHELD; WERE NOT APPLICABLE ON THE FACTS OF THE ASSESSEES CASE. ONCE A CATEGORIC AL VIEW HAS DULY BEEN TAKEN AFTER PROPER ADJUDICATION OF FACTS AND LAW, T HEN SUCH A VIEW CANNOT BE CONSIDERED AS AN APPARENT MISTAKE. AS FAR AS A CASE LAW CITED NOW BY LD.AR, PRONOUNCED BY THE TRIBUNAL, WE CAN ONLY COMM ENT THAT THE MA NO.7/AHD/2007 (IN ITA NO.1803/AHD/2007 & CO NO.155/AHD/2007 MILLENNIUM PARK HOLDING PVT.LTD. VS. ITO ASST.YEAR 2004-05 - 6 - QUESTION OF COMMENCEMENT OF BUSINESS AS ALSO THE ST ART OF THE BUSINESS ENTIRELY DEPENDS ON THE FACTS OF EACH CASE BEING A FACTUAL ASPECT WHICH DIFFERS FROM CASE TO CASE, HENCE SUCH AN ISSUE CANN OT BE GENERALIZED SO AS TO HOLD THAT A LAW PRONOUNCED IN A PARTICULAR CASE CAN COVER ALL THE CASES INVOLVING THIS ISSUE, I.E. THE QUESTION OF COMMENCE MENT OF BUSINESS. WE, THEREFORE HOLD THAT THE OBJECTION RAISED THROUGH TH IS MISCELLANEOUS PETITION HAS NO FORCE SPECIALLY IN THE LIGHT OF THE CASE LAWS CITED SUPRA FROM THE SIDE OF THE REVENUE, THUS DESERVES TO BE D ISMISSED. WE HOLD ACCORDINGLY. 6. IN THE RESULT, MISCELLANEOUS PETITION IS D ISMISSED SD/- SD/- ( &.'!( ')# ) ( ' ' * ) $ +, $ ( A. MOHAN ALANKAMONY ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/ 03 /2013 -.., .,../ T.C. NAIR, SR. PS $* + ,-. /$.( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / 01 2 / CONCERNED CIT 4. 2 () / THE CIT(A)-VIII, AHMEDABAD 5. 567 ,,01, 01#, ('$/$ / DR, ITAT, AHMEDABAD 6. 789 : / GUARD FILE. $*' / BY ORDER, 5 , //TRUE COPY// 0/ 1 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD