ISLAND STAR MALL DEVELOPERS PVT. LTD,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEALS) NFAC, MUMBAI

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ITA 2163/MUM/2021Status: DisposedITAT Mumbai22 July 2022AY 2014-1511 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred by dismissing the appeal solely based on the date of the order without considering the date of service and the assessee's claim of timely filing. The matter was remanded back to the CIT(A) for a fresh examination of the delay and merits.

What were the facts?

The assessee filed an appeal against an order passed under Section 154 of the Income Tax Act. The CIT(A) dismissed the appeal solely on the grounds of delay, stating it was filed 384 days late. The assessee contended that the order was served later, making the appeal within the prescribed time limit.

What were the issues?

Whether the appeal filed before the CIT(A) was time-barred, and if so, whether the delay was condonable. The primary issue was the date of service of the order for calculating the appeal period.

Which sections of the Income-tax Act were involved?

Section 154,Section 246A,Section 250,Section 249(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

For Appellant: Shri Vijay Mehta, AR
For Respondent: Mr. Sanjay V. Deshmukh, DR
Hearing: 21.06.2022Pronounced: 22.07.2022
1.

This appeal is filed by the assessee against the order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] for A.Y. 2014-15 on 11th October, 20201, by which the ld CIT {A}has dismissed the appeal of the assessee filed against the order u/s 154 of the Act passed by the Dy. Commissioner of Income Tax, Central Circle 6(3)(1), Mumbai [ld AO ] holding that appeal is delayed and no condonation application is filed.

“1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) has erred in passing order u/s 250 of the Act, merely on the ground that the matter is time barred as there is delay in filing appeal u/s 246A of the Act and thereby dismissing the grounds raised by the appellant against the order u/s 154 of the Act without considering the fact that the order was served on 28.02.2019 and the appellant had filed the appeal within thirty days i.e. on 28.03.2019 as duly prescribed and covered under Section 249(2)(c) of the Act. Thus, the contention of the Hon'ble CIT(A) that there was delay in filing of appeal and the same is not condoned is invalid and bad in law and requires to be quashed.

2.

Without prejudice to Ground No. 1 and based on the facts and in the circumstances of the case and in law, the Ld. AO has erred in passing a rectification order by relying on the assessment order dated 16.11.2016 wherein rental income was assessed as Income from Business instead of Income from House Property. Thus, the disallowance of construction interest pre of Rs.14,50,41,337 is bad in law and should be deleted.

3. Without prejudice to Ground No. 1 & 2 and based on the facts and in the circumstances of the case and in law, the Ld. AO has failed to allow capitalization of the amount of pre-construction interest of Rs.14,50,41,337 in the cost of the portion

4. Without prejudice to Ground No. 1 & 2 and based on the facts and in the circumstances of the case and in law, the Ld. AO has failed to allow depreciation on the amount of capitalization of pre construction interest to the cost of the portion of the building from which rental income is earned. Appellant prays that depreciation on capitalization of pre-construction interest should be granted to the appellant.

5. Without prejudice to Ground No. 1, on the facts and in the circumstances of the case and in law, the Ld. AO failed to allow credit of TDS of Rs.10,22,766 despite the same being claimed in the return of income of the appellant. The appellant prays that such short credit shall be granted to the appellant.”

3.

The fact of the case shows that the assessee is a Private Limited Company engaged in development of commercial, retail and entertainment complex. It is also engaged in business of rental of space and providing various services in the commercial complex. It filed its return of income on 29 September 2014 at a loss of ₹15,87,48,854/-, which was revised on 25 March 2016. The case of the assessee was picked up for scrutiny and assessment under Section 143(3) of the Income-tax Act, 1961

4.

The assessee is engaged in letting out of space of the mall and providing various services. Assessee has following revenue streams:-

i. Income from simple leases of ₹76,42,14,256/- was offered for taxation under the head income from house property. ii. Income from services amounting to ₹43,50,82,378/- was offered for taxation under the head business income.

5.

During the course of assessment proceedings, the learned Assessing Officer was of the view that the composite rent income of both the streams should be taxed under the head income from business and profession. Assessee objected to the same by submitting the agreement and stating that the assessee is the owner by title and actual possession of the construction of the plot. All the costs are capitalized and the asset was put to use during the year of transferring it to fixed assets account from capital work in progress but Assessee did not claim any depreciation on the same. Therefore, it offered the same as income from house property under Section 22 of the Act. Assessee also on its own disallowed proportionate expenditure, which is related to house property income. The common

10.

According to the provision of Section 249(2)of the Act, the appeal to the learned CIT (A) shall be presented within 30 days from the date of service of the notice of demand relating to the assessment order. As claimed by assessee that order under Section 154 of the Act was not available on ITBA but only the tax computation sheet is available. Such order was made available to the assessee only on 28

11.

The learned CIT (A) perused column no. 14 of form no. 35 but did not peruse the column 2(b) and (c) of the same form. Merely, based on column no. 14 of form no. 35 the appeal of assessee was considered as delayed by taking the date of the order as 9 February 2018. There was dispute that the order was passed on 9 February 2018 but received by assessee on 28 February 2019. Appeal is required to be filed within 30 days from the date of receipt of order. Therefore, appeal as claimed by the assessee is filed in time and therefore, learned CIT (A) should have perused the various columns filed in form no. 35, which is stated to be true to the best of the information of the director of the company.

12.

The LD CIT [A] looked at the date of order i.e. 9/02/2018 , noted that appeal is filed on 28/03/2019 , in column where it is mentioned that there is no delay in filing appeal, held that appeal is delayed by 384 days , no condonation request is filed, hence, dismissed appeal.

13.

The learned CIT (A) should have at least given an opportunity to the assessee of clarifying the above facts stated when mobile number and email address of the assessee are provided at column no. 17 of form no. 35. If one looks at the stand of the

14.

In view of this, we set aside this appeal back to the file of the learned CIT (A) to first examine,

a. What is the mode and date of the service of the order u/s 154 to the assessee and whether such service is in accordance with the law or not. b. Whether there was any delay in filing of the appeal or not for the reasons stated above and then decide about the condonation of the same. c. If it is found that appeal is really delayed, assessee must be given an opportunity to explain whether such delay was for sufficient cause or not. In the event , assessee submits such an explanation, to consider it in accordance with law. d. If the appeal of the assessee is found to have been filed in time and in accordance with law, the appeal of the assessee should be decided on the merits of the case in accordance with the law.

15.

Accordingly, ground no. 1 of the appeal is allowed.

16.

Other grounds of appeal are not required to be adjudicating in view of our above decision in Ground no 1.

17.

In the Result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 22.07.2022.

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