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Income Tax Appellate Tribunal, “C” Bench, Mumbai
Before: Shri Ravish Sood & Shri N.K. Pradhan
O R D E R
PER RAVISH SOOD, JM
The present cross appeals filed by the assessee are directed against the respective orders passed by the CIT(A)-17, Mumbai, dated 28.09.2017, which in turn arises from the respective assessment orders passed under Sec.143(3) of the Income Tax Act, 1961 (for short „I.T Act‟). As common issues are involved in the aforementioned appeals, therefore, the same are being taken up and disposed off together by way of a consolidated order. We shall first advert the appeal of the assessee for A.Y. 2012-13. The assessee assailing the P a g e | 2 AYs. 2010-11 to 2012-13 Prolific Ventures Pvt. Ltd. Vs. Income Tax Officer – 10(3)-4 order of the CIT(A) has raised before us the following grounds of appeal:
“1. The learned Commissioner (Appeals) erred in enhancing the assessment by freshly adjudicating an issue which had been already decided by the Hon’ble ITAT (Mumbai).
2. The authorities below have erred in disregarding the decision of Hon’ble ITAT (Mumbai) dated 24.05.2015 rendered in appellant's own case for A.Y. 200910.
3. The authorities below erred in disallowing Appellants claim that income from Rent and Service Charges should be taxed under the head “Income from Business”.
4. The authorities below erred in disallowing interest as not permissible as deduction u/s 57(iii).
The authorities below erred in disallowing depreciation as not permissible as deduction u/s 57(iii).
The authorities below erred in disallowing the Appellants claim of deduction of business expenses.
The learned Assessing Officer has erred in initiating penalty proceedings in a case which has been highly litigated up to the Hon’ble Supreme Court.”
Briefly stated, the assessee company which is engaged in the business of providing value addition & auxiliary services had e-filed its return of income for A.Y. 2012-13 on 30.09.2012, declaring total income at Rs.4,32,278/-. The return of income filed by the assessee was processed as such under Sec.143(1) of the I.T Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec.143(2). The A.O assessed the income of the assessee, vide his order passed under Sec.143(3), dated 30.03.2015 at Rs.47,11,750/-.
Aggrieved, the assessee assailed the mater in appeal before the CIT(A). The CIT(A) after deliberating on the contentions advanced by the assessee was however not persuaded to subscribe to the same and dismissed the appeal.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorized P a g e | 3 AYs. 2010-11 to 2012-13 Prolific Ventures Pvt. Ltd. Vs. Income Tax Officer – 10(3)-4 Representative (for short „A.R‟) for the assessee at the very outset of the hearing of the appeal submitted that she was only pressing Ground of appeal
No.
6. In terms of the aforesaid concession of the ld. A.R the Grounds of appeal Nos. 1 to 4 and Ground of appeal No. 7 are dismissed as not pressed.
5. We shall now confine ourselves to the ground of appeal No. 6, which in terms of the concession of the ld. A.R is the sole surviving ground before us. It was submitted by the ld. A.R that the assessee in its return of income for the year under consideration had claimed a „business loss‟ of Rs.43,88,642/-, after excluding the rental income and income from other sources as was credited in its profit and loss account for the year under consideration. It was submitted by the ld. A.R that the assessee had adjusted the „business loss‟ for the year under consideration against its income from house property, as a result whereof the balance income from house property was scaled down to an amount of Rs.3,56,630/-. The ld. A.R submitted that the A.O while framing the assessment declined to allow the claim of the „business loss‟ as was raised by the assessee in its return of income for the year under consideration. It was submitted by her that as the assessee was a company which was carrying on its business from the first floor of a leased premises, therefore, the A.O had erred in not allowing the expenses incurred in the normal course of its business activities and also the expenses which were indispensably required to be incurred to retain its corporate entity. It was further averred by the ld. A.R that despite the fact that the assessee had raised a specific ground of appeal viz. ground of appeal No. 3 before the CIT(A), therein assailing the order of the A.O insofar he had not granted deduction of the expenses which were otherwise allowable to the assessee as a corporate entity, however, the first appellate authority had failed to adjudicate the said issue.
P a g e | 4 AYs. 2010-11 to 2012-13 Prolific Ventures Pvt. Ltd. Vs. Income Tax Officer – 10(3)-4 6. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. On a perusal of the copy of the return of income (along with computation) of the assessee company for the year under consideration i.e A.Y. 2010-13, it is discernible that the latter had reflected a “business loss” of Rs.43,88,642/-. The A.O while framing the assessment had disallowed the “business loss” claimed by the assessee and had assessed its income at Rs.47,11,750/-, as against the returned income of Rs.4,32,278/-. In sum and substance, the A.O while framing the assessment had failed to consider the claim of “business loss” raised by the assessee. On appeal, the assessee had specifically assailed the declining on the part of the A.O to grant expenses which were allowable to the assessee being a corporate entity. In this regard the assessee had raised a specific ground of appeal viz. „Ground of appeal No. 3‟ before the CIT(A), which reads as under: “(3) the ld. A.O has erred in not granting expenses allowable as a corporate entity.”
7. We have perused the order of the CIT(A) and are persuaded to subscribe to the contention advanced by the ld. A.R that despite the fact that the assessee had specifically assailed the order passed by the A.O on the ground that he while framing the assessment had erred in not granting the expenses which were allowable to the assessee in its corporate entity, however, the same had not been adjudicated by the said first appellate authority. We thus in terms of our aforesaid observations are of the considered view that as the CIT(A) has failed to adjudicate the specific ground of appeal viz. “Ground of appeal No. 3” raised by the assessee before him, therefore, the matter in all fairness requires to be restored to his file. The CIT(A) is directed to adjudicate the aforementioned “Ground of appeal No. 3” as was raised by the P a g e | 5 ITA Nos. 146-148/Mum/2018 AYs. 2010-11 to 2012-13 Prolific Ventures Pvt. Ltd. Vs. Income Tax Officer – 10(3)-4 assessee before him by way of a speaking order. Needless to say, the CIT(A) shall during the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate its claim before him. We thus in terms of our aforesaid observations restore the case to the file of the CIT(A), for the limited purpose of adjudicating the “Ground of appeal No. 3” raised by the assessee before him.
The appeal of the assessee is allowed for statistical purposes in terms of our aforesaid observations.
ITA Nos. 146 & 148/Mum/2018 AYs. 2010-11 & 2011-12 9. As the facts and the issue involved in the captioned appeals of the assessee i.e A.Y. 2010-11 AND for A.Y. 2011-12 remains the same, as were there before us in the case of the assessee for A.Y. 2012-13 viz. ITA No. 147/Mum/2018 as had been adjudicated by us hereinabove, therefore, our order passed in the said appeal shall apply mutatis mutandis for the disposal of the captioned appeals. We may herein observe that the assessee in its appeal for A.Y. 2010-11 has withdrawn “Grounds of appeal
Nos. 1 to 4” and the “Ground of appeal No. 6”, as a result whereof the only surviving ground of appeal as remains before us is “Ground of appeal No. 5”. In similar terms, the assessee in its appeal for A.Y. 2011-12 had withdrawn the “Grounds of appeal Nos. 1 to 3” & “Ground of appeal No. 5”, as a result whereof the only ground of appeal that means before us is “Ground of appeal No. 4”. As in both of the aforementioned years i.e A.Y. 2010-11 & AY. 2011-12 the CIT(A) had erred in not adjudicating the specific contention advanced by the assessee as regards granting of expenses allowable pursuant to its corporate entity, therefore, the order of the P a g e | 6 ITA Nos. 146-148/Mum/2018 AYs. 2010-11 to 2012-13 Prolific Ventures Pvt. Ltd. Vs. Income Tax Officer – 10(3)-4 CIT(A) for both of the said years are restored to his file on the same terms for fresh adjudication in conformity with our observations recorded while disposing off the appeal of the assessee for A.Y. 2012-
13. As observed by us hereinabove, the appeal of the assessee for AY: 2010-11 i.e AY: 2011-12 i.e ITA No. 148/Mum/2018 are restored to the file of the CIT(A) for the limited purpose of adjudication of the “Ground of appeal No. 5” and “Ground of appeal No.4”, as was raised by the assessee before him in the said respective years.
The appeal of the assessee for A.Y. 2010-11, AY. 2011-12 and A.Y 2012-13 i.e to 148/Mum/2018 are allowed for statistical purposes in terms of our aforesaid observations.