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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI P. K. BANSAL, VP & SHRI AMARJIT SINGH, JM
Assessee by: Shri Anuj Kisnadwala (AR) Department by: Shri M.C. Omi Ningshen (DR) सुनवाईकीतारीख / Date of Hearing:15.11.2017 घोषणाकीतारीख /Date of Pronouncement:05.01.2018 आदेश / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 28.01.2016 passed by the Commissioner of Income Tax (Appeals)- 14, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2010-11.
The assessee has raised the following grounds:- “1. In the facts & circumstances of the case and in law the A.O. erred in treating income from 'Business Centre' being run as "business" (as per object clause of Memorandum of Association) as A.Y. 2011-12 "Income from House Property" as against assessing the same as "Business Income". The Id. CIT(A) upheld the stand taken by the AO merely based on earlier decision of ITAT in assesses own case, without taking into account ratio of decisions rendered by various Courts & Tribunals & especially decision of Apex Court in Chennai Properties & Investments Ltd. [2015] 56 taxmann.com 456(SC) & Mumbai Tribunal decisions in ACIT vs Stellar Development Pvt. Ltd. [2015] 54 taxmann.com 252(Mum-Tri) & WSN Global Services Pvt. Ltd.[2011] 45 SOT 74 (mum-Tri), which were pronounced subsequent to the order of the ITAT in assesses own case relied upon by the CIT(A).
2. In the facts & circumstances of the case and in law the A.O. was not justified in treating income from 'Business Centre' offered as "Business Income" as "Income from House Property" and consequently erred in not allowing deduction for expenses for operating the 'Business Centre' & depreciation on the immovable properties held by the company.
3. Without prejudice to the above, it is prayed that income from running the Business Centre, at the least be held as "Income from Other Sources" & not as "Income from House Property". Consequently, assessee is also entitled to deduction for expenses for operating the 'Business Centre' & depreciation on the immovable properties held by it which were erroneously not allowed by the AD. The Id. CIT(A) confirmed the order of the AO merely based on earlier decision of ITAT in assesses own case, without taking into account ratioof the decision of Bombay High Court in Dudhsagar Investments Pvt.Ltd.[2014] 49Taxmann.com354(Bom). rendered subsequent to the order of the ITAT in assesses own case relied upon by the C 11(A).
The Learned AO has erred in law and facts in restricting the deduction of expenses to the extent of INR 29.08,102 out of INR 41,06,956. He ought to have allowed remaining expenses of INR 11,98.854.
The Learned AO has erred in law and facts in not allowing depreciation of INR 10,76.747 on Sewri premises, although the said property was used for assesses financing business and business centre activities after sale of Parel property in A.Y. 2004- 05. The Id. CIT(A) erred in confirming this view of the AO.
The Learned AO has erred in law and facts in calculating tax and interest u/s 234B of the Act.
ITA. No.1773/M/2016 A.Y. 2011-12
The appellant craves leave to add, amend, alter and/or deleteany of the grounds of appeal
before or during the course of appeal.”
3. The brief facts of the case are that the assessee filed its e-return of income declaring total income to the tune of Rs.8,78,59,654/- on 15.10.2010 for the A.Y. 2010-11 which only comprises of short term capital gains earned by the assessee on transactions of shares. The case was selected for scrutiny under CASS. Thereafter, the notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee. The assessee company is mainly engaged in the business of providing business Centre Service, borrowing and lending activities and DEPB trading activity. The assessee owns a business premises i.e., 405-408, Navbharat Estate, “B” Wing, 4th floor, Zakaria Bunder Road, Sewri (W), Mumbai-400015 which was let out to various tenants. The assessee received the rent to the tune of Rs.34,56,600/- the assessee has shown the rental income to the tune of Rs.34,56,600/- as income from business instead of income from house property. Therefore, the notice was given and after the receipt of reply, the said income was treated as income from house property. Thereafter, certain claim of depreciation and expenditure to earn the exempt income u/s 14A and other expenses were disallowed and the income of the assessee was assessed to the tune of Rs.8,94,56,480/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of Assessee, therefore, the assessee has filed the present appeal before us.
ITA. No.1773/M/2016 A.Y. 2011-12 ISSUE NO. 1to 3:- 4. Issue no. 1& 3 are inter-connected are being taken up together for adjudication. Under these issues the assessee has challenged the treatment of income given by the AO received as rent to the tune of Rs.34,56,600/-. The assessee filed the return of income by showing the rental income to the tune of Rs.34,56,600/- as income from the business. However, the Assessing Officer treated the same as income from house property. Subsequently the finding of the Assessing Officer has been confirmed by the CIT(A). The ld. Representative of the assessee has argued that the Hon’ble ITAT in the assessee’s own case has remanded these issues before the AO in dated 06.10.2016, therefore, these issues are liable to be remanded before the AO to decide the matter of controversy afresh in view of the direction raised therein. However, on the other hand, the Ld. Representative of the Department has refuted the said contentions. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. Copy of order in ITA. NO.2026/M/2016 for the A.Y. 2011-12 dated 06.10.2016 has been perused. We observed that the these issues have been remanded before the AO to decide the matter afresh. Relevant finding has been given in para no. 6 of the judgment is hereby reproduced below:- “6. We have heard the rival submissions perused the relevant finding given in the impugned orders as well as the material referred to before us. From the perusal of the certain ITA. No.1773/M/2016 A.Y. 2011-12 facts noted by the Assessing Officer and CIT (A) it is seen that, assessee is engaged in the business of providing business centre services'. In the year 994-95, the assessee has amended its "Objects" (which fact has been noted at page 2 of the CIT(A)'s order), which reads as under:- “To carry on the business of establishing running operating and maintaining and conducting business services therein, to lease, sub-lease, let, sub-let sub-license, rent, hire or company’s land, premises, properties shops, offices, galas, workshops, factories or other placed of business or any part thereof, whether leasehold or free hold or otherwise used, occupied, owned or possessed by the company, with or without any furniture, fixtures, fittings articles, effect or otherwise things therein.” In pursuance of the said object, the name of the company was also changed to “Saidarshan Business Centeres Pvt. Ltd.” for running of business centre activities, the assessee has been rendering various types of services, which has been elaborated at page 2 & 3 of the appellant order. However, in the a.y. 2003-04, the Tribunal after detailed discussion and following the ratio laid down by the Hon’ble Calcutta High Court in the case of CIT Vs. Shambhu Investment Pvt. Ltd. reported in (2001) 249 ITR 47 which later on was a decision, various expenses have been disallowed in the manner provided by Tribunal. In this year, the case of the Ld. Counsel before us is that, in the light of the latest Supreme Court decisions, the earlier precedence should not be followed because, now the law as has been culled out from these Apex court decisions are that, if the nature of activities carried out by the assessee are in accordance with the "objects" enshrined in the MOA, that is. In; the purpose of systematic business activity then same needs to be examined in that light. We agree with this proposition of the Ld. Counsel, because ultimately, the mandate of the law is that income is to be assessed under the correct head of income and also the statutory deductions and expenditure as admissible under law have to be allowed. The cannot be estoppels against the levy and if Supreme –Court decision any law then it has to reckon as law which a1wyxited. Accordingly, we are setting aside this entire 1uStah1litv of income from the business centre' to the Assessing Officer to examine, whether the same is assessed under the head "business income" or "income from house property' in the light of A.Y. 2011-12