Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member)
The captioned appeal by assessee for Assessment Year [AY] 2003-04 contests the order of Ld. Commissioner of Income Tax (Appeals)-9 [CIT(A)], Mumbai dated 22/02/2012 qua reassessment proceedings on legal grounds as well as on merits. Since none has appeared before us on behalf of the assessee despite being provided with sufficient opportunity of being heard, therefore, we proceed to decide the appeal on the basis of material available on record and after hearing the Ld. DR.
Briefly stated, the assessee, being resident firm, was subjected to an assessment u/s 143(3) read with Section 147 of the Income Tax Act, 1961 vide Assessing Officer [AO] order dated 07/12/2010 wherein the total income of the assessee was determined at Rs.80,640/- as against returned loss of Rs.5,32,666/- filed by the assesse on 27/11/2003. The original assessment was completed u/s 143(1) of the Act vide order dated 11/02/2004 accepting the returned loss. The assessee reflected income from renting of factory premises for Rs.1,15,200/- as ‘Business income’ and claimed expenses of Rs.1,13,412/- and depreciation of Rs.5,25,454/- against the same which led to the triggering of reassessment proceedings by issuance of notice dated 15/10/2009 u/s 148 which was duly served on the assessee. In response, the assessee failed to file the return of income, which led to issuance of another notice on 08/11/2010. Against the same, the assessee requested to treat the original return filed by him as return in response to the said notice and also requested to supply the reasons for reopening which were duly supplied. The assessee raised objection against reopening which were duly rejected by AO. Finally, the AO treated the rental income under the head ‘House Property’ ITA No.3852/M/2012 Simto Property Developers Limited Assessment Year 2003-04 against which the assessee was allowed statutory deduction to the extent of 1/3rd only ignoring the expenses and depreciation claimed by the assessee for Rs. 1,13,412/- & Rs.5,25,454/- respectively. Aggrieved, the assessee carried the matter before Ld. CIT(A) without any success vide order dated 22/02/2012 wherein the assessee assailed reopening on legal grounds as well as contested the impugned additions on merits. The Ld. CIT(A) while upholding the reopening placed reliance on the decision of its predecessor in assessee’s own case for AY 2001-02 & 2002-03 and confirmed the order of Ld. AO. Aggrieved, the assessee is in appeal before us.
The Ld. Departmental representative placed reliance on the findings of the Ld. CIT(A) and fairly stated that the Tribunal in assessee’s own case for AY 2001-02 & 2002-03 order dated 18/11/2016 allowed assessee’s appeal qua expenditure and depreciation claim of the assessee. However, the issue of rental income earned by the assessee was not covered by the said order and the same has rightly been assessee under the head ‘House Property’.
We have heard the same and perused relevant material on record. So far as reopening is concerned, we see no reason to interfere with the findings of the Ld. CIT(A) as the original return was processed u/s 143(1) and the reopening has been initiated within a period of Six years and therefore, the only condition to be satisfied in this regard is that the Assessing Officer has reasons to believe that certain income earned by assessee has escaped assessment. The Ld. AO after perusing the assessment of earlier years came to a conclusion that no business was being carried on by the assessee during impugned AY and hence the expenditure claimed by him were not allowable to him. Therefore, legal grounds raised
by assessee stands rejected. Simto Property Developers Limited Assessment Year 2003-04
5. On merits, we find that the Tribunal in the cited order for 2001-02 & 2002-03 has allowed expenditure & depreciation claim of the assessee on the reasoning that the same were essential expenditure to maintain the assessee’s business assets and therefore, following judicial discipline, we held so. The assessee shall be allowed depreciation and other expenditure claimed by him, subject to verification by AO. As far as the rental income earned by the assessee is concerned, prima facie, the same has rightly been taxed under the head ‘Income From house property’ as the assessee has received rent against certain premises and renting is not the business of the assessee and therefore, the finding of Ld. AO to that extent are confirmed. Against the same, the assessee has rightly been allowed statutory deductions as per Section 24. The grounds of appeal, on merits, are thus partly allowed. The Ld. AO is directed to re-compute the income / business loss of the assessee in terms of our order.
6. In nutshell, the assessee’s appeal stands partly allowed.
Order pronounced in the open court on 28th April, 2017.