ITO 20(3)(1), MUMBAI v. ELECTRONIC & ENGINEERING, CO., MUMBAI

ITA 2138/MUM/2012 | 2008-2009
Pronouncement Date: 11-10-2013 | Result: Dismissed

Appeal Details

RSA Number 213819914 RSA 2012
Assessee PAN AAAFE0594M
Bench Mumbai
Appeal Number ITA 2138/MUM/2012
Duration Of Justice 1 year(s) 6 month(s) 11 day(s)
Appellant ITO 20(3)(1), MUMBAI
Respondent ELECTRONIC & ENGINEERING, CO., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 11-10-2013
Date Of Final Hearing 30-09-2013
Next Hearing Date 30-09-2013
Assessment Year 2008-2009
Appeal Filed On 30-03-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMB ER / ITA NO. 2138 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 0 8 09 ) INCOME TAX OFFICER WARD 20(3)(1) PIRAMAL CHAMBERS LALBAUG MUMBAI 400 0 12 .. / APPELLANT V/S ELECTRONIC & ENGINEERING CO. EEC HOUSE PLOT NO. C 7 DALAI INDUSTRIAL ESTATE NEW LINK ROAD ANDHERI (W) MUMBAI 400 053 .... / RESPONDENT PERMANENT ACCOUNT NUMBER AAAFE0594M / ASSESSEE BY : MR. MAYUR KISNADWALA / REVENUE BY : MR. J.K. GARG / DATE OF HEARING 30.09.2013 / DATE OF ORDER 11 - 10 - 2013 / ORDER / PER AMIT SHUKLA J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE R EVENUE CHALLENGING THE IMPUGNED ORDER DATED 6 TH JANUARY 2010 PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXXI MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (FOR SHORT 'THE ELECTRONIC & ENGINEERING CO. 2 ACT' ) FOR THE ASSESSMENT YEAR 20 0 8 09 VIDE WHICH THE SOLE ISSUE RAISED IS THAT THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT THE RENT COMPENSATION AND SERVICE CHARGES AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM HOUSE PROPERTY AS ADOPTED BY THE ASSESSING OFFICER. 2. THE RELEVANT FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH WAS EARLIER ENGAGED IN THE BUSINESS OF MANUFACTURING OF NON DESTRUCTIVE TESTING EQUIPMENT AND ALLIED QUALITY CONTROL EQUIPMENT IN THE PAST YEARS. THE MANUFACTURING ACTIVITIES OF THE ASSESSEE HAS BEEN CLOSED DOWN DUE TO SOME LABOUR DISPUTE AND ITS OFFICE PREMISE HAS BEEN LET OUT TO ITS SISTER CONCERN FROM WHOM THE ASSESSEE IS RECEIVING RENT WHICH HAS BEEN TREATED AS BUSINESS CENTRE RECEIPTS IN THE PROFIT & LOSS ACCOU NT. BEFORE THE ASSESSING OFFICER IN RESPONSE TO THE SHOW CAUSE NOTICE AS TO WHY SUCH RECEIPTS SHOULD NOT BE TAXED AS INCOME FROM HOUSE PROPERTY THE ASSESSEE SUBMITTED THAT ITS MAIN BUSINESS WAS MANUFACTURING OF EQUIPMENT OF HIGH PRECESSION EQUIPMENT OF S PECIALIZED AND TECHNICAL NATURE. THIS MANUFACTURING ACTIVITY WAS CARRIED OUT FOR MORE THAN 40 YEARS. HOWEVER THE ASSESSEES MANUFACTURING ACTIVITY COULD NOT BE CARRIED OUT DUE TO SOME PROBLEMS AND LABOUR DISPUTE. PART OF T HE OFFICE PREMISE WAS RENTED OUT FOR EARNING THE INCOME SO AS TO RECOVER THE LOSSES INCURRED DUE TO SUSPENSION OF MANUFACTURING ACTIVITIES. THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION AND HELD THAT IN THE EARLIER YEARS ALSO THE ASSESSEES SIMILAR NATURE OF RECEIPTS HAVE BEEN ASSESSED AS INCOME FROM HOUSE PROPERTY AND LEARNED COMMISSIONERS ORDER TREATING IT TO BE A BUSINESS INCOME HAS NOT BEE N ACCEPTED BY THE REVENUE AND FURTHER APPEAL HAS BEEN FILED BEFORE THE TRIBUNAL. WHILE COMING TO THESE CONCLUSIONS HE ALSO REFERRED AND RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN SHANBHU INVESTMENT PVT. LTD. V/S CIT [ 2003 ] 263 ITR 143 (SC) AND ACCORDINGLY HE TAXED THE BUSINESS CENTRE RECEIPT AS INCOME FROM HOUSE PROPERTY. ELECTRONIC & ENGINEERING CO. 3 3. THE LEARNED COMMISSIONER (APPEALS) HELD THAT EARL IER DECISION OF THE LEARNED COMMISSIONER (APPEALS) HAVE BEEN CONFIRMED BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2005 06 AND 2006 07 AND THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE STANDS COVERED BY THE DECISION OF THE TRIBUNAL DURING THE ASSESSMENT YEARS 2005 06 AND 2007 08 WHEREIN IT HAS BEEN HELD THAT THE BUSINESS CENTRE RECEIPTS ARE INCOME FROM BUSINESS. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTION PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. THE ISSUE BEFORE US HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AFTER DETAIL DISCUS SION BY THE TRIBUNAL IN THE EARLIER YEARS . AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO FILED A COPY OF BUSINESS CENTRE AGREEMENTS AND THE FLOOR PLAN OF THE BUILDING SHOWING THAT MOST OF THE AREA IS BEING USED BY THE ASSESSEE FOR ITS OWN BUSINESS AND OTHER PART HAS BEEN LET OUT DUE TO TEMPORARY SUSPENSION OF THE MANUFACTURING BUSINESS PENDING DECISION OF THE COURT CASES BY THE WORKERS. ON A PERUSAL OF THESE DETAILS AND ALSO OTHER ATTENDANT FACTS WE FIND THAT THIS ISSUE HAS BEEN DI SCUSSED AT LENGTH BY THE TRIBUNAL AND HA S ARRIVED TO A CONCLUSION THAT THE BUSINESS CENTRE RECEIPTS HAS TO BE TREATED AS BUSINESS INCOME. THE DETAIL FINDING HAS BEEN GIVEN IN ITA NO.4516/MUM./2010 IN THE ASSESSMENT YEAR 2005 06 ORDER DATED 30 TH NOVEMBER 2 011 WHICH HAS BEEN FOLLOWED IN SUBSEQUENT YEARS I.E. ASSESSMENT YEAR 2006 07 AND 2007 08 ALSO . CONSISTENT WITH THE EARLIER YEARS JUDICIAL PRECEDENCE WE ALSO DIRECT THE ASSESSING OFFICER TO TREAT THE BUSINESS CENTRE RECEIPTS TO BE ASSESSED AS BUSINESS I NCOME AND NOT AS INCOME FROM HOUSE PROPERTY. THUS THE GROUND RAISED BY THE REVENUE IS TREATED AS DISMISSED. ELECTRONIC & ENGINEERING CO. 4 7. 7. IN THE RESULT REVENUES APPEAL IS TREATED AS DISMISSED. 11 - 10 - 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 11 - 10 - 2013 . S D/ - SD/ - SD / - P.M. JAGTAP ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI DATED : 11 - 10 - 2013 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) / THE CIT(A ) ; (4) / THE CIT MUMBAI CITY CONCERNED ; (5) / THE DR ITAT MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI