Sri Sri Lakshmi Aditya Students Hostel,, Kakinada v. The ACIT, Circle-1,, Rajahmundry

ITA 288/VIZ/2008 | 2004-2005
Pronouncement Date: 03-01-2011 | Result: Allowed

Appeal Details

RSA Number 28825314 RSA 2008
Bench Visakhapatnam
Appeal Number ITA 288/VIZ/2008
Duration Of Justice 2 year(s) 7 month(s) 7 day(s)
Appellant Sri Sri Lakshmi Aditya Students Hostel,, Kakinada
Respondent The ACIT, Circle-1,, Rajahmundry
Appeal Type Income Tax Appeal
Pronouncement Date 03-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 03-01-2011
Date Of Final Hearing 04-11-2010
Next Hearing Date 04-11-2010
Assessment Year 2004-2005
Appeal Filed On 26-05-2008
Judgment Text
ITA NO.288/VIZ/2008 SRI LAKSHMI ADITYA STUDENTS HOSTEL KKD IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 288 /VIZAG/ 20 08 ASSESSMENT YEAR : 2004 - 05 SRI LAKSHMI ADITYA STUDENTS HOSTEL KAKINADA ACIT CIRCLE - 1 KAKINADA (APPELLANT) VS. (RESPONDENT) PAN NO.ABJFS 8749N APPELLANT BY: SHRI G.V.N. HARI CA RESPONDENT BY: SHRI TH. LUCAS PETER CIT(DR) ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER : - THIS APPEAL IS PREFER RED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT REVISING THE ASSESSMENT ORDER ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER PASSED U/S 263 OF THE I.T. ACT BY LD. CIT RAJAHMUNDRY IS CONTRARY TO THE FACTS AND LAW APPLICABLE TO APPELLANTS CASE. 2. THE VERY SHOW CAUSE NOTICE ISSUED IS INVALID AND CONSEQUENT REVISION PROCEEDINGS ARE NULL AND VOID AS THE GROUND AND BELIEF ENTERTAINED BY LD. CIT TO INITIATE REVISION PROCEEDINGS ARE ALREADY SEIZED THE ISSUE OUT OF PURVIEW OF SEC263 O F I.T. ACT BY THE CONSCIOUS DECISION TAKEN BY LD. ASSESSING OFFICER ON THE VERY SAME GROUND IN THE FACTS AND CIRCUMSTANCES APPELLANTS CASE. 3. THE VERY ORDER PASSED BY LD. CIT U/S 263 OF I.T. ACT IS IMPROPER AND INVALID AS PROPER OPPORTUNITY OF BEING HEARD W AS NOT GIVEN TO THE APPELLANT TO PRESENT ITS CASE EITHER AT THE TIME OF INITIATION OR AT THE TIME OF HEARING IN REGARD TO ALLEGATION/MATERIAL AND GROUNDS BASING ON WHICH THE IMPUGNED ORDER IS PASSED. 4. THE ORDER PASSED BY LD. ASSESSING OFFICER ON 12.9.2006 U /S 143(3) OF I.T. ACT CANNOT BE SAID TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND HENCE OUT OF THE PURVIEW OF SEC 263 OF THE I.T. ACT. ITA NO.288/VIZ/2008 SRI LAKSHMI ADITYA STUDENTS HOSTEL KKD 2 5. (A) THE LD. CIT RAJAHMUNDRY IS NOT AT ALL JUSTIFIED IN HOLDING THAT RUNNING OF HOSTEL CANNOT BE TREATED AS BUSINESS AND AS SUCH INCOME THERE FROM CANNOT BE ASSESSED AS BUSINESS INCOME (B) THE LD. CIT OUGHT TO HAVE ACCEPTED THE FACT THAT RUNNING STUDENTS HOSTEL BY PROVIDING ACCOMMODAT ION AND BOARDING FACILITIES IN SYSTEMATIC AND ORGANIZED MANNER DOES CONSTITUTE BUSINESS AND HENCE INCOME FROM SAID BUSINESS SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS ONLY. 2. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HA S INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE FIRM IS IN THE BUSINESS OF RUNNING STUDENTS HOSTEL AND IT HAS FILED ITS RETURN OF INCOME DECLARING A LOSS OF RS.13 75 000/ - . T HE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT . L ATER ON IT WAS S ELECTED FOR SCRUTINY. A NOTICE U/S 143(2) AND 142(1) WERE ISSUED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE LEASE RENT RECEIVED ON HIRING OF HOSTEL SHOULD NOT BE TREATED AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME. IN RESPONSE THE RE TO ASSESSEES A.R. FILED A NOTE RE GA RDING THE RENT RECEIVED DURING THE YEAR AND CONTENDED THAT DURING THE FINANCIAL YEAR THE ASSESSEE HAS TEMPORARILY SHUT DOWN THE BUSINESS OF RUNNING HOSTEL DUE TO SOME TECHNICAL PROBLEM . INSTEAD OF KEEPING THE HOSTEL BUILDING IDLE THE COMMERCIAL ASSET WERE EXPLOITED TO GENERATE INCOME BY GIVING IT HIRE FOR A TEMPORARY PERIOD. HE HAS ALSO PLACED RELIANCE UPON THE JUDGEMENTS OF THE A.P. HIGH COURT IN THE CASE OF CIT VS. ARYAN INDUSTRIES PVT. LTD. THE A.O. EXAMINED THE ISSUE IN THE LIGHT OF AFORESAID JUDGEMENTS AND ACCEPTED THE CLAIM OF BUSINESS INCOME OF THE ASSESSEES. 3. THE CIT REVISED THE ASSESSMENT ORDER AFTER HAVING RE - EXAMINED THE FACTS OF THE CASE AND ALSO FORMING A VIEW THAT TH E ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECT THE A.O. TO COMPUTE THE INCOME FROM LETTING OF PROPERTY UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ITA NO.288/VIZ/2008 SRI LAKSHMI ADITYA STUDENTS HOSTEL KKD 3 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE OF NATURE OF RENT RECEIVED WAS ALSO DULY EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF THE ASSESSEES CONTENTION AND BEING CONVINCED WITH IT HE ACCEPTED THE CLAIM OF THE ASSESSEES. NOW FOR HIS OWN REASONS CIT HAS REVISED THE ORDER OF THE A.O. THE LD . COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IT IS A SETTLED POSITION OF LAW THAT WHEREVER TWO VIEWS ARE POSSIBLE AND ASSESSING OFFICER HAS TAKEN ONE VIEW THE ORDER OF THE A.O. CANNOT BE REVISED ONLY FOR THE SIMPLE REASON THAT CIT DOES NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICER. THEREFORE THE REVISION IS NOT LEGALLY VALID. 5. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THAT CIT HAS RIGHTLY REVISED THE ORDER OF THE A.O. IN THE LIGHT OF JUDGEMENT OF THE APEX COURT IN THE CASE OF SHAMBHU INVESTMENT PRIVATE LIMITED VS. CIT REPORTED AT 263 ITR 143 (SC) IN WHICH RENTAL INCOME ON LETTING O F PROPERTY IS TO BE CONSIDERED AS AN INCOME FROM HOUSE PROPERTY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDER OF AUTHORITIES BELO W AND DOCUMENTS PLACED ON RECORD. FROM A CAREFUL PERUSAL OF THE ASSESSMENT ORDER WE FIND THE ISSUE OF NATURE OF RENTAL RECEIPT ON LETTING OF THE PROPERTY WAS EXAMINED BY THE A.O. IN THE LIGHT OF EXPLANATIONS FURNISHED BY THE ASSESSEE AND BEING CONVINCE D WITH IT T HE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE. THOUGH THE CIT WAS OF THE DIFFERENT VIEW BUT HE DID NOT MA K E OUT A CASE THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS NOT POSSIBLE AND IS AN ABSURD VIEW AGAINST THE LEGAL PROPOSITIONS SETTLED BY THE APEX COURT. SINCE THE ISSUE HAS BEEN EXAMINED BY THE A.O. AND HE HAS TAKEN ONE OF THE POSSIBLE VIEW THAT VIEW CANNOT BE REVISED BY THE CIT U/S 263 OF THE ACT ONLY FOR THE REASON THAT IT WAS NOT ACCEPTABLE TO THE CIT. IF THE ASSESSING OFF ICER HAS NOT EXAMINED THE ISSUE THEN ONE CAN UNDERSTAND THAT THE A.O. HAS NOT APPLIED HIS MIND AND CIT HAS EVERY RIGHT TO REVISE THE ORDER OF THE A.O. ONCE THE ASSESSING OFFICER HAS APPLIED HIS MIND AND ADJUDICATED THE ISSUE IN A PARTICULAR MANNER THAT O RDER CAN ONLY BE ITA NO.288/VIZ/2008 SRI LAKSHMI ADITYA STUDENTS HOSTEL KKD 4 REVISED BY THE CIT IF HE IS ABLE TO MAKE OUT A CASE THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS PERVERSE AND AGAINST THE PRINCIPLES OF LAW SETTLED BY THE APEX COURT. SINCE THE A.O. HAS TAKEN A ONE OF THE POSSIBLE VIEW THE CIT HAS WRO NGLY EXERCISED HIS JURISDICTION TO REVISE THE SAME. THEREFORE WE SET ASIDE THE ORDER OF THE CIT . 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 03.01 .20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 03 RD JANUARY 2011 COPY TO 1 SRI LAKSHMI ADITYA STUDENTS HOSTEL D.NO.2 - 23 - 2 SARADA DEVI STREET SRINAGAR KAKINADA - 533 003 2 ACIT CIRCLE - 1 KAKINADA 3 THE CI T RAJAHMUNDRY 4 THE CIT (A) RAJAHMUNDRY 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM