ARCHNA OVERSEAS P. LTD, MUMBAI v. ITO 6(1)(3), MUMBAI

ITA 4221/MUM/2011 | 2007-2008
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 422119914 RSA 2011
Assessee PAN AAACA7246F
Bench Mumbai
Appeal Number ITA 4221/MUM/2011
Duration Of Justice 10 month(s) 7 day(s)
Appellant ARCHNA OVERSEAS P. LTD, MUMBAI
Respondent ITO 6(1)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2012
Assessment Year 2007-2008
Appeal Filed On 23-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI. D.K. AGARWAL (JM) AND SHRI. N.K. BILLA IYA (AM) ITA NO.4221/MUM/2011 ASSESSMENT YEAR: 2007-08 ARCHNA OVERSEAS PVT. LTD. 167 DR. A.B. ROAD WORLI MUMBAI-18 PAN NO: AAACA 7246 F VS. INCOME TAX OFFICER 6(1)(3) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : MS. SAISUDHA MULTANI RESPONDENT BY : SHRI T. ROUMUAN PAITE DATE OF HEARING : 22.03.2012 DATE OF PRONOUNCEMENT : 30.03.2012 O R D E R PER N.K. BILLAIYA A.M: THE PRESENT APPEAL IS DIRECTED BY THE ASSESSEE AGAI NST THE ORDER OF CIT(APPEALS)-14 MUMBAI DATED 21.02.2011 FOR THE AS SESSMENT YEAR 2007- 08. THE APPELLANT HAS RAISED FIVE GROUNDS OF APPEA L. THE SUM AND SUBSTANCE OF ALL THE GROUNDS OF APPEALS TAKEN TOGET HER BOILS DOWN TO DECIDE TWO ISSUES :- 1) WHETHER RENT INCOME TO THE TUNE OF `. 17 22 720/- SHOULD BE TREATED AS INCOME FROM HOUSE PROPERTY OR UNDER TH E HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. 2) WHETHER THE ASSESSEE IS ENTITLED TO CLAIM EXPENDITU RE TO THE TUNE OF `. 10 10 835/- FROM ABOVE SAID INCOME . 2. THE FACTS OF THE CASE ARE THAT THE APPELLANT COM PANY FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME ON 2 9.09.2007 DECLARING ITA NO. 4221/MUM/2011 ARCHANA OVERSEAS PVT LTD. 2 TOTAL INCOME AT `. 52 365/-. THE SAID RETURN WAS SELECTED FOR SCRUTIN Y ASSESSMENT AND ACCORDINGLY NOTICES U/S.143(2) AND 1 42(1) WERE DULY SERVED UPON THE ASSESSEE. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE LEARNED A.O. POINTED OUT TO THE ASSESSEE COMPANY THAT IT HAS SHO WN RENT RECEIVED TO THE TUNE OF `. 17 22 720/- UNDER THE HEAD INCOME FROM BUSINESS AN D PROFESSION HAVING SO POINTED OUT THE LEARNED A.O. THAN ASKED THE ASSESSEE COMPANY WHY THE SAME SHOULD NOT BE TAXED U NDER THE HEAD INCOME FROM HOUSE PROPERTY. 3.1 IN RESPONSE TO THIS SPECIFIC QUERY THE ASSESSE E COMPANY EXPLAINED ITS STAND VIDE ITS LETTER DATED 12.11.2009 AND CITE D VARIOUS DECISIONS OF HONBLE HIGH COURTS WHICH ARE EXHIBITED AT PAGE 4 OF THE ASSESSMENT ORDER AND CLAIMED THAT THE AFORESAID INCOME SHOULD BE TREATED AS PROFITS AND GAINS FROM BUSINESS AND PROFESSION. 3.2 THIS CONTENTION OF THE ASSESSEE DID NOT FIND AN Y FAVOUR WITH THE A.O. WHO COMPUTED THE RENT INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ALLOWED DEDUCTION @ 30% U/S.24 OF THE ACT. 4. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(APPEALS) AND REITERATED ITS STAND THAT THE RENT AMOUNTING TO `. 17 22 720/- SHOULD BE TAXED UNDER THE HEAD PROFITS AND GAINS FROM BUS INESS AND PROFESSION AND EXPENDITURE CLAIMED SHOULD BE ALLOWED ACCORDING LY. 5. THE LEARNED CIT(A) AFTER CONSIDERING ALL THE FAC TS AND RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT VS. SHAMBHU INVESTMENTS PVT. LTD. 263 ITR 143 CONFIRMED THE ORD ER OF THE LEARNED A.O. 6. AGGRIEVED THE ASSESSEE IS BEFORE US. THE LEARN ED COUNSEL APPEARING FOR THE APPELLANT COMPANY REITERATED ITS STAND AND EMPHASIZED THAT THE PROPERTY GIVEN ON RENT IS A COMMERCIAL PROPERTY AND CLAIMED THAT THE RENT RECEIVED FROM THE SAID COMMERCIAL PROPERTY SHOULD B E TAXED UNDER THE ITA NO. 4221/MUM/2011 ARCHANA OVERSEAS PVT LTD. 3 HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION . TO SUBSTANTIATE THE LEARNED COUNSEL EXPLAINED THAT THE APPELLANT COMPAN Y HAS BEEN INCURRING EXPENDITURE AMOUNTING TO `. 4 20 000/- ON PERSONS WHO ARE LOOKING AFTER THE UPKEEP OF THE PROPERTY AND ALSO OTHER EXPENSES ON UP KEEPING OF THE SAID PROPERTY. THE LEARNED COUNSEL WENT ON TO SUBM IT THAT THE PRIME OBJECT OF THE COMPANY IS TO EXPLOIT THE PROPERTY AN D NOT TO EARN THE RENTAL INCOME. 7. REBUTTING THIS SUBMISSION OF THE LEARNED AR THE LEARNED DR INSISTED THAT THERE IS NO ERROR IN THE ORDER OF THE LD. CIT(A) AND THEREFORE THE FINDING GIVEN BY THE LD. CIT(A) DESERVES TO BE UPHELD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDER OF THE LOWER AUTHORITIES. IT IS NOT IN DISPUTE THAT THE APPELLA NT COMPANY IS RECEIVING RENT ONLY FROM ONE PROPERTY WHICH IS LET OUT TO ONL Y ONE TENANT WHICH HAS RESULTED INTO A RENTAL INCOME OF `. 17 22 720/- DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO SEEN THAT THE MAIN OBJEC T OF THE COMPANY IS NOT TO LET OUT THE PROPERTIES ON RENT. THEREFORE IN VIEW OF THE PROVISION OF LAW THE RENT RECEIPT AMOUNTING TO `. 17 22 720/- IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. THIS ASPECT HAS ALSO BEEN DE ALT BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHAMBHU INVES TMENTS PVT. LTD. (SUPRA). RESPECTFULLY FOLLOWING THE RATIO LAID DO WN BY THE HON'BLE SUPREME COURT IN THE AFORESAID CASE WE DID NOT F IND ANY ERROR IN THE ORDER OF THE CIT(APPEALS). ACCORDINGLY THE ORDER O F THE LD. CIT(A) IS CONFIRMED. THE ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. 9. THE SECOND ISSUE RELATES TO THE CLAIM OF THE EXP ENSES INCLUDING DEPRECIATION TO THE TUNE OF `. 10 10 835/-. AS WE HAVE HELD THAT THE RENTAL INCOME IS TO BE TAXED UNDER THE HEAD INCOME FROM H OUSE PROPERTY THE LEARNED A.O. HAS ALREADY ALLOWED THE DEDUCTION @ 30 % AS PER SECTION 24 OF THE ACT AND AS THE APPELLANT COMPANY HAS NO OTHER I NCOME THE CLAIM OF EXPENSES TO THE TUNE OF `. 10 10 835/- IS REJECTED. THE APPEAL ON THIS GROUND IS ALSO DISMISSED. ITA NO. 4221/MUM/2011 ARCHANA OVERSEAS PVT LTD. 4 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MARCH 2012. SD/- SD/- (D.K. AGARWAL) (N.K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DT: 30.03.2012 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. THE DR A - BENCH ITAT MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ROSHANI