M/s Quarkcity India Private Limited, Mohali v. DCIT, Mohali

ITA 46/CHANDI/2012 | 2005-2006
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 4621514 RSA 2012
Assessee PAN AAACQ1134G
Bench Chandigarh
Appeal Number ITA 46/CHANDI/2012
Duration Of Justice 6 month(s) 15 day(s)
Appellant M/s Quarkcity India Private Limited, Mohali
Respondent DCIT, Mohali
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 27-07-2012
Date Of Final Hearing 23-07-2012
Next Hearing Date 23-07-2012
Assessment Year 2005-2006
Appeal Filed On 12-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R. SOOD AM AND MS. SUSHMA CHOWLA JM ITA NO. 46/CHD/2012 ASSESSMENT YEAR: 2005-06 M/S QUARKCITY INDIA P. LTD V D.C.I.T. C-6(1) MOH ALI A-45 INDUSTRIAL AREA PHASE VII B MOHALI AAACQ 1134 G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VINEET THUKRAL RESPONDENT BY: SHRI MANJEET SINGH DATE OF HEARING: 23.07.2012 DATE OF PRONOUNCEMENT: 27.07.2012 ORDER PER T.R. SOOD A.M IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED BU T ONLY DISPUTE IS REGARDING CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE ACT BY THE LD. CIT(A) AMOUNTING TO RS. 12 71 325/-. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ASSESSEE HAD INCOME FROM INTEREST ON FDR AMOUNTING TO RS. 29 19 353/-. THE SAME WAS SHOWN IN COMPUTATION OF INCOME AS INCOME FROM OTHER SOURCES. THE SAME WAS CLAIMED AGAINST THE BUSINESS LOSSES BY TREATING IT AS INCOM E FROM BUSINESS. THE ASSESSING OFFICER ADDED THIS AMOUNT AS INCOME FROM OTHER SOURCES AND DID NOT ALLOW THE SET OFF AGAINST THE LOSSES BY HOLDING THA T THE ASSESSEE HAS NOT COMMENCED BUSINESS. AS FAR AS TREATMENT OF INTERES T IS CONCERNED THE SAME WAS CONSIDERED AS INCOME FROM OTHER SOURCES BY THE LD. CIT(A) IN QUANTUM PROCEEDINGS BY FOLLOWING THE DECISION OF HON'BLE SU PREME COURT IN CASE OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. V. CIT 227 ITR 172 (S.C) WHICH HAS BEEN CONFIRMED BY THE TRIBUNAL ALSO. THE PENAL TY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS INITIATED AND ULTIMATELY P ENALTY U/S 271(1)(C) WAS LEVIED. 2 3. BEFORE THE LD. CIT(A) IT WAS MAINLY CONTENDED T HAT THERE WAS A DISPUTE REGARDING COMMENCEMENT OF BUSINESS BETWEEN THE ASSE SSEE AND THE REVENUE AND THE DISPUTE WAS A MIXED QUESTION OF LAW AND FAC TS. THE LD. CIT(A) DID NOT AGREE WITH THIS SUBMISSION AND CONFIRMED THE PENALT Y. 4. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAS ITSELF SHOWN THE INCOME FROM INTEREST ON FDR AS INCOME FROM OTHER SOURCES BUT CLAIMED THE SAME AGAINST THE BUSINESS LOSSES. THIS WAS DENIED BY THE ASSESSING OFFICER BY OBSERVING THAT THE LOSSES CANN OT BE ALLOWED BECAUSE THE ASSESSEE HAS NOT COMMENCED HIS BUSINESS. HE SUBMIT TED THAT THOUGH THE ASSESSEE DID NOT ARGUE MUCH ON MERIT BEFORE THE TR IBUNAL AND THE ACTION OF ASSESSING OFFICER WAS CONFIRMED BUT THE ARGUMENTS W ERE MADE IN RESPECT OF ALLOWANCES OF EXPENDITURE AND THE TRIBUNAL ALLOWED MANY EXPENSES BY HOLDING THAT IN ASSESSMENT YEAR 2005-06 THE ASSESSEE HAS DE FINITELY COMMENCED THE BUSINESS. IN THIS REGARD HE INVITED OUR ATTENTION TO THE OBSERVATIONS OF THE TRIBUNAL AT PARA 12 OF THE ORDER IN WHICH IT WAS CL EARLY HELD THAT THE ASSESSEE HAS DEFINITELY COMMENCED HIS BUSINESS IN ASSESSMENT YEAR 2005-06. 5. ON THE OTHER HAND THE LD. DR FOR THE REVENUE S TRONGLY RELIED ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY. THE PENALTY HAS BEEN LEVIED BECAUSE THE ASSESSEE HAD SHOWN INTEREST AS I NCOME FROM BUSINESS. WE FIND THAT THIS IS NOT THE CORRECT BECAUSE WHILE CON FIRMING THE ADDITION IN QUANTUM APPEAL THE TRIBUNAL HAS OBSERVED AT PARA 18 AS UNDE R:- GROUND NO. 5 OF THE GROUNDS OF APPEAL FOR ASSESSME NT YEAR 2005-06 IS REGARDING THE TREATMENT OF INTEREST INCOME OF RS. 29 90 353/- WHICH HAS BEEN ASSESSED AS INCOME F ROM OTHER SOURCES. DURING THE COURSE OF HEARING IT WAS FOUND AS A MAT TER OF FACT THAT IN THE RETURN OF INCOME THE APPELLANT HAD ITSELF TREATED SUCH INTEREST INCOME AS INCOME FROM OTHER SOURCES. THE COUNSEL FOR THE APP ELLANT CITED THE JUDGMENT IN THE CASE OF DALMIA PROMOTERS LTD.(SUPRA ). THE SAID CASE HAS NO APPRECIATION HERE FOR THE REASON THAT IN THA T CASE IN THE PROCEEDING ASSESSMENT YEAR IT WAS AN ACCEPTED POSI TION THAT INTEREST INCOME HAD BEEN TREATED AS INCOME FROM BUSINESS AND SECONDLY IT WAS SHOWN THAT SUCH INCOME WAS EARNED ON FUNDS UTILIZED FOR THE REAL ESTATE BUSINESS OF THE ASSESSEE-COMPANY. HOWEVER NO SUCH EVIDENCE HAS BEEN LED BEFORE US AND IN CONSEQUENCES THEREOF WE ARE OF THE CONSIDERED VIEW THAT THE APPELLANTS CLAIM TO TREA T INTEREST INCOME AS BUSINESS INCOME IS NOT TENABLE AND IS THEREFORE REJECTED. 3 7. THUS IT IS CLEAR THAT THE ASSESSEE HAS ITSELF RE TURNED INTEREST INCOME AS INCOME FROM OTHER SOURCES WHICH WAS CONFIRMED BY TH E TRIBUNAL ALSO. AT THE SAME TIME WHILE ADJUDICATING THE ISSUE REGARDING AL LOWABILITY OF EXPENSES IT WAS OBSERVED IN PARA 12 AS UNDER:- IN VIEW THEREOF IT IS INESCAPABLE TO HOLD THAT TH E ASSESSEE-COMPANY HAD SET UP ITS BUSINESS ON 7.5.2004 A DATE WHICH FALLS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2005-06 AND ACCORDI NGLY THE EXPENDITURE INCURRED BY THE APPELLANT COMPANY AFTER THE SAID DATE CAN BE CONSIDERED FOR DEDUCTION AS REVENUE EXPENDITURE WHI LE COMPUTING TOTAL INCOME FOR THE ASSESSMENT YEAR 2005-06. 8. THE ABOVE MAKES IT CLEAR THAT THE TRIBUNAL HAS G IVEN A FINDING THAT THE BUSINESS WAS ALSO SET UP DURING ASSESSMENT YEAR 200 5-06 THOUGH THE ASSESSEE COULD HAVE EASILY GOT THE BENEFIT OF SET O FF OF LOSSES BUT THAT ISSUE WAS NOT ARGUED. THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME BECAUSE THE INTEREST INCOME DULY DECLARED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES BUT THE ASSESSEE WAS TRYING TO ADJUST THE SAME AGAINST BUSINESS LOSSES. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE THERE IS NO CONCEALMENT A ND THEREFORE PENALTY CANNOT BE LEVIED AND ACCORDINGLY WE DELETE THE PEN ALTY. 9. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 27.07. 2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.07.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 4 5