SHRIPACK PRODUCTS P.LTD, MUMBAI v. ITO WD 9(3)(1), MUMBAI

ITA 7139/MUM/2010 | 2007-2008
Pronouncement Date: 07-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 713919914 RSA 2010
Assessee PAN AAAFS4423P
Bench Mumbai
Appeal Number ITA 7139/MUM/2010
Duration Of Justice 4 month(s) 20 day(s)
Appellant SHRIPACK PRODUCTS P.LTD, MUMBAI
Respondent ITO WD 9(3)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 07-03-2011
Assessment Year 2007-2008
Appeal Filed On 18-10-2010
Judgment Text
1 ITA NO.7139/MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI SMC SMC SMC SMC BENCH BENCH BENCH BENCH MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI BEFORE SHRI R K PANDA AM BEFORE SHRI R K PANDA AM BEFORE SHRI R K PANDA AM BEFORE SHRI R K PANDA AM ITA NO. ITA NO. ITA NO. ITA NO. 7139/MUM/2010 7139/MUM/2010 7139/MUM/2010 7139/MUM/2010 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 2007 2007 2007 2007- -- -08 0808 08 ) )) ) SHRIPACK PRODUCTS P LTD GANDHI & ASSOCIATES CAS 2 ND FLOOR VOLTAS INTERNATIONAL HOUSE 28 G N VAIDYA MARG FORT MUMBAI VS THE INCOME TAX OFFICER WARD 9(3)(1) MUMBAI ( (( (APPELLANT APPELLANT APPELLANT APPELLANT) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAAFS4423P AAAFS4423P AAAFS4423P AAAFS4423P ASSESSEE BY SHRI MILIND KOTHARI REVENUE BY SHRI R K GUPTA/DR PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 11.8.210 OF THE CIT(A) - 20 MUMBAI RELATING TO ASS ESSMENT YEAR 2007-08. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN; THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN TREATING THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND NOT ALLOWING THE SET OFF OF BROUGHT FORWARD DEPRECATION FROM SUCH RENTAL INCOME. 2 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E COMPANY WAS IN THE BUSINESS OF MANUFACTURING OF PLASTIC PRODUCTS. PRE SENTLY THE BUSINESS OF THE COMPANY AS SUBMITTED BEFORE THE ASSESSING OFFICER WAS TO GIVE THE FACTORY GALAS ON RENT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS DECLARED BUSINESS INCOME OF RS. 54 731/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE C OMPANY HAS INCOME FROM LET OUT OF ITS PROPERTY I.E. HOUSE PROPERTY AND NOT FRO M ANY SORT OF BUSINESS. 2 ITA NO.7139/MUM/2010 THEREFORE THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME FROM LETTING OUT ACTIVITIES BE NOT TREATED AS INCOME FROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME AS CLAIMED BY THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT MANUFACTURING ACTIVI TY HAS BEEN SUSPENDED SINCE ASSESSMENT YEAR 2001-02 AND THE INCOME FROM S UCH RENTAL HAS TO BE TREATED AS BUSINESS INCOME. 2.1 HOWEVER THE ASSESSING OFFICER WAS NOT CONVINCE D WITH THE EXPLANATION GIVEN BY THE ASSESSEE. APPLYING THE RATIO OF THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENTS REPORTED I N 263 ITR 243 HE TREATED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY. W HILE DOING SO HE ALSO REJECTED THE CLAIM OF SET OFF OF BROUGHT FORWARD D EPRECIATION FROM SUCH RENTAL INCOME. 3 IN APPEAL THE CIT(A) RELYING ON A COUPLE OF DE CISIONS HELD THAT RENTAL INCOME HAS TO BE TREATED AS INCOME FROM HOUSE PR OPERTY AND NOT BUSINESS INCOME. 3.1 AS REGARDS THE SECOND LIMB OF ARGUMENTS REGARD ING SETTING OFF OF UNABSORBED FROM SUCH INCOME FROM HOUSE PROPERTY HE SIMPLY MENTIONED THAT THE SAME DO NOT MERIT CONSIDERATION SINCE THE ASSES SEE HAS NOT CITED THE RELEVANT PROVISIONS OF THE ACT WHICH PERMIT SUCH DE DUCTIONS WHILE COMPUTING INCOME FROM HOUSE PROPERTY. 3 ITA NO.7139/MUM/2010 4 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 THE LD COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT EVEN IF RENTAL INCOME IS TREATED AS INCOME FROM HOUSE PROPE RTY BROUGHT FORWARD UNABSORBED DEPRECATION LOSS WHICH PARTAKE THE CHAR ACTER OF THE CURRENT YEAR DEPRECIATION SHOULD BE ALLOWED TO BE SET OFF AGAIN ST SUCH RENTAL INCOME. HE SUBMITTED THAT THOUGH SPECIFIC GROUNDS HAVE BEEN TA KEN EARLIER AND THE DECISION IN THE CASE OF CIT VS VIRMANI INDUSTRIES P LTD REPO RTED IN 216 ITR 607 (SC) AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF BARODA SPG.& WEAVING MILLS LTD VS CIT REPORTED IN2 38 ITR 221(GU J) WERE CITED BEFORE THE CIT(A) THE CIT(A) HAS NOT ADJUDICATED ON THIS ISS UE. THEREFORE THE ISSUE RELATING TO SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECATIO N FROM THE INCOME FROM HOUSE PROPERTY HAS TO BE RESTORED TO THE FILE OF TH E CIT(A) FOR HIS ADJUDICATION. 5.1 THE LD DR ON THE OTHER HAND FAIRLY CONCEDED THA T ALTHOUGH THE ABOVE TWO DECISIONS WERE CITED BEFORE THE CIT(A) WHICH HAS B EEN GIVEN IN THE STATEMENT OF FACTS BY THE ASSESSEE THE SAME HAS NOT BEEN CONSI DERED BY THE CIT(A). THEREFORE HE HAS NO OBJECTION IF THE ISSUE RELATI NG TO SET OFF OF UNABSORBED DEPRECIATION LOSS FROM RENTAL INCOME IS RESTORED TO THE FILE OF THE CIT(A) FOR HIS ADJUDICATION. 4 ITA NO.7139/MUM/2010 6 AFTER HEARING BOTH THE SIDES AND IN VIEW OF THE C ATENA OF JUDGMENTS RELIED UPON BY THE CIT(A) I HOLD THAT RENTAL INCOME ON A CCOUNT OF LET OUT OF HOUSE PROPERTY HAS TO BE TREATED AS INCOME FROM HOUSE PRO PERTY. 6.1 SO FAR AS THE ISSUE RELATING TO SET OFF OF BROU GHT FORWARD UNABSORBED DEPRECIATION LOSS FROM INCOME FROM HOUSE PROPERTY I FIND THE CIT(A) HAS NOT CONSIDERED THE DECISIONS CITED BEFORE HIM BEFORE RE JECTING THE CONTENTION OF THE ASSESSEE. THEREFORE IN THE INTEREST OF JUSTICE I DEEM IT PROPER TO RESTORE THE ISSUE RELATING TO SET OFF OF BROUGHT FORWARD UNABSO RBED DEPRECIATION LOSS FROM THE RENTAL INCOME TO HIS FILE FOR FRESH ADJUDICATION. THE CIT(A) SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROU ND RAISED BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED FOR STATISTICAL PURPOSE. 7 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING I.E. ON 7 TH MAR 2011. SD/- ( R K PANDA ) ( R K PANDA ) ( R K PANDA ) ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 7 TH MAR 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI