P.J. SILK MILLS, v. ITO WD 20(1)(1),

MA 842/MUM/2009 | 2005-2006
Pronouncement Date: 06-08-2010 | Result: Allowed

Appeal Details

RSA Number 84219924 RSA 2009
Assessee PAN AAAFP6034H
Bench Mumbai
Appeal Number MA 842/MUM/2009
Duration Of Justice 7 month(s) 26 day(s)
Appellant P.J. SILK MILLS,
Respondent ITO WD 20(1)(1),
Appeal Type Miscellaneous Application
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 06-08-2010
Assessment Year 2005-2006
Appeal Filed On 11-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI S.V. MEHROTRA (AM) AND SMT. ASHA VIJAY ARAGHAVAN (JM) M.A. NO. 842/MUM/2009 (ARISING OUT OF ITA NO. 627/MUM/2009) ASSESSMENT YEAR-2005-06 M/S. PEEJAY SILK MILLS R.K. BOTHRA 3/37 TARDEO A.C. MARKET MUMBAI-400 034 PAN-AAAFP6034H VS. THE ITO WARD-20(2)(1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.K. NATHRA RESPONDENT BY: SHRI MAYANK PRIYADARSHI O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS MA BY THE ASSESSEE IS AGAINST THE IMPUGNED OR DER IN ITA 627/M/09 DT.17.11.09 FOR THE ASSESSMENT YEAR 2005-0 6. PARA 5 & 6 OF THE IMPUGNED ORDER READS AS UNDER: 5. AGGRIEVED THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE ORDER OF THE CIT(A) BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI R.K. BATHRA DID NOT PRESS THE FIRST GROUND OF APPEA L IN AS MUCH AS HE ACCEPTED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. SAMBHU INVESTMENTS (P) LTD (SUPRA) BUT THE SECOND GROUND OF APPEAL WHICH READS AS FOLLOWS WAS PRESSED BEFORE US:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHETHER THE LEARNED CIT(A) WAS CORRECT IN HOLDING T HAT GROUND NO.5 TO 8 BECOME INFRUCTUOUS THEREFORE NO N EED TO ADJUDICATE UPON IN VIEW OF THE FINDING THAT COMPEN SATION RECEIVED FROM LETTING OUT OF CABINS TO BE TAXED AS INCOME FROM HOUSE PROPERTY IN SPITE OF THE FACT THAT APPEL LANT HAS INCOME TO BE TAXED UNDER THE HEAD INCOME FROM BUSIN ESS AS HELD BY CIT(A) HIMSELF. 6. AFTER HEARING BOTH SIDES WE FIND THAT THE CIT(A ) HAS NOT CONSIDERED THE FACT THAT SERVICE CHARGE FOR RENDERING COMPUTER SERVICES IS ASSESSABLE UNDER THE HEAD OTHER SOURCES. THE EXP ENDITURE AND M.A NO.842 /M/09 2 DEPRECIATION INCURRED FOR EARNING SUCH INCOME HAS T O BE ALLOWED AS A DEDUCTION UNDER SECTION 57 OF THE INCOME TAX ACT. THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THE MATTER AND RE MIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE C LAIM OF THE ASSESSEE IN RESPECT OF EXPENSES INCURRED IN RELATION TO INCOME FROM OTHER SOURCES RECEIVED BY THE ASSESSEE AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE 2. THE ASSESSEE HAS NOW FILED AN MA STATING THAT AS THE LD. CIT(A) HIMSELF HAS HELD THAT THE INCOME FROM RENDERING THE COMPUTER SERVICES IS ASSESSABLE UNDER THE HEAD BUSINESS AND HENCE THE TRIBUNAL ERRED IN HOLDING AND THE SAME IS ADMISSIBLE UNDER THE HEAD OTHER SOURCES. 3. WE HEARD BOTH THE PARTIES. THE LD. CIT(A)AT PAG E 3.3. OF HIS ORDER HELD AS FOLLOWS: I HAVE CONSIDERED THE ABOVE NOTED SUBMISSIONS OF T HE AR. FROM THE ABOVE DISCUSSION I CONSIDER THAT THE AO I S NOT JUSTIFIED IN TREATING THE RECEIPTS OF RS. 3 90 000/ - BEING COMPUTER SERVICE CHARGES AS INCOME FROM HOUSE PROPE RTY. THIS INCOME IS NOWHERE RELATED TO THE LETTING OUT O F CABINS NOR ITS PART OF THE UTILITY AGREEMENTS ENTERED INTO FO R THIS PURPOSE BY THE APPELLANT. THIS THEREFORE CANNOT BE ASSESS ED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THEREFORE I FIND THAT THIS INCOME BY ITS NATURE NEEDS TO BE ASSESSED AS B USINESS INCOME. THE AO IS ACCORDINGLY DIRECTED TO ASSESS T HIS RECEIPTS RECEIVED BY THE APPELLANT ON ACCOUNT OF COMPUTER CH ARGES AS BUSINESS INCOME AND ALLOW RELATED EXPENSES CORRESPO NDING TO THE EARNING OF SAID INCOME AS PER VARIOUS PROVISION OF THE ACT. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 4. SINCE WE FIND THAT IN CIT(A)S ORDER PARA 3.3 T HE LD. CIT(A) HIMSELF HAS HELD THAT THE INCOME FROM RENDERING OF COMPUT ER SERVICES IS ADMISSIBLE AS BUSINESS INCOME. HE THEREFORE REPL ACE PARA-6 TO READ AS FOLLOWS: WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO ASSESS THE RECEIPTS RECEIVED BY TH E ASSESSEE ON ACCOUNT OF COMPUTER CHARGES AS BUSINESS M.A NO.842 /M/09 3 INCOME AND ALLOW THE EXPENSES FOR THE EARNING OF TH E SAID INCOME AS PER PROVISIONS OF THE ACT. 5. IN THE RESULT THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS DAY OF JULY 2010 (S.V. MEHROTRA ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED .. JULY 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI DATE INITIALS 1 DRAFT DICTATED ON: 22.7.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 22.7.2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______ M.A NO.842 /M/09 4