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2016 (4) TMI 120 - ITAT MUMBAI

2016 (4) TMI 120 - ITAT MUMBAI - TMI - Income on account of rent - "income from house property‟ OR "income from business‟ - Held that:- We find it appropriate to send this issue back to the file of the AO to examine this aspect properly. If this income has been assessed under the head „income from business‟ in all the past years, then, Revenue should not change the head of income unless the AO is able to bring out on record some material pointing out change in facts or law. For .....

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earing to the assessee before deciding this issue afresh. With these observations, this issue is sent back to the file of the AO.

Disallowance of benefit of deduction u/s. 80IB of interest income, rental income and income from other sources - Held that:- This issue is squarely covered against the assessee with the judgement of the Hon‟ble Supreme Court in the case of Liberty India (2009 (8) TMI 63 - SUPREME COURT) wherein it has been held by the Hon‟ble Supreme Court that .....

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WANI TANEJA, ACCOUNTANT MEMBER For The Assessee : Shri Ajay Kumar Rastogi For TGhe Revenue : Shri Amol Kamat, CIT-DR ORDER PER ASHWANI TANEJA, AM : These appeals pertain to the same assessee for different years involving identical issues, and therefore, these are being disposed of by a common order. ITA NO. 4848/Mum/2010 for A.Y 2006-07 2. Ground nos. 1 to 3 : In these grounds, the assessee has challenged the action of the ld. CIT(A) in confirming the action of the AO in treating the income on a .....

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that it has been consistently showing this rental income under the head business income since last many years. The explanation of the assessee was not accepted by the AO and he assessed this rental income under the head income from house property‟. Being aggrieved, the assessee contested the matter in appeal before the ld. CIT(A). 4. In the appeal before the ld. CIT(A), it was submitted that the assessee has derived this income by way of exploiting its business asset and therefore the inc .....

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property‟. Being aggrieved, the assessee has filed an appeal before the Tribunal. 5. During the course of the hearing before us, it has been argued by the ld. Counsel, inter alia, that the assessee has been showing the impugned income as part of its business income since last many years. The assessment orders in the earlier years have been passed u/s 143(3). The claim of the assessee has always been accepted, but in this year the AO without making any distinction on facts and without givi .....

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ower authorities. It has been argued by him that a particular head has been prescribed under the Act for assessing income from house property and, therefore, it has been rightly assessed under that head by the AO. 7. We have gone through the orders passed by the lower authorities and also heard the submissions made by both the sides before us. It has been argued by the ld. Counsel that the assessee has been showing this income under the head income from business‟ consistently since many ye .....

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reasoning or analysis has been given in the assessment order. It is further noted that the ld. CIT(A) has also not examined this crucial aspect carefully. It has been held by the Hon‟ble Supreme Court in the case of CIT v. Excel Industries Ltd., 358 ITR 295 (SC) that if a particular view has been adopted or accepted by the Revenue consistently in many years, then, suddenly in a particular year it should not change its view or stand as it may cause avoidable hardship to the tax payer. In vi .....

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e claim of the assessee. In the absence of the same, the AO is not permitted to change the head of income and should accept the claim of the assessee. The assessee is permitted to submit requisite details and documentary evidences, as may be required by the AO, or as may be considered appropriate by it, as per law and facts. The AO shall give adequate opportunity of hearing to the assessee before deciding this issue afresh. With these observations, this issue is sent back to the file of the AO. .....

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as been claimed. Hence, the assessee company was asked to explain why the interest income should not be treated as income from other sources and should not be excluded while working out the deduction u/s. 80IB of the I.T. Act. In reply to the above query, the assessee company submitted that it was manufacturing various pharmaceutical drugs and hence entitled to 100% deduction on its income u/s. 80IB. However, the AO did not accept the assessee‟s contention because the assessee had deposite .....

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e interest income from the profit of the industrial undertaking and taxed it under the head Income from Other Sources . 9. Being aggrieved, the assessee filed an appeal before the ld. CIT(A), wherein he made detailed submissions. Relevant portion of the submissions filed by the assessee before the ld. CIT(A) is reproduced below : It is respectfully submitted that the language used in section 80IA and 80IB is "where the gross total income of an assessee includes any profits and gains derived .....

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(80IA/ 80IB) and, therefore, their applicability would also be totally different. Emphasis be given on the words "in profits and gains derived from any business of an industrial undertaking" as distinguished from "any profit and gains derived from an industrial undertaking. At this point we pause and find out what is the import of the words "any business" used in the statute. The word "any" as appearing in Black's law dictionary is "some one out of ma .....

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A/ 80IB as distinguished from that connected with section 80HH and similar other sections and there is no ambiguity about this. The ld. CIT(A) was not satisfied with the submissions of the assessee and it was held by him that for claiming deduction u/s. 80IB, the income should have been derived from the industrial undertaking. He upheld the action of the AO in not granting the benefit of deduction u/s. 80IB on the amount of interest and other receipts in the nature of income from other sources b .....

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in the case of Sterling Food reported in 237 ITR 579, Cambay Electric Supply Industrial Co. Ltd. v. CIT reported in 113 ITR 84 and Pandian Chemicals Ltd. vs. CIT reported in 262 ITR 278 has held as under:- ….. However, as regards the interest on fixed deposits with bank as well as interest on Guarantee & Margin Money from Bank, we are of the considered opinion that the same cannot be held as "income derived from the Industrial Undertaking" and consequently not eligible for .....

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During the hearing before us, the ld. Counsel reiterated the submissions as were made by the assessee before the ld. CIT(A). On the other hand, the ld. DR relied upon the judgment of the Hon‟ble Supreme Court in the case of Liberty India v. CIT, 317 ITR 218 (SC). In response to our query with respect to applicability of the judgment of the Hon‟ble Supreme Court in the case of Liberty India (supra), no distinction could be made by the ld. Counsel of the assessee on facts or on law. 11 .....

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rofit and gains which are derived from the industrial undertaking would be eligible to be considered. The ld. Counsel of the assessee was not able to show that the receipts on account of interest and rental income were in any manner derived from the industrial undertaking. Thus, respectfully following aforesaid judgment of the Hon‟ble Supreme Court, this issue is decided against the assessee and therefore these grounds are dismissed. 12. Ground no. 13 is for challenging the levy of interes .....

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lso. As a result, the appeal is partly allowed for statistical purposes. ITA No. 6990/Mum/2011 for A.Y 2008-09 16. It is noted that in this year also the grounds raised by the assessee in its appeal are identical to the grounds raised in the appeal for A.Y 2006-07, therefore, the AO is directed to follow our order for A.Y 2006-07 with respect to the grounds raised in this year also. As a result, the appeal is partly allowed for statistical purposes. ITA No. 266/Mum/2012 for A.Y 2009-10 17. In th .....

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he income from house property. 18.1. The brief facts are that during the course of assessment proceedings, the AO observed that the during the year the assessee has incurred professional fee amounting to ₹ 15,75,215/- to M/s. Kanga & Co. The AO asked the assessee to submit the details of professional services rendered by this party and also the allowbility of the same. In reply, the assessee submitted that assessee paid fees to the solicitors on account of their ground floor Andheri of .....

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e and allowable as full deduction. The AO held that in the assessee's case, the assessee has paid the legal fees to stop the land lord from developing the property which was let out on rent. Therefore, these expenses are to be allowed under the head income from house property as the expenses were incurred in connection with the rented property. The AO further held that the litigation expenses were not incurred for the purpose of business. As per the provisions of section 37(1) of the Act, th .....

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has paid a sum of ₹ 15,75,215/- to solicitors namely M/s Kanga & Company for protecting tenancy right of the assessee in the office premises at ground floor of the building which has been let out to it by M/s Bharat Insulation Company Limited. The genuineness of expenditure has not been disputed by the A.O., nor any expenditure was attributed as personal in nature. It is also not the case of the A.O. that the expenditure incurred is for infraction of any law. The assessee further subm .....

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nterprises Ltd. Vs. CIT The assessee further submitted that here there would have been loss of source of income to the assessee in case it would not have undergone a legal battle with the landlord for protecting its tenancy right of the office premises. Any amount spent for protecting loss of source of income is a deductible expenditure u/s 37 of the I.T. Act. However, the ld. CIT(A) was not satisfied with the submissions of the assessee and it was held by him that the amount of fee paid to the .....

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