Case Law Details
Deep Multiplex Pvt. Ltd. Vs ITO (ITAT Ahmedabad)
The assessee consistently followed that the income derived from the lease charges on the multiplex is a business income of the assessee in earlier years as well as in the present year. The assessee has filed appeal before the Tribunal which on merit, the assessee has succeeded. The CIT(A) has agreed that the issue on merit is covered in favour of the assessee despite that confirmed the addition on the ground that the assessee agreed during the assessment proceedings that the same comes under the head income from other sources. The reliance on the decision of Hon’ble Gujarat High Court in case of S. R. Kosthi (Supra) is relevant in the present case as the Hon’ble High Court has specifically held that if the assessee under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. Therefore, in light of the decision of the Tribunal in assessee’s own case for A.Y. 2012-13 the issue on merit has been decided in favour of the assessee, therefore, we held that it was a business exploitation by the assessee in respect of lease charges on multiplexes which tantamount to business income.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Both appeals filed by the assessee are directed against the orders passed by the Ld. CIT(A)-1, Vadodara on 11.03.2020 for Assessment Years 2015-16 & 2016-17.
2. The grounds of appeal raised by the assessee in ITA No. 307/Ahd/2020 for A.Y. 2015-16 read as under:
“1. The appellant company had agreed for additions before the Learned Assessing Officer as the records of the Company available with the Tax Counsel showed that no appeal was filed against the order passed by the Learned CIT (A) for A.Y.2012-13 during the Assessment proceedings for A.Y. 2015-16.
2. The appellant company had filed the appeal for A.Y. 2012-13 on 11.07.2017 before the Hon’ble ITAT on advise from the Counsel, whom the company had consulted for filing the appeal before the Hon’ble ITAT.
3. The Learned CIT (Appeals) erred in not considering the fact that the appellant company had filed appeal of A.Y. 2012-13 before ITAT and the said appeal was allowed by the Hon’ble ITAT.
4. The Learned CIT (A) erred in holding that the addition is agreed addition and further erred in holding that the appeal was not maintainable.
5. The Learned CIT (A) erred in confirming the finding of the Assessing Officer that the income of the appellant was Income from Other Sources as per findings of CIT (A) and not Income from business.
6. The appeal is filed beyond 60 days as per Taxation and Other Laws (Relaxation of certain provisions) Ordinance 2020 dated 31st March,2020.
7. The appellant company craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.”
3. The assessee company earned income from cinema complex given on lease to PVR Ltd. The assessee filed return of income for A.Y. 2015-16 on 29.09.2015 under Section 139 declaring total income at Rs. NIL and book profit under Section 115JB of Rs. 13,43,160/- on which tax payable at Rs. 2,48,485/-. The case of the assessee was selected for scrutiny and notice under Section 143(2) and 142(1) was issued and served upon the assessee. The assessment under Section 143(3) of the Income Tax Act was completed on 22.06.2017 determining total income at Rs. 54,83,110/- which includes addition of Rs. 1,19,291/- on account of interest income.
4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. A.R. submitted that the issue on merit was decided by the Tribunal in assessee’s own case for A.Y. 2012-13 being ITA No. 1719/Ahd/2017 order dated 12.02.2020, thereby accepting the contention of the assessee that the revenue sharing from operation of multiplex as well as other liabilities of the assessee demonstrate that it was business exploitation by the assessee and hence the same should be assessed as business income. The Ld. A.R. submitted that due to bonafide mistake of the assessee the assessee agreed before the Assessing Officer that the lease rent income comes under the head income from other sources at the time of assessment proceedings. The said mistake cannot be taken into account as the assessee has offered the said income as business income in previous years which was accepted by the Revenue. The Ld. A.R. further submitted that merely agreeing to consider the lease charges as income from other sources cannot debar the assessee for claiming the same before the appellate authority as business income. On merit the issue is in favour of the assessee which was accepted by the CIT(A). But the CIT(A) dismissed only on the ground that at the time of assessment proceedings the assessee agreed that the lease income is coming under the purview of income from other sources. The Ld. A.R. relied upon the decision of Hon’ble Punjab & Haryana High Court in case of Chhat Mull Aggarwal vs. CIT (1979) 116 ITR 694 (Puj. & Har.) as well as the decision of Hon’ble Gujarat High Court in case of S. R. Koshti vs. CIT (2005) 146 taxman 335 (Guj.) thereby stating that the assessee should not be stopped from taking of plea which under the eyes of law is correct position. Merely on the ground that on the previous occasion the assessee has agreed the change of head of income, the CIT(A) cannot dismiss the appeal though agreeing that the issue on merit is in favour of assessee.
6. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). The Ld. D.R. further submitted that once the assessee has agreed/conceded that the lease charges comes under the head income from other sources and requested to allow the expenses under Section 57 and the depreciation thereof, the assessee subsequently cannot change its stand thereby claiming the same as business income.
7. We have heard both the parties and perused all the relevant material available on record. There is delay of 29 days in filing present appeals. The Ld. A.R. explained that the delay is caused during Covid Pandemic period. The delay appears to be genuine hence the same is condoned. The assessee consistently followed that the income derived from the lease charges on the multiplex is a business income of the assessee in earlier years as well as in the present year. The assessee has filed appeal before the Tribunal which on merit, the assessee has succeeded. The CIT(A) has agreed that the issue on merit is covered in favour of the assessee despite that confirmed the addition on the ground that the assessee agreed during the assessment proceedings that the same comes under the head income from other sources. The reliance on the decision of Hon’ble Gujarat High Court in case of S. R. Kosthi (Supra) is relevant in the present case as the Hon’ble High Court has specifically held that if the assessee under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. Therefore, in light of the decision of the Tribunal in assessee’s own case for A.Y. 2012-13 the issue on merit has been decided in favour of the assessee, therefore, we held that it was a business exploitation by the assessee in respect of lease charges on multiplexes which tantamount to business income. The appeal of the assessee being ITA No. 307/Ahd/2020 for A.Y. 2015-16 is allowed.
8. The grounds of appeal raised by the assessee in ITA No. 308/Ahd/2020 for A.Y. 2016-17 read as under:
“1. The appellant company had agreed for additions before the Learned Assessing Officer as the records of the Company available with the Tax Counsel showed that no appeal was filed against the order passed by the Learned CIT (A) for A.Y.2012-13 during the Assessment proceedings for A.Y. 2016-17.
2. The appellant company had filed the appeal for A.Y. 2012-13 on 11.07.2017 before the Hon’ble ITAT on advise from the Counsel, whom the company had consulted for filing the appeal before the Hon’ble ITAT.
3. The Learned CIT (Appeals) erred in not considering the fact that the appellant company had filed appeal of A.Y. 2012-13 before ITAT and the said appeal was allowed by the Hon’ble ITAT.
4. The Learned CIT (A) erred in holding that the addition is agreed addition and further erred in holding that the appeal was not maintainable.
5. The Learned CIT (A) erred in confirming the finding of the Assessing Officer that the income of the appellant was Income from Other Sources as per findings of CIT (A) and not Income from Business.
6. The appeal is filed as per Taxation and Other Laws (Relaxation of certain provisions) Ordinance 2020 dated 31st March,2020.
7. The appellant company craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.”
9. As regards ITA No. 308/Ahd/2020 for A.Y. 2016-17, the issues are identical and hence the said appeal filed by the assessee is also allowed.
10. In the result, both the appeals filed by the assessee are allowed.
