IN THE INCOME TAX APPELLATE TRIBUNAL " A", BENCH MUMBAI
,
BEFORE SHRI R.C.SHARMA, AM
&
SHRI SANJAY GARG, JM
ITA No.2788/Mum/2011
( Assessment Year :2007-2008)
ITO 6(1)(3), Mumbai-20 Vs. M/s ARK Industries Pvt.
Ltd., 103, Steel Centre,
1st Floor, Ahmedabad
Street, Masjid (E),
Mumbai-400 020
PAN/GIR No. : AAEC A 8885 E
( Appellant) .. ( Respondent)
/Revenue by : Shri J.Premanand
/Assessee by : Shri Ashok J. Patil
Date of Hearing : 4th December, 2014
Date of Pronouncement 12th December, 2014
ORDER
PER R.C.SHARMA (A.M):
This is an appeal filed by the Revenue against the order of CIT(A)
dated 28-2-2011 for the Assessment Year 2007-08, in the matter of order
passed u/s.143(3) of the Act.
2. The only grievance of the Revenue relates to CIT(A)'s direction for
treating income from warehousing as income from business in place of
AO's action treating the same as income from house property.
3. Rival contentions have been heard and record perused. Facts in
brief are that the assessee company has filed its return of income on
30.10.2009 declaring total income at Rs.1,11,068/-. The case was
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selected for scrutiny. During the assessment proceedings, the AO noticed
that assessee is a registered private limited company incorporated in the
year 2004 and is carrying on the business of Steel processing and also
earns income from Warehousing. In the concerned assessment year the
assessee had entered into contract with Essar Steels Limited for Storage
and Material Handling. The Essar Steels Limited has appointed assessee
as stockyard for HR/CR, coils, Sheets, packet and for that assessee will
have to perform activities like safe storage material under covered shade
with proper flooring, dust free environment safe unloading/loading
activities from truck/trailer with the help of EOT crane. The assessee
earned income from warehousing amounting to Rs.31,82,646/-, which
was offered as business income after claim of expenditure incurred
thereon. The AO treated such income as income from house property.
4. By the impugned order, CIT(A) held that income earned by the
assessee was assessable under the head business income after having
the following observations :-
"To earn the said income assessee has spent Rs. 17,81,783/-
during the period to earn the Warehousing income. The other
expenses incurred during the year to the tune of Rs. 42,92,997/-
was capitalized to capital work in progress and was added to the
assets. Only the relevant expenses were claimed as expenses to
earn the said warehousing income. The warehousing income
wouldn't have accrued without spending the expenses. This clearly
suggest that the assessee has carried out business activities and
has not earned income from house property rights. The above fact
clearly suggest that the intention of the assessee was to earn the
profits and same cannot be earned without providing the required
services listed in the agreement."
5. We have considered rival contentions and found from the record
that assessee had carried out warehousing activity for which he earned
gross receipts of Rs.31,82,646/-. For carrying out the warehousing
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activity, the assessee has undertaken activity of receipt handling &
dispatch of materials, maintenance of stock register, description of
material received, Truck No./Trailer No., Invoice No., GRR No. & Date.
The assessee also carried out activity of stock reconciliation, physical
stock verification and stock verification. The warehousing income has
been earned from the business volume achieved after providing the
desired activities as listed in the contract. To earn the said income
assessee has spent Rs. 17,81,783/- during the period. The other
expenses incurred during the year to the tune of Rs. 42,92,997/- was
capitalized to capital work in progress and was added to the assets. Only
the relevant expenses were claimed as expenses to earn the said
warehousing income. The warehousing income wouldn't have accrued
without carrying all the above activities. This clearly suggest that the
assessee has carried out business activities and has not earned income
from house property rights or other sources. The above fact clearly
suggests that the intention of the assessee was to earn the business
profits and same cannot be earned without providing the required services
listed in the agreement.
6. The detailed finding recorded by the CIT(A) with regard to the
services rendered by assessee at para 6 has not been controvered by the
department by brining any positive material on record. Accordingly, we do
not find any infirmity in the order of CIT(A) for treating the warehousing
income as income from business.
7. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on this 12/12/2014.
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ITA No.2788/11
12/12/2014
Sd/- Sd/-
( ) ( )
(SANJAY GARG) (R.C.SHARMA)
/ JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai; Dated 12/12/2014
/pkm, PS
Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent.
3. / The CIT(A), Mumbai.
4. / CIT
5. / DR, ITAT, Mumbai
6. Guard file.
//True Copy//
/ BY ORDER,
(Asstt. Registrar)
/ ITAT, Mumbai
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