2013 (5) TMI 530 - AT - Income Tax

Income from joint venture - income from other sources v/s Business income - disallowance of expenses - Held that - There is no mention in the orders of the authorities below that assessee was also engaged in the petrol pump business. Assessee is submitting that petrol pump license was terminated by the BPCL on 16.5.2000, but was eventually restored upon Hon ble Apex Court decision in this regard. Thus commencement of the petrol pump business occurred much after the orders of CIT (A) in this regard. Hence, the additional documents in the shape of letter of BPCL dated 20.11.2012 and order of the Hon ble Apex Court dated 16.12.2011 were not before CIT (A) or AO, thus this needs to be considered in arriving at the conclusion whether the assessee was carrying any business. Some of the expenses have been allowed by the CIT (A) in assessment year 2007-08 which have not been allowed for the assessment year 2006-07. The additional ground raised that AO failed to record a finding determining the amount of business losses to be carried forward to the subsequent years available for adjustment in future, as per provisions of law. This was not raised before the CIT (A) Thus as assessee has submitted certain additional documents which were not before the authorities below as well as raised certain grounds which were also not before the authorities below matter is remitted to the file of the AO to consider the issues afresh - both the appeals filed by the Assessee stand allowed for statistical purposes.

Summary

Issues:
1. Treatment of income from joint venture as "income from other sources" instead of business income.
2. Disallowance and relief of business expenses.
3. Allowance of credit for brought forward unabsorbed depreciation against income assessed under "Other Sources."
4. Failure of the Assessing Officer to determine the amount of business losses to be carried forward.

Detailed Analysis:
Issue 1: The main contention in the appeals was the treatment of income from a joint venture as "income from other sources" rather than business income. The Assessing Officer concluded that since the business activity related to the authorized distributorship had ceased, the income from the joint venture should be taxed under "income from other sources." The Commissioner partially upheld this decision, leading to the appeal.

Issue 2: The Assessing Officer disallowed certain business expenses, citing the closure of the business activity. The Commissioner agreed in principle but allowed some expenditure. The appellant argued that they were engaged in various businesses, including a petrol pump business, which was restored post a legal battle. The tribunal noted that this information was not considered by the lower authorities and remitted the matter back to the Assessing Officer for a fresh review.

Issue 3: The appellant also raised concerns about the disallowance of credit for brought forward unabsorbed depreciation against income assessed under "Other Sources." This issue was not raised before the Commissioner, and the tribunal directed the Assessing Officer to consider this matter along with all additional documents and submissions.

Issue 4: An additional ground raised was the failure of the Assessing Officer to determine the amount of business losses to be carried forward for future adjustments, as required by law. This issue was not presented before the Commissioner but was highlighted before the tribunal, which instructed the Assessing Officer to address this during the reassessment.

In conclusion, the tribunal allowed both appeals for statistical purposes, remitting the case back to the Assessing Officer for a comprehensive review considering all relevant documents, submissions, and additional grounds raised by the appellant. The tribunal emphasized providing the appellant with a fair opportunity to present their case during the reassessment process.