ALIYARUKUNJU V., KARUNAGAPPALLY V. THE COMMISSIONER OF INCOME TAX, KOTTAYAM

ITA/303/2010

AI Insights

The case involves Aliyarukunju, the appellant, who contested the classification of his income from lodging activities by the Income Tax Appellate Tribunal. The Tribunal had classified the income under 'Income from House Property', while the appellant argued it should be classified as 'Business Income'. The legal debate centered on whether the appellant's activities constituted a business. The court referenced decisions from both the Supreme Court and previous judgments to conclude that without systematic business activities, the income should be classified under the head of property income. The court also addressed issues of unexplained expenditures and credits, finding no substantial legal question that warranted overturning the Tribunal's decisions.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 755960 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 12-01-2012
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax v. Punjab Gas Cylinder Ltd. [328 ITR 162], Shambhu Investment P.Ltd. v. Commissioner of Income Tax [263 ITR 143]
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: S RAJ
• Keywords: Assessment years; Business income; Income from house property; Income tax appellate tribunal
• Section: 328 ITR 162; 263 ITR 143

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE. P.S.GOPINATHAN THURSDAY, THE 12TH DAY OF JANUARY 2012/22ND POUSHA 1933 ITA.No. 303 of 2010 ( ) ----------------------- ITA.754/Coch/2007 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/APPELLANT/ASSESEE.: ------------------------------- ALIYARUKUNJU, MANAKKALATHU, THEKKETHIL, ADINADU SOUTH, KARUNAGAPPALLY KOLLAM. BY ADV. SRI.S.ARUN RAJ RESPONDENT/RESPONDENT/REVENUE: -------------- 1 COMMISSIONER OF INCOME TAX, KOTTAYAM. R, BY SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) R, BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 12-01- 2012, ALONG WITH ITA. 310/2010 & ITA. 311/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. ---------------------------------------------- I.T.A.Nos.303, 310 & 311 OF 2010 ----------------------------------------------- Dated this the 12th day of January, 2012 J U D G M E N T ~~~~~~~~~~~ C.N.Ramachandran N air, J . The connected appeals are filed by the very same assesee challenging the orders of the Income Tax Appellate Tribunal pertaining to the assessment years 2001-2002, 2002-2003 and 2003-2004. 2. We have heard learned counsel, Adv.Sri.Arun Raj, appearing for the appellant and the learned standing counsel for the Revenue. 3. The common question raised for all the years is whether the Tribunal was justified in confirming the assessment of income from lodging under the head 'Income from House Property' and not under the head 'Business Income' as claimed by the assessee. The counsel has relied on judgment of this Court reported in Commissioner of Income-Tax v. Punjab Gas Cylinder Ltd. [328 ITR 162], where this Court held that income from lodging is 'Business Income'. However, the learned ITA.Nos.303/2010 etc. 2 standing counsel referring to the decision of the Supreme Court in Shambhu Investment P.Ltd. v. Commissioner of Income Tax [263 ITR 143] relied on by the Tribunal and contended that the income returned by the appellant was rightly held to be 'Income from House Property'. 4. After hearing both sides, what we notice is there is nothing to indicate on record to prove that the appellant carried on lodging as a business activity and not as an investment. Generally, letting out of buildings on monthly rent should be treated as Income from House Property and not as a business income. However, if the building is let out on daily rental basis, certainly it should be treated as a business activity. However, there is nothing to indicate in the records that the appellant was engaged in lodging business, which is not proved even with register of guests maintained by the appellant. Unless an activity is systematically carried on in the nature of business, the department has to necessarily assess income from property under the head specifically provided for it. In the absence of any material on record, we are unable to accept the contention of the appellant. Consequently, this ground is rejected. Next issue ITA.Nos.303/2010 etc. 3 pertains to additions made for the 3 years under various heads of unexplained expenditure and unexplained credits. After hearing both sides and after going through the records, we do not find any question of law arising from the findings of the Tribunal on any of these issues. The reason for addition is that the appellant/assessee could not explain the investment or expenditure or credits used for investments. We, therefore, do not find any merit in the appeals. Consequently, all the appeals are dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (P.S.GOPINATHAN, JUDGE) ps/16/1 "