M/s Maltex Malsters Ltd., Patiala V. ITO, Patiala

CO 3/CHANDI/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8482 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-05-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH AGGARWAL
• Assessee Lawyers: J S NAGAR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA , JM ITA NO. 1218/CHD/2012 ASSESSMENT YEAR : 2009-10 I.T.O. WARD -4 V M/S MALTEX MALSTERS LTD. PATIALA P.B. 45, RAUNI NABHA ROAD, PATIALA AAACM 9807 C C.O NO. 3/CHD/2013 IN ITA NO. 1218/CHD/2012 ASSESSMENT YEAR : 2009-10 M/S MALTEX MALSTERS LTD. V I.T.O. WARD 4, PATIALA P.B. 45, RAUNI NABHA ROAD, PATIALA AAACM 9807 C (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI J.S. NAGAR RESPONDENT BY: SHRI SUBHASH AGGARWAL DATE OF HEARING 15.5.2013 DATE OF PRONOUNCEMENT 17.5.2013 O R D E R PER T.R.SOOD, A.M THE APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST TH E ORDER PASSED BY THE LD. CIT(A), PATIALA DATED 17.9. 2012 AND THE ASSESSEE HAD FILED A CROSS-OBJECTIONS AGAINST T HE SAME. ITA NO. 1218/CHD/2012 APPEAL OF THE REVENUE 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1 IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSIN G OFFICER TO ASSESS INCOME ON ACCOUNT OF INTEREST RE CEIVED FROM UNITED BREWERIES LTD., WHO IS A MAJOR SHAREHO0 LDER IN THE ASSESSEE-COMPANY WITH SUBSTANTIAL INTEREST, UNDER 2 THE HEAD PROFITS AND GAINS OF BUSINESS AS AGAINST THE HEAD INCOME FROM OTHER SOURCES BY FOLLOWING THE TRIBUNALS DECISIONS DATED 28.2.2008 AND 17.8.2010 PASSED IN ITA NO. 774/CHD/2007 AND 1065/CHD/2009 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004- 05 AND 2006-07 WITHOUT APPRECIATING THE FACTS THAT THE DEPARTMENT HAS CONTESTED SAID ORDERS DATED 28.2.200 8 AND 17.8.2010 AND HAS ALREADY FILED FURTHER APPEALS WITH THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & H ARYANA AT CHANDIGARH ON THE PLEA THAT INCOME ACCRUING IN A MANNER OTHER THAN IN A REGULAR COURSE OF BUSINESS I S TO BE ASSESSED AS INCOME FROM OTHER SOURCES. MOREOVER NO BUSINESS ACTIVITIES HAD BEEN CARRIED OUT BY THE LES SOR DURING THE YEAR UNDER CONSIDERATION. 2. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAS SHOWN INCOME FROM INTEREST AMOUNTING T O RS. 20,20,552/- WHICH WAS RETURNED UNDER THE HEAD INCO ME FROM BUSINESS. THE ASSESSING OFFICER WAS OF THE VIEW T HAT THE ASSESSEE IS A MANUFACTURING COMPANY AND NOT A FINAN CE COMPANY\, THEREFORE, THE INTEREST IS TO BE ASSESSE D AS INCOME FROM OTHER SOURCES AND ACCORDINGLY HE ASSESSED T HIS INTEREST AS INCOME FROM OTHER SOURCES. 4 ON APPEAL, THE LD. CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NO. 806/CHD /2011, ASSESSMENT YEAR 2008-09 HELD THAT THE INCOME TO BE TREATED AS INCOME FROM BUSINESS. 5 BEFORE US, THE LD. DR FOR THE REVENUE STRONGLY SU PPORTED THE ORDERS OF ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL 3 IN ASSESSEES OWN CASE IN ITA NO. 806/CHD/2011, ASS ESSMENT YEAR 2008-09. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO. 806/CHD/2011 (SUPRA) BY FOLLOWING THE ORDERS OF EAR LIER YEARS. THE RELEVANT PARA 4 READS AS UNDER: 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT CHANDIGARH BENCH B CHANDIGAR H DATED 13.05.2011 IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE IN THE ASSESSEES CASE IN ITA NO. 1393/CHD/2010 RELATING TO ASSESSMENT YEAR 2007-08 W HILE DECIDING A SIMILAR ISSUE THE TRIBUNAL HELD AS UNDER :- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT SIMILAR ISSUE ARO SE BEFORE THE TRIBUNAL VIDE GROUND NO.1 IN ASSESSEES OWN CASE IN ITA NO. 1065/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 WHEREIN THE TRIBUNAL VIDE ORDER DATED 17.08.2010 HAD DISMISSED THE GROUND OF APPEAL RAISED BY THE REVENUE VIDE PARAS 3&4 OF ITS ORDER BY HOLDING AS UNDER:- 3. IN GROUND NO. 1 THE DISPUTE RELATES TO ASSESSABILITY OF INTEREST INCOME EARNED BY THE ASSESSEE. THE ASSESSING OFFICER TREATED THE INTERES T INCOME AS INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME CONSIDERED BY THE ASSESSEE. THE CIT(APPEALS) HAS SINCE DIRECTED THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES BY FOLLOWING THE PRECEDENTS IN ASSESSEES OWN CASE PERTAINING TO THE ASSESSMENT YEARS 2001-02 AND 2004-05. IN ASSESSMENT YEAR 2001-02, CIT(APPEALS) HAD DIRECTED THE ASSESSING OFFICER TO TREAT INTERES T INCOME AS BUSINESS INCOME AND SUCH ORDER HAS BEEN ACCEPTED BY THE DEPARTMENT AS NO APPEAL HAS BEEN PREFERRED BEFORE THE TRIBUNAL. SIMILARLY, IN T HE ASSESSMENT YEAR 2004-05, CIT(APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHICH HAS FURTHER BEEN AFFIRMED BY THE TRIBUNAL VIDE ITA NO. 774/CHANDIGIARH/2007 DATED 28.02.2008. 4. BEFORE US, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO ESTABLISH THAT ANY OF THE AFORESAID PRECEDENTS HAVE BEEN ALTERED BY ANY 4 HIGHER AUTHORITY. ACCORDINGLY, WE FIND NO MISTAKE O N THE PART OF THE CIT(APPEALS) IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME AS BUSINESS INCOME FOLLOWING THE AFORESAID PRECEDENTS IN ASSESSEES OWN CASE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 7. FOLLOWING THE PARITY OF REASONING GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 17.08.2010 IN ITA NO. 1065/CHD/2009 (SUPRA). AS THE ISSUE IS IDENTICAL, W E DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE IN THE PRESENT APPEAL. FOLLOWING THE ABOVE, WE DECIDE THIS ISSUE AGAINST T HE REVENUE. APPEAL OF THE REVENUE IS DISMISSED. CROSS-OBJECTIONS NO.3/CHD/2013 8. IN THIS CROSS-OBJECTIONS THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: THAT THE LD. CIT(A), PATIALA HAS ERRED IN HOLDING THAT THE LEASE INCOME OF RS. 59,00,902/- IS INCOME FROM OTHE R SORUCES AS AGAINST BUSINESS INCOME SHOWN BY THE ASSESSEE 9 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE EARLIE R ORDERS OF THE TRIBUNAL. THE SAME WAS ADJUDICATED FOR ASSESSME NT YEAR 2008-09 IN CROSS-OBJECTIONS NO. 72/CHD/2011. RELEV ANT PARA 7 READ AS UNDER: 7 AT THE TIME OF HEARING, SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE PRESENT CROSS OBJECTION IS COVERED BY THE OR DER OF THE TRIBUNAL IN THE CASE OF ASSESSEE IN C.O. NO. 7/CHD/201 1 (IN ITA NO. 1 393/CHD/20 1 0) RELATING TO ASSESSMENT YEAR 2007-08. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL VIDE ORDER DATED 13.5.2011 IN C.O. NO. 7/CHD/201 1 HELD AS UNDER:- '10. WE FIND THAT SIMILAR ISSUES WERE ADJUDICATED UPON BY THE TRIBUNAL IN PARAS 4 TO 5 OF ITS ORDER DATED 31.3.2010 IN THE 5 CASE OF ASSESSEE IN ITA NO. 90/CHD/2010 RELATING TO ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 31.3.2010, DISMISSING THE APPEAL OF ASSESSEE IT WAS HELD AS UNDER:- '4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. UNDENIABLY, THE ORDER OF THE TRIBUNAL DATED 28.02.2008 (SUPRA) IN ASSESSEE'S OWN. CASE FOR THE ASSESSMENT YEAR 2004-05 HAS DEALT WITH SIMILAR CONTROVERSY AS IS RAISED IN THE PRESENT APPEAL. THE TRIBUNAL CONSIDERED THE LEASE OF ENTIRE BUSINESS ASSETS ALONGWITH ITS EMPLOYEES BY THE ASSESSEE TO M/S UNITED BREWERIES LTD. AND THE TERMS AND CONDITIONS THERETO. INITIALLY, THE ENTIRE BUSINESS ASSETS WERE LEASED OUT W.E.F. 01.04.1998 UP TO 31.03.2003. BEFORE THE EXPIRY OF LEASE ON 31.03.2003, THE PARTIES EXECUTED A 'FRESH LEASE DEED ON 29.01.2003 TERMINATING THE EARLIER LEASE PRIOR TO THE EXPIRY OF THE LEASE PERIOD AND A FRESH LEASE DEED WAS ENTERED FOR A PERIOD OF 10 YEARS ON REVISED TERMS AND CONDITIONS. IN THE SAID LEASE ARRANGEMENT, ANNUAL AMOUNT PAYABLE TO THE ASSESSEE WAS FIXED AT RS. 30, 00, OOO/- FOR TWO YEARS SUBJECT TO REVISION WITH MUTUAL CONSENT. THE SAID LEASE ARRANGEMENT WAS THE SUBJECT MATTER OF CONSIDERATION BY THE TRIBUNAL IN ASSESSMENT YEAR 2004-05 AND, THE TRIBUNAL HELD THAT THE LEASE INCOME RECEIVED BY THE ASSESSEE WAS ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND NOT AS 'BUSINESS '.INCOME' AS CONTENDED BY THE ASSESSEE. 5. DURING THIS YEAR, THE CLAIM OJ THE LEARNED COUNSEL FOR THE APPELLANT IS THAT THE AMOUNT PAYABLE TO THE ASSESSEE HAS BEEN REVISED WITH MUTUAL 'CONSENT AND INS T( J .AD O/ A JIXE D ANN UA I PAYMENT AGREED TO EARLIER, NOW THE CONSIDERATION IS PAYABLE ON THE BASIS OF THE PRODUCTION ACHIEVED. IN OUR CONSIDERED OPINION, THE AFORESAID CHANGE IN THE MANNER OF PAYMENT OF CONSIDERATION, DOES NOT CALL FOR REVISITING THE ORDER OF THE TRIBUNAL DATED 28.02.2008. A PERUSAL OF THE PRECEDENT REVEALS THAT THE TRIBUNAL CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES AND CONCLUDED THAT THERE DOES NOT APPEAR TO BE ANY INTENTION OF THE ASSESSEE TO RESTART THE BUSINESS ON ITS OWN AND THEREFORE, INCOME FROM LETTING OUT OF BUSINESS ASSETS TO A SISTER CONCERN WAS HELD ASSESSABLE AS 'INCOME FROM OTHER 'SOURCES'. IN OUR CONSIDERED OPINION, THE DISTINCTION SOUGHT TO BE BROUGHT OUT BY THE LEARNED COUNSEL BASED ON THE CHANGE IN TERMS OF PAYMENT OF LEASE MONEY, DOES NOT DEFEAT THE INFERENCE DRAWN BY THE TRIBUNAL EARLIER. SIMILARLY, THE ACCEPTANCE OF THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 BY THE ASSESSING OFFICER IS NOT DETERMINATIVE OF THE DISPUTE IN AS MUCH AS THE SAME HAS BEEN SUMMARILY ACCEPTED U/S 143(1) OF THE ACT, WHICH DOES NOT ENTAIL ANY APPLICATION OF MIND BY THE ASSESSING OFFICER. 6 THIRDLY, WITH RESPECT TO THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL BEFORE US, THE SAME IN OUR VIEW DO NOT HELP IN AS MUCH AS THE TRIBUNAL HAS ALREADY APPLIED ITS MIND CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE IN THE ASSESSMENT YEAR 2004-05. IN CONCLUSION, IN THE BACKGROUND OF THE DECISION OF TH E TRIBUNAL DATED 28.02.2008 IN ASSESSES'S OWN CASE FOR ASSESSMENT YEAR 2004-05, IN THIS YEAR ALSO, WE FIND NO JUSTIFICATION TO ACCEPT THE PLEA OF THE ASS ESSEE THAT THE LEASE INCOME BE ASSESSED UNDER THE HEAD 'BUSINESS INCOME'. INSTEAD, THE STAND OF THE REVENUE TO ASSESS THE SAME UNDER THE HEAD ''INCOME FROM OTHER SOURCES' IS HEREBY AFFIRMED. ACCORDINGLY, THE ASSESSEE FAILS ON GROUND NOS. 1 & 2. FOLLOWING THE ABOVE, CROSS-OBJECTIONS NO. 3/CHD/201 3 ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE AND THE CR OSS- OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 17.5.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17 .5.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR