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

CO 72/CHANDI/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6384 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-09-2011
• Court: TRIBUNAL
• Department Lawyers: SUBHASH AGGARWAL
• Assessee Lawyers: AJAY SHARMA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 806/CHD/2011 ASSESSMENT YEAR: 2008-09 THE ITO, VS. M/S MALTEX MAISTERS LTD., WARD-4, PATIALA PATIALA PAN NO. AAACM 9807 C & C.O NO. 72/CHD/2011 (IN ITA NO. 806/CHD/2011) ASSESSMENT YEAR: 2008-09 M/S MALTEX MALSTERS LTD., VS. THE ITO, WARD-4 PATIALA PATIALA PAN NO. AAACM 9807 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY SHARMA RESPONDENT BY : SHRI SUBHASH AGGARWAL DATE OF HEARING : 26.09.2011 DATE OF PRONOUNCEMENT : 26.09.2011 ORDER PER H.L.KARWA, VP THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A), PATIALA DATED 12.7.2011 RELATING TO ASSESSMENT YEAR 2008-09 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL READS AS UNDER:- 2 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS INCOME ON ACCOUNT OF INTEREST RECEIVED FROM UNITED BREWERIES LTD., WHO IS A MAJOR SHAREHOLDER I N THE ASSESSEE COMPANY WITH SUBSTANTIAL INTEREST, UND ER THE HEAD PROFITS AND GAINS OF BUSINESS AS AGAINST THE HEAD INCOME FROM OTHER SOURCES BY FOLLOWING THE HON'BLE TRIBUNALS DECISIONS DATED 28.02.2008 & 17.8.2010 PASSED IN ITA NO. 774/CHANDI/2007 & 1065/CHD/2009 IN ASSESSEE,S OWN CASE FOR ASSESSMENT YEARS 2004-05 & 2006-07 WITHOUT APPRECIATING THE FA CT THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID ORDER S DATED 28.2.2008 & 17.8.2010 AND HAS ALREADY FILED FURTHER APPEALS WITH THE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ON THE PLEA THAT INCOME ACCRUING IN A MANNER OTHER THAN IN A REGULAR COURSE OF BUSINESS IS TO BE ASSESSED AS INCOME FRO M OTHER SOURCES. MOREOVER NO BUSINESS ACTIVITIES HA D BEEN CARRIED OUT BY THE LESSOR DURING THE YEAR UNDE R CONSIDERATION. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SSESSEE FILED RETURN DECLARING NIL INCOME ON 31.12.2008 AND THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT). SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) OF THE ACT ON 29.1 0.2010 FOR AN INCOME OF RS. 58,69,618/-. DURING THE ASSESSMENT, THE ASS ESSING OFFICER NOTICED THAT IN THE PROFIT AND LOSS ACCOUNT FILED WITH THE RETURN, THE ASSESSEE HAD SHOWN LEASE INCOME OF RS. 62,87,306/- UNDER THE HEA D BUSINESS AND PROFESSION. THE ASSESSING OFFICER HELD THAT LEASE INCOME OF RS. 62,87,306/- IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. ON APPEAL, THE CIT(A) ALLOWED THE APPEAL OF THE ASSESS EE FOLLOWING THE DECISION OF THE ITAT, CHANDIGARH BENCH B CHANDIGA RH 13.5.2011 PASSED IN ASSESSEES CASE IN ITA NO. 1393/CHD/20101 RELATI NG TO ASSESSMENT YEAR 2007-08. 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 3 FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT CHANDIGARH BENCH B CHANDIGARH DATED 13.5.2011 IN FAVOUR OF THE ASSESSE E AND AGAINST THE REVENUE IN THE ASSESSEES CASE IN ITA NO. 1393/CHD/ 2010 RELATING TO ASSESSMENT YEAR 2007-08 WHILE 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 AROSE BEFORE THE TRIBUNAL VIDE GROUND NO.1 IN ASSESSEES OWN CASE IN ITA NO. 1065/CHD/2009 RELATING TO ASSESSMENT YEAR 2006-07 W HEREIN THE TRIBUNAL VIDE ORDER DATED 17.8.2010 HAD DISMISS ED 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 OFFIC ER TO TREAT THE INTEREST INCOME AS BUSINESS INCOME INSTEAD OF 'INCOME FROM OTHER SOURCES' BY FOLLOWIN G THE PRECEDENTS IN ASSESSEE'S 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 INTEREST INCOME AS BUSINESS INCOME AND SUCH ORDER HAS BEEN ACCEPTED BY THE DEPARTMENT AS NO APPEAL HAS BEEN PREFERRED BEFORE THE TRIBUNAL. SIMILARLY, IN THE ASSESSMENT YEAR 2004-05, CIT(APPEALS) DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE, WHICH HAS FURTHER BEEN AFFIRMED BY TH E TRIBUNAL VIDE ITA NO.774/CHANDI/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 HIGHE R AUTHORITY. ACCORDINGLY, WE FIND NO MISTAKE ON THE PART OF THE CIT(APPEALS) IN DIRECTING THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME AS BUSINESS INCOME FOLLOWING THE AFORESAID PRECEDENTS IN ASSESSEE'S OWN CASE. ACCORDINGLY, GROUND NO.1 RAISE D BY THE REVENUE IS DISMISSED. 4 7. FOLLOWING THE PARITY OF REASONING GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 17.8.2010, IN ITA NO.1065/CHD/2009 (SUPRA), AS THE ISSUE IS IDENTICAL , WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE IN THE PRESENT APPEAL. 5. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE, WE DO NOT FIND MERIT IN THE APPEAL OF THE REVENUE A ND HENCE WE DISMISS THE SAME. C.O. NO. 72/CHD/2011 6. THE ONLY GROUND RAISED BY THE ASSESSEE IN THE CR OSS OBJECTIONS READS AS UNDER:- THAT THE LD. CIT(A), PATIALA HAS ERRED IN HOLDING T HAT THE LEASE INCOME OF RS. 62,87,306/- IS INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME SHOWN BY T HE ASSESSEE. 7. AT THE TIME OF HEARING, SHRI SUBHASH AGGARWAL, L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE PR ESENT CROSS OBJECTION IS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE IN C.O. NO. 7/CHD/2011 (IN ITA NO. 1393/CHD/2010) RELATING TO A SSESSMENT YEAR 2007- 08. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL V IDE ORDER DATED 13.5.2011 IN C.O. NO. 7/CHD/2011 HELD AS UNDER:- 10. WE FIND THAT SIMILAR ISSUES WERE ADJUDICATED U PON BY THE TRIBUNAL IN PARAS 4 TO 5 OF ITS ORDER DATED 31. 3.2010 IN THE CASE OF ASSESSEE IN ITA NO. 90/CHD/2010 RELATIN G TO ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 31.3.2010, DISMISSING THE APPEAL OF ASSESSEE IT WAS HELD AS UN DER:- 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 5 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 ENTIR E BUSINESS ASSETS WERE LEASED OUT W.E.F. 01.04.1998 UPTO 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.30,00,000/- 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 OF THE LEARNED COUNSEL FOR THE APPELLANT IS THAT THE AMOUNT PAYABLE TO THE ASSESSEE HAS BEEN REVISED WITH MUTUAL CONSENT AND INSTEAD OF A FIXED ANNUAL 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 RE- START 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. 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 6 2004-05. IN CONCLUSION, IN THE BACKGROUND OF THE DECISION OF THE TRIBUNAL DATED 28.02.2008 IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05, IN THIS YEAR ALSO, WE FIND NO JUSTIFICATION TO ACCE PT THE PLEA OF THE ASSESSEE 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 FAIL S ON GROUND NOS. 1 & 2. 11. THE ISSUE RAISED IN THE PRESENT APPEAL BEING IDENTICAL TO THE ISSUE RAISED IN ASSESSMENT YEAR 20 06-07, FOLLOWING THE PARITY OF REASONING GIVEN IN THE ORDE R OF THE TRIBUNAL (SUPRA), WE DISMISS THE GROUND NO.1 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION. 8. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE, WE DISMISS THE GROUND. 9. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS O BJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 26 TH SEPTEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7