COMMISSIONER OF INCOME-TAX, KARNAL V. M/S INDERJEET RELHAN AND ORS

ITA/239/2011

AI Insights

The case involves an appeal by the Commissioner of Income Tax, Karnal against M/s Inderjeet Relhen and others concerning the classification of rental income from godowns. The primary legal issue was whether the rental income should be classified under 'Income from Business and Profession' or 'Income from House Property'. The Assessing Officer initially classified the income under 'Income from House Property' after issuing a notice under Section 148 of the Income Tax Act, 1961. The CIT (A) reversed this decision, classifying it under 'Income from Business and Profession', a decision upheld by the Tribunal in earlier rulings. However, the Tribunal's failure to consider an amended ground of appeal led to the High Court's intervention, resulting in the remand of the case for a fresh decision.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 718373 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 20-08-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: S K MUKHI
• Assessee Lawyers: YOGESH PUTNEY
• Keywords: Assessment year 2003-04; Income from Business & Profession; Income from house property; Miscellaneous Application; Rectification of mistake
• Section: 147; 148; 143(3); 260A

Judgement Text

"ITA No. 239 of 2011 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 239 of 2011 (O&M) Date of Decision: 20.8.2013 Commissioner of Income Tax, Karnal ....Appellant. Versus M/s Inderjeet Relhen and others ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE JASPAL SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. C.M. No. 15388-CII of 2011 Allowed as prayed for. ITA No. 239 of 2011 1. This appeal is filed by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) against the order dated 25.10.2010 passed by the Income Tax Appellate Tribunal, Delhi Bench “F”, New Delhi (in short “the Tribunal”) in ITA No. 4282/DEL/2006 for the assessment year 2003-04, claiming the following substantial questions of law:- “i) Whether on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right Singh Gurbachan 2013.09.03 16:02 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 239 of 2011 -2- in law in holding the rental income as income from Business & Profession as against income from House Property assessed by the AO? ii) Whether on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right in law in disposing of the Revenue's appeal by ignoring the amended grounds of appeal taken by the Revenue, which were allowed to be considered afresh by allowing the misc. application filed by the Revenue in view of the Income Tax Appellate Tribunal's Delhi Bench “F” Delhi's decision dated 12.3.2010 in IT appeal No. 4282 (Del) 2006 passed in the assessee's case for the A.Y. 2003-04 in Misc. Application No. 630 (Del)2008?” 2. Put shortly, the facts necessary for adjudication of the present appeal as mentioned therein are that the assessee derived income from letting out of godowns to HAFED and CONFED amounting to ` 36,69,803/-. The said income was shown by the assessee under the head “Income from Business and Profession” and after claiming various expenses in profit and loss account, filed its return on 30.11.2003 declaring a loss of ` 4,29,685/-. Since the income declared by the assessee was from letting out of the godowns, the same falls under the head 'Income From House Property' and not under the head 'Profit and Gains of Business' as shown by the assessee, notice under Section 148 of the Act was issued on 8.6.2004 after recording reasons. Accordingly, the Assessing Officer, vide order dated 29.11.2004 Singh Gurbachan 2013.09.03 16:02 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 239 of 2011 -3- (Annexure A-1) assessed the income under Section 143(3)/147 of the Act at a total income of ` 25,77,818/- (including other income) as against the loss of ` 4,29,685/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [For brevity “the CIT (A)”]. The CIT(A) vide order dated 10.10.2006 (Annexure A-2) allowed the appeal of the assessee holding that the income assessed under the head “Income from House Property” should be assessed under the head “Income from business and profession” and also allowed the depreciation on building and other expenses as claimed by the assessee. Against the order of the CIT(A), the revenue filed an appeal before the Tribunal who vide order dated 17.9.2007 (Annexure A-3) dismissed the appeal and affirmed the findings of the CIT(A). According to the revenue, the Tribunal had not considered the amended grounds of appeal filed by the revenue. Thereafter, the revenue filed misc. application before the Tribunal for rectifying the mistake apparent on the record. The Tribunal vide order dated 12.3.2010 (Annexure A-4) passed in the misc. application recalled its order dated 17.9.2007 for fresh adjudication of the matter. Again the Tribunal dismissed the appeal filed by the revenue vide order dated 25.10.2010 (Annexure A-5) relying on its own decision in the assessee's own case for the assessment years 2004-05 and 2005-06 passed in ITA Nos. 3932 and 3934/Del/2007 dated 11.4.2008. Hence, the present Income Tax Appeal. 3. Learned counsel for the revenue submitted that before the Tribunal a misc. application was filed for recalling the order dated 17.9.2007 passed by the Tribunal as the Tribunal had failed to consider the amended ground of appeal filed by the then Income Tax Officer, Singh Gurbachan 2013.09.03 16:02 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 239 of 2011 -4- Ward No.4, Panipat vide letter No. 383 dated 25.4.2007, wherein the following amended ground had been raised:- “On the facts and in the circumstances of the case, the ld. Commissioner of Income-tax (Appeals) has erred in law by holding the rental income from plinths and go-downs is assessable under the head 'income from business and profession' as against the income from house property and directing the assessing officer to allow the depreciation on plinths and go- downs, at the rate of 10 per cent amounting to Rs.21,60,923/- as claimed by the assessee?” 4. It was urged that the original order dated 17.9.2007 was recalled and the appeal was ordered to be decided afresh by taking the amended ground of appeal into consideration, still the Tribunal vide order dated 25.10.2010 (Annexure A-5) failed to consider the amended ground of appeal and had, thus, committed the same error while deciding the appeal again. 5. Learned counsel for the assessee, on the other hand, supported the order passed by the Tribunal. 6. After hearing learned counsel for the parties, we find that the amended ground of appeal filed on 25.4.2007 was allowed as has been noticed by the Tribunal in its order dated 12.3.2010 (Annexure A- 4). However, a perusal of the order dated 25.10.2010 which has been impugned in this appeal shows that the Tribunal failed to consider the amended ground of appeal which has been reproduced above. 7. In view of the above, questions of law are answered Singh Gurbachan 2013.09.03 16:02 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No. 239 of 2011 -5- accordingly and, consequently, the order dated 25.10.2010 passed by the Tribunal is set aside and the matter is remanded to the Tribunal for passing a order afresh after considering the amended ground of appeal in accordance with law. (AJAY KUMAR MITTAL) JUDGE August 20, 2013 (JASPAL SINGH) gbs JUDGE Singh Gurbachan 2013.09.03 16:02 I attest to the accuracy and integrity of this document High Court Chandigarh "