DCIT, CIR-14(2), KOLKATA, Kolkata V. Ashamangal Portfolio Pvt. Ltd., Howrah

ITA 1083/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0838 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 18-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: M SATNALIWALA
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D, KOLKATA [BEFORE SHRI P.M. JAGTAP, AM AND SHRI S.S. VISWANETHRA RAVI, JM] I.T.A. NO. 1083/KOL/2016 ASSESSMENT YEAR: 2010-11 D.C.I.T CIRCLE 14(2)..............................APPELLANT AAYAKAR BHAWAN, POORVA, ROOM NO. 611, 6 TH FLOOR, 110, SHANTIPALLI, KOLKATA - 700107 ASHAMANGAL PORTFOLIO PVT. LTD......RESPONDENT 103/24/1, FORESHORE ROAD, SHIBPUR, HOWRAH 711 102 [PAN : AABCA3340B]] APPEARANCES BY: SHRI SAURABH KUMAR, ADDL. CIT (DR), APPEARING ON BEHALF OF THE REVENUE. SHRI M. SATNALIWALA, FCA APPEARING ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : DECEMBER 05, 2017 DATE OF PRONOUNCING THE ORDER : DECEMBER 05, 2017 ORDER PER P.M. JAGTAP, AM THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (APPEALS) 5, KOLKATA DATED 08.03.2016 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DIRECTING THE A.O. TO TREAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE FOR WARE HOUSES AS THE INCOME OF THE ASSESSEE FROM BUSINESS AND NOT INCOME FROM HOUSE PROPERTY AS TREATED BY THE A.O. 2. THE ASSESSEE IN THE PRESENT CASE A COMPANY WHICH DERIVES RENTAL INCOME IN THE FORM OF WARE HOUSING CHARGES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 04.10.2010 DECLARING A TOTAL INCOME AT NIL. IN THE SAID RETURN, THE RENTAL INCOME RECEIVED IN THE FORM OF WARE HOUSING CHARGES ETC. WAS DECLARED BY THE 2 I.T.A. NO. 1083/KOL/2016 ASSESSMENT YEAR: 2010-11 ASHAMANGAL PORTFOLIO PVT. LTD. ASSESSEE COMPANY AS ITS BUSINESS INCOME AND AFTER CLAIMING DEDUCTION FOR THE VARIOUS EXPENSES, NIL INCOME WAS DISCLOSED BY THE ASSESSEE. KEEPING IN VIEW THE STAND CONSISTENTLY TAKEN IN THE ASSESSMENTS COMPLETED IN THE CASE OF THE ASSESSEE FOR THE EARLIER YEARS ON THE SIMILAR ISSUE, THE A.O. BROUGHT TO TAX THE RENTAL INCOME RECEIVED BY THE ASSESSEE COMPANY IN ITS HAND UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND AFTER ALLOWING DEDUCTIONS UNDER SECTION 24(A) AND 24(B), THE ASSESSMENT WAS COMPLETED BY HIM UNDER SECTION 143(3) VIDE AN ORDER DATED 18.03.2013 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 68,37,299/-. 3. AGAINST THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO FOLLOWED THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR A.Y. 2000-01 TO 2003-04 VIDE ITS ORDER DATED 13.02.2014 AND DIRECTED THE A.O. TO TREAT THE RENTAL INCOME RECEIVED BY THE ASSESSEE IN THE FORM OF WARE HOUSING CHARGES ETC. AS ITS BUSINESS INCOME AS SHOWN IN THE RETURN OF INCOME. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS AGREED BY THE LEARNED REPRESENTATIVES OF BOTH THE SIDES, THE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2000-01 TO 2003-04 RENDERED VIDE ITS ORDER DATED 3 I.T.A. NO. 1083/KOL/2016 ASSESSMENT YEAR: 2010-11 ASHAMANGAL PORTFOLIO PVT. LTD. 04.04.2008 IN ITA NO. 2005 & 6901/MUM/2005 AND 4571 & 4572/MUM/2006. A COPY OF THE SAID ORDER IS PLACED ON RECORD BEFORE US AND PERUSAL OF THE SAME SHOWS THAT A SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE VIDE PARAGRAPH NO. 6 OF ITS ORDER WHICH READS AS UNDER: ON CAREFUL ANALYSIS OF THE UNDISPUTED FACTS NARRATED SUPRA IN THE LIGHT OF THE VARIOUS JUDICIAL PRONOUNCEMENTS THAT WERE RELIED ON BY THE ASSESSEE IN SUPPORT OF ITS CLAIMS. IT IS FOUND THAT THE ASSESSEE IS NEITHER THE OWNER NOR THE LESSOR OF THE PROPERTY THAT WAS EXPLOITED BY THE ASSESSEE BY CARRYING ON BUSINESS AFTER REPAIRS AND MAINTENANCE, GIVING ON LEASE TO OTHERS AND BY PROVIDING ELECTRICITY CONNECTIONS, SECURITY ETC. AND DERIVES INCOME THEREFROM. THE PROVISIONS CONTAINED IN SECTION 22 OF THE IT ACT CLEARLY MENTIONS THAT THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDINGS OR LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER, OTHER THAN SUCH PORTIONS OF SUCH PROPERTY AS HE MAY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEABLE TO INCOME TAX SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN CLEAR TERMS THE PROVISION SAYS THAT THE PROPERTY MUST BE OWNED BY THE ASSESSEE IN ORDER TO CHARGE THE INCOME DERIVED FROM IT OR ITS PORTION OTHER THAN THAT PORTION USED FOR CARRYING ON BUSINESS ACTIVITIES AS INCOME FROM HOUSE PROPERTY. IN THE PRESENT CASE ON HAND, BY GOING THROUGH ALL THE DOCUMENTS AND MATERIAL MADE AVAILABLE BY THE ASSESSEE BEFORE THE DEPARTMENTAL AUTHORITIES AND MENTIONED IN THE ORDERS PASSED BY THEM NOWHERE IT WAS POINTED OUT THAT HOW THE ASSESSEE BECAME THE PROPERTY OWNER OR LESSEE THEREOF. ON THE OTHER HAND, THE ASSESSEE HAS PRODUCED BEFORE THE DEPARTMENTAL AUTHORITIES COPIES OF THE PROCEEDINGS UNDERWENT BETWEEN KPT AND M/S. BINANI METALS LTD. WHICH CATEGORICALLY DISCLOSES THAT THE LEASE PERIOD WITH KPT AND M/S. BINANI METALS LTD. HAS EXPIRED LONG AGE AND THE ASSESSEE WAS NOT RECOGNIZED BY THE KPT AS EVEN OCCUPIER OF THE PROPERTY IN QUESTION AND THERE ARE NO DOCUMENTS OF ANY TYPE TO SHOW THAT THE ASSESSEE HAS ACQUIRED ANY RIGHT IN THE PROPERTY IN QUESTION FROM THE TRUE OWNER OF THE PROPERTY I.E. KPT. EVEN THE ATTEMPTS MADE BY THE ASSESSEE TO ACCEPT THE OWNERSHIP OF THE KPT IN ITS TURN AND ITS RECOGNITION OF THE KPT AS TENANT OF THE PROPERTY IN QUESTION, WAS NOT ACCEPTED BY THE KPT FOR MANY REASONS INCLUDING THAT OF MANDATORY REQUIREMENT OF SANCTION OF APPROVAL BY THE GOVT. OF INDIA AND IN VIEW OF THE PENDING EVICTION PROCEEDINGS OF THE ORIGINAL TENANT M/S. 4 I.T.A. NO. 1083/KOL/2016 ASSESSMENT YEAR: 2010-11 ASHAMANGAL PORTFOLIO PVT. LTD. BINANI METALS LTD. WHOSE LEASE HAS ALREADY EXPIRED. THE ONLY BASE THAT CAN BE MADE IS THE BILLS CHARGED BY M/S. BINANI METALS LTD. TO THE ASSESSEE TOWARDS THE PROPERTY IN OCCUPATION UNDER VARIOUS HEADS BUT NOWHERE IN THESE DOCUMENTS IT WAS MENTIONED THAT THE ASSESSEE HAS BEEN RECOGNIZED AS THE SUB-LESSEE OF KPT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS RENDERED BY THE VARIOUS JUDICIAL FORUMS THAT WERE RELIED ON BY THE ASSESSEE SUCH AS BY THE HONBLE SUPREME COURT IN THE CASE OF R.B. JODHAMAL KUTHALIA VS CIT 82 ITR 570 WHEREIN IT WAS HELD THAT THE OWNER MUST BE THE PERSON, WHO CAN EXERCISE, THE RIGHTS OF OWNER NOT ON BEHALF OF THE OWNERS BUT IN HIS OWN RIGHT. THIS TRIBUNALS BOMBAY BENCH AS WELL AS HYDERABAD BENCH REPORTED IN 110 ITD 331 AND 337 AND 99 ITD 18 IS OF THE SAME VIEW TO THE EFFECT THAT IF THE ASSESSEE IS NOT THE OWNER OF THE BUILDING, INCOME FROM LETTING OUT THE SAME WITH AMENITIES WOULD HAVE TO BE ASSESSEE EITHER UNDER HEAD BUSINESS OR INCOME FROM OTHER SOURCES DEPENDING ON THE FACT AS TO WHETHER RENTING OUT OF THE BUILDING OR LAND WAS APPURTENANT THERETO WAS DONE BY THE COURSE OF BUSINESS OR NOT. IN THE LIGHT OF THE RATIO LAID DOWN BY THE JUDICIAL FORUMS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY IN QUESTION AND NOT HAVING ANY RIGHT OVER IT AND IS NOTHING BUT THE BUSINESS INCOME BUT NEVER BE THE INCOME FROM HOUSE PROPERTY. THIS ISSUE RAISED BY THE ASSESSEE IS ACCEPTED BY DIRECTING THE DEPARTMENTAL AUTHORITIES TO TREAT THE SAME ACCORDINGLY. 5. IT IS ALSO OBSERVED THAT THE ABOVE DECISION RENDERED FOR A.Y. 2000-01 TO 2003-04 HAS BEEN SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL TO DECIDE THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE FOR A.Y. 2004-05 AND 2005-06 VIDE ITS ORDER DATED 19.12.2013 PASSED IN ITA 1978 & 1979/KOL/2010. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF A.Y. 2000-01 TO 2005-06, WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL RENDERED FOR THE SAID YEARS AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THE ISSUE UNDER CONSIDERATION. 5 I.T.A. NO. 1083/KOL/2016 ASSESSMENT YEAR: 2010-11 ASHAMANGAL PORTFOLIO PVT. LTD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DECEMBER, 2017. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 05/12/2017 BISWAJIT, SR. PS COPY OF ORDER FORWARDED TO: 1. ASHAMANGAL PORTFOLIO PVT. LTD., 103/24/1, FORESHORE ROAD, SHIBPUR, HOWRAH-711102. 2. DCIT CIR-14(2), AAYAKAR BHAWAN POORVA, ROOM NO. 611, 6 TH FLOOR, 110 SHANTIPALLI, KOLKATA 700107. 3. THE CIT(A) 4. THE CIT 5. DR TRUE COPY, BY ORDER, SR. P.S. / H.O.O. ITAT, KOLKATA