ITO, Panchkula V. M/s Polo Hotels Ltd., Panchkula

ITA 1118/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0714 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Business income
• Section: 143(3); 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1118/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER, VS. POLO HOTELS LTD., WARD 3, VILLAGE CHOWKI, HOTEL NORTH PARK PANCHKULA. NEAR GHAGGAR BRIDGE, PANCHKULA. PAN: AABCP0940L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR, DR RESPONDENT BY : SHRI VINEET KRISHAN DATE OF HEARING : 07.01.2013 DATE OF PRONOUNCEMENT : 14.01.2013 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PANCHKULA DAT ED 29.08.2012 RELATING TO ASSESSMENT YEAR 2009-10 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY EFFECTIVE GROUND OF APPEAL RAISED BY TH E REVENUE READS AS UNDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE LEASE INCOME DECLARE D BY THE ASSESSEE IS BUSINESS INCOME AND NOT INCOME FROM HOU SE PROPERTY. 3. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL STANDS COVERED BY THE O RDER OF THE TRIBUNAL RELATING TO ASSESSMENT YEARS 2004-05, 2006-07 TO 20 08-09. 2 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANC E ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE TRIBUNAL IN ITA NO.532/CHANDI/2011 IN THE APPEA L FILED BY THE REVENUE AGAINST THE ASSESSEE RELATING TO ASSESSMENT YEAR 2008-09, VIDE ORDER DATED 29.6.2011, HAD DISMISSED THE APPEAL OF THE REVENUE RELYING UPON THE ORDER OF THE TRIBUNAL RELATING TO ASSESSME NT YEAR 2007-08, ORDER DATED 9.12.2010. THE TRIBUNAL IN THE APPEAL RELATI NG TO ASSESSMENT YEAR 2007-08 HAD OBSERVED AS UNDER: '7. WE HAVE HEARD BOTH THE PARTIES. IT IS NOT IN D ISPUTE THAT THE ASSESSEE HAS LEASED OUT THE ENTIRE HOTEL BUILDI NG TOGETHER WITH THE EQUIPMENTS, FURNITURE ETC., FOR A PERIOD EXCEED ING 15 YEARS LO M/S HOT MILLIONS FOODS PVT.LTD. AND THAT THE ASS ESSEE HAS RECEIVED LEASED RENT OF RS.62,10,000/- IN THE YEAR UNDER APPEAL. IT IS HOWEVER THE CASE OF THE LEARNED, COUN SEL FOR THE APPLICANT THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FO R ASSESSMENT YEAR 2004-05. THE AFORESAID FACT IS ALSO NOT DISPUTED B Y THE LEARNED DEPARTMENT REPRESENTATIVE. LEARNED DEPARTME NT REPRESENTATIVE HOWEVER RELIED UPON THE DECISIONS RE FERRED TO BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. 8. THE ASSESSING OFFICER HAS REFERRED TO THE JUDGEMENT IN SULTAN BROTHERS PVT.LTD. V CIT, 51 ITR 353 (S.C). PERUSAL OF THE AFORESAID JUDGEMENT SHOWS THAT IT HAS BEEN RENDERED BY A BENCH OF 5 JUDGES OF THE HON'BLE SUPREME CO URT. THEREFORE THE PRINCIPLES LAID DOWN IN THE AFORESAID JUDGEMENT WOU LD CONTINUE TO BE A BINDING TILL THEY ARE MODIFIED OR OVER-RULED B Y A LARGER BENCH OF THE HON'BLE SUPREME COURT. IN THAT CASE THE C ASE, A PRIVATE COMPANY, HAD CONSTRUCTED A-BUILDING ON A CERTAIN PL OT OF LAND, FITTED IT UP WITH FURNITURE AND FIXTURES AND LET IT OUT ON LEASE FULLY EQUIPPED AND FURNISHED FOR THE PURPOSE OF RUNNING A HOTEL. THE ISSUE THAT AROSE WAS WHETHER THE LEASE RENTAL WAS L IABLE TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY OR AS INCOME FROM BUSINESS. THE HON'BLE SUPREME COURT NOTED THAT TH E ASSESSEE AND LESSEE HAD INSISTED IN THAT CASE THAT THE BUILDING AND THE FIXTURES AND FURNITURE WERE TO BE USED FOR THE PURPOSE OF RU NNING A HOTEL AND THEREFORE, THE LEASE SATISFIED ALL THE CONDITIO NS FOR APPLICABILITY OF SECTION 12(4) OF THE OLD ACT OF 1922 AND THE RE NT FROM THE BUILDING HAD TO BE COMPUTED UNDER SECTION 12 AFTER PROVIDING FOR THE ALLOWANCES MENTIONED IN SUB-SECTION 4 THEREOF, AND THAT SECTION 9 DID NOT APPLY. IN THE PRESENT CASE ALS O THE VERY FACT THAT THE LEASE OF HOTEL BUILDING HAS BEEN GIVEN FOR AS LONG AS 15 YEARS MAKES IT ABSOLUTELY CLEAR THAT THE ASSESSEE A ND THE LESSEE INTEND TO USE THE BUILDING TOGETHER WITH FIXTURES, FURNITURE AND 3 EQUIPMENTS FOR ONLY ONE PURPOSE I.E. FOR THE PURPOS E OF LEASING OUT A HOTEL AND RUNNING THE HOTEL THEREAFTER. 9. IN SHAMBOO INVESTMENT PVT. LTD. V CIT, 263 ITR 143 (S.C) THE ASSESSEE HAD OWNED IMMOVABLE PROPERTY A PART OF WHI CH IT LET OUT FOR USE AS TABLE SPACE TO OCCUPANTS WITH FIXTURES, FURNITURE, LIGHTS AND THE AIR CONDITIONERS. ASSESSEE PROVIDED SERVICE S LIKE WATCH AND WARD STAFF, ELECTRICITY, WATER AND OTHER COMMON AME NITIES. ON THESE FACTS, THE HON'BLE HIGH COURT HELD THAT THE R ENTAL INCOME FROM LETTING OUT THE SPACE WAS CHARGEABLE TO TAX AS INCOME FROM HOUSE PROPERTY. APPEAL FILED BY THE ASSESSEE AGAINS T AFORESAID JUDGEMENT OF HON'BLE HIGH COURT WAS DISMISSED BY TH E SUPREME COURT. 10. NOT-WITHSTANDING THE RELIANCE CORRECTLY PLACED BY ASSESSING OFFICER ON THE AFORESAID JUDGEMENTS FOR C OMING TO THE CONCLUSION THAT LEASE RENTAL WAS ASSESSABLE AS INCOME FROM HOUSE PROPERTY, THE FACT HOWEVER REMAINS THAT A BENCH OF THIS TRIBUNAL HAS TAKEN A VIEW IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05 THAT RENTAL INCOME WAS LIABLE TO BE ASSESSED AS INCOME FROM BUSINESS. JUDICIAL DI SCIPLINE REQUIRES AN ASSESSEE TO FOLLOW THE DECISION OF THE CO- ORDINATE BENCHES; UNION OF INDIA V PARAS, LAMINATES PVT. LTD., 186 ITR 722, 726-727 (S.C). IN THIS VIEW OF T HE MATTER WE CONFIRM THE ORDER PASSED BY THE CIT(APPEALS) IN THE CASE BEFORE US FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S CASE FOR ASSESSMENT YEAR 2004-05. 6. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO T HE FACTS IN THE PRECEDING YEARS WHEREIN THE ASSESSEE HAD LET OUT IT S BUILDING TO THE LESSEE FOR THE PERIOD OF 15 YEARS. FOLLOWING THE R ATIO LAID DOWN BY THE TRIBUNAL (SUPRA) WE UPHOLD THE ORDER OF THE CIT (AP PEALS) AND DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF JANUARY, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14 TH JANUARY, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 4