M/s. Shrinath Warehousing Co., Pune V. Deputy Commissioner of Wealth-tax,

ITA 1387/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4150 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-08-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 27-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI VIKAS AWASTHY, JM / ITA NO.1387/PUN/2016 / ASSESSMENT YEAR : 2011-12 M/S. SHRINATH WAREHOUSING CO., S/NO. 139, FURSUNGI, TAL. HAVELI, DIST. PUNE-412308 PAN : AAEFS2598H ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4, PUNE. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 30.10.2018 / DATE OF PRONOUNCEMENT : 30.10.2018 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-7, PUNE DATED 09.02.2 016 FOR THE ASSESSMENT YEAR 2011-12. 2 ITA NO.1387/PUN/2016 A.Y.2011-12 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUANCE OF NOTICE THROUGH RPAD. A PERUSAL OF THE CASE FILE SHOWS THA T THE APPEAL WAS FIRST LISTED FOR HEARING ON 17.04.2018. NOTICE OF HEARING O F APPEAL WAS SENT TO THE ASSESSEE THROUGH RPAD ON 28.02.2018. S INCE THE BENCH DID NOT FUNCTION ON 17.04.2018, THE APPEAL WAS ADJOURNED T O 21.06.2018. ON 21.06.2018, NONE APPEARED ON BEHALF OF THE AS SESSEE. FRESH NOTICE OF HEARING OF APPEAL WAS SENT TO THE ASSES SEE FOR 21.08.2018. ON 21.08.2018, THE APPEAL WAS ADJOURNED TO 30.1 0.2018. DESPITE NOTICE, AGAIN NONE APPEARED TO REPRESENT THE AS SESSEE TODAY. IT APPEARS THAT THE ASSESSEE IS NOT KEEN TO PURSUE HIS A PPEAL BEFORE THE TRIBUNAL. IN SUCH CIRCUMSTANCES, WE ARE CONSTRAINED TO TA KE UP THE APPEAL FOR HEARING IN EX-PARTE PROCEEDINGS QUA ASSESSEE /APPELLANT, WITH THE ASSISTANCE OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 3. THE ASSESSEE IN APPEAL HAS PRIMARILY ASSAILED THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THE INCOME E ARNED BY THE ASSESSEE FROM RENTING OF WAREHOUSE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS AGAINST THE SAID INCOME DECLARED BY ASSESSEE UNDER THE HEAD BUSINESS INCOME. 4. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A PARTNERSHIP FIRM AND OWNS NUMBER OF WAREHO USES. THE ASSESSEE RENTED PART OF WAREHOUSES TO VARIOUS INDIVIDUA LS AND ENTITIES. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER AP PEAL, THE ASSESSEE RECEIVED RS.1,68,07,517/- AS RENTAL INCOME FROM LET TING OUT OF THE WAREHOUSE. THE ASSESSEE OFFERED THE SAID INCOME AFTER CLAIMING EXPENDITURE UNDER THE HEAD BUSINESS INCOME. THE ASSE SSING OFFICER 3 ITA NO.1387/PUN/2016 A.Y.2011-12 DID NOT CONCUR WITH THE VIEW OF ASSESSEE AND HELD THE IN COME RECEIVED BY ASSESSEE FROM LETTING OUT OF WAREHOUSE AS INCOME FR OM HOUSE PROPERTY AND MADE ADDITION OF RS.43,99,964/- AFTER ALLOWING STATUTORY DEDUCTION. 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 03.03.2014 PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRE D TO AS THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER PLACIN G RELIANCE ON THE VARIOUS DECISIONS CONFIRMED THE FINDINGS OF AS SESSING OFFICER AND DISMISSED THE APPEAL OF ASSESSEE. 6. SHRI PANKAJ GARG REPRESENTING THE DEPARTMENT VEHEM ENTLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPE ALS). THE LD. DR SUBMITTED THAT RENTAL INCOME RECEIVED BY ASSESSEE FRO M LETTING OUT OF WAREHOUSE HAS RIGHTLY BEEN ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY LD. DR AND HAV E PERUSED THE ORDERS OF AUTHORITIES BELOW. THE SOLITARY ISSUE RAISED IN GROUND NOS. 1, 2 AND 3 OF THE APPEAL IS AGAINST HOLDING RE NTAL INCOME FROM LETTING OUT OF WAREHOUSES BY ASSESSEE UNDER THE HEAD INC OME FROM HOUSE PROPERTY AS AGAINST BUSINESS INCOME DECLARED BY THE ASSESSEE. ON THE FACTS OF THE CASE AS NARRATED ABOVE, THE COMMISS IONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE FINDINGS OF ASSESSING OFFICER B Y OBSERVING AS UNDER: 4 ITA NO.1387/PUN/2016 A.Y.2011-12 6.6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND LAW APPARENT FROM THE RECORDS. THERE IS NO CHANGE IN TH E FACTS OF THE CASE FROM A.Y.2000-01 TO A.Y.2010-11 AND ACTIVITY O F THE APPELLANT REMAINED SAME I.E. LETTING OUT OF THE GODOWNS. THE CIT(A)-II IN A.Y.2003-04, 2005-06, 2006-07 AND 2007-08 HAS HELD THAT RENT RECEIVED FROM GODOWNS ARE TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. THE CONTENTION OF THE APPELLANT IS THAT APPELLANT HAS CONSTRUCTED A WAREHOUSE AS A COMMERCIAL COMPLEX AND CONDUCTED CONTINUOUS COMMERCIAL SYSTEMATIC BUSINESS ACTIVITY BY PROVIDING MORE THAN 100 NO. OF OCCUPANTS IN WAREHOU SE ON SPECIFIC TERMS. THE APPELLANT IS PROVIDING SPACE TO TENANTS AND NOT DOING ANY BUSINESS ACTIVITY AS SUCH AND THE CAS E OF THE APPELLANT IS SIMILAR TO CASE OF KEYARAM HOTELS (P.) LTD (SUPRA) WHEREIN IT HAS BEEN HELD THAT LETTING OUT OF THE CO MMERCIAL COMPLEX WOULD BE ASSESSED AS INCOME FROM HOUSE PROP ERTY AND NOT AS BUSINESS INCOME. THE DECISION OF THE JUR ISDICTIONAL HIGH COURT IN CASE OF PAREKH TRADERS VS. CIT (1984) 150 ITR 310 (BOM.) & MAHARASHTRA FERTILIZERS & CHEMICALS VS. CIT (1984) 150 ITR 317 (BOM) MAKES IT CLEAR THAT LETTIN G OUT OF THE GODOWNS WILL BE INCOME FROM HOUSE PROPERTY. THE SUP REME COURT IN CASE OF EAST INDIA HOUSING & LAND DEVELOPMENT TRUST LTD VS. CIT (1961) 42 ITR 49 (SC) FURTHER, CLARIFIE S THAT INCOME FROM LETTING OUT OF GODOWNS WILL BE INCOME FROM HOU SE PROPERTY. THE APPELLANT IS ALSO PROVIDING SERVICES LIKE SECUR ITY GUARD, ELECTRICITY IN COMMON AREAS, MAINTENANCE OF INTERNA L ROAD AND MAINTENANCE OF PARKING FACILITIES ETC. ON THIS ISSU E MADRAS HIGH COURT IN CASE OF A. R. COMPLEX (SUPRA) HAS HEL D THAT LETTING OF THE COMMERCIAL COMPLEX WOULD BE INCOME F ROM HOUSE PROPERTY AND IN RESPECT OF SERVICES HELD THAT AUTHO RITIES SHOULD BIFURCATE RECEIPTS WHICH ALSO INCLUDED SERVICE CHAR GES AND QUANTIFIED PORTION OF RECEIPTS FOR RENDERING SERVIC ES AND SUCH APPORTIONED AMOUNT SHOULD BE ASSESSED UNDER HEAD 'I NCOME FROM BUSINESS' OR 'INCOME FROM OTHER SOURCES'. 6.7 IN VIEW OF THE ABOVE, INCOME FROM LETTING OUT O F GODOWNS HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. T HE INCOME FROM SERVICES PROVIDED HAS TO BE ASSESSED AS INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES. THEREFORE, GROUND NO.1 TO 4 OF THE APPEAL IS DISMISSED. THERE IS NO MATERIAL AVAILABLE ON RECORD CONTRARY TO THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. ACCORDINGLY, THE GROUNDS NOS.1 TO 3 OF THE APPEAL ARE DISMISSED. 8. THERE IS NO GROUND NO. 4 IN THE APPEAL. THE GROUND NO . 5 AND 6 ARE GENERAL IN NATURE, HENCE, REQUIRES NO ADJUDICATION. 5 ITA NO.1387/PUN/2016 A.Y.2011-12 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER HEARING OF TH E APPEAL ON THE 30 TH DAY OF OCTOBER, 2018. SD/- SD/- R. S. SYAL VIKAS AW ASTHY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 30 TH OCTOBER, 2018 SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-7, PUNE. 4. THE CIT-6, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE.