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

ITA 1393/CHANDI/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5453 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 09-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAGANPREET SANDHU
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1393/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ACIT, VS. M/S MALTEX MALSTERS LTD., CIRCLE, PATIALA PATIALA PAN NO. AAACM9807C & C.O. NO. 7/CHANDI/2011 (IN ITA NO.1393/CHD/2010) ASSESSMENT YEAR : 2007-08 M/S MALTEX MALSTERS LTD., VS. THE ACIT, CIRLCE, PATIALA PATIALA PAN NO. AAACM9807C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. LAGANPREET SANDHU RESPONDENT BY: SHRI SUBHASH AGGARWAL ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF C IT(A), PATIALA DATED 30.9.2009 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REV ENUE. 2. BOTH THE APPEAL OF THE REVENUE AND CROSS OBJECTI ON FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE ONLY GROUND OF APPEAL RAISED BY THE REVENUE IS AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE INCOME ON ACCOUNT OF INTEREST RECEIVED FROM UN ITED BREWERIES LTD, WHO IS A MAJOR SHAREHOLDER IN THE AS SESSEE COMPANY WITH SUBSTANTIAL INTEREST, UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AS AGAINST THE HEAD INCOME FROM OTHER SOURCES BY FOLLOWING THE HON'BLE TRIBUNALS DECISION DATED 28.2.2008 PASSED IN ITA NO. 774/CHANDI/2007 I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 , WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS NOT A CCEPTED THE SAID ORDER DATED 28.2.2008 AND HAS ALREADY FILE D FURTHER APPEAL WITH THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ON THE PLEA THAT INCOME ACC RUING IN A MANNER OTHER THAN IN A REGULAR COURSE OF BUSIN ESS IS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. MOREOV ER NO BUSINESS ACTIVITIES HAD BEEN CARRIED OUT BY THE LES SOR DURING THE YEAR UNDER CONSIDERATION. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD SHOWN INTEREST INCOME OF RS. 24.25 LACS IN THE PROFIT AND LOSS ACC OUNT UNDER THE HEAD BUSINESS IN THE RETURN OF INCOME. THE SAID INTER EST WAS RECEIVED AFTER THE STOCK TRANSFER AND DELAY IN PAYMENT OF LEASE MO NEY AND WAS CLAIMED TO HAVE BEEN RECEIVED IN THE NORMAL COURSE OF CARRY ING OF BUSINESS ACTIVITY. THE CLAIM OF THE ASSESSEE BEFORE THE ASS ESSING OFFICER WAS THAT THE FACTS ARE SAME AND SETTLED IN ASSESSMENT YEAR 2 000-01. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID INTEREST RECE IVED BY THE ASSESSEE IS ASSESSABLE AS INCOME FROM OTHER SOURCES. THE CIT(A ) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ASSESS ED THE INTEREST INCOME AS BUSINESS INCOME . THE REVENUE IS IN APPEAL AGAIN ST THE ORDER OF THE CIT(A). 5. THE LD. DR FOR THE REVENUE SUPPORTED THE ASSESS MENT ORDER WHEREAS LD. COUNSEL FOR THE ASSESSEE STATED THAT TH E ISSUE RAISED IN THE PRESENT APPEAL BY THE REVENUE IS SIMILAR TO THE ISS UE RAISED BY THE 3 REVENUE IN ITA NO.1065/CHD/2009 VIDE GROUND NO.1 WH EREIN THE TRIBUNAL HAD DISMISSED THE GROUND RAISED BY THE REV ENUE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL V IDE GROUND NO.1 IN ASSESSEES OWN CASE IN ITA NO. 1065/CHD/2009 RELATI NG TO ASSESSMENT YEAR 2006-07 WHEREIN THE TRIBUNAL VIDE ORDER DATED 17.8.2010 HAD DISMISSED THE GROUND OF APPEAL RAISED BY THE REVENU E VIDE PARAS 3 & 4 OF ITS ORDER BY HOLDING AS UNDER:- 3. IN GROUND NO.1, THE DISPUTE RELATES TO ASSESSAB ILITY OF INTEREST INCOME EARNED BY THE ASSESSEE. THE ASSESSI NG OFFICER TREATED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES AS AGAINST BUSINESS INCOME CONSIDERED BY THE ASSESSEE. THE CIT(APPEALS) HAS SINCE DIRECTED THE A SSESSING OFFICER TO TREAT THE INTEREST INCOME AS BUSINESS I NCOME 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 ASSESSMEN T YEAR 2001-02, CIT(APPEALS) HAD DIRECTED THE ASSESSING OF FICER TO TREAT INTEREST INCOME AS BUSINESS INCOME AND SUCH ORDER HAS BEEN ACCEPTED BY THE DEPARTMENT AS NO APP EAL HAS BEEN PREFERRED BEFORE THE TRIBUNAL. SIMILARLY, IN THE ASSESSMENT YEAR 2004-05, CIT(APPEALS) DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE, WHICH HAS FURTHER BEEN AFFI RMED BY THE TRIBUNAL VIDE ITA NO.774/CHANDI/2007 DATED 28.02.2008. 4. BEFORE US, NO MATERIAL HAS BEEN BROUGHT ON RECOR D BY THE REVENUE TO ESTABLISH THAT ANY OF THE AFORESAID PRECEDENTS HAVE BEEN ALTERED BY ANY HIGHER AUTHORIT Y. 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 AF ORESAID PRECEDENTS IN ASSESSEE'S OWN CASE. ACCORDINGLY, GRO UND NO.1 RAISED BY THE REVENUE IS DISMISSED. 7. FOLLOWING THE PARITY OF REASONING GIVEN BY THE T RIBUNAL IN ITS ORDER DATED 17.8.2010, IN ITA NO.1065/CHD/2009 (SUP RA), AS THE ISSUE IS IDENTICAL, WE DISMISS THE GROUND OF APPEAL RAISE D BY THE REVENUE IN THE PRESENT APPEAL. 4 8. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED T HE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A),L PATIALA HAS ERRED IN HOLDING THAT THE LEASE INCOME OF RS. 64,41,605/- IS INCOME FROM OTHE R SOURCES AS AGAINST BUSINESS INCOME SHOWN BY THE ASS ESSEE. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING SET O FF OF LOSS U/S 72 OF THE INCOME TAX ACT. THE SAID LOSS IS LIA BLE TO BE SET OFF AGAINST INCOME ASSESSED AS BUSINESS INCOME . 9. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THAT THE ISSUES RAISED IN THE PRESENT CROSS OBJECTIONS ARE COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE IN ITA NO. 90/CHD/ 2010 RELATING TO ASSESSMENT YEAR 2006-07. THE LD. DR FOR THE REVEN UE SUPPORTED THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE TRIBUN AL DATED 31.3.2010. 10. WE FIND THAT SIMILAR ISSUES WERE ADJUDICATED UP ON 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 RELATING TO ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 31.3.2010, DISMISSING THE APPEAL OF ASSESSEE IT WAS HELD AS UNDER:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. UNDENIABLY, THE ORDER OF THE TRIBUNAL DA TED 28.02.2008 (SUPRA) IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2004-05 HAS DEALT WITH SIMILAR CONTROVERSY AS IS RAISED IN THE PRESENT APPEAL. TH E TRIBUNAL CONSIDERED THE LEASE OF ENTIRE BUSINESS AS SETS ALONGWITH ITS EMPLOYEES BY THE ASSESSEE TO M/S UNIT ED BREWERIES LTD. AND THE TERMS AND CONDITIONS THERETO . INITIALLY, THE ENTIRE BUSINESS ASSETS WERE LEASED O UT W.E.F. 01.04.1998 UPTO 31.03.2003. BEFORE THE EXPI RY OF LEASE ON 31.03.2003, THE PARTIES EXECUTED A FRESH L EASE DEED ON 29.01.2003 TERMINATING THE EARLIER LEASE PR IOR TO THE EXPIRY OF THE LEASE PERIOD AND A FRESH LEASE DEED WAS ENTERED FOR A PERIOD OF 10 YEARS ON REVISED TER MS AND CONDITIONS. IN THE SAID LEASE ARRANGEMENT, ANN UAL AMOUNT PAYABLE TO THE ASSESSEE WAS FIXED AT RS.30,00,000/- FOR TWO YEARS SUBJECT TO REVISION WI TH 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 ASSESSABL E 5 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 C OUNSEL 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 ORD ER 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 T HERE DOES NOT APPEAR TO BE ANY INTENTION OF THE ASSESSEE TO RE-START THE BUSINESS ON ITS OWN AND THEREFORE, INC OME FROM LETTING OUT OF BUSINESS ASSETS TO A SISTER CON CERN WAS HELD ASSESSABLE AS 'INCOME FROM OTHER SOURCES' . IN OUR CONSIDERED OPINION, THE DISTINCTION SOUGHT TO B E BROUGHT OUT BY THE LEARNED COUNSEL BASED ON THE CHA NGE 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 ASSESSME NT 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, WHIC H DOES NOT ENTAIL ANY APPLICATION OF MIND BY THE ASSE SSING OFFICER. THIRDLY, WITH RESPECT TO THE DECISIONS RE LIED UPON BY THE LEARNED COUNSEL BEFORE US, THE SAME IN OUR VIEW DO NOT HELP IN AS MUCH AS THE TRIBUNAL HAS ALR EADY APPLIED ITS MIND CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE IN THE ASSESSMENT YEAR 20 04- 05. IN CONCLUSION, IN THE BACKGROUND OF THE DECISI ON OF THE TRIBUNAL DATED 28.02.2008 IN ASSESSEE'S OWN CAS E FOR ASSESSMENT YEAR 2004-05, IN THIS YEAR ALSO, WE FIND NO JUSTIFICATION TO ACCEPT THE PLEA OF THE ASSESSEE TH AT THE LEASE INCOME BE ASSESSED UNDER THE HEAD BUSINESS INCOME. INSTEAD, THE STAND OF THE REVENUE TO ASSE SS THE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IS HEREBY AFFIRMED. ACCORDINGLY, THE ASSESSEE FAILS O N GROUND NOS. 1 & 2. 11. THE ISSUE RAISED IN THE PRESENT APPEAL BEING ID ENTICAL TO THE ISSUE RAISED IN ASSESSMENT YEAR 2006-07, FOLLOWING THE PA RITY OF REASONING GIVEN IN THE ORDER OF THE TRIBUNAL (SUPRA), WE DISM ISS THE GROUND NO.1 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION. 6 12. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE IS CONSEQUENTIAL TO THE ISSUE RAISED VIDE GROUND NO.1 AND IN VIEW OF OUR DISMISSING THE GROUND NO.1, GROUND NO.2 RAISED BY THE ASSESSEE STA NDS DISMISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MAY, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH MAY, 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