ACIT, New Delhi V. M/s Anjala Exhibitors Pvt. Ltd., New Delhi

ITA 1492/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6430 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Rule of consistency; Reasonable cause; Reassessment proceedings
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 64

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 1492/DEL/2012 (ASSESSMENT YEAR: 2008 - 09 ) ACIT, CIRCLE - 1(1), NEW DELHI VS. ANJALA EXHIBITORS PVT LTD, 10796, JHANDEWALAN ROAD, NABI KARIM, NEW DELHI PAN:AAACA0219J (APPELLANT) (RESPONDENT) REVENUE BY : SH. SK JAIN, DR ASSESSEE BY: SH. RANJAN CHABRA, CA DATE OF HEARING 01/03 / 2017 DATE OF PRONOUNCEMENT 23 / 03 / 2017 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - IV, NEW DELHI DATED 31.12.2012 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER THE LD CIT(A) HAS ERRED IN LAW O N FACTS IN DELETING THE ADDITION OF RS. 3337589/ - MADE ON ACCOUNT OF DISALLOWANCE OF 30% STATUTORY DEDUCTION AND TREATING THE INCOME AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY IGNORING THE FACT THAT: - (A) THERE IS NO RENT AGREEMENT OR LESSOR OR LESSEE RELATIONSHIP AND THE AGREEMENT ITSELF IS TITLED OPERATION AND MANAGEMENT AGREEMENT TO RUN THE ALREADY EXISTING CINEMA BUSINESS. (B) THE ASSESSEE HAS GIVEN CINEMA BUILDING WITH PLANT, MACHINERY, FURNITURE AND OTHER INFRASTRUCTURE AND W AS TO RECEIVE PART OF SALES MADE BY THE JOINT ENTITY, AS SHARE OF HIS INCOME. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS THE OWNER OF A LEASEHOLD PROPERTY SITUATED AT NARIANA INDUSTRIAL AREA, NEW DELHI, WHICH IS RUN BY THE NAME OF PAYAL CINEMA TILL THE YEAR 2000. SUBSEQUENTLY, ON 18.05.2000 THE ASSESSEE COMPANY ENTERED INTO OPERATION AND MANAGEMENT WITH M/S. PRIYA VILLAGE ROADSHOW LTD (PVR) FOR REFURBISHMENT, DEVELOPMENT, MANAGEMENT AND OPERATION OF THE CINEMA. THE ASSESSEE COMPANY SHOWN INCOME OF R S. 12861546/ - AS IT SHARE FROM THE ABOVE CINEMA. THE LD AO OBSERVED IN HIS THE ASSESSMENT ORDER THAT THE INCOME FROM PAYAL CINEMA IS INCOME FROM OTHER PAGE 2 OF 8 SOURCE AND NOT THE INCOME FROM HOUSE PROPERTY. ACCORDINGLY, THE AO DISALLOWED THE 30% OF STATUTORY DEDUCT ION AMOUNTING TO RS. 3337589/ - . AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT(A), WHO DELETED THE DISALLOWANCE MADE BY THE LD AO AND FURTHER DIRECTED THE AO TO ALLOW THE ADMISSIBLE DEDUCTION U/S 24 OF THE ACT AND TAX THE INCOME AS INCOME FROM HOUSE PROPERTY. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD DR RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT THE DISALLOWANCE DELETED BY THE LD CIT(A) IS NOT JUSTIFIABLE. 5. ON THE OTHER HAND THE LD AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY BY THE DECISION OF THE COORDINATE BENCH OF ITAT DELHI DATED 26.04.2013 IN ITA NO. 162/DEL/2012, IN THE CASE OF THE ASSESSEE ITS ELF FOR ASSESSMENT YEAR 2007 - 08. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. IN THE CASE OF THE ASSESSEE ITSELF FOR AY 2007 - 08 THE COORDINATE BENCH HAS DECIDED THE ISSUE IN ITA NO. 162/DEL/201 2 VIDE ORDER DATED 26.04.2013 WHEREIN THE COORDINATE BENCH WHILE DECIDING GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE VIDE PARA NO. 12 ONWARDS HAS HELD AS UNDER: - 12. AFTER CAREFUL CONSIDERATION OF THE ABOVE SUBMISSIONS, CONTENTIONS AND CITATIONS RELIED B Y BOTH THE PARTIES IN THE LIGHT OF RECORD PLACED BEFORE US AT THE OUTSET, WE OBSERVE THAT ALTHOUGH THE PRINCIPLE OF RES - JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS BUT THE RULE OF CONSISTENCY CANNOT BE IGNORED. IF, AO HAS TAKEN A VIEW IN THE EARL IER ASSESSMENT PROCEEDINGS FOR PRECEDING EARLIER THREE YEARS CONCLUDED U/S 143 (3) OF THE ACT, THEN THE AO MAY TAKE A DIFFERENT VIEW IN THE SUBSEQUENT ASSESSMENT PROCEEDINGS BUT THERE MUST BE SOME RATIONAL AND REASONABLE CAUSE FOR DOING SO. DEVIATION OR CH ANGE OF OPINION ON THE SAME MATERIAL AND FACTS IN THE SUBSEQUENT ASSESSMENT PROCEEDINGS IS NOT PERMISSIBLE UNTIL AND UNLESS, THE AO HAS BROUGHT OUT ANY JUSTIFIED OR PROPER REASONING FOR DOING SO. IN THE PRESENT CASE , THE AO ACCEPTED THE CLAIM OF THE ASSES SEE DURING ASSESSMENT YEARS 2004 - 05,2005 - 06 AND 2006 - 07 FINALIZED ASSESSMENT U/S 143 (3) OF THE ACT AND HELD THAT INCOME FROM PVR LTD. IS AN INCOME FROM HOUSE PROPERTY. DURING THE SUBSEQUENT ASSESSMENT PROCEEDING FOR THE YEAR UNDER CONSIDERATION I.E. 2007 - 08 THE AO TOOK A DEVIATED AND NEW VIEW AND HELD THAT INCOME FROM PVR LTD. WAS ACTUALLY INCOME FROM OTHER SOURCES BECAUSE THE AGREEMENT DATED 18.05.2000 WAS NOT A RENT AGREEMENT BUT IT WAS AN ARRANGEMENT FOR RUNNING CINEMA BUSINESS AS PER NEW EMERGING REQUI REMENTS OF THE BUSINESS. THE AO HAS NOT BROUGHT OUT ANY NEW FACT OR EVIDENCE TO SUPPORT PAGE 3 OF 8 THIS CONTENTION AND SIMPLY HELD THAT THE INCOME FROM PVR LTD. WAS NOT AN INCOME FROM HOUSE PROPERTY. 13. DURING THE FIRST APPELLATE PROCEEDING THE CIT (A) ALSO CONSIDE RED THE ISSUE OF CONSISTENCY AND HELD AGAINST THE ASSESSEE BY PASSING IMPUGNED ORDER. THE RELEVANT OPERATIVE PARTS OF THE IMPUGNED ORDER READ AS UNDER: '2.6.2 I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THE ISSUE OF CONSISTENCY. IT IS TRITE LAW THAT THE PRI NCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. MOREOVER, THE AO HAS REPORTED THAT IN THE ASSESSMENT/REASSESSMENTS FOR THE A. Y.2004 - 05, 2005 - 06 AS WELL AS 2008 - 09 THE SAME VIEW AS TAKEN IN THE IMPUGNED ASSESSMENT HAS BEEN TAKEN BY THE DEP ARTMENT AND THE REASSESSMENT FOR THE YEAR 2006 - 07 IS STILL PENDING. THE APPELLANT HAVE FILED COPIES OF THE ORIGINAL ASSESSMENT ORDER FOR THE A. Y. 2004 - 05, 2005 - 06 AND 2006 - 07. IT IS NOTICED FROM THESE ORDERS THAT THOUGH THE ASSESSMENTS HAVE BEEN COMPLETED U/S 143(3) OF THE I. T. ACT, IN ALL THREE YEARS THE INCOME AS DECLARED BY THE APPELLANT UNDER THE HEAD OF 'INCOME FROM HOUSE PROPERTY' HAS SIMPLY BEEN ACCEPTED WITHOUT ANY DISCUSSION IN THE ASSESSMENT ORDER. FOR THE FIRST TIME, THE ISSUE OF THE CHARACTER OF RECEIPTS HAS BEEN DISCUSSED IN THE IMPUGNED ASSESSMENT ORDER FOR THE INSTANT A. Y. 2007 - 08 IN WHICH IN - DEPTH ANALYSIS OF THE PROVISIONS OF THE 'OPERATION AND MANAGEMENT AGREEMENT' DATED 18.05.2000 HAS BEEN UNDERTAKEN BY THE AO AND A FINDING HAS BEEN GI VEN THAT THE IMPUGNED INCOME IS TO BE ASSESSED UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. ON THE BASIS OF THIS FINDING ARRIVED AT BY THE AO AFTER PROPER APPRECIATION OF FACTS OF THE CASE DURING THE ASSESSMENT PROCEEDINGS FOR THE INSTANT A. Y. 2007 - 08, THE AO HAD INITIATED REASSESSMENT PROCEEDINGS FOR THE EARLIER YEARS AND ALSO CONTINUED WITH THE SAME VIEW IN LATER ASSESSMENT YEARS. THE APPELLANT HAS PLACED RELIANCE ON THE TWO DECISIONS OF HON. DELHI HIGH COURT IN WHICH THE DECISION OF HON. SUPREME COURT IN THE CASE OF RADHA SWAMI SATSANG BEAS (1992) 193 ITR 321 SC HAS BEEN FOLLOWED. HOWEVER, THE ISSUE OF RES JUDICATA VS. CONSISTENCY IN TAX MATTERS WAS DECIDED IN A MORE RECENT JUDGMENT OF THE HON. SUPREME COURT IN THE CASE OF MUNICIPAL CORPORATION OF CITY OF THANE VS. VIDYUT METALLICS LTD. & ANR . (2007) 8 SCC 688 WHICH HAS BEEN QUOTED BY THE HON. ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOEL BUILDERS 331 ITR 344 (ALL) WHILE DEALING WITH THE ISSUE OF RES JUDICATA VIS - A - VIS PRINCIPLE OF CONSISTENCY IN TAXATION MATTERS. RELEVANT PORTION OF HON. HIGH COURT'S ORDER IS EXTRACTED HEREUNDER: 59. IN THE CASE OF RADHA SWAMI SATSANG VS. CIT (SUPRA), THEIR LORDSHIPS OF HON'BLE SUPREME COURT WHILE DEALING WITH THE PRINCIPLE OF CONSISTENCY AND PRINCIPLE OF RES JUDICATA PAGE 4 OF 8 OBSERVED THAT UNLESS THERE IS A MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE DIFFERENT VIEW OF THE MATTER, IT SHALL NOT BE PROPER FOR THE REVENUE TO RE OPEN AND TAKE CONTRARY VIEW. TO REPRODUCE RELEVANT PORTION FROM THE JUDGMENT OF RADHA SWAMI SATSANG (SUPRA), TO QUOTE. 'WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RES JUDICATA DOES NOT APPLY TO INCOME - TAX PROCEEDINGS. AGAIN. EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEA, MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED B Y NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. ON THESE REASONINGS IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER. AND IF THERE WAS NOT CHANGE IT WAS IN SUPPORT OF THE ASSESSES, WE DO NOT THINK THE QUEST.1ON SHOULD HAVE BEEN REOPENED AND CONTRARY TO WHAT HAD BEEN DECIDED BY THE CIT IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THERE FORE, OF THE VIEW THAT THESE APPEALS SHOULD BE ALLOWED AND THE QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE. NAMELY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG (SUPRA) WAS ENTITLED TO EXEMPTION UNDER SS. 11 AND 12 OF THE IT ACT OF 1961.' THEIR LORDSHIPS OF HON'BLE SUPREME COURT HELD THAT THE PROPOSITION OF LAW AND OBSERVATION MADE THEREIN IS CONFINED TO THE SAID CASE AND MAY NOT BE TREATED AS AUTHORITY ON THE ASPECTS FOR GENERAL APPLICATION. 60. HOWEVER, IN THE CASE OF MUNICIPAL CORPORATION OF CITY OF THANE (SUPRA), HON'BLE SUPREME COURT WHILE HOLDING THAT THE STRICT RULE OF RES JUDICATA AS ENVISAGED BY S . 11 CPC HAS NO APPLICATION, THEIR LORDSHIPS FURTHER HELD THAT AS A GENERAL RULE, EACH YEAR'S ASSESSMENT IS FINAL FOR THAT YEAR AND DOES NOT GOVERN LATER YEARS BECAUSE IT DETERMINES THE TAX FOR A PARTICULAR YEAR. TO REPRODUCE RELEVANT PORTION, TO QUOTE: '1 4. SO FAR AS THE PROPOSITION OF LAW IS CONCERNED. IT IS WELL SETTLED AND NEEDS NO FURTHER DISCUSSION. IN TAXATION - MATTERS, THE STRICT RULE OF RES JUDICATA AS ENVISAGED BY S. 11 OF THE CPC, 1908 HAS NO APPLICATION. AS A GENERAL RULE. EACH YEAR'S ASSESSMENT IS FINAL ONLY FOR THAT YEAR AND DOES NOT GOVERN LATER YEARS, BECAUSE IT DETERMINES THE TAX FOR A PARTICULAR PERIOD. IT IS, THEREFORE, OPEN TO THE REVENUE/TAXING AUTHORITY TO CONSIDER THE POSITION OF THE ASSESSEE EVERY YEAR FOR THE PURPOSE OF DETERMINING AN D COMPUTING THE LIABILITY TO PAY TAX PAGE 5 OF 8 OR OCTROI ON THAT BASIS IN SUBSEQUENT YEARS. A DECISION TAKEN BY THE AUTHORITIES IN THE PREVIOUS YEAR WOULD NOT ESTOP OR OPERATE AS RES JUDICATA FOR SUBSEQUENT YEAR, (VIDE MAHARAN MILLS (P) LTD. VS ITO 1959SUPP (2) SCR 547 : AIR 1959 SC 881 ; VISHESHWAR SINGH VS. CIT (1961) 3 SCR 287 ; INSTALMENT SUPP (P) LTD. VS. UNION OF INDIA (1962) 2 SCR 644; NEW JEHANGIR VAKIL MILLS VS. CIT (1964) 2 SCR 971; AMALGAMATED COALFIELDS LTD. VS. JANAPADA SABHA 1963 SUPP (1) SCR 172 ; DEVILAL VS. STO (1965) 1 SCR 686; UDATAB CHINUBHAI VS. CIT (1967 )1 SCR 913; M.M IPOH VS. CIT *1968) 1 SCR 65; KAPUR CHAND VS TRO (1969) 1 SCR 691; CIT VS D URGA PRASAD AIR 1971 SC 2439; RADHASWAMI SATSANG VS. CIT (1991) 100 CTR (SC) 267 : (1992) 1 SCC 659: AIR 1992 SC 377; SCIETY OF MEDICAL COUNCIL (1925) ALL ER 675: (1926) AC 94 : 95 LJPC 33; TURNER ON RES J UDICATA, 2ND EDITION, PARA 219,P. 193). IN THE SAME JUDGMENT (SUPRA), HON'BLE SUPREME COURT FURTHER PROCEEDED TO OBSERVE THAT, TO QUOTE: A DECISION REACHED IN ONE YEAR WOULD BE A COGENT FACTOR IN THE DETERMINATION OF A SIMILAR QUESTION IN A FOLLOWING YEAR, BUT ORDINARILY THERE IS NO BAR AGAINST THE INVESTIGATION BY THE ITO OF THE SAME FACTS ON WHICH A DECISION IN RESPECT OF AN EARLIER YEAR WAS ARRIVED AT. HON'BLE SUPREME COURT FURTHER SHOWED ITS AGREEMENT WITH THE PRINCIPLE OF LAW ENUNCIATED BY RADHA SWAMI SATSANG (SUPRA) (PARA 24) 61. LAW EMERGES AFTER CONSIDERING VARIOUS PRONOUNCEMENT OF HON'BLE SUPREME COURT AND OTHER HIGH COURTS IS THAT THE PRINCIPLE OF CONSISTENCY IS A RULE IN GENERAL BUT FOR COGENT REASONS OR ON JUSTIFIABLE GROUND, THE REVENUE HAS GOT RIGHT TO DEPART FROM ITS EARLIER PRACTICE AND TAKE A DIFFERENT VIEW WHICH SHALL BE DETERMINED UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. WHILE DEPARTING FROM EARLIER PRACTICE, THE REVENUE CANNOT ACT MECHANICALLY WITHOUT APPLYING ITS MIND TO EARLIER FAC TS AND CIRCUMSTANCES UNDER WHICH A VIEW WAS TAKEN BY THE TAXMAN AND THE FACTS AND CIRCUMSTANCES OF THE ASSESSMENT YEAR IN QUESTION CALLING TO DEPART FROM EARLIER VIEW. WHERE THERE IS A FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASSESSMENT YEARS ALLOWE D BY THE AUTHORITIES TO SUSTAIN, IT WOULD NOT BE APPROPRIATE TO CHANGE THE VIEW IN SUBSEQUENT YEAR EXCEPT ON JUSTIFIABLE GROUND LIKE CHANGE OF CIRCUMSTANCES OR NON - CONSIDERATION OF RELEVANT MATERIAL OR STATUTORY PROVISIONS, OR FAILURE ON THE PART OF ASSESS ING OR APPELLATE AUTHORITY TO EXERCISE IURISDICTION FOR EXTRANEOUS REASON OR SMALL AMOUNT OF REVENUE INVOLVED OR OTHER JUSTIFIABLE GROUND DEPENDING ON FACTS OF EACH CASE. (EMPHASIS SUPPLIED)' PAGE 6 OF 8 2.6.3 FROM THE DISCUSSION IN THE FOREGOING PARAGRAPHS, IT IS CLE AR THAT IN VIEW OF ION. SUPREME COURT, ON ONE HAND, THE STRICT RULE OF RES JUDICATA AS ENVISAGED BY S.11OF THE CPC, 1908 HAS NO APPLICATION AND ON THE OTHER, THE PRINCIPLE OF CONSISTENCY ID NOT BE DEEMED AS AN IMMUTABLE PRINCIPLE IN MATTERS OF TAXATION. IT HAS TO BE WED GENERALLY BUT FOR COGENT REASONS OR ON JUSTIFIABLE GROUNDS, REVENUE HAS GOT TO DEPART FROM ITS EARLIER PRACTICE. NON - CONSIDERATION OF THE RELEVANT MATERIAL OR STATUTORY PROVISIONS OR FAILURE ON THE PART OF ASSESSING AUTHORITY TO EXERCISE JU RISDICTION FOR EXTRANEOUS REASON HAVE BEEN ENUMERATED AS SOME OF THE JUSTIFIABLE GROUNDS BY THE HIGH COURT IN CIT V. GOEL BUILDERS (SUPRA). AS NOTED EARLIER, PROVISIONS OF THE 'OPRATIONS & MANAGEMENT AGREE MENT' WITH MIS PVR LTD. NEVER CAME TO BE EXAMINED ASSESSMENT ORDERS FOR THE EARLIER ASSESSMENT YEARS FOR WHATEVER REASONS THOUGH ASSESSMENTS WERE SCRUTINISED U/S143(3) BY THE THEN ASSESSING OFFICERS. FOR THE FIRST IN THE IMPUGNED ASSESSMENT ORDER FOR A.Y. 2007 - 08, THE ASSESSING OFFICER EXAMINED THE ISSUE WITH REFERENCE TO THE VARIOUS CLAUSES OF THE OPERATION & MANAGEMENT AGREEMENT AND GAVE A FINDING THAT THE CONSIDERATION RECEIVED IN TERMS OF AGREEMENT IS TO BE ASSESSED AS 'INCOME FROM OTHER SOURCES'. THE EARLIER ASSESSMENTS HAVE ALSO BEEN REOPENED ON THE BASIS OF THE ABOVE FINDINGS AND ASSESSMENTS HAVE ALREADY BEEN COMPLETED IN THOSE CASES. THUS, TO MY MIND, KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY AS INTERPRETED ABOVE BY THE HON. COURTS, THERE HAS BE EN NO BREACH OF THIS PRINCIPLE IN THE INSTANT CASE EITHER. 2.7 IN VIEW OF THE FINDINGS AND DISCUSSION AS WELL AS THE JUDICIAL PRONOUNCEMENT AS DISCUSSED IN THE FOREGOING PARAGRAPHS, I HOLD THAT IN THE GIVEN CIRCUMSTANCES OF THE CASE THE CONSIDERATION RECEI VED BY THE APPELLANT IN TERMS OF OPERATION AND MANAGEMENT AGREEMENT DATE 18.05.2000 AS AMENDED ON 20.05.2000 ENTERED INTO WITH M/S PVR LTD. WILL BE TAXABLE UNDER THE 'INCOME FROM OTHER SOURCES' RATHER THAN AS 'INCOME FROM HOUSE PROPERTY' AS CLAIMED BY THE APPELLANT. GROUND NOS. 1 AND 2 ARE, THEREFORE, DECIDED AGAINST THE APPELLANT AND ARE DISMISSED.' 14. FROM BARE READING OF ABOVE, THE CIT (A) HELD THAT RULE OF RES - JUDICATE AS ENVISAGED BY SECTION 11 OF CIVIL PROCEDURE CODE, 1908 HAS NO APPLICATION IN THE TAX MATTERS AND REVENUE HAS GOT AMPLE RIGHT TO DEPART FROM ITS EARLIER PRACTICE. THE CIT (A) HAS HELD THAT THE PROVISIONS OF OPERATION AND MANAGEMENT AGREEMENT DATED 18.05.2000 BETWEEN THE ASSESSEE AND PVR LTD. NEVER CAME TO BE EXAMINED IN THE ASSESSMENT P ROCEEDINGS FOR EARLIER ASSESSMENT YEARS FOR WHAT SO EVER REASONS THOUGH THE ASSESSMENTS WERE SCRUTINIZED U/S 143 (3) OF THE ACT BY THE THEN AO. AT THE COST OF REPETITION, WE OBSERVE THAT WE SUPPORT THE VIEW THAT STRICT RULE OF PAGE 7 OF 8 RES - JUDICATA HAS NO APPLICATI ON TO THE MATTERS OF TAXATION AND REVENUE HAS GOT RIGHT TO DEPART FROM ITS EARLIER PRACTICE BUT AT THE SAME TIME, WE ALSO HOLD THAT THE REVENUE MUST BRING OUT SOME MATERIAL EVIDENCES OR REASONABLE CAUSE SUPPORTING TO NEW FACTS TO TAKE A DEPARTURE FROM ITS EARLIER PRACTICE. IN THE PRESENT CASE, THEAO HAS ONLY CONSIDERED THE TITLE OF THE IMPUGNED AGREEMENT DATED 18.05.2000, WHICH READS AS 'OPERATION AND MANAGEMENT AGREEMENT' AND HELD THAT IT WAS AN AGREEMENT TO SHARE PROFITS OF THE CINEMA BUSINESS BUT FROM CA REFUL READING OF THE ABOVE AGREEMENT AND OTHER DOCUMENTS AVAILABLE ON PAPER BOOK SPREADED OVER 142 PAGES, WE HAVE NO HESITATION TO HOLD THAT THE INTENTION OF THE PARTIES WHILE EXECUTING AND ENTERING IN THE AGREEMENT DATED 18.05.2000 WAS NOT TO SHARE THE PR OFITS OF THE CINEMA BUSINESS AS PARTNERS, JOINT VENTURE OR FRANCHISE BUT THE INTENTION OF THE PARTIES WAS TO RENT OUT THE PROPERTY ON MINIMUM FIXED CONSIDERATION IN ONE PART AND SECOND PART WAS RELATED TO THE AMOUNT OF SALES OF TICKETS. THIS ARRANG EMENT CA NNOT BE SAID AS PARTNER SHIP, JOINT VENTURE OR FRANCHISE IN ANY MANNER. FROM THE COPY OF THE AGREEMENT AVAILABLE ON PAGE NO. 64 TO 78 OF PAPER BOOK AND OTHER RELEVANT AVAILABLE PAPER BOOK PAGE NO. 79 TO 87, WE OBSERVE THAT ON THE NEXT DATE OF AGREEMENT I.E. 19TH MAY, 2000 THE PVR LTD. RETURNED FURNITURE, FITTINGS AND OTHER EQUIPMENTS TO THE ASSESSEE WITH SPECIFIC FOOT NOTE TO THE LIST THAT NO ASSETS, EQUIPMENTS, FURNITURE, FIXTURE OTHER THAN BUILDING HAS BEEN RETAINED BY M/S PRIYA VILLAGE ROADSHOW LIMITED. T HIS RECITALS AND DOCUMENTS SPECIFICALLY SHOW THAT ONLY CINEMA BUILDING WAS HANDED OVER TO PVR LTD. BY THE ASSESSEE FOR FIXED CONSIDERATION AS MENTIONED IN SCHEDULE SECOND OF THE AGREEMENT. WE ALSO OBSERVE THAT THE DR HAS NOT DISPUTED THE FACT THAT AFTER TA KING OVER VACANT POSSESSION OF CINEMA BUILDING FROM ASSESSEE TO THE PVR LTD. CONVERTED IT INTO FOUR SCREENS MULTIPLEX WITH ALL MODERN FITTINGS, FIXTURES AND FURNITURE THEREIN. FROM CLAUSSE 2.11 OF THE AGREEMENT DATED 18.05.2000 (PAGE 69 OF PAPER BOOK) WE C LEARLY OBSERVE THAT THE OVERALL RISK/CONTROL OF THE MANAGEMENT, OPERATION AND DEVELOPMENT OF THE CINEMA RESTS WITH PVR LTD. AND ASSESSEE IS NOT BEARING ANY KIND OF RISK UNDER THE AGREEMENT. THE DR HAS NOT DISPUTED THE POINT THAT PVR LTD. INDEPENDENTLY OBTA INED THE CINEMA LICENSE, ENTERTAINMENT TAX REGISTRATION ETC. IN ITS NAME AND STARTED ITS BUSINESS FROM 1ST AUGUST, 2001. FROM THE ORDERS OF THE AUTHORITIES BELOW, WE ALSO OBSERVE THAT THIS FACT HAS NOT BEEN CONTROVERTED THAT THE MULTIPLEX BUSINESS IS BEING INDEPENDENTLY OPERATED BY PVR LTD. AT ITS OWN AND THERE IS NO ELEMENT OF JOINT VENTURE, PARTNER SHIP OR FRANCHISE WITH THE ASSESSEE. 15. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF PAREKH TRADERS VS. CIT (POONA), (SUPRA ) WE HOLD THAT INCOME DERIVED AS RENT FROM PROPERTY MUST BE COMPUTED UNDER THAT SPECIFIC HEAD REGARDLESS OF THE FACT THAT PROPERTY HAD AT ONE POINT OF TIME BEAN UTILIZED BY THE ASSESSEE FOR BUSINESS PURPOSES. SUCH PROPERTY CANNOT BE TREATED AS A BUSINESS A SSET AND PAGE 8 OF 8 RENT THEREOF AS INCOME FROM BUSINESS. IN VIEW OF ABOVE, WE FURTHER OBSERVE THAT A DISTINCTION MUST BE DRAWN BETWEEN THE LETTING OUT OF LAND OR HOUSE PROPERTY ON THE ONE HAND AND OF PLANT AND MACHINERY ON THE OTHER HAND. THE HON'BLE BOMBAY HIGH COU RT HAS CLEARLY HELD THAT PLANT AND MACHINERY ARE COMMERCIAL ASSETS AND THEIR EXPLOITATION EVEN BY MEANS OF LETTING OUT, YIELDS OR BRING INCOME FROM BUSINESS AND PER CONTRA, INCOME EARNED FROM LETTING OUT THE BUILDING IS INCOME FROM PROPERTY. IN THE CASE IN HAND THE PVR LTD. TAKEN OVER ONLY CINEMA BUILDINGS ON RENT AND REMAINS FURNITURE, FIXTURES AND OTHER EQUIPMENTS HAVE BEEN RETURNED BY THE PVR LTD. TO THE ASSESSEE, ACCORDINGLY FIXED RENTAL EARNED THEREFROM DESERVES TO BE TREATED AS RENTAL INCOME FROM HOUS E PROPERTY. RESULTANTLY, GROUND NO.2 OF THE ASSESSEE IS ALLOWED WITH A DIRECTION TO THE AO THAT THE RECEIPTS FROM PVR LTD. BY THE ASSESSEE BE TREATED AS INCOME FROM HOUSE PROPERTY AND ALL CONSEQUENTIAL BENEFITS AND DEDUCTIONS BE ALLOWED TO THE ASSESSEE IN THIS REGARD. 7. THE LD DR COULD NOT POINT OUT THAT HOW THIS ISSUE IS NOT COVERED BY THE ORDER OF THE COORDINATE BENCH IN CASE OF THE ASSESSEE FOR AY 2007 - 08, NOR HE COULD POINT OUT ANY OTHER JUDICIAL PRECEDENT OR CHANGES IN THE FACTS OF THE CASE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE APPEAL OF THE REVENUE DESERVES TO BE DISMISSED. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 2 3 / 03 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 / 03 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI