DCIT, Circle - 8, Kolkata, Kolkata V. M/s. PFH Mall & Retail Management Limited, Kolkata

ITA 2049/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7975 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2010
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 03-12-2009
• Court: TRIBUNAL
• Department Lawyers: B R PURKAYASTHA
• Keywords: Business income
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : KOLKATA [BEFORE HONBLE SMT. DIVA SINGH, JM & SHRI C.D.RAO , AM] I.T. A. NO. 2049/KOL/2009 ASSESSMENT YEAR 2000-01 D.C.I.T., CIRCLE-8, -VS- M/S PFH MALL & RETAIL MA NAGEMENT LTD. KOLKATA KOLKATA PAN : AABCK 3775 A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.R.PURKAYASTHA RESPONDENT BY : SHRI RAVI TULSIYAN, O R D E R PER SMT. DIVA SINGH, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-VIII, KOLKATA DATED 23.09.2009 PERTAINING TO A.YR.2000-01 WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE :- 1. THAT LD.CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY HOLDING THAT RENTAL INCOME FROM ASSESSEES BUILDING SHOULD BE TREATED AS BUSINESS INCOME. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR ABRO GATE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 2. RIGHT AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDER OF THE TRIBUNAL DATED 11.05.2007 FOR A.YRS. 2001-02 AND 2003-04 IN ASSESS EES OWN CASE. THE SAID ORDER IT WAS SUBMITTED HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT. COPIES OF THE SAID ORDER AND JUDGEMENT WERE PLACED BEFORE THE BENCH. T HESE FACTS, IT WAS SUBMITTED, HAVE BEEN TAKEN NOTE OF BY THE COORDINATE BENCH OF THE T RIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 1226/KOL./2009 AND 1227/KOL2009 VIDE ITS O RDER DATED 24 TH DECEMBER, 2009 PERTAINING TO A.YRS.2002-03 AND 2005-06 BY THE TRIB UNAL. ACCORDINGLY IT WAS SUBMITTED THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE. 2 3. SINCE IT WAS A DEPARTMENTAL APPEAL THE LD. DR WA S REQUIRED TO ADDRESS THE BENCH KEEPING IN MIND THE ARGUMENTS ADVANCED ON BE HALF OF THE ASSESSEE. IT WAS SUBMITTED BY THE LD. DR THAT HE WOULD RELY ON THE A SSESSMENT ORDER, HOWEVER, IN REGARD TO THE FACT THAT THE COORDINATE BENCH OF THE TRIBUNAL HAD DECIDED THE ISSUE BY ACCEPTING THE CLAIM OF THE ASSESSEE OVER THE YEARS AND THE ORDER DATED 11.05.2007 OF THE COORDINATE BENCH HAS BEEN UPHELD BY THE HIGH CO URT. HE HAD NO SUBMISSIONS TO BE MADE. NO ARGUMENTS WERE ADVANCED CANVASSING A CONTR ARY VIEW EITHER ON FACT OR LAW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT IN THE YEAR UNDER CONSIDERA TION THE AO PROCEEDED THAT IN THE ORDER UNDER CONSIDERATION NAMELY 147/143)3) HAS TAK EN NOTE OF THE ORDER DT. 11.5.2007 OF THE ITAT IN ASSESSEES OWN CASE FOR SUBSEQUENT A SSESSMENT YEARS. HOWEVER SINCE THE REFERENCE APPLICATION U/S 260A OF THE IT ACT AG AINST THE SAID ORDER HAD BEEN FILED THE INCOME RETURNED AS BUSINESS INCOME WAS ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. A PERUSAL OF THE ORDER FURTHER SHO WS THE AO WAS OF THE VIEW THAT THE ACTIVITY OF THE ASSESSEE IS ONLY TO DISGUISE ITS RE AL INTENTION WHICH IS TO EARN RENTAL INCOME FROM THE IMMOVABLE PROPERTIES. HE TOOK INTO CONSIDERATION THAT DURING THE YEAR THERE WERE THREE AGREEMENTS PREVAILING TO EARN MALL MANAGEMENT CHARGES, TWO AGREEMENTS DATED 21.06.1999 (BOTH FOR 6 YEARS) AND ANOTHER AGREEMENT OF DATED 01.03.2000 FOR 7 YEARS. ACCORDINGLY TAKING INTO CON SIDERATION THE JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF M/S. SHAMBHU INVE STMENT PVT. LTD. (263 ITR 143) THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED. 5.1. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE LD. CIT(A) TAKING NOTE OF THE ORDER DATED 11.05.2007 OF THE ITAT CITED SUPRA ACCE PTED THE CLAIM OF THE ASSESSEE AGAINST WHICH THE DEPARTMENT IS IN APPEAL BEFORE TH E TRIBUNAL./ 6. WE HAVE TAKEN INTO CONSIDERATION THE FACT THAT O RDER DATED 11.05.2007 WAS UPHELD BY THE JURISDICTIONAL HIGH COURT AND THE CO ORDINATE BENCH VIDE ITS ORDER DATED 24 TH DECEMBER, 2009 IN ITA NOS. 1226 AND 1227/KOL/2007 HAD AN OCCASION TO CONSIDER THE SAME IN THE FOLLOWING MANNER:- 3 6.8. AFTER CAREFULLY ANALYZING THE FACTS OF THE I NSTANT CASE, AND FOLLOWING THE CONSENSUS OF JUDICIAL OPINION ON THE ISSUE, OUR CON SIDERED VIEW IS THAT, THE MERE FACT THAT THE INCOME IS ATTACHED TO IMMOVABLE PROPE RTY, CANNOT BE THE SOLE CRITERION FOR ASSESSMENT OF SUCH INCOME AS INCOME F ROM HOUSE PROPERTY. IT IS NECESSARY TO DIG FURTHER TO FIND OUT WHAT IS THE PR IMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT IS FOUND THAT THE MAIN INTENTION IS FOR SIMPLY LETTING OUT OF PROPERTY OR ANY PORTION THEREOF, THE RESULTANT INCOME MUST BE ASSESSED AS INCOME FROM HOUSE PROPERTY. IF, ON THE OTHER HAND, THE MAIN INTENTION IS FOUND TO BE THE EXPLOITATION OF THE IM MOVABLE PROPERTY BY WAY OF COMMERCIAL ACTIVITIES, THEN THE RESULTANT INCOME MU ST BE HELD AS BUSINESS PURPOSE AND WITH A VIEW TO EARN PROFIT. HENCE, ALL THESE ACTIVITIES ARE IN THE NATURE OF COMMERCIAL ACTIVITIES. ACCORDINGLY WE HOL D THAT THE INCOME DERIVED BY THE ASSESSEE FORM SHOPPING MALLS/BUSINESS CENTRES I S TO BE ASSESSED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY. 6.1. IT IS ALSO SEEN THAT IT IS THE SAME AGREEMENTS WHICH CONTINUE TO HOLD SWAY IN THE YEAR UNDER CONSIDERATION AS THIS WAS AN EARLIER YEA R. ONCE THE SAME FACTS PREVAIL NAMELY THE CHARGES BEING REALIZED AS PER THE SAME A GREEMENTS WHICH HAVE CONSISTENTLY BEEN INTERPRETED AND HELD TO BE AN ACTIVITY TO BE C ONSIDERED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION THE OCCASION TO RE-IN TERPRET THE SAME AGREEMENTS CANNOT BE DONE AS THE SAME WOULD TANTAMOUNT TO JUDICIAL IN DISCIPLINE. ACCORDINGLY IN THE LIGHT OF THE PECULIAR FACTS AND CIRCUMSTANCES WHERE THERE WERE CONSISTENT ORDERS OF DIFFERENT COORDINATE BENCHES OF THE TRIBUNAL IN ASSESSEES FA VOR AND THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES SINCE IT IS THE SAME AGREEM ENTS WHICH HAVE BEEN TAKEN INTO CONSIDERATION THE DEPARTMENTAL GROUND IS DISMISSED RESPECTFULLY FOLLOWING THE ORDERS OF THE CO-ORDINATE BENCHES AND THE JURISDICTIONAL H IGH COURT. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED AS PER THE PRONOUNCEMENT MADE IN THE OPEN COURT IN THE PRESENCE OF THE PARTI ES ON THE DATE OF HEARING ITSELF IE.. 25.03.2010. SD/- SD/- (C.D.RAO) (DIVA SINGH) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED : 25.03.2010. 4 COPY OF THE ORDER IS FORWARDED TO :- 1) M/S. PFH MALL & RETAIL MANAGEMENT LIMITED, 5, LINDS AY STREET, KOLKATA-700087. 2) D.C.I.T., CIRCLE-8, KOLKATA 3) CIT (A)-VIII, KOLKATA (4) CIT - KOLK ATA. 5) D. R., I.T.A.T., KOLKATA. (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, (RG) I.T.A.T., KOLKATA.