Edward Parangath, Palakkad V. ITO, Palakkad

ITA 224/COCH/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52319 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 09-11-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 26-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHAJR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S.GANESAN (JUDICIAL MEMBER) I.T.A.NOS.224 TO 229/COCH/2010 ASST. YEARS:2000-01 TO 2005-06 EDWARD PARANGATH, PALAKKAD. VS. THE INCOME - TAX OFFICER, WARD-5, PALAKKAD. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI SIVADAS CHETTOOR, CA RESPONDENT BY MS. VIJAYAPRABHA,JR.DR DATE OF H EARING 09 - 11 - 2011 DATE OF P RONOUNCEMENT 22 - 1 2 - 2011 O R D E R ALL THESE SIX APPEALS OF THE ASSESSEE ARE DIRECTE D AGAINST THE SEPARATE ORDERS PASSED BY THE CIT(APPEA LS)-V, KOCHI. SINCE COMMON ISSUES ARE RAISED IN ALL THE SE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS IN R ESPECT OF CLASSIFICATION OF INCOME, I.E. WHETHER IT IS THE IN COME FROM HOUSE PROPERTY OR FROM BUSINESS. 3. SHRI SIVADAS CHETTOOR, C.A. APPEARED FOR THE ASS ESSEE AND SUBMITTED THAT THE ASSESSEE IS HAVING TWO SHOPP ING ITA NOS. 224 TO 229/COCH/2010 2 COMPLEX. THE ASSESSEE FILED RETURN OF INCOME CLAI MING THAT THE INCOMES FROM THESE TWO SHOPPING COMPLEXES ARE BUSINESS INCOME. MORE THAN A DECADE, THE ASSESSIN G OFFICER ACCEPTED THE RETURN FILED BY THE ASSESSEE AS BUSINE SS INCOME. FOR THE ASSESSMENT YEAR 1992-93, A SCRUT INY ORDER WAS PASSED U/S.143(3) ACCEPTING THE INCOME FR OM THESE SHOPPING COMPLEXES AS BUSINESS INCOME. HOWE VER, FOR THE YEAR UNDER CONSIDERATION, THE ASSESSING OFF ICER REOPENED THE ASSESSMENT ON THE GROUND THAT THE INCO ME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS FILED A COPY OF THE SAMPLE AGREEMENT SAID TO BE ENTERED INTO WITH THE TENANTS AND SUBMITTED THAT THE ASSESSEE IS EXPLOITING THE COMME RCIAL PROPERTY THEREFORE THE RENTAL INCOME RECEIVED BY TH E ASSESSEE HAS TO BE CLASSIFIED AS INCOME FROM BUSINE SS. EVEN IF FOR ARGUMENT SAKE THAT INCOME IS TO BE CLAS SIFIED AS INCOME FROM HOUSE PROPERTY, THE LD.REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ALSO PROVID ING SERVICES LIKE PARKING AREA, WATER SUPPLY, DRAINAGE, ELECTRICITY, ETC. THEREFORE, THE RENT RELATABLE T O THE SERVICES PROVIDED BY THE ASSESSEE LIKE ELECTRICITY, PARKING AREA, DRAINAGE AND WATER SUPPLY, ETC. IS TO BE TREATED A S BUSINESS INCOME IN VIEW OF THE JUDGMENT OF THE JURISDICTIONA L HIGH COURT IN THE CASE OF ATTUKAL SHOPPING COMPLEX P.LTD. - ITA NOS. 224 TO 229/COCH/2010 3 259 ITR 567. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT FURNISHED THE EN TIRE REASONS RECORDED FOR RE-ASSESSMENT U/S.147 OF THE ACT. REFERRING TO THE JUDGMENT OF THE APEX COURT IN GKN DRIVE SHAFTS LTD. VS. ITO (2003) 259 ITR 19, THE LD. REPRESENTATIVE SUBMITTED THAT SINCE THE ENTIRE REAS ONS RECORDED WERE NOT FURNISHED, THE ASSESSMENT ORDER I S VITIATED. ON A QUERY FROM THE BENCH, WHAT WAS SU PPLIED TO THE ASSESSEE, THE LD. REPRESENTATIVE SUBMITTED THAT ONLY A GIST OF THE REASONS RECORDED BY THE ASSESSING OFFIC ER WAS FURNISHED TO THE ASSESSEE AND THE LD. REPRESENTATIV E FURTHER VERY FAIRLY SUBMITTED THAT HE HAS ALSO FILED THE OB JECTIONS. THE LD. REPRESENTATIVE PLACED HIS RELIANCE ON THE J UDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOEL BUILDERS (2011) 331 ITR 344 AND SUBMITTED THAT WHEN THE INCOME WAS ASSESSED AS BUSINESS INCOME FOR SEVERAL YEARS AND THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANC ES, THE INCOME CANNOT BE NOW CLASSIFIED AS INCOME FROM HOUS E PROPERTY. 4. ON THE CONTRARY, MS. VIJAYAPRABHA, LD. JR.DR SUB MITTED THAT FOR ALL THE EARLIER YEARS, THE RETURNED INCOME WAS ACCEPTED WITHOUT ANY SCRUTINY AND EXAMINATION. SI NCE THE MATERIAL FACTS WERE NOT EXAMINED BY THE LOWER AUTHO RITIES ITA NOS. 224 TO 229/COCH/2010 4 FOR ALL THE EARLIER YEARS, ACCORDING TO THE LD. DR IT CANNOT BE SAID THAT THE DEPARTMENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE AS BUSINESS INCOME. ACCORDING TO THE LD. DR EACH YEAR IS INDEPENDENT AND SEPARATE. THEREFORE, WHEN THE FACTS WERE NOT EXAMINED BY THE ASSESSING OFFICER FO R THE EARLIER ASSESSMENT YEARS IT MAY NOT PRECLUDE HIM FR OM EXAMINING THE FACTS FOR THE YEARS UNDER CONSIDERATI ON. MERELY BECAUSE THE INCOME WAS ACCEPTED AS BUSINESS INCOME WITHOUT ANY EXAMINATION FOR THE EARLIER ASSESSMENT YEARS IT DOES NOT PREVENT THE ASSESSING OFFICER FROM EXAMINI NG THE REAL FACTS AND ASSESS THE INCOME UNDER THE RIGHT HE AD. REFERRING TO THE REASONS RECORDED BY THE ASSESSING OFFICER, THE D.R. SUBMITTED THAT THE ASSESSEE KNOWS VERY WEL L THE REASONS FOR REOPENING THE ASSESSMENT AND HE HAS ALS O FILED THE OBJECTIONS. THEREFORE, IT IS NOT CORRECT TO S AY THAT THE REASONS WERE NOT FURNISHED. ACCORDING TO THE LD. DR THE ASSESSEE HAS SIMPLY LET OUT THE PROPERTY AND RECEIV ING THE RENTAL INCOME. IT IS NOT AN EXPLOITATION OF THE C OMMERCIAL ASSETS. THEREFORE, ACCORDING TO THE LD. DR THE AU THORITIES HAVE RIGHTLY ASSESSED THE INCOME AS INCOME FROM HOU SE PROPERTY. 5. RIVAL CONTENTIONS WERE CONSIDERED IN THE LIGHT O F THE MATERIALS AVAILABLE ON RECORD. IT IS NOT THE CASE OF THE ITA NOS. 224 TO 229/COCH/2010 5 ASSESSEE THAT THE REASONS RECORDED WERE NOT DISCLOS ED OR FURNISHED. THE ONLY CONTENTION OF THE LD. REPRESEN TATIVE OF THE ASSESSEE IS THAT GIST OF THE REASONS RECORDED W ERE FURNISHED AND THE ASSESSEE HAS ALSO FILED THE OBJEC TIONS. THEREFORE, AS RIGHTLY CONTENDED BY THE LD. DR THE A SSESSEE KNOWS THE REASONS VERY MUCH FOR REOPENING THE ASSES SMENT U/S.147. APEX COURT IN THE CASE OF GKN DRIVE SHAFTS LTD. (SUPRA) EXAMINED THE ISSUE ON AN APPEAL FILED BY THE ASSESSEE AGAINST THE JUDGMENT OF THE DELHI HIGH COU RT IN A PROCEEDING UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA. THE APEX COURT OBSERVED THAT THE ASSESSING OFFICER IS BOUND TO FURNISH THE REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE ASSESSEE IS ENTITLED TO FILE OBJECT IONS TO REOPEN THE ASSESSMENT AND THE AO IS BOUND TO DISPOS E OF THE SAME BY PASSING A SPEAKING ORDER. IN THE CASE BEF ORE THE APEX COURT THE REASONS FOR REOPENING HAVE BEEN DISC LOSED IN THE COURSE OF THE PROCEEDINGS FOR FIVE ASSESSMENT Y EARS FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING. THEREFORE , THE ASSESSING OFFICER WAS DIRECTED TO DISPOSE OF THE OB JECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFORE PROCE EDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVE SAID FIVE AS SESSMENT YEARS. IN RESPECT OF THE APPEALS FILED AGAINST THE ORDER OF THE ASSESSMENT BEFORE THE CIT(APPEALS), SUPREME COU RT DIRECTED THE CIT(APPEALS) TO DISPOSE OF THE APPEAL ITA NOS. 224 TO 229/COCH/2010 6 EXPEDITIOUSLY. THEREFORE, IT IS OBVIOUS THAT WH EREVER ASSESSEE FILED OBJECTIONS TO THE REOPENING OF THE ASSESSMENT, THE SAME HAS TO BE DISPOSED OF BEFORE PROCEEDING WITH THE ASSESSMENT. THE APEX COURT HA S ALSO DIRECTED TO DISPOSE OF THE APPEALS EXPEDITIOUSLY WH ERE-EVER THE ASSESSMENT PROCEEDINGS WERE COMPLETED. THEREFOR E, WHERE-EVER THE ASSESSMENT WAS COMPLETED AND THE APP EAL WAS FILED BEFORE THE CIT(APPEALS), WE MAY NOT BE AB LE TO SAY THAT THE PROCEEDINGS ARE VITIATED. FURTHER WHERE- EVER ASSESSMENT WAS NOT COMPLETED, THE ASSESSING OFFICER HAS TO DISPOSE OF THE OBJECTIONS BEFORE PROCEEDING WITH TH E ASSESSMENT. IN THIS CASE, ADMITTEDLY THE ASSESSME NT PROCEEDINGS ARE COMPLETED AND THE CIT(APPEALS) HAS ALSO DISPOSED OF THE APPEALS. THEREFORE, IT MAY NOT BE SAID THAT THE PROCEEDINGS BEFORE THE ASSESSING OFFICER IS VIT IATED. 6. NOW COMING TO THE CLASSIFICATION OF INCOME, A SSESSEE HAS FILED A SAMPLE AGREEMENT SAID TO BE ENTERED INT O WITH THE TENANTS. FOR THE PURPOSE OF CONVENIENCE, WE ARE RE- PRODUCING ONE OF THE AGREEMENT SAID TO BE ENTERED I NTO BY THE ASSESSEE WITH TENANT, WHICH READS AS FOLLOWS: THIS RENT DEED ENTERED INTO ON THIS THE 6 TH DAY OF DECEMBER,1996 BY AND BETWEEN: ITA NOS. 224 TO 229/COCH/2010 7 1. M. EDWARD PARANGATH, XIV-134 AND 135, PARANGATH TOWERS, KALMANDAPAM, PALAKKAD-1 (HEREINAFTER REFERRED TO AS THE LANDLORD WHICH EXPRESSION SHALL INCLUDE HIS HEIRS AND ASSIGNS OF T HE FIRST PART; AND, 2. M/S. GOLD STAR PAINTS AND CHEMICALS PVT.LTD., A REGISTERED COMPANY WITH ITS REGISTERED OFFICE AT PALAKKAD AND REPRESENTED BY ITS MANAGING DIRECTOR (HEREINAFTER REFERRED TO AS THE TENANT WHICH TERMS SHALL INCLUDE ITS SUCCESSORS, EXECUTORS AND ASSIGNS OF THE SECOND PART; WHEREEAS THE LANDLORD IS THE ABSOLUTE OWNER AND IN POSSESSION OF THE IIIRD FLOOR OF THE BUILDIN G WITH PARKING FACILITY ON THE FRONT YORD SPECIFICALL Y DESCRIBED IN THE FIRST SCHEDULE HEREUNDER HEREINAFT ER REFERRED TO AS THE SAID FLOOR. AND WHEREAS THE TENANT HAS REQUESTED THE LANDLORD TO LET THE SAID FLOOR FOR THE BUSINESS PUR POSE OF THE TENANT; WHEREEAS THE LANDLORD HAS ACCEPTED THE REQUEST OF THE TENANT AS PER THE TERMS AND CONDITIONS AGREED BETWEEN THEM; AND WHEREAS THE PARTIES ABOVE, CONSIDERED IT NECESSARY AND EXPEDIENT TO THE INTENT OF BOTH THE PARTIES TO REDUCE THE VARIOUS TERMS AND CONDITIONS TO WRITING AS HEREUNDER. ITA NOS. 224 TO 229/COCH/2010 8 NOW THIS RENT DEED WITNESSETH AS FOLLOWS:- 1. THAT THE RATE OF RENT FOR THE 1300 SQ.FT. AREA OF THEE SAID FLOOR SHALL BE RS.4600/- (RUPEES FOUR THOUSAND SIX HUNDRED ONLY). 2. THAT THE RENT SHALL BE PAYABLE TO THE LANDLORD ON THE 1 ST WEEK OF EVERY ENGLISH CALENDAR MONTH. IN THE EVENT OF DEFAULT OF PAY THE RENT BY THE TENANT, THE LANDLORD SHALL BE ENTITLED TO RECEIVE INTEREST AT THE RATE OF 12% PER ANNUM FROM THE DATE OF DEFAULT. THE TENANT SHALL BE ENTITLED TO RECEIVE RECEIPT FOR THE RENT PAID TO THE LAND LORD. 3. THAT THE PERIOD OF TENANCY SHALL BE FOR ONE YEAR FROM THE DATE OF COMMENCEMENT OF LEASE. THE TENANCY SHALL BE RENEWABLE BY MUTUAL CONSENT ANNUALLY FOR A PERIOD OF ANOTHER YEAR. IN THE EVE NT OF RENEWAL OF THE LEASE, LANDLORD SHALL BE ENTITLED TO AN INCREASE IN RENT AT THE RATE OF 5% ABOVE THE REN T STATED ABOVE ANNUALLY. 4. THAT THE TENANT HANDED OVER AN AMOUNT OF RS.15,000/- (RUPEES FIFTEEN THOUSAND ONLY) AS ADVANCE TO THE LANDLORD ON THE DATE OF COMMENCEMENT OF LEASE. THE TENANT SHALL NOT BE ENTITLED TO ANY INTEREST ON ADVANCE. PARTIES MUTUALLY AGREES THAT THE TENANT SHALL BE ENTITLED T O RECEIVE THE ADV ACE ON TERMINATION OF TENANCY AFTER DEDUCTING THE ARREARS OF RENT IF ANY WITH INTEREST AS PER CLAUSE 2 ABOVE. ITA NOS. 224 TO 229/COCH/2010 9 5. THAT THE TENANT SHALL PAY ALL THE ELECTRICITY AND WATER CHARGES IN RESPECT OF THE SAID FLOOR IN THE NAME OF THE LANDLORD REGULARLY AND PUNCTUALLY WITHOUT ANY DELAY OR DEFAULT. 6. THAT THE TENANT SHALL NOT MAKE ANY MATERIAL ALTERATION IN THE SAID FLOOR WITHOUT PREVIOUS WRITT EN CONSENT BY THE LANDLORD. THE TENANT SHALL NOT USE THE SAID FLOOR SO AS TO DESTROY OR REDUCE ITS VALUE OR UTILITY IN ANY MANNER. THE TENANT SHALL KEEP THE FLOOR IN A TENANTABLE CONDITION. 7. THAT THE TENANT SHALL NOT TRANSFER NOR SUBLET THE SAID FLOOR OR ANY PART THEREOF TO ANY BODY. 8. THAT THE TENANT SHALL PERMIT LANDLORD OR HIS SERVANTS AND HIS AGENTS AT ALL REASONABLE TIMES TO ENTER INTO THE SAID FLOOR TO SUBLET THE CONDITION THEREOF. 9. THAT IF THE TENANT COMMITS B4REACH OF ANY OF THE CONDITIONS OR COVENANTS OF THE RENT DEED THE LEASE SHALL BE TERMINATED AT THE OPTION OF THE LANDLORD WHO SHALL BE ENTITLED TO RECOVER ALL THE ARREARS OF RENT IF ANY AND ALL DAMAGES FOR SUCH BREACH AND ALSO EVICT THE TENANT AND RECOVER VACANT POSSESSION OF THE ROOM. S C H E D U L E IIIRD FLOOR:- ITA NOS. 224 TO 229/COCH/2010 10 BUILDING KNOWN IN THE NAME AND STYLE OF PARANGATH TOWERS HAVING AN AREA OF 1300 SQ.FT. WITH ELECTRIC CONNECTION, WATER SUPPLY AND PARKING FACILITIES ON FRONT YARD SITUATED IN PALAKKAD DISTR ICT, KALMANDAPAM, HAVING DOOR NO.XIV-134 AND 135. IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THIS DEED ON THIS THE 6 TH DAY OF DECEMBER,1996 IN THE PRESENCE OF THE FOLLOWING WITNESSES: LANDLORD SD/- TENANT SD/- WITNESSES: 1. SD/- 2. SD/- A BEAR READING OF THIS AGREEMENT SHOWS THAT THIS IS AN AGREEMENT SIMPLICITOR FOR LETTING OUT A PORTION OF THE BUILDING WITH AN INTENTION TO RECEIVE RENTAL INCOME. THE RENTAL AGREEMENT SAID TO BE ENTERED WITH THE TENANT DOES N OT SHOW THAT IT IS AN EXPLOITATION OF A COMMERCIAL ASSET. LIKE A LAND-OWNER/LANDLORD, ASSESSEE ENTERED INTO A SIMPLE AGREEMENT WITH THE TENANT FOR ONE YEAR. THEREFORE , THE RENTAL INCOME HAS TO BE ASSESSED AS INCOME FROM HOU SE PROPERTY. REFERRING TO THE SCHEDULE OF THE ABOVE S AID AGREEMENT, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED ITA NOS. 224 TO 229/COCH/2010 11 THAT THE ASSESSEE IS PROVIDING PARKING FACILITY, WA TER SUPPLY, ELECTRIC CONNECTION, ETC. 7. PARKING FACILITY IS AN ESSENTIAL CONDITION FOR C ONSTRUCTION OF ANY BUILDING. THE MUNICIPAL CORPORATION MAY NOT HAVE PERMITTED THE ASSESSEE TO PUT UP THE CONSTRUCTION U NLESS THE SUFFICIENT CAR PARKING SPACE IS PROVIDED WITHIN THE PREMISES. APART FROM EAR-MARKING SOME AREA FOR CAR PARKING, T HE ASSESSEE IS NOT PROVIDING ANY OTHER SERVICE AT ALL. THEREFORE, EAR-MARKING OF CAR PARK AS REQUIRED UNDE R THE LOCAL MUNICIPAL LAW FOR THE PURPOSE OF CONSTRUCTION CANNOT BE CONSIDERED AS SERVICE PROVIDED TO THE TENANT. IT I S NOT THE CASE OF THE ASSESSEE THAT, ANY SPECIALIZED CONCRETE STRUCTURE IS MADE FOR REGULATING AND PROVIDING EXTENSIVE CAR PARKING FACILITY. 8. NOW COMING TO THE WATER SUPPLY, DRAINAGE AND ELECTRICITY CONNECTION, ETC. WATER IS SUPPLIED BY T HE LOCAL BODY ON PAYMENT OF NECESSARY FEES AND CHARGES. LI KEWISE, DRAINAGE SERVICE IS ALSO PROVIDED BY THE LOCAL BODY . ASSESSEE WOULD HAVE NOTHING TO DO WITH THAT EXCEPT PAYING THE STIPULATED CHARGES/FEES FOR THE WATER AND DRAIN AGE CONNECTION. LIKEWISE, ELECTRICITY CONNECTION IS P ROVIDED BY THE STATE ELECTRICITY BOARD ON PAYMENT OF THE CHARG ES. IT IS ITA NOS. 224 TO 229/COCH/2010 12 NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS INSTALLED GENERATOR OR TRANSFORMER OR ANY OTHER INSTALLATION FOR THE PURPOSE OF SUPPLY OF UNIFORM AND UN-INTERRUPTED POW ER TO THE TENANTS. WATER, DRAINAGE, ELECTRICITY ARE PROV IDED BY THE RESPECTIVE LOCAL BODY / BOARD. THE ASSESSEE HAS TO PAY THE STATUTORY CHARGES, ETC. HAD THE ASSESSEE REGULATED THE CAR PARKING BY APPOINTING EMPLOYEES AND THE ASSESSEE HA S INSTALLED DESALINATION PLANT FOR PROVIDING PURIFIED WATER OR SUPPLY OF WATER TO THE TENANT IN ANY OTHER MODE AND INSTALLED TRANSFORMER OR GENERATOR FOR UN-INTERRUPT ED POWER SUPPLY, THE MATTER WOULD STAND ON AN ENTIRELY DIFFE RENT FOOTING. IT IS NOT THE CASE OF THE ASSESSEE THAT HE HAS PROVIDED EITHER TRANSFORMER/GENERATOR/OTHER MECHANI CAL EQUIPMENTS, WATER PURIFIER OR SUPPLIED WATER IN ANY OTHER MODE OR APPOINTED SOMEBODY TO REGULATE THE TRAFFIC WITHIN THE PREMISES. THEREFORE, THE ASSESSEE IS NOT EXPL OITING ANY COMMERCIAL ASSET. MOREOVER, THE ASSESSEE IS NOT PR OVIDING ANY SERVICE ALSO. 10. NOW COMING TO THE CONTENTION OF THE ASSESSEE THAT MORE THAN A DECADE, THE INCOME WAS ASSESSED AS INCO ME FROM BUSINESS. NO DOUBT, THE RETURN FILED BY THE ASSESSEE FOR THE EARLIER ASSESSMENT YEARS WAS ACCEPTED AS SU CH WITHOUT ANY EXAMINATION. EVEN THOUGH FOR THE ASSE SSMENT YEAR 1992-93 THE RETURN WAS TAKEN FOR SCRUTINY, THE ITA NOS. 224 TO 229/COCH/2010 13 ASSESSING OFFICER WITHOUT EXAMINING THE RENTAL AGRE EMENT ACCEPTED THE RETURN. THERE IS NO EXPRESS DISCUSSI ON IN THE ASSESSMENT ORDER AS TO WHY THE ASSESSING OFFICER AC CEPTED THE RETURN FILED BY THE ASSESSEE. THE ASSESSMENT ORDER BEING A QUASI JUDICIAL ORDER HAS TO CONTAIN ITS REA SON WHY A PARTICULAR INCOME IS ASSESSED AS INCOME FROM BUSINE SS OR OTHERWISE. IN THE ABSENCE OF ANY SUCH DISCUSSION AND REASONS IT IS OBVIOUS THAT THE ASSESSING OFFICER HA S NOT APPLIED HIS MIND EVEN THOUGH THE SAME WAS TAKEN FOR SCRUTINY FOR THE ASSESSMENT YEAR 1992-93. THEREF ORE, IT MAY NOT BE CORRECT TO CONTEND THAT THE ASSESSING OF FICER HAS ACCEPTED THE RETURN U/S.143(3) FOR THE ASSESSMENT Y EAR 1992-93. THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFICER WITHOUT ANY APPLICATION OF MIND HAS ACCEPTE D THE RETURN U/S.143(3) FOR ASSESSMENT YEAR 1992-93. TH EREFORE, IT CANNOT BE A BAR FOR THE ASSESSING OFFICER TO EXA MINE THE RENTAL AGREEMENT IN THE SUBSEQUENT YEARS. FURTHER -MORE, EACH ASSESSMENT YEAR IS INDEPENDENT, SEPARATE AND D ISTINCT. THE ASSESSING OFFICER HAS TO EXAMINE THE FACTS OF T HE CASE IN EACH YEAR SEPARATELY AND FRAME THE ASSESSMENT ACCOR DING TO LAW. IT IS ALSO WELL SETTLED PRINCIPLES OF LAW TH AT RES JUDICATA IS NOT APPLICABLE TO THE INCOME-TAX PROCEE DINGS. ITA NOS. 224 TO 229/COCH/2010 14 11. WHEN THE ASSESSING OFFICER HAS NOT EXAMINED THE FACTS IN THE EARLIER ASSESSMENT YEAR, THIS TRIBUNA L IS OF THE OPINION THAT THE AO IS WELL WITHIN HIS POWER TO EXA MINE THE FACTS OF THE CASE IN ANY OF THE SUBSEQUENT ASSESSME NT YEARS. MERELY BECAUSE INCOME WAS ASSESSED AS INCOME FROM BUSINESS WITHOUT ANY EXAMINATION, IT DOES NOT PREVE NT THE ASSESSING OFFICER TO EXAMINE THE FACTS FOR THE YEAR S UNDER CONSIDERATION. AS OBSERVED BY THE APEX COURT PERP ETUATING ERROR IS NOT HEROISM. THE PROCEEDINGS BEFORE THE ASSESSING OFFICER BEING A JUDICIAL PROCEEDING THE ASSESSING O FFICER HAS TO EXAMINE THE FACTS OF THE CASE AND ASSESS THE INC OME UNDER THE RIGHT HEAD AS CLASSIFIED UNDER THE I.T.AC T. SINCE THE RENTAL AGREEMENT SHOWS THAT THE LETTING OUT THE PROPERTY IS A SIMPLICITOR AS A LANDLORD, THIS TRIBUNAL IS OF THE OPINION THAT THE INCOME HAS TO BE NECESSARILY ASSESSED AS I NCOME FROM HOUSE PROPERTY. 12. I HAVE CAREFULLY GONE THROUGH THE JUDGMEN T OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. GOEL BU ILDERS. THE ASSESSEE BEFORE THE ALLAHABAD HIGH COURT WAS EN GAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF HEAVY PI PES AND COOLERS. THE ASSESSEE TOOK A PLOT ON LEASE FROM T HE LUCKNOW DEVELOPMENT AUTHORITY FOR CONSTRUCTION OF A COMMERCIAL COMPLEX. THE ASSESSEE LET OUT THE OPE N SPACE ITA NOS. 224 TO 229/COCH/2010 15 OF ITS COMPLEX IN THE ASSESSMENT YEAR 1986-87 AND T HE RENTAL INCOME WAS OFFERED FOR TAXATION AS BUSINESS INCOME. RIGHT FROM THE ASSESSMENT YEARS 1986-87 TO 1992-93, THE REVENUE ACCEPTED THE CLAIM OF THE ASSESSEE TO THE E FFECT THAT THE RENTAL INCOME WAS TAXABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. IN THE ASSE SSMENT YEARS 1993-94 AND 1994-95, THE ASSESSING OFFICER TA XED THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WITHOUT LOOKING INTO THE PAST ASSESSMENTS RIGHT FRO M 1986- 87. ON THESE FACTS AND CIRCUMSTANCES, THE ALLAHABAD HIGH COURT AFTER REFERRING TO THE JUDGMENT OF THE APEX C OURT IN THE CASE OF RADHASOAMI SATSANG VS. COMMISSIONER OF INCOME-TAX [192] 193 ITR 321 FOUND THAT THE PRINCIP LES OF RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDIN GS. EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ON E YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUN DAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND T HE PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPRO PRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YE AR. IT IS TO BE KEPT IN MIND THAT FOR EARLIER ASSESSMENT Y EARS IN THE CASE BEFORE THE ALLAHABAD HIGH COURT, THE INCOME WA S ASSESSED AS BUSINESS INCOME IN A PROCEEDING U/S.143 (3) AND ITA NOS. 224 TO 229/COCH/2010 16 IN SOME OF THE YEARS, THE CIT(APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO TAKE T HE SAME AS BUSINESS INC OME. THE ORDER OF THE CIT(APPEALS) WAS NOT CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL. THEREFORE, THE ORDER OF COMMISSIONER OF INCOME-TAX(A) BECAME FINAL FOR SOME OF THE EARLIER ASSESSMENT YEARS. WHEN APPELLATE AUTHORITY DIRECTED THE ASSESSING OFFICER TO CLASSIFY THE INCOME UNDER THE HEAD BUSINESS THE ASSESSING OFFICER CANNOT GO BEYOND T HE DIRECTION OF THE COMMISSIONER OF INCOME-TAX(A) FOR SUBSEQUENT ASSESSMENT YEARS WHEN THE FACTS ARE IDEN TICAL. FOR THE ASSESSMENT YEAR 1993-94, WHEN THE APPEAL WA S FILED BEFORE THE TRIBUNAL, THE TRIBUNAL FOUND THAT THERE WAS NO CHANGE IN THE CIRCUMSTANCES WHEN COMPARED TO THE EA RLIER YEAR. THEREFORE, THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(APPEALS). IN THE CASE BEFORE US, THE FACTS AR E ENTIRELY DIFFERENT. IN FACT NO ASSESSMENT ORDER WAS PASSED U/S.143(3) AND THE RETURNS WERE ACCEPTED U/S.143(1 )(A) OF THE ACT WITHOUT EXAMINING THE AGREEMENT AT ALL. F OR THE ASSESSMENT YEAR 1992-93, EVEN THOUGH, THE ASSESSMEN T ORDER WAS PASSED U/S 143(3), THE ASSESSING OFFICER HAS NOT EXAMINED THE RENTAL AGREEMENT EXECUTED BY THE TENAN TS. IN FACT, NO AUTHORITY APPLIED ITS MIND TO THE FACTS IN THE EARLIER ASSESSMENT YEARS. THEREFORE, IT CANNOT BE SAID THA T THE REVENUE HAS TAKEN ANY VIEW IN RESPECT OF THE CLASSI FICATION ITA NOS. 224 TO 229/COCH/2010 17 OF THE INCOME, EXCEPT ACCEPTING THE RETURN. IN FA CT, NO APPEAL WAS FILED EITHER BEFORE THE CIT(APPEALS) OR BEFORE THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS. THEREFORE , APPELLATE AUTHORITIES HAVE NO OCCASION TO EXAMINE THE AGREEME NT SAID TO BE ENTERED INTO BY THE ASSESSEE AND THE TENANT. IN OTHER WORDS, NO JUDICIAL MIND HAS BEEN APPLIED TO THE FAC TUAL SITUATION EITHER BY THE ASSESSING OFFICER OR BY THE APPELLATE AUTHORITIES. IN VIEW OF THE ABOVE FACTS, THE JUDG MENT OF THE ALLAHABAD HIGH COURT MAY NOT BE OF ANY ASSISTANCE T O THE ASSESSEE. AS RIGHTLY FOUND BY THE CIT(APPEALS) IN COME HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY AND NO T FROM BUSINESS IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF SHAMBU INVESTMENT P.LTD. VS. CIT 263 ITR 143 AND IN SULTAN BROTHERS (P) LTD (1964) 51 ITR 357. THEREFORE THIS TRIBUNAL FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. 13. I HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF THE KERALA HIGH COURT IN ATTUKAL SHOPPING COMPLEX (P) L TD (SUPRA). IN THE CASE BEFORE THE KERALA HIGH COURT, FOR ADMINISTERING THE COMMON FACILITY, THE ASSESSEE HAS EMPLOYED TWENTY EMPLOYEES. THE ASSESSEE IS SUPPLYI NG WATER TO THE TENANT. THE ASSESSEE ESTABLISHED LATR INES INSIDE AND OUTSIDE THE BUILDING AND MAINTAINED THE SAME. ITA NOS. 224 TO 229/COCH/2010 18 THE ASSESSEE HAS PROVIDED SPECIALIZED CONCRETE FLOO RING FOR EXTENSIVE CAR PARKING FACILITY. A SEPARATE OFFICE / ESTABLISHMENT IS MAINTAINED TO OVERSEE ALL THE ARRA NGEMENT. THE LICENCE FEE IS SPLIT UP INTO LICENCE FEE TOWARD S BUILDING AND LICENCE FEE TOWARDS AMENITIES. IN THOSE FACTUA L CIRCUMSTANCES, THE KERALA HIGH COURT, AFTER REFERRI NG TO THE JUDGMENT OF THE APEX COURT IN SULTAN BROTHERS (P) L TD VS COMMISSIONER OF INCOME-TAX (SUPRA) HELD THAT THE IN COME FROM PROPERTY HAS TO BE DIVIDED AS INCOME FROM PROP ERTY AND INCOME FROM BUSINESS. IN THE CASE BEFORE US, T HE FACTS ARE ENTIRELY ON DIFFERENT FOOTING. A BARE READING OF THE SO- CALLED RENTAL AGREEMENT DOES NOT DISCLOSE ANY SERVI CE PROVIDED BY THE ASSESSEE EXCEPT LETTING THE PROPERT Y / BUILDING TO THE TENANT. NO SPECIALIZED CONCRETE FL OORING FOR CAR PARKING IS PROVIDED BY THE ASSESSEE. AS PER TH E RENTAL AGREEMENT, THE ASSESSEE IS NOT EXPECTED TO DO ANYTH ING EXCEPT COLLECTION OF RENT AND DUTIES AS A LANDLORD. THEREFORE, THE TRIBUNAL IS OF THE OPINION THAT THE JUDGMENT OF THE KERALA HIGH COURT IN ATTUKAL SHOPPING COMPLE X (P) LTD (SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF T HE CASE. AS HELD BY THE APEX COURT IN SULTAN BROTHERS (P) LT D (SUPRA) EACH CASE HAS TO BE LOOKED AT FROM A BUSINESSMANS POINT OF VIEW TO FIND OUT WHETHER THE LETTING WAS THE DOING OF A BUSINESS OR EXPLOITATION OF HIS PROPERTY BY AN OWNE R. ITA NOS. 224 TO 229/COCH/2010 19 14. THE ALTERNATE PLEA OF THE ASSESSEE THAT THE RENT RELATABLE TO THE SERVICE CHARGES HAS TO BE TREATED AS INCOME FROM BUSINESS HAS NO MERIT AT ALL. AS OBSERVED EA RLIER, ELECTRICITY CONNECTION, WATER AND DRAINAGE CONNECTI ON, CAR PARKING, ETC. ARE PART OF THE BUILDING AND THE ASSE SSEE HAS NOT DONE ANYTHING EXCEPT GETTING THE SERVICE CONNEC TIONS FROM THE CONCERNED AUTHORITIES. THESE FACILITIES ARE BASIC AND MINIMUM REQUIREMENTS ATTACHED WITH BUILDING WIT HOUT WHICH THE STRUCTURE CANNOT BE LET OUT AT ALL. THER EFORE, AS DISCUSSED EARLIER, THE ASSESSEE IS NOT PROVIDING AN Y SERVICE TO THE TENANTS. ACCORDINGLY, THIS GROUND IS REJEC TED. 15. THE ASSESSEE HAS TAKEN ONE MORE GROUND WITH REGARD TO THE DEDUCTION U/S.80U/80DDB. DURING THE COURSE OF HEARING, THE LD. REPRESENTATIVE OF THE ASSESSEE SUB MITTED THAT HE IS NOT PRESSING THIS GROUND AND HAS MADE AN ENDORSEMENT TO THIS EFFECT. ACCORDINGLY, THE CLAI M REGARDING 80U/80DDB IS REJECTED. 16. IN THE RESULT, ALL THESE APPEALS OF THE ASSESSEE AR E DISMISSED. SD/- (N.R.S. GANESAN) J UDICIAL MEMBER ERNAKULAM, DATED THE 22 ND DECEMBER, 2011. PM. ITA NOS. 224 TO 229/COCH/2010 20 COPY FORWARDED TO: 1. EDWARD PARANGATH, RAJIV VIHAR, CHANDRANAGAR, PALAKK AD. 2. THE INCOME-TAX OFFICER, WARD-5, PALAKKAD. 3. CIT(A)-V, KOCHI. 4. CIT, THRISSUR. /5. D.R.