C.Krishnan, Salem V. ITO wARD i (4), Erode

ITA 2308/CHNY/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68637 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI IRS
• Assessee Lawyers: V SRIDHARA N
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.2308(MDS)/2012 ASSESSMENT YEAR : 2009-10 SHRI C.KRISHNAN, 74-PARK ROAD, ERODE. PAN AEKPK0579C. VS. THE INCOME-TAX OFFICER, WARD I(4), ERODE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.SRIDHARA N, C.A. RESPONDENT BY : SHRI T.N.BETGERI, I RS, JCIT DATE OF HEARING : 13 TH AUGUST, 2013 DATE OF PRONOUNCEMENT : 13 TH AUGUST, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT - - ITA 2308 OF 2012 2 COIMBATORE, DATED 30-11-2012 AND ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX AC T, 1961. 2. THE FIRST GROUND RAISED BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DI RECTING THE ASSESSING OFFICER TO TREAT THE INCOME FROM PROPERTY AS INCOME FROM BUSINESS. 3. THE ISSUE ARISES FROM THE FACT THAT THE ASSESSE E IS EARNING RENTAL INCOME FROM GODOWNS AND THE ATTACHED SHANTIES LET OUT TO VARIOUS BUSINESS PEOPLE. THE ASSESSEE T REATED THE RENTAL INCOME AS INCOME FROM HOUSE PROPERTY AND FIL ED HIS RETURN OF INCOME ACCORDINGLY. THE ASSESSING OFFICER HELD THAT THE RENTAL INCOME EARNED BY THE ASSESSEE WAS IN THE NAT URE OF BUSINESS INCOME AND, THEREFORE, IT SHOULD BE ASSESS ED UNDER THE HEAD INCOME FROM BUSINESS. THE ASSESSMENT WAS DONE ACCORDINGLY. THIS POSITION WAS CONFIRMED BY THE CO MMISSIONER OF INCOME-TAX(APPEALS) IN FIRST APPEAL. 4. WE HEARD BOTH SIDES IN DETAIL ON THIS POINT. 5. THE ASSESSEE IS THE OWNER OF GODOWN BUILDINGS A S WELL AS SHANTIES ATTACHED TO THOSE GODOWNS. THEY A RE NOT TEMPORARY STRUCTURES, AS CONSIDERED BY THE LOWER AU THORITIES. - - ITA 2308 OF 2012 3 THEY ARE ALL PUCCA CONSTRUCTIONS, LET OUT FOR BUSIN ESS PEOPLE IN A CONTINUOUS MANNER FOR LONG YEARS TOGETHER. THE ASS ESSEE IS NOT CARRYING ON ANY OTHER BUSINESS. HE IS NOT CARRYING ON ANY ACTIVITIES IN ANY OF THE PREMISES OF THOSE PROPERTI ES. IT IS THE TENANTS WHO ARE CARRYING ON THE RESPECTIVE BUSINESS ES IN THE GODOWNS AND SHANTIES. THE ASSESSEE IS GETTING ONLY RENTAL INCOME FROM THOSE TENANTS AND NOT ANY OTHER INCOME BY WAY OF SHARE OF PROFIT OR ANYTHING OF THAT SORT. 6. IN THE FACTS AND CIRCUMSTANCES, IT IS A SIMPLE CASE WHERE THE RENTAL INCOME EARNED BY THE ASSESSEE SHOU LD BE TREATED AS INCOME FROM HOUSE PROPERTY. ALL OTHER D ISCUSSIONS MADE BY THE ASSESSING AUTHORITY ARE WITHOUT ANY BAS IS AND THEY ARE ALL BASED ON PRESUMPTIONS AND SURMISES. THE DE CIDING FACTOR OF INCOME FROM HOUSE PROPERTY IS THE RELATIO N BETWEEN THE ASSESSEE AND THE LESSEES AS THAT OF LANDLORD AND TE NANTS. THE ASSESSEE IS EARNING RENTAL INCOME EXCLUSIVELY ON TH E BASIS OF HIS RELATION WITH OTHER BUSINESS PEOPLE AS THAT OF LAND LORD AND TENANTS. WHEN THE POSITION OF THE ASSESSEE IS VERY CLEAR AS LANDLORD SIMPLICITER, THERE IS NO REASON TO IGNORE THE PRIMA FACIE FACT ARISING OUT OF THE FACTS OF THE CASE. - - ITA 2308 OF 2012 4 7. A SIMILAR CASE WAS CONSIDERED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF TINSUKIA DEVELOP MENT CORPORATION LTD. VS. CIT, 120 ITR 476. THE HONBLE CALCUTTA HIGH COURT HELD THAT BUSTEES ON THE LAND CONSISTING OF STRUCTURES WITH NO FOUNDATION BUT WITH LIGHT PLINTHS OR FLOOR AND WITH WALLS MADE OF PLANKS OF UNSEASONED INDIGENOUS WOOD OR COR RUGATED SHEETS FIXED ON BAMBOO FRAMES OR INDIGENOUS LOGS OF WOOD WITH CORRUGATED SHEET ROOF ARE HELD TO BE BUILDINGS. TH E HONBLE SUPREME COURT IN THE CASE OF EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD. VS. CIT, 42 ITR 49, HAS HELD THAT THE INCOME RECEIVED BY THE ASSESSEE FROM SHOPS IS INDIS PUTABLE INCOME FROM PROPERTY AND SO IS THE INCOME FROM STAL LS FROM OCCUPANTS. IN THE PRESENT CASE, IT IS NOT AT ALL P OSSIBLE TO HOLD THAT THE SHANTIES ERECTED BY THE ASSESSEE ARE TEMPO RARY STRUCTURES AND THE RENTAL INCOME IS ONLY SEASONAL I N NATURE. 8. THEREFORE, IN THE FACTS AND CIRCUMSTANCES, WE D IRECT THE ASSESSING OFFICER TO TREAT THE DISPUTED INCOME AS INCOME FROM HOUSE PROPERTY AND COMPLETE THE ASSESSMENT ACC ORDINGLY. 9. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIE D IN - - ITA 2308 OF 2012 5 REMANDING THE CLAIM OF LOSS ON SALE OF SHARES TO TH E ASSESSING OFFICER. IT IS THE CASE OF THE ASSESSEE THAT IN TH E COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD CA LLED FOR THE DETAILS OF THE CLAIM OF LOSS AND THE SAME WERE FURN ISHED. THERE IS NO WHISPER ABOUT THE CLAIM OF LOSS IN THE ASSESS MENT ORDER AND SO THE NORMAL PRESUMPTION WOULD BE THAT THE ASS ESSING OFFICER HAS ACCEPTED THE CLAIM. IT IS THE CASE OF THE ASSESSEE THAT, THEREFORE, THE CLAIM OF THE ASSESSEE SHOULD B E STRAIGHTAWAY ALLOWED. 10. WE CONSIDERED THIS ISSUE. THE ASSESSING OFFIC ER HAS NOT MENTIONED ANYTHING ABOUT THE DISALLOWANCE I N THE ASSESSMENT ORDER. AS RIGHTLY POINTED OUT BY THE AS SESSEE, THIS LEADS TO THE IRREFUTABLE CONCLUSION THAT THE ASSESS ING OFFICER HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE IN CLAIMIN G THE SET OFF OF LOSS, AFTER VERIFYING THE DETAILS FURNISHED BY T HE ASSESSEE. THE COMMISSIONER OF INCOME-TAX(APPEALS) HIMSELF HAS STA TED IN THE LAST PARAGRAPH OF HIS ORDER THAT THE ASSESSING OFFI CER HAS NOT DISCUSSED ANY DETAILS REGARDING THE LOSS FROM TRADI NG IN DERIVATIVES. BUT, THE COMMISSIONER OF INCOME-TAX(A PPEALS) FURTHER STATES THAT THE ASSESSEE HAS NOT PRODUCED A NY DETAILS - - ITA 2308 OF 2012 6 BEFORE HIM. ON THAT GROUND, HE DIRECTS THE ASSESSI NG OFFICER TO EXAMINE THE ISSUE OF LOSS ARISING FROM TRADING IN D ERIVATIVES. IT IS TO BE SEEN THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE HAS CLAIMED THE LO SS FROM TRADING IN DERIVATIVES TO BE SET OFF AGAINST INCOME FROM HOUSE PROPERTY. THE DISPUTE OF THE ASSESSING OFFICER WAS ONLY IN RESPECT OF THE QUESTION WHETHER THE RENTAL INCOME S HOULD BE ASSESSED AS RENTAL INCOME OR AS BUSINESS INCOME. H E HAS NOT RAISED ANY OBJECTION AGAINST THE LOSS RETURNED BY T HE ASSESSEE IN TRADING IN DERIVATIVES. THIS IS CRYSTAL CLEAR FROM THE ASSESSMENT ORDER ITSELF. THEREFORE, THERE IS NO JUSTIFICATION IN THE ACTION OF THE COMMISSIONER OF INCOME-TAX(APPEALS) IN PROVIDING A SECOND INNINGS TO THE ASSESSING OFFICER ON A NEVER DISPUT ED ISSUE. WE, THEREFORE, SET ASIDE THE SAID DIRECTION OF THE COMMISSIONER OF INCOME-TAX(APPEALS) AND DIRECT THE ASSESSING OFF ICER TO SET OFF THE LOSS AGAINST OTHER INCOME OF THE ASSESSEE A RISING IN THE VERY SAME ASSESSMENT YEAR. 11. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE I S ALLOWED. - - ITA 2308 OF 2012 7 ORDERS PRONOUNCED ON TUESDAY, THE 13 TH OF AUGUST, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 13 TH AUGUST, 2013. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.