ITO, CHENNAI V. Kodai Housing Private Limited, CHENNAI

ITA 231/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4203 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIRANJANI JICIT
• Assessee Lawyers: G BASKAR; SRI NIRAYANI
• Keywords: Business income

Judgement Text

, C/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.231 /MDS./2017 ( ASSESSMENT YEAR : 2012-13) THE INCOME TAX OFFICER, CORPORATE WARD 4(3), CHENNAI 600 034. VS. M/S.KODAI HOUSING PVT LTD., NO.B-201/21B, DBS SUSHMA STREET, T.NAGAR, CHENNAI 600 017. PAN AADCK 0188 P ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.V.SRINIRANJANI, JICIT, D.R / RESPONDENT BY : MR.G.BASKAR,ADVOCATE & MS.SRI NIRAYANI ADVOCATE ! ' / DATE OF HEARING : 20.06.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 20.06.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE , AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-8, CHENNA I DATED 21.11.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. ITA NO. 231/MDS/2017 2 2. THE GROUND RAISED IN ITS APPEAL IS THAT LD.CIT( A) ERRED IN DELETING THE ADDITION OF ` 42 LAKHS BY HOLDING THAT INCOME FROM LETTING OUT OF PROPERTY BE ASSESSED AS INCOME FROM BUSINESS . 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS LETTING OUT THE PROPERTY OWNED BY THE COMPANY AT KODAIKANAL TO M/S. SUJANA METAL PRODUCTS LTD., FOR A RENT OF ` 5 LAKHS PER MONTH TOTALING TO ` 60 LAKHS PER ANNUM AND THE ASSESSEE CLAIMED VARIOUS EXPENSES UNDER THE HEAD BUSINESS INCOME. THE LD. ASSESSING OFFICER HAD TREATED THE INCOME EARNED FROM RENTING OR PREMISES AS INCOME F ROM HOUSE PROPERTY INSTEAD OF BUSINESS INCOME AND ACCORDIN GLY, THE AO COMPUTED INCOME OF ASSESSEE. AGGRIEVED WITH THE AC TION OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) TREATED IT AS BUSIN ESS INCOME ONLY ON THE REASON THAT THE ASSESSEE COMPANY HAS BEEN RE NDERING ADDITIONAL SERVICES TO THEIR TENANT FOLLOWING THE JUDGEMENT OF APEX COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTM ENTS LTD. VS. CIT (373 ITR 673)(SC). AGAINST THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 231/MDS/2017 3 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN MY OPINION, IN PRINCIPLE, I AGREE WITH THE FINDINGS OF THE LD.CIT(A) AS THERE WAS A BINDING DECISION OF SUPREM E COURT IN THE CASE OF CHENNAI PROPERTIES AND INVESTMENTS LTD. VS. CIT(SUPRA) WHEREIN HELD THAT: 10. NO DOUBT IN SULTAN BROTHERS (P.) LTD.'S CASE, A CONSTITUTION BENCH JUDGMENT OF THIS COURT HAS CLARIFIED THAT MERELY AN ENTRY IN THE OBJECTS CLAUSE SHOWING A PARTICULAR OBJECT WOULD NOT BE THE DETERMINATIVE FACTOR TO ARRIVE AT AN CONCLUSION WHETHER THE INCOME IS TO BE TREATED AS INCOME FROM BUSINESS AND SUCH A QUESTION WOULD DEPEND UPON THE CIRCUMSTANCES OF EACH CASE, VIZ., WHETHER A PARTICULAR BUSINESS I S LETTING OR NOT. THIS IS SO STATED IN THE FOLLOWING WORDS : 'WE THINK EACH CASE HAS TO BE LOOKED AT FROM A BUSI NESSMAN'S POINT OF VIEW TO FIND OUT WHETHER THE LETTING WAS THE DOI NG OF A BUSI NESS OR THE EXPLOITATION OF HIS PROPERTY BY AN OWNER. WE DO NOT FUR THER THINK THAT A THING CAN BY ITS VERY NATURE BE A COMMERCIAL ASSET. A COMMERCIAL ASSET IS ONLY AN ASSET USED IN A BUSINES S AND NOTHING ELSE, AND BUSINESS MAY BE CARRIED ON WITH PRACTICAL LY ALL THINGS. THEREFORE, IT IS NOT POSSIBLE TO SAY THAT A PARTICU LAR ACTIVITY IS BUSINESS BECAUSE IT IS CONCERNED WITH AN ASSET WITH WHICH TR ADE IS COMMONLY CARRIED ON. WE FIND NOTHING IN THE CASES REFERRED T O SUPPORT THE PROPOSITION THAT CERTAIN ASSETS ARE COMMERCIAL ASSE TS IN THEIR VERY NATURE.' 11. IN THIS CASE, LETTING OF THE PROPERTIES IS IN FACT IS THE BUSINESS OF THE ASSESSEE. THE ASSESSEE, THEREFORE, RIGHTLY DISCLOSE D THE INCOME UNDER THE HEAD 'INCOME FROM BUSINESS'. IT CANNOT BE TREATED A S 'INCOME FROM THE HOUSE PROPERTY' ITA NO. 231/MDS/2017 4 5. HOWEVER, THE AO STRAIGHT AWAY TREATED THE INCOME AS INCOME FROM HOUSE PROPERTY AND HE HAS NOT EXAMINED THE ALL OWABILITY OF VARIOUS EXPENSES UNDER THE HEAD INCOME FROM BUSINES S. HE HAS NOT EXAMINED WHETHER THE DEDUCTION CLAIMED BY THE ASSES SEE TO BE ALLOWED U/S.30 TO 38 AND SEC.40 OF THE ACT AS BUSI NESS INCOME. BEING SO, WHILE AGREEING WITH THE HEAD OF INCOME AS INCOME FROM BUSINESS, THE ISSUE IS REMITTED TO THE FILE OF LD. ASSESSING OFFICER TO EXAMINE THE ALLOWABILITY OF DEDUCTION UNDER THE HEA D INCOME FROM BUSINESS WHILE COMPUTING THE INCOME. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF REVENUE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 20 TH JUNE, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF