RASIKLAL & CO. P. LTD, MUMBAI V. ITO 7(2)(1), MUMBAI

ITA 2334/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55576 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-09-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: K R LAKSHMINARAYAN
• Keywords: Business income; Rule of consistency
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI T.R.SOOD (A. M) ITA NO.2334/MUM/2010(A.Y. 2005-06) M/S.RASIKLAL & CO. PVT. LTD. 83-C, DR. E.MOSES ROAD, WORLI, MUMBAI -18 PAN:AAACR 3916P (APPELLANT) VS. ITO 7(2)(1), AAYKAR BHAVAN, MK ROAD, MUMBAI 20. (RESPONDENT) APPELLANT BY : SHRI K.R.LAKSHMI NARAYAN RESPONDENT BY : SHRI C.G.K.NAIR DATE OF HEARING : 22/09/2011 DATE OF PRONOUNCEMENT : 28/0 9/2011 ORDER PER N.V.VASUDEVAN, J.M, THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 16/12/2009 OF CIT(A)-13 MUMBAI RELATING TO ASSESSMENT YEAR 200 5-06. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS FOLLOWS: 1. THE ORDER PASSED BY THE LEARNED CIT (A) IS BAD IN LAW. 2. THE LEARNED CIT (A) ERRED IN NOT DIRECTING THE A .O. TO ASSESS THE INCOME DERIVED BY APPELLANT FROM WAREHOUSING ACTIVI TIES AS BUSINESS INCOME AND TO ALLOW THE EXPENSES INCLUDING INTEREST DEBITED TO P & I A/C. 3. THE LEARNED CIT(A) ERRED IN NOT TAKING NOTE OF T HE FACT THAT APPELLANTS CASE IS COVERED BY ITAT MUMBAI ORDER IN HIS OWN CASE FOR A.Y. 1998-99, 1999-2000, 2000-01 AND 2003-04. 4. THE LEARNED CIT (A FAILED TO APPRECIATE THAT A LETTER WAS FILED IN HIS OFFICE (COPY ENCLOSED) ENCLOSING COPIES OF ITATS O RDER IN APPELLANTS OWN CASE FOR THE RELEVANT YEARS. ITA NO.2240/MUM/2010(A.Y. 2004-05) 2 5. IT IS PRAYED THAT RESPECTFULLY FOLLOWING ITATS ORDER, INCOME FROM WAREHOUSING ACTIVITIES MAY PLEAS BE ASSESSED AS BUS INESS INCOME AND THE EXPENSES INCLUDING INTEREST DEBITED TO P & L A/ C. MAY PLEASE BE ALLOWED.. 2. THE ASSESSEE IS A COMPANY. THE ASSESSEE OWNED I NDUSTRIAL UNIT/GALA LOCATED AT NAVI MUMBAI. THE ASSESSEE HAD LET OUT T HOSE PREMISES. THE INCOME FROM LETTING WAS OFFERED TO TAX BY THE ASSES SEE UNDER THE HEAD INCOME FROM BUSINESS. THE ASSESSEE HAD CLAIMED V ARIOUS EXPENSES IN THE P&L ACCOUNT AS DEDUCTION AGAINST THE INCOME RECEIVE D IN THE FORM OF RENT. ACCORDING TO THE AO THE INCOME IN QUESTION HAD TO B E ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ONLY STATUTO RY DEDUCTIONS AS CONTEMPLATED UNDER SECTION 24 OF THE INCOME TAX ACT , 1961 (THE ACT) WILL BE ALLOWED AS DEDUCTION. THE ASSESSEE HOWEVER CLAIMED THAT IT WAS PROVIDING SERVICES FOR STORAGE OF GOODS, WATCH AND WARD AND O THER ALLIED SERVICES IN AN ORGANIZED AND SYSTEMATIC MANNER AS WAREHOUSING BUS INESS AND, THEREFORE, THE INCOME FROM LETTING HAS TO BE CONSIDERED AS BUS INESS INCOME AND THE EXPENSES CLAIMED IN THE P&L ACCOUNT SHOULD BE ALLOW ED AS DEDUCTION. 3. THE AO CALLED FOR LEASE AGREEMENT FROM ONE OF TH E TENANT BY ISSUE OF A NOTICE UNDER SECTION 133(6) OF THE ACT. THE TENANT M/S. GLAXO SMITHKLINE PHARMACEUTICALS LTD. FURNISHED A COPY OF THE LEASE AGREEMENT. THE AO WAS OF THE VIEW THAT THE CONSIDERATION PAID BY THE TENA NT WAS A COMPREHENSIVE MONTHLY RENT AND THAT THE AMENITIES AND SERVICES GR ANTED TO THE OCCUPANTS WERE NECESSARILY ATTACHED TO LETTING OUT OF THE PRE MISES AND CANNOT SUBSTANTIATE THE CASE OF THE ASSESSEE. THE AO ALSO CALLED UPON THE ASSESSEE TO PRODUCE GOODS INWARD/OUTWARD REGISTER, GOODS MOV EMENT REGISTER, STOCK REGISTER ETC. THE AO ALSO CALLED FOR PRODUCTION OF WAREHOUSING LICENCE. THESE WERE NOT PRODUCED. THE AO THEREFORE, HELD TH AT THE INCOME DECLARED BY THE ASSESSEE WAS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE ITA NO.2240/MUM/2010(A.Y. 2004-05) 3 PROPERTY. IT WAS BROUGHT TO THE AOS NOTICE THAT THE HONBLE CIT(A) IN THE CASE OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEAR S HAD ALREADY HELD THAT THE INCOME FROM LETTING HAS TO BE ASSED AS BUSINESS INCOME. ACCORDING TO THE AO THE DECISION OF THE CIT(A) WAS NOT ACCEPTED BY THE REVENUE AND AN APPEAL WAS PENDING BEFORE THE HONBLE ITAT. THE AO , THEREFORE, BROUGHT THE INCOME IN QUESTION TO TAX UNDER THE HEAD INCOME FR OM HOUSE PROPERTY AND ALLOWED STATUTORY DEDUCTION UNDER SECTION 24 OF THE ACT. THUS THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT MUCH HIGHER SUM THEN WAS DECLARED IN THE RETURN OF INCOME BY THE ASSESSEE. 4. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED T HE ORDER OF THE AO. THE ORDER OF THE CIT(A) WAS PASSED EX-PARTE. THE C IT(A) WAS HOWEVER AWARE OF THE FACT THAT IN A.Y 1998-99 TO 2000-01 AND 2003 -04 THE CLAIM OF THE ASSESSEE HAD BEEN UPHELD BY THE ITAT. SINCE THE AS SESSEE DID NOT APPEAR BEFORE THE CIT(A), THE CIT(A) UPHELD THE ORDER OF T HE AO. 5. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE TIM E OF HEARING IT WAS BROUGHT OUR NOTICE THAT IN A.Y 1999-2000 IN ITA NO. 580/M/06 BY ORDER DATED 28/8/08 THIS TRIBUNAL AFTER EXAMINING THE VAR IOUS CLAUSES IN THE AGREEMENT BY WHICH THE PROPERTY WAS LET OUT BY THE ASSESSEE AND CAME TO THE CONCLUSION THAT INCOME FROM LETTING HAD TO BE ASSESSED AS INCOME FROM BUSINESS. THE RELEVANT OBSERVATIONS OF THE TRIBUNA L IN THIS REGARD ARE AS FOLLOWS: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. DEPARTMENTAL REPRESENT ATIVE HAS MAINLY RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SHAMBU INVESTMENT PVT. LTD. VS. CIT (2003) 263 ITR 143 (SC) TO CONTEND THAT INCOME FROM WAREHOUSE WAS LIABLE TO BE TAXED UNDER THE ITA NO.2240/MUM/2010(A.Y. 2004-05) 4 HEAD `INCOME FROM HOUSE PROPERTY. FROM THE FACTS OF THAT CASE WE OBSERVE THAT THE INCOME WAS DERIVED BY LETTING OUT FURNISHED PREMISES ON MONTHLY RENT BASIS TO VARIOUS PARTIES ALONG WITH FURNITURE AND FIXTURES LIKE AIR CONDITIONERS ETC. FOR BEING USED AS TABLE SPACE AND ALSO COMMON SERVICES LIKE WATCH AND WARD STAFF WERE PROVIDED. IT WAS ALSO NOTED BY THE HONBLE HIGH COURT THAT THE ASSES SEE HAD ALREADY RECOVERED A SUM OF RS.4,25,000/- BY WAY OF A SECURI TY ADVANCES FROM THE OCCUPANTS AND HENCE, THE ENTIRE COST OF THE PRO PERTY WAS RECOVERED BY WAY OF SUCH INTEREST FREE ADVANCES. UNDER THOSE CIRCUMSTANCES, IT WAS HELD THAT THE ASSESSEE COULD NOT BE SAID TO HAV E EXPLOITED THE PROPERTY FOR ITS COMMERCIAL BUSINESS ACTIVITIES AND HENCE, THE INCOME WAS TAXABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY. THE HONBLE SUPREME COURT AFFIRMED THE VIEW OF THE HONBLE HIGH COURT. 5. FROM THE FACTS OF THIS CASE, IT TRANSPIRES THAT THE HONBLE SUPREME COURT HAS NOT LAID DOWN ANY UNIVERSALLY APP LICABLE PRINCIPLE THAT INCOME FROM IMMOVABLE PROPERTY, BE INVARIABLY TAXED UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. IT WAS ON THE C ONSIDERATION OF THE CUMULATIVE EFFECT OF ALL THE FACTORS PREVAILING IN CASE, WHICH HAVE BEEN NOTED ABOVE, THAT THE INCOME FROM IMMOVABLE PROPER TY WAS HELD TO BE TAXABLE UNDER THIS HEAD. IT BECOMES MORE EXPLICIT W HEN WE GO THROUGH THE JUDGMENT IN ENTIRETY AND NOTE THAT DIFFERENT TE STS HAVE BEEN FORMULATED IN THIS CASE TO DETERMINE THE HEAD UNDER WHICH SUCH INCOME BE TAXED. IT HAS BEEN LAID DOWN IN THIS CAS E THAT : `MERELY BECAUSE INCOME IS ATTACHED TO IMMOVABLE PROPERTY, I T CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM HOUSE PROPERTY. THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY HAS TO BE SEEN. IF IT IS FOUND, APPLYING S UCH DECISIONS THAT THE MAIN INTENTION IS FOR LETTING OUT OF PROPERTY OR AN Y PORTION THEREOF, THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM HOUSE PROPERTY. IN CASE IT IS FOUND THAT THE MAIN INTENTI ON IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMMERCIAL ACTIVITIES, IN THAT EVENT IT MUST BE HELD AS BUSINESS INCOME. IT IS THEREFORE , CLEARLY BORNE OUT THAT THE MAIN TEST TO DETERMINE THE HEAD UNDER WHIC H THE INCOME FROM IMMOVABLE PROPERTY BE TAXED IS THE PURPOSE FOR WHI CH THE PROPERTY IS USED. IF IT IS EXPLOITED COMMERCIALLY, THEN THE RES ULTING INCOME WOULD BE TAXED UNDER THE HEAD `BUSINESS INCOME. 6. WE HAVE COME ACROSS AN ORDER PASSED BY TH E PUNE BENCH OF THE TRIBUNAL IN NUTAN WAREHOUSEING CO. (P) LTD. VS. ITO (2007) 106 TTJ ITA NO.2240/MUM/2010(A.Y. 2004-05) 5 (PUNE) 137, IN WHICH THE GODOWN INCOME HAS BEEN HEL D TO BE TAXABLE UNDER THE HEAD `INCOME FROM HOUSE PROPERTY. ON THE CONTRARY THE LD. AR HAS RELIED ON THE ORDER PASSED BY THE RAJKOT BEN CH OF THE TRIBUNAL IN THE CASE OF ITO VS. TEJMALBHAI AND CO. (2006 28 2 ITR (AT) 224 (RAJKOT) IN WHICH IT HAS BEEN HELD THAT INCOME FROM STORAGE FACILITIES PROVIDED BY THE ASSESSEE TO CUSTOMERS IS TO BE TAXE D UNDER THE HEAD `PROFITS AND GAINS FROM BUSINESS OR PROFESSION. ON GOING THROUGH THESE ORDERS IN JUXTAPOSITION TO THE JUDGMENT IN TH E CASE OF SHAMBHU INVESTMENT (SUPRA), WE FIND THAT NO STRAITJACKET FO RMULA CAN BE DEVISED TO DETERMINE CONCLUSIVELY AS TO UNDER WHICH HEAD INCOME FROM IMMOVABLE PROPERTY SHOULD FALL. ALL THE RELEVANT FA CTORS NEED TO BE NECESSARILY LOOKED INTO TO DECIDE THE CHARACTER OF INCOME. IF THE FACTS SHOW THAT THE ASSESSEE IS DOING A COMPLEX COMMERCIA L ACTIVITY BY EXPLOITING THE IMMOVABLE PROPERTY, THEN THE INCOME WOULD FALL UNDER THE HEAD `PROFITS AND GAINS FROM BUSINESS OR PROFES SION. IF ON THE OTHER HAND, THE ASSESSEE HAS SIMPLY LET OUT THE SPA CE AND IS EARNING THE RENTAL INCOME, IT WOULD FALL UNDER THE HEAD `IN COME FROM HOUSE PROPERTY. ON THE EXAMINATION OF THE FACTS OF THE CASE BEFORE PUNE BENCH IN NUTAN WAREHOUSING (SUPRA), THE ASSESSEE HA D LET OUT HIS GODOWN. OTHER ACTIVITIES CARRIED ON BY THE ASSESSEE SUCH AS THE PROVISION OF ELECTRICITY AND SECURITY ETC. WERE FOU ND BY THE TRIBUNAL TO BE ONLY INCIDENTAL TO THE MAIN ACTIVITY OF LETTING OUT. THE TRIBUNAL HAS RECORDED A CATEGORICAL FINDING THAT NO COMPLEX COMM ERCIAL ACTIVITY WAS DONE BY THE ASSESSEE. ON THE OTHER HAND THE RAJKO T BENCH IN THE CASE OF TEJMALBHAI & CO. (SUPRA) FOUND THAT THE SER VICES PROVIDED BY THE ASSESSEE WERE A COMMERCIAL ACTIVITY AND HENCE T HE INCOME WAS ELIGIBLE TO BE CONSIDERED UNDER THE HEAD `BUSINESS INCOME. ON THE ANALYSIS OF THESE DECISIONS WE OBSERVE THAT WHAT IS MATERIAL TO CONSIDER IS THE NATURE OF ACTIVITY DONE BY THE ASSE SSEE AND NOT THE MANNER IN WHICH THE RENTAL INCOME IS MEASURED. A P ERSON MAY SIMPLY LET OUT HIS IMMOVABLE PROPERTY AND GET COMPENSATED BY WAY OF A PERCENTAGE IN THE PROFITS FROM THE BUSINESS CARRIE D ON BY THE TENANT IN THAT PREMISES. IN SUCH A SITUATION, THE NATURE OF I NCOME FROM PROPERTY WOULD NOT GET ALTERED TO `BUSINESS INCOME ONLY BEC AUSE IT IS A NOT A FIXED MONTHLY RENT. IT WOULD CONTINUE TO BE CATEGO RIZED UNDER THE HEAD `INCOME FROM HOUSE PROPERTY NOTWITHSTANDING T HE WAY IN WHICH IT IS QUANTIFIED. ON THE CONTRARY, AN OWNER OF PR OPERTY MAY GET COMPENSATED BY WAY OF A FIXED MONTHLY PAYMENT, BUT FOR THE ACTIVITIES OF THE COMPLEX COMMERCIAL NATURE, THEN THE RESULTANT INCOME WOULD NOT PARTAKE OF THE CHARACTER OF `INC OME FROM HOUSE PROPERTY. THUS THE DECISIVE TEST IS THE TRUE NATUR E OF ACTIVITY CARRIED OUT BY THE ASSESSEE WHICH PRODUCES THE INCOME FROM IMMOVABLE PROPERTY AND NOT THE WAY IN WHICH IT IS MEASURED. ITA NO.2240/MUM/2010(A.Y. 2004-05) 6 7. ADVERTING TO THE FACTS OF THE INSTANT CAS E WE NOTE THAT THE ASSESSEE HAD A WAREHOUSE WHICH WAS LET OUT TO 17 PE RSONS DURING THE YEAR IN QUESTION. SIXTY PERCENT OF THE FIRST FLOOR WAS LET OUT TO M/S GLAXO INDIA LTD, WITH WHICH AGREEMENT DATED 30.9.19 99 WAS ENTERED INTO. THIS AGREEMENT IS CONSIDERED AS A REPRESENTA TIVE OF SUCH OTHER AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH THE OT HER CUSTOMERS BECAUSE THE AO AS WELL AS THE CIT(A) HAVE TAKEN COG NIZANCE OF THIS AGREEMENT. A COPY OF THE SAID AGREEMENT IS PLACED O N RECORD, THE RELEVANT CLAUSES OF WHICH ARE AS UNDER :- - EFFECTIVE 1ST OCTOBER, 1999, FROM THE TOTAL SPA CE ADMEASURING APPROXIMATELY 9,500 SQ. FT. ON THE GROUND FLOOR OF YOUR PREMISES SITUATED AT PLOT NO.D - 22/1, TTC AREA, MIDC TURBHE, NAVI MUMBAI, 60% SPACE WILL BE USED BY GLAXO INDIA LTD. FOR STORAGE OF THEIR STOCKS OF BULK-DRUGS & PHARMACEUTICALS. - NO SECURITY DEPOSIT WILL BE PAID BY GLAXO INDIA L TD. TO RASIKLAL & CO. FOR USE OF THIS WAREHOUSE. - GLAXO INDIA LTD. SHALL PAY A MONTHLY REN T OF RS.60,000/- TO M/S. RASIKLAL & CO. PVT . LTD. FOR USE OF THIS SPACE UPON RECEIPT OF DEBIT NO TE. - RASIKLAL & CO. SHALL PROVIDE ADEQUATE SECURITY FO R SAFETY OF THE MATERIAL STORED AT ABOVE PLACE. - RASIKLAL AND CO. SHALL DEPUTE RESPONSIBLE OFFICER TO RECEIVE & DELIVER STOCKS, MAINTAIN RECORDS OF INCOMING & OUTGOING STOCKS IN THE REGISTER, PREPARATION OF RELEVANT DOCUMENTS LIKE GOODS RECEIVED NOTES, DELIVERY CHALLANS, MONTHLY STOCKS REPORT ETC. AND SEND THE SAME TO GLAXO INDIA LTD. - PHYSICAL STOCK CHECK SHALL BE CARRIED OUT BY RASIKL AL & CO. AT REGULAR INTERVALS TO SEE THAT BLOCK STOCKS & PHYSICAL STOCKS ARE MATCHING. - LABOURS FOR LOADING/UN-LOADING AND STACKING OF THE MATERIAL, SAMPLING & INSPECTION OF THE MATERIAL BY GLAXOS QUALITY ASSURANCE DEPARTMENT OR BY ANY OTHER AGENCY LIKE SGS, OMIC, AFFIXING OF ITA NO.2240/MUM/2010(A.Y. 2004-05) 7 LABELS/SHIPPING MARKS ETC. WILL BE PROVIDED BY RASIKLAL & CO. AND WILL BE CHARGED AT ACTUALS. - RASIKLAL & CO. SHALL OBTAIN REQUISITE LICENCES UNDE R FORM-20B & FORM-21B FROM FDA FOR STORAGE OF BULK DRUGS & PHARMACEUTICALS AT ABOVE PLACE AND RE-NEW IT FROM TIME TO TIME. - RASIKLAL & CO. SHALL STORE THE MATERIAL AS PER THE STORAGE CONDITIONS MENTIONED ON THE LABEL. - RASIKLAL & CO. SHALL ENSURE THAT PESTICIDES ARE SPRAYED IN THE GODOWN AT VARIOUS CORNERS AND RECORDS OF THE SAME SHALL BE MAINTAINED. ALSO RODENT BAITS SHALL BE KEPT AT FEW PLACES AND ANY UNUSUAL OBSERVATION SHALL BE ENVISAGED AND REPORTED TO GLAXO /BWIL. - RASIKLAL & CO. SHALL PROVIDE WEIGHING BALANCE OF 10 0 KGS. CAPACITY AND SHALL DO THE CALIBRATION OF THE SAME AT REGULAR INTERVALS. GODOWN KEEPER SHALL CHECK AT RANDOM THE WEIGHTS OF THE PACKAGES/DRUMS RECEIVED & SHORTAGE/EXCESS SHALL BE REPORTED TO GLAXO. 8. ON THE PERUSAL OF THE ABOVE CLAUSES IT CAN BE EA SILY NOTED THAT THE ASSESSEE COMPANY WAS UNDER OBLIGATION TO PROVID E ADEQUATE SECURITY FOR THE SAFETY OF THE MATERIAL STORED APAR T FROM THE RESPONSIBILITY OF RECEIVING AND DELIVERING STOCK, M AINTAINING RECORD OF INCOMING AND OUTGOING STOCK IN THE REGISTER ETC. A ND ALSO TAKING OF PHYSICAL INVENTORY AT REGULAR INTERVALS. IT WAS AL SO UNDER DUTY TO DO THE LOADING AND UNLOADING AND STOCK TAKING OF MATER IAL WAS ALSO TO BE DONE BY THE ASSESSEE IN ADDITION TO ENSURING THAT T HE PESTICIDES WERE PROPERLY SPRAYED IN GODOWN. FROM THESE RESPONSIBIL ITIES FASTENED ON THE ASSESSEE, IT IS DISCERNIBLE THAT THE ASSESSEE W AS NOT MERE LETTING OUT ITS PREMISES FOR WAREHOUSING BUT WAS DOING A CO MPLEX COMMERCIAL ACTIVITY. ALL THE DUTIES CAST UPON THE ASSESSEE BY ITS CUSTOMERS DO REALLY GO TO SHOW THAT THE ASSESSEE WAS RESPONSIBLE FOR ENSURING THE INCOMING OF GOODS, ITS PROPER STORAGE AND THEIR OUT GOING APART FROM PROVIDING ADEQUATE SECURITY AND HOST OF OTHER ACTIV ITIES NOTED ABOVE. IT IS STILL FURTHER NOTED THAT UNLIKE THE CASE OF SHAM BU INVESTMENT P. LTD. (SUPRA), NO SECURITY DEPOSIT WAS PAID BY GLAXO INDI A LTD. TO THE ASSESSEE FOR THE USE OF ITS WAREHOUSE. THUS, THE M AJOR CONTENTION WHICH WEIGHED WITH THE HONBLE SUPREME COURT, BEING THE RECEIPT OF ITA NO.2240/MUM/2010(A.Y. 2004-05) 8 SECURITY DEPOSIT FOR A SUM SUFFICIENT TO RECOVER T HE COST OF THE PROPERTY, IN HOLDING THAT THE INCOME FROM LETTING OF THE IMMOVABLE PROPERTY WAS TAXABLE UNDER THE HEAD INCOME FROM HO USE PROPERTY, IS LACKING IN OUR CASE SINCE NO SECURITY WAS RECEIVE D BY THE ASSESSEE AS IS CLEARLY EMANATING FROM THE CLAUSES OF THE AGREEM ENT NOTED ABOVE. WE FURTHER NOTE THAT EXCEPT FOR MINOR REIMBURSEMENT OF SOME EXPENSES, ONE COMPOSITE PAYMENT HAS BEEN RECEIVED BY THE ASSESSEE TOWARDS THE PROVISION OF SERVICES AS WELL AS SPACE FOR WAREHOUSING. WE ARE UNABLE TO APPRECIATE THAT HOW THIS INCOME CAN B E CATEGORIZED UNDER THE HEAD `INCOME FROM HOUSE PROPERTY AS THE SERVICES PROVIDED BY THE ASSESSEE ARE OF COMPLEX COMMERCIAL NATURE. WE THEREFORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS SC ORE. 9. THERE IS ANOTHER INTERESTING ASPECT OF THIS CASE . IT IS EMERGING FROM PARA-2 OF THE IMPUGNED ORDER, WHICH HAS REMAIN ED UNCONTROVERTED BY THE LD. DR, THAT IN EARLIER YEARS ALSO THE INCOME FROM WAREHOUSE WAS ASSESSED AS BUSINESS INCOME. TH E PRINCIPLE OF CONSISTENCY REQUIRES THAT THE VIEW TAKEN BY THE REV ENUE IN AN EARLIER YEAR SHOULD NOT BE DEPARTED FROM IN THE SUCCEEDING YEARS UNLESS THE FACTUAL OR LEGAL POSITION UNDERGOES CHANGE. THE HO NBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT (19 92), 193 ITR 321 HAS APPROVED THE PRINCIPLE OF CONSISTENCY. SIMILA R VIEW HAS BEEN EXPRESSED IN A CATENA OF CASES INCLUDING CIT VS. LE ADER VALVES LTD.(2007), 295 ITR 273(P&H) AND DIT(EXEMPTION).VS . GURUNANAK VIDYA BHANDAR TRUST(2004), 272 ITR 379(DEL.). AS THE INCOME FROM THE GODOWN WAS CONSISTENTLY TAXED BY THE REVENUE UN DER THE HEAD `BUSINESS INCOME IN THE EARLIER YEARS AND NO CHANG E IN THE FACTUAL OR LEGAL POSITION IN THIS YEAR HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR, IN OUR CONSIDERED OPINION THERE IS NO JUSTIFICA TION IN UNSETTLING THE HITHERTO SETTLED LEGAL POSITION. WE THEREFORE, APPR OVE THE VIEW TAKEN BY THE LD. CIT(A). 7. THE ABOVE ORDER OF THE TRIBUNAL WAS FOLLOWED IN A.Y 2000-01 IN ITA NO.581/M/06 AND ITA NO.3214 & 3215/M/06 FOR A.Y 199 8-99 AND 2003-04. BESIDES THE ABOVE IN WEALTH TAX PROCEEDINGS THIS PR OPERTY HAS BEEN HELD TO BE FALLING WITHIN EXCLUSION CARVED OUT BY SECTION 2 (EA) OF THE WEALTH TAX ACT 1959 NAMELY PROPERTY USED FOR WAREHOUSING SERVICES (COMMERCIAL PURPOSE). THE HONBLE HIGH COURT IN WTA NO.3001 OF 2009 BY IT S ORDER DATED 8/2/2010 HAS ALREADY UPHELD THIS VIEW. IN VIEW OF THE ABOVE WE HOLD THAT ITA NO.2240/MUM/2010(A.Y. 2004-05) 9 THE INCOME IN QUESTION SHOULD BE ASSESSED UNDER THE HEAD INCOME BUSINESS AND THE ASSESSEE SHOULD BE ALLOWED DEDUCTION CLAIME D IN THE P&L ACCOUNT. THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 28 TH DAY OF SEPT., 2011. SD/- SD/- (T.R.SOOD ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 28 TH SEPT.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RD BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.2240/MUM/2010(A.Y. 2004-05) 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 22/9/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23/9/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER