M/s. Dinex Hotel Pvt. Ltd., Dehradun V. DCIT, Dehradun

ITA 2499/DEL/2012

• Counselvise Citation: 249920114 RSA 2012
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S AHLAWAT
• Assessee Lawyers: SM MATHUR
• Keywords: Business income; Opportunity of being heard; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.2499/DEL/2012 2499/DEL/2012 2499/DEL/2012 2499/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2008 2008 2008 2008- -- -09 0909 09 M/S DINEX HOTEL PVT.LTD., M/S DINEX HOTEL PVT.LTD., M/S DINEX HOTEL PVT.LTD., M/S DINEX HOTEL PVT.LTD., 59, GANDHI ROAD, 59, GANDHI ROAD, 59, GANDHI ROAD, 59, GANDHI ROAD, DEHRADUN DEHRADUN DEHRADUN DEHRADUN 248 001. 248 001. 248 001. 248 001. PAN : AACCD0592K. PAN : AACCD0592K. PAN : AACCD0592K. PAN : AACCD0592K. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2, 2,2, 2, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.M.MATHUR, CA. RESPONDENT BY : SHRI J.S.AHLAWAT, SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : IN THIS APPEAL BY THE ASSESSEE, FOLLOWING GROUNDS ARE RAISED:- 1. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY TREATING THE INCOME RECEIVED FROM RENTING A PART OF HOTEL PREMISES AS INCOME FROM HOUSE PROPERTY RATH ER THAN BEING TAXED UNDER THE HEAD INCOME FROM BUSINE SS OR PROFESSION WITHOUT APPRECIATING THE FACT THAT THE SAID INCOME HAD CONSISTENTLY BEING ASSESSED AS BUSINESS INCOME IN THE PREVIOUS ASSESSMENT YEARS WHICH INCL UDE ASSESSMENT FOR IMMEDIATE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08 WHERE THE ASSESSMENT WAS COMPLETED U/SEC. 143(3) OF THE ACT. ITA-2499/DEL/2012 2 2. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE BY NOT FOLLOWING THE RULE OF CONSISTENCY INSPI TE OF THE FACT THAT DURING THE ASSESSMENT YEAR UNDER APPEAL, NO MATERIAL CHANGE IN NATURE OF INCOME HAVE BEEN TAKEN PLACE. THE FACTS AND CIRCUMSTANCES OF THE CASE ARE ABSOLUTELY IDENTICAL TO THE FACTS OF EARLIER YEARS. 3. THAT HONBLE COMMISSIONER OF INCOME TAX (APPEALS ) WHILE UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER WITH REGARDS TO TAXING THE RENTAL RECEIPT AS INCOM E FROM HOUSE PROPERTY HAS FAILED TO APPRECIATE THAT THE IMPUGNED PROPERTY IS BEING EXPLOITED AS BUSINESS AS SET AND WAS USED FOR HOTEL BUSINESS SINCE THE YEAR 1982 AND THE APPELLANT COMPANY IS HAVING LICENCE TO OPERATE THIS BUILDING AS HOTEL BUILDING. THIS LICENCE IS BEING RENEWED YEAR AFTER YEAR TILL NOW. THUS THE LEARNED ASSESSI NG OFFICER HAS WRONGLY ASSESSED THE RENTAL INCOME RECEIVED FRO M THIS PROPERTY AS INCOME FROM HOUSE PROPERTY IGNORING T HE PAST ASSESSED HISTORY OF THE CASE WITH IS BAD IN LA W. 4. THAT THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS IN SUSTAINING THE FINDINGS OF THE LEARNED ASSESSING OF FICER IN RESPECT OF PART DISALLOWANCE OF THE DEDUCTION OUT O F DIRECTORS REMUNERATION. THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) WHILE SUSTAINING THE SAID DISALLOWANCE HAS ALSO IGNORED THE PAST ASSESSED HIS TORY ON THIS ISSUE, THEREFORE, HIS ACTION IS ALSO ERRONEOUS IN LAW. ITA-2499/DEL/2012 3 THE APPELLANT, ACCORDINGLY PRAY TO YOUR HONOUR THAT THE ERRONEOUS ORDER PASSED BY THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) MAY KINDLY BE CANCELLED AND APPROPRIATE RELIEF BE PROVIDED TO THE APPELLANT AFT ER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE APPE LLANT. 2. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSEE IS IN THIS LINE OF BUSINE SS SINCE PAST SEVERAL YEARS AND IN ALL THE PRECEDING YEARS AS WELL AS SUB SEQUENT YEARS, THE INCOME FROM RENT HAS BEEN ASSESSED AS INCOME FROM B USINESS. THAT THE ASSESSEE IS COMMERCIALLY EXPLOITING THE PROPERT Y BY RENTING HALL AND ROOMS TO SEPARATE PERSONS. THE ASSESSEE IS HOL DING THE LICENCE OF RUNNING THE LODGE. HE, THEREFORE, SUBMITTED THAT W HEN IN ALL THE PRECEDING AS WELL AS SUBSEQUENT YEARS THE INCOME FR OM RENT HAS BEEN ASSESSED AS BUSINESS INCOME, A CONTRARY VIEW SHOULD NOT HAVE BEEN TAKEN IN ONE YEAR WHICH IS UNDER APPEAL. IN SUPPOR T OF THIS CONTENTION, HE RELIED UPON THE DECISION OF HONBLE APEX COURT I N THE CASE OF RADHA SOAMI SATSANG VS. CIT - 193 ITR 321. 3. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE HONBLE APEX COURT IN THE CASE OF RADHA SOAMI SATSANG (SUPR A) HELD AS UNDER:- HELD, REVERSING THE DECISION OF THE HIGH COURT, ON THE FACTS, (I) THAT PROPERTY GIVEN TO THE SATGURU WAS I NTENDED FOR THE COMMON PURPOSE OF FURTHERING THE PURPOSE OF THE INSTITUTION. THE CENTRAL COUNCIL HAD AUTHORITY TO MANAGE THE PROPERTIES OF THE INSTITUTION AND, ON REVOCATIO N OF THE ITA-2499/DEL/2012 4 TRUST, THE PROPERTY WAS NOT TO GO BACK TO THE SATGU RU, AND, AT THE MOST, IN THE PLACE OF THE TRUST, THE CENTRAL COUNCIL WOULD EXERCISE AUTHORITY. THE TRIBUNAL WAS JUSTIFI ED IN HOLDING THAT THE PROPERTIES WERE SUBJECT TO A LEGAL LIABILITY OF BEING USED FOR THE RELIGIOUS OR CHARITABLE PURPO SES OF THE SATSANG. (II) THAT, IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE DEPARTMENT TO TAKE A DIFFERENT VIEW FROM THAT TAKEN IN EARLIER PROCEEDINGS, THE QUESTION OF THE E XEMPTION OF THE ASSESSEE APPELLANT SHOULD NOT HAVE BEEN REOP ENED. STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. THOUGH, EACH ASSESSMENT YE AR BEING A UNIT, WHAT WAS DECIDED IN ONE YEAR MIGHT NO T APPLYIN THE FOLLOWING YEAR; WHERE A FUNDAMENTAL ASP ECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS H AS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTI ES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLE NGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO AL LOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 5. THE RATIO OF THE ABOVE DECISION OF HONBLE APEX COURT WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE CASE UNDER APPEAL BECAUSE ON IDENTICAL FACTS, THE RENTAL INCOME HAS BEEN ASSESSE D AS BUSINESS INCOME IN ALL THE PRECEDING YEARS. IT HAS ALSO BEE N STATED BY THE LEARNED COUNSEL THAT EVEN IN THE SUBSEQUENT YEAR, T HE SAME HAS BEEN ACCEPTED AS BUSINESS INCOME. THE ASSESSEES COUNSE L HAS ALSO PLACED BEFORE US THE ASSESSMENT ORDER OF THE IMMEDIATELY P RECEDING YEAR I.E. AY 2007-08 WHEREIN, IN THE ORDER PASSED UNDER SECTI ON 143(3), THE ASSESSING OFFICER HAS ACCEPTED THE INCOME DISCLOSED BY THE ASSESSEE. ITA-2499/DEL/2012 5 IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DE CISION OF HONBLE APEX COURT IN THE CASE OF RADHA SOAMI SATSANG (SUPR A), WE DIRECT THE ASSESSING OFFICER TO ASSESS THE RENTAL INCOME OF TH E ASSESSEE AS BUSINESS INCOME AND CONSEQUENTLY TO ALLOW THE DEDUC TION FOR THE EXPENDITURE INCLUDING REMUNERATION PAID TO THE DIRE CTORS INCURRED BY THE ASSESSEE FOR EARNING OF THE BUSINESS INCOME. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 9 TH AUGUST, 2012. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 09.08.2012 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S DINEX HOTEL PVT.LTD., M/S DINEX HOTEL PVT.LTD., M/S DINEX HOTEL PVT.LTD., M/S DINEX HOTEL PVT.LTD., 59, GANDHI ROAD, 59, GANDHI ROAD, 59, GANDHI ROAD, 59, GANDHI ROAD, DEHRADUN DEHRADUN DEHRADUN DEHRADUN 248 001. 248 001. 248 001. 248 001. 2. RESPONDENT : DEPUTY COMMISSIONER OF IN DEPUTY COMMISSIONER OF IN DEPUTY COMMISSIONER OF IN DEPUTY COMMISSIONER OF INCOME TAX, COME TAX, COME TAX, COME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -2, 2,2, 2, DEHRADUN. DEHRADUN. DEHRADUN. DEHRADUN. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR