ITO, Ward - 13(1), Kolkata , Kolkata V. M/s. Ashamangal Portfolio Pvt. Ltd., Howrah

ITA 2559/KOL/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4272 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI K MONDAL SRDR
• Assessee Lawyers: R JAIN
• Keywords: Business income; Depreciation; Assessment record
• Section: 143(3)

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 2559 / KOL / 20 17 ASSESSMENT YEAR :2012-13 INCOME TAX OFFICER, WARD-13(1), 9 TH FLOOR, 110, SHANTIPLLY, AAYAKAR BHAWAN (POORVA), KOLKATA-107 V/S . M/S ASHAMANGAL PORTFOLIO PVT. LTD., 103/24/1, FORESHORE ROAD, SHIBPUR, HOWRH-711102 [ PAN NO.AABCA 3340 B ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SHRI K. MONDAL, SR-DR /BY RESPONDENT SHRI R. JAIN, FCA /DATE OF HEARING 01-10-2018 /DATE OF PRONOUNCEMENT 10-10-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 C HALLENGES CORRECTNESS OF COMMISSIONER OF INCOME TAX (APPEALS) -5, KOLKATAS ORDER DATED 18.10.2017, PASSED IN CASE NO.44/CIT(A)-5/DCI T.CIR-13(1)/15-16, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL SEEKS TO REVIVE THE ASSESSING OFFICERS ACTION TREA TING THE TAXPAYERS INCOME OF 239,98,414/- FROM ITS WAREHOUSING FACILITIES UNDER THE HEAD HOUSE PROPERTY INCOME THAN FROM BUSINESS IN LOWER APPELLATE PROCEE DINGS. WE NOTICE AT THE OUTSET THAT CIT(A)S DETAILED DISCUSSION UNDER CHAL LENGE READS AS UNDER:- ITA NO.2559/KOL/2017 A.Y. 2012-1 3 ITO WD-13(1), KOL. VS. M/S ASHA MANGAL PORTFOLIO PVT. LTD. PAGE 2 3. GROUNDS NO.1 AND 2:- GROUNDS NO.1 AND 2 RELATE T O TREATMENT OF BUSINESS INCOME OF WAREHOUSE CHARGES AS INCOME FROM HOUSE PROPERTY (RENT) AND DISALLOWING EXPENSES FROM BUSINESS BY THE LD. ASSESSING OFFICER . 3.1 THE AO IN HIS ASSESSMENT ORDER FOUND THAT THE A SSESSEE COMPANY DERIVED INCOME MAINLY FROM WAREHOUSING CHARGES AND SERVICES . THE AO HAS HELD THAT THE ASSESSEE IS THE OWNER OF THE WAREHOUSING STRUCTURE IN RESPECT TO WHICH IT HAS BEEN CLAIMING DEPRECIATION, ALL THROUGHOUT CLEARLY ESTAB LISHING THE OWNERSHIP CLAIM OF THE ASSESSEE. THE AO HAS DISALLOWED A SUM OF RS.2,39,98 ,414/- UNDER THE HEAD INCOME FORM HOUSE PROPERTY AS FOLLOWS : WAREHOUSING CHARGES : RS.1,72,75,226/- MAINTENANCE CHARGES : RS. 14,30,268/- GROUND RENT : RS. 52,92,920/- TOTAL : RS.2,39,98,414/- 3.2. THE AIR OF THE APPELLANT IN HIS SUBMISSION HAD HIGHLIGHTED THE FOLLOWING POINTS :- 1. IT IS SUBMITTED THAT INCOME FROM WAREHOUSING CHA RGES, MAINTENANCE CHARGES ETC. RECEIVED BY THE APPELLANT HAS BEEN ACC EPTED BY THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, KOLKATA 'BUSINESS IN COME' IN APPELLANT'S OWN CASE IN ORDER DATED 04/04/2008 (COPY ENCLOSED) AND ALSO REGARDING BUSINESS INCOME THE HON'BLE INCOME TAX APPELLATE TRIBUNAL HA S GIVEN THE FINDING ON THE BASIS OF MATERIALS ON RECORD THAT THE APPELLANT IS NEITHER THE OWNER OF LAND NOR THE SUPER STRUCTURE. 2. IT IS SUBMITTED THAT HON'BLE INCOME TAX APPELLAT E TRIBUNAL, KOLKATA IN THE ASSESSEE'S OWN CASE FOR THE AY 2004-05 AND AY 2005- 06 HAS AGAIN DECIDED THAT THERE IS NO FACTUAL CHANGE IN THESE TWO ASSESS MENT YEAR FROM WHAT WERE IN THE EARLIER YEAR AS DECIDED BY THE TRIBUNAL. ASS ESSEE'S INCOME IS AGAIN PRONOUNCED TO BE 'INCOME FROM BUSINESS' AND NOT 'IN COME FROM HOUSE PROPERTY'. COPY OF THE SAID ORDER DATED 19.02.2013 IS ENCLOSED FOR READY REFERENCE. 3. IT IS SUBMITTED THAT THE INCOME TAX APPELLATE TR IBUNAL, KOLKATA HAS REITERATED THE ABOVE MENTIONED PRONOUNCEMENT IN ITS ORDER FOR THE ASSESSMENT YEAR 2008-09 IN THE ASSESSEE'S OWN CASE. COPY OF THE SAID DATED 13.02.2014 IS ENCLOSED FOR READY REFERENCE. 4. BUT FOR THE YEAR THE LD. CIT (A)-L VIDE HIS ORDE R DATED 10108/2008 BEING APPEAL NO. 527/CIT (A)-LICIR.-43/2007-08 HAS DECIDE D THE ISSUE FULLY IN FAVOR OF THE APPELLANT AND DELETED ALL THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF TREATMENT OF BUSINESS INCOME AS RENTAL INCOME AND CORRESPONDING DISALLOWANCE OF ALL THE EXPENSE DEBIT ED IN PROFIT & LOSS A/C AS WELL AS INTEREST PAID AND DEPRECIATION. 5. AGAIN FOR THE ASSESSMENT YEAR 2010-11 THE LD. CI T (A)-5 VIDE HIS ORDER DATED 08/03/2016 BEING APPEAL NO. 115/CIT(A)-5/C.-1 3(1)/13-14/14-15 HAS DECIDED THE ISSUE FULLY IN FAVOR OF THE APPELLANT A ND DELETED ALL THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF TRE ATMENT OF BUSINESS INCOME AS RENTAL INCOME AND CORRESPONDING DISALLOWA NCE OF ALL THE EXPENSE DEBITED IN PROFIT & LOSS ALC AS WELL AS INTEREST PA ID AND DEPRECIATION (COPY ENCLOSED) 6. IN FACT THERE HAS BEEN NO CHANGE IN THE BUSINESS OF THE APPELLANT COMPANY AND ALSO FACTUAL POSITION OF THE CASE. ITA NO.2559/KOL/2017 A.Y. 2012-1 3 ITO WD-13(1), KOL. VS. M/S ASHA MANGAL PORTFOLIO PVT. LTD. PAGE 3 7. THE FINDING GIVEN BY THE LD. ASSESSING OFFICER I N HIS ORDER GIVING REASONS FOR TREATING THE BUSINESS INCOME AS RENTAL INCOME I S INCORRECT IN VIEW OF THE DETAILED FINDING GIVEN ABOUT OWNERSHIP OF LAND AND SUPER-STRUCTURE BY THE HON'BLE INCOME TAX APPELLATE TRIBUNAL AS PER COPY O F THE ORDER ENCLOSED EARLIER. 8. IT IS A FACT ON RECORD THAT THE ASSESSES IS NEIT HER OWNER OF LAND NOR SUPER STRUCTURE. 9. IN VIEW OF THE ABOVE THE TREATMENT OF BUSINESS I NCOME I LOSS BY THE ASSESSING OFFICER AS RENTAL INCOME IS BAD IN LAW AN D SUCH TREATMENT SHOULD BE DELETED IN VIEW OF HONBLE INCOME TAX APPELLATE TRIB UNAL'S ORDER. 3.3. I HAVE GONE THROUGH THE SUBMISSION OF THE APPE LLANT, AND PERUSED THE RELEVANT ASSESSMENT RECORDS. THE CIT.(APPEAL)-5, KOLKATA, ON THE SAME ISSUE IN HIS ORDER FOR ASSESSMENT YEAR 2010-11, FOLLOWING THE DECISION OF THE HON'BLE ITAT, KOLKATA IN THE APPELLANT'S OWN CASE HAD ALLOWED THE APPELLANT'S PL EA, THAT INCOME FROM WAREHOUSING IS AN INCOME FROM BUSINESS. ON PERUSAL OF THE RECOR DS, IT APPEARS THAT THE HON'BLE ITAT KOLKATA IN THE APPELLANT'S OWN CASE FOR THE AS SESSMENT YEARS 2000-01, 2001- 02, 2002-03, 2003-04, 2004-05, 2005-06 AND 2008-09 HAS DISMISSED THE APPEAL OF REVENUE AND UPHELD THE APPELLANT'S CONTENTION THAT INCOME FROM WAREHOUSING CHARGES FALLS UNDER THE HEAD 'INCOME FROM BUSINESS' AND NOT 'INCOME FROM HOUSE PROPERTY'. THE SALIENT OBSERVATIONS OF THE ITAT, KO LKATA IN THEIR RESPECTIVE ORDERS ARE REPRODUCED IN BREVITY AS FOLLOWS : 'ON CAREFUL ANALYSIS OF THE UNDISPUTED FACTS NARRAT ED SUPRA IN THE LIGHT OF THE VARIOUS JUDICIAL PRONOUNCEMENTS THAT WERE RELIED ON BY THE ASSESSEE IN SUPPORT OF ITS CLAIMS. IT IS FOUND THAT THE ASSESSE E IS NEITHER THE OWNER NOR THE LESSOR OF THE PROPERTY THAT WAS EXPLOITED BY THE AS SESSEE BY CARRYING ON BUSINESS AFTER REPAIRS AND MAINTENANCE, GIVING ON L EASE TO OTHERS AND BY PROVIDING ELECTRICITY CONNECTIONS, SECURITY ETC. AN D DERIVES INCOME THEREFROM. THE PROVISIONS CONTAINED IN SECTION 22 OF THE IT. A CT CLEARLY MENTIONS THAT THE ANNUAL VALUE OF PROPERTY CONSISTING OF ANY BUILDING S OR LANDS APPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER, OTHER T HAN SUCH PORTIONS OF SUCH PROPERTY AS HE MANY OCCUPY FOR THE PURPOSES OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM THE PROFITS OF WHICH ARE CHARGEAB LE TO INCOME-TAX, SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD ' INCOME FROM HOUSE PROPERTY '. IN CLEAR TERMS THE PROVISION SAYS THAT THE PROPERTY MU ST BE OWNED BY THE ASSESSEE IN ORDER TO CHARGE THE INCOME DERIVED FROM IT OR ITS PORTION OTHER THAN THAT PORTION USED FOR CARRYING ON BUSINESS ACT IVITIES AS INCOME FROM HOUSE PROPERTY. IN THE PRESENT CASE ON HAND BY GOIN G THROUGH ALL THE DOCUMENTS AND MATERIAL MADE AVAILABLE BY THE ASSESS EE BEFORE THE DEPARTMENTAL AUTHORITIES AND MENTIONED IN THE ORDER S PASSED BY THEM NOWHERE IT WAS POINTED OUT THAT HOW THE ASSESSEE BE CAME THE PROPERTY OWNER OR LESSEE THEREOF.' THE ITAT, KOLKATA HAS REFERRED TO THE DECISION OF T HE HON'BLE SUPREME COURT IN THE CASE OF RB JODHAMAL KUTHALIA VS. CIT 82 ITR 570 WHE REIN IT WAS HELD THAT 'THE OWNER MUST BE THE PERSON, WHO CAN EXERCISE, THE RIG HTS OF OWNER NOT ON BEHALF OF THE OWNERSHIP BUT IN HIS OWN RIGHT.' THIS TRIBUNALS BOM BAY BENCH AS WELL AS HYDERABAD BENCH REPORTED IN 110 ITD 331 AND 337 AND 99 ITD 18 IS OF THE SAME VIEW TO THE EFFECT THAT 'IF THE ASSESSEE IS NOT THE OWNER OF TH E BUILDING, INCOME FROM LETTING OUT THE SAME WITH AMENITIES WOULD HAVE TO BE ASSESSED E ITHER UNDER HEAD ' BUSINESS ' OR 'INCOME FROM OTHER SOURCES' DEPENDING ON THE FAC T AS TO WHETHER RENTING OUT OF THE BUILDING OR LAND WAS APPURTENANT THERETO WAS DONE I N THE COURSE OF BUSINESS OR NOT.' IN THE LIGHT OF THE RATIO LAID DOWN BY THE JUDICIAL FORUMS, WE ARE OF THE CONSIDERED ITA NO.2559/KOL/2017 A.Y. 2012-1 3 ITO WD-13(1), KOL. VS. M/S ASHA MANGAL PORTFOLIO PVT. LTD. PAGE 4 VIEW, THAT THE APPELLANT IS NOT THE OWNER OF THE PR OPERTY, IN QUESTION AND NOT HAVING ANY RIGHT OVER IT AND IS NOTHING, BUT THE BUSINESS INCOME BUT NEVER BE THE INCOME FROM HOUSE PROPERTY. THIS ISSUE RAISED BY THE APPEL LANT IS ACCEPTED BY DIRECTING THE DEPARTMENTAL AUTHORITIES TO TREAT THE SAME ACCORDIN GLY. 3.4 AFTER A CAREFUL CONSIDERATION OF THE DECISIONS AS FOREGOING INCLUDING THE BINDING DECISIONS OF THE JURISDICTIONAL ITAT, KOLKATA IN TH E APPELLANTS OWN CASE, THE RELEVANT ASSESSMENT RECORDS AND THE SUBMISSIONS OF THE APPEL LANT, INCOME FROM WAREHOUSING STRUCTURE IS TO BE CONSIDERED AS INCOME FROM BUSI NESS. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. THIS GROUND OF APPEAL IS SUCC EEDS AND, THEREFORE, ALLOWED. 3. IT HAS THEREFORE COME ON RECORD THAT THE VERY IS SUE STANDS ACCEPTED IN ASSESSEES FAVOUR IN VARIOUS CO-ORDINATE BENCHES D ECISIONS PERTAINING TO PRECEDING ASSESSMENT YEARS. THE ASSESSING AUTHORITY HEREIN IS VERY FAIR IN NOT DRAWING ANY DISTINCTION ON FACTS OR IN LAW. WE THER EFORE ADOPT THE JUDICIAL CONSISTENCY TO AFFIRM CIT(A)S FINDINGS REVERSING T HE ASSESSING OFFICERS ACTION TREATING THE ASSESSEES INCOME FROM WAREHOUSE PROPE RTY INCOME UNDER THE BUSINESS HEAD. 4. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 10/10/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 10 / 10 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-13(1), 9 TH FL, 110, SHANTIPALLY, AAYAKAR BHAWAN, KOL-107 2. /RESPONDENT-M/S ASHAMANGAL PORTFOLIO PVT. LTD.,103/ 24/1, FORESHORE ROAD, SHIBPUR, HOW RAH-711102 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,