The ITO, Ward-2(2), RAJKOT-GUJARAT V. Rajkot Municipal Corporaiton, RAJKOT-GUJARAT

ITA 320/RJT/2011

• Counselvise Citation: 32024914 RSA 2011
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 17-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: D M THAKKAR
• Keywords: Business income; Depreciation; Rule of consistency; Earning of tax free income
• Section: 56; 263; 28; 144; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 320 /RJ T/201 1 ASSESSMENT YEAR : 200 5 - 0 6 ITO, WARD 2(2), RAJKOT V. RAJKOT MUNICIPAL CORPORATION, DR. AMBEDKAR BHAVAN, DHEBAR ROAD, RAJKOT PAN: AAALR 0138 G DATE OF HEARING : 1 4 .0 6 .2013 DATE OF PRONOUNCEMENT : 12 .0 7 .2013 REVENUE BY : SHRI K C MATHEWS, DR ASSESSEE BY : SHRI D M THAKKAR, CA ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - III , RAJKOT ON 07 . 0 6 .20 1 1 , ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT (A) - III, RAJKOT HAS ERRED IN LAW AND ON FACTS IN NOT TREATING THE RENTAL INCOME FROM COMMUNITY HALL OF RS.8.11 LACS, MARKETING BUILDIN G OF RS.6.90 LACS, BUILDING OF RS. 12 LACS, PLANETARIUM OF RS.0.08 LACS, STADIUM OF RS.3.90 LACS, MARKET LAND OF RS.1.66 LACS AND HOARDING OF RS.76.42 LACS AS BUSINESS INCOME AND SHOULD NOT HAVE ALLOWED THE SAME AS EXEMPTED U/S. 10(20) O F THE I. T. ACT. 2. ON THE FACTS OF THE CASE, THE LD. CIT (A) - III, RAJKOT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) - III, RAJKOT MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY KINDLY BE RESTO RED BACK TO THE EXTENT. 2. THE ASSESSEE IS A MUNICIPAL CORPORATION. IT DID NOT FILE ITS RETURN OF INCOME U/S 139 FOR THE YEAR UNDER APPEAL. NOTICE ISSUED BY THE AO U/S 142 CALLING UPON THE ASSESSEE TO FILE ITS RETURN OF INCOME WAS ALSO NOT COMPLIED WITH. THE ASSESSEE HAS THUS NOT FILED ANY RETURN OF INCOME FOR THE YEAR UNDER APPEAL. THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 144 ON 31.12.2007 AT NIL INCOME. THE COMMISSIONER OF INCOME - TAX CALLED FOR THE RECORDS AND EXAMINED THEM. BY HIS ORDER DATED 2 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION 25.09. 2008 PASSED U/S 263 , HE CANCELLED THE ASSESSMENT AS ORIGINALLY COMPLETED U/S 144 ON 31.12.2007 AND DIRECTED THE ASSESSING OFFICER TO FRAME THE ASSESSMENT DE - NOVO. HE ALSO DIRECTED THE ASSESSING OFFICER NOT TO ALLOW EXEMPTION TO THE ASSESSEE U/S 10(20) OF THE INCOME - TAX ACT AND ALSO TO TREAT INCOME ARISING FROM L ETTING OUT GROUNDS, LAND, PLOT, ETC., AS PROFIT AND GAIN OF BUSINESS AND TO TAX THE SAME ACCORDINGLY. THE AFORESAID ORDER PASSED BY THE LD . COMMISSIONER U/S 263 ON 25.09.2008 WAS SUBJECT MATTER OF C HALLENGE BEFORE THIS TRIBUNAL. BY ITS ORDER DATED 17.04.2009 IN APPEAL AGAINST THE AFORESAID ORDER PASSED BY THE LD COMMISSIONER U/S 263, THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AFTER CONSIDERING WHETHER INCOME BEING GENERAT ED BY THE ASSESSEE WAS IN THE NATURE OF INCOME FROM THE SUPPLY OF COMMODITY OR SERVICE. THE DIRECTIONS GIVEN BY THIS TRIBUNAL IN ITS ORDER DATED 17.0 4 .2009 ARE AS UNDER: - 4. I HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES, PERUSED THE RECORDS AVAILABL E BEFORE US. I HAVE ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I FIND FROM THE RECORD THAT THE ASSESSEE DID NOT REMAIN PRESENT BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER WITHOUT HEARING THE ASSESSEE A ND WITHOUT INQUIRY WHICH IS WARRANTED. THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRY WHETHER THE INCOME ARISING FROM PROVIDING GROUND AND PLOTS ON RENT IS THE INCOME IN THE HANDS OF THE ASSESSEE IS BY WAY OF PROFIT AND GAINS OF BUSINESS OR NOT AND THE ASS ESSING OFFICER HAS NOT MADE ANY INQUIRY WHETHER THIS INCOME EXEMPT UNDER THE PROVISIONS OF SECTION 10(2) OF THE ACT. I FIND THAT SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF C I T V/S. SHRI BHAGWAN DAS REPORTED IN 271 ITR 367, WHEREIN, FOLLOWING THE DECISION OF MALABAR INDUSTRIAL CO. LTD. V/S. CIT REPORTED IN 243 ITR 83 HAS HELD THAT ANY ORDER PASSED WITHOUT ANY INQUIRY AND SUCH INQUIRY IS WARRANTED THEN SUCH ORDER CONSTITUTE PREJUDICIAL AND AGAINST THE INTEREST OF REVENUE. IN THE INSTANT CASE ON HAND, WE FIND THAT THE ORIGINAL ASSESSMENT WAS PASSED UNDER SECTION 144 OF THE ACT. AFTER FILING THE RETURN THE ASSESSEE DID NOT REMAIN PRESENT. THEREFORE THERE WAS NO OCCASION TO MAKE AN INQUIRY. THEREFORE, AS 3 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION PER THE DECISION IN THE CASE OF ACIT V/S. RAJESH JHAVERI STOCK BROKERS (P) LTD. REPORTED IN 291 ITR 500 (SUPREME COURT), WHEREIN IT IS HELD THAT THE INTIMATION UNDER SECTION 143(1)(A) CANNOT BE TREATED AS ORDER OF ASSESSMENT. WE FIND THAT THE COMMISSIONER OF INCOME TAX HAS DI RECTED THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT TO ASSESS THE INCOME ARISING OUT OF PROVIDING THE GROUNDS, PLOT ON RENT IN THE HANDS OF THE ASSESSEE AS PROFIT AND GAIN OF THE BUSINESS; BUT I AM NOT AGREE WITH THIS DIRECTION GIVEN BY THE CIT AND I DI RECT THE ASSESSING OFFICER TO DECIDE THE ISSUE AFTER MAKING REASSESSMENT AND ASSESSEE THE INCOME OF THE ASSESSEE ARISING FROM THE RENT INCOME OF PLOT AND GROUND SUBJECT TO WHETHER THIS INCOME IS COMPLETELY EXEMPT U/S.10(20) OF THE ACT BECAUSE THIS INCOME I S INCOME OF LOCAL AUTHORITY. THEREFORE, SUCH INCOME IS A SERVICE OR NOT AND AFTER HEARING THE ASSESSEE. THE ASSESSING OFFICER IS DIRECTED TO REFRAME THE ASSESSMENT. 3. PURSUANT TO THE AFORESAID DIRECTIONS GIVEN BY THIS TRIBUNAL, THE ASSESSING OFFICER HAS NO W COMPLETED THE ASSESSMENT ON 30.12.2010. PERUSAL OF PAGE 3 OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEE HAD FURNISHED DETAILS OF INCOME FROM LETTING OUT COMMUNITY HALL S (RS.8.11 LA KHS ), MARKET LAND (RS.1.66 LA KHS ), MARKET BUILDING RENT (RS. 6.90 LA KH S ), BUILDING RENT (RS.12 LA KHS ), DISNEYLAND RENT (RS.10.25 LA KHS ), PLANETAR IUM INCOME (RS.0.08 LA KHS ) AND STADIUM RENT (RS.3.90 LA KHS ) IN ADDITION TO INCOME FROM HOARDINGS AMOUNT ING TO RS.76.42 LA KHS , BEFORE THE AO . THE AGGREGATE OF ALL THE AFORESAID INCO ME REPORTED BY THE ASSESSEE WAS RS.119.32 LA KHS OUT OF WHICH THE ASSESSEE CLAIMED DEPRECIATION AMOUNTING TO RS.16.13 LA KHS AND OTHER EXPENSES AMOUNTING TO RS.106.45 LA KHS . THE NET RESULT SHOWN BY THE ASSESSEE WAS NET LOSS OF RS.3.2 6 LA KHS . THE ASSESSING O FFICER NOTICED THAT THE ASSESSEE HAS NEITHER FILED ITS RETURN OF INCOME NOR GOT ITS ACCOUNT S AUDITED AS REQUIRED BY LAW. HE THEREFORE ALLOWED 75% OF GROSS RECEIPT S (RS.119.32 LA KHS) AS EXP ENDITURE AND RESULTANTLY TAXED REMAINING RS.29.83 LA KHS . 4. ON APP EAL, THE LD CIT(A) HAS TREATED THE RENTAL INCOME FROM COMMUNITY HALL S (RS.8.11 LA KHS ), RENTAL INCOME FROM MARKET BUILDING (RS.6.90 LA KHS ), RENTAL INCOME FROM BUILDING (RS.12 LA KHS ), RENTAL INCOME FROM PLANETAR IUM (RS.0.08 LA KHS ), RENTAL 4 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION INCOME FROM STADIUM (RS.3.90 LA KHS ), RENTAL INCOME FROM MARKET LAND (RS.1.66 LA KHS ) AS INCOME IN CONSIDERATION OF SERVICES PROVIDED BY THE MUNICIPAL CORPORATION. HE THEREFORE HELD THE AFORESAID ITEMS OF INCOME AS EXEMPT U/S 10(20) OF THE INCOME - TAX ACT. AS REGARDS INCOME FR OM H OARDINGS AMOUNTING TO RS.76.42 LA KHS , HE FOLLOWED THE ORDER OF THIS TRIBUNAL AND HELD THAT IT WAS IN THE NATURE OF INCOME FROM OTHER SOURCES AND THEREFORE EXEMPT U/S 10(20) OF THE INCOME - T AX ACT. 5. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT INCOME FROM HOARDINGS WAS IN THE NATURE OF BUSINESS INCOME AND NOT IN THE NATURE OF INCOME FROM SUPPLY OF COMMODITY OR SERVICE AND THEREFORE THE ORDER PASSED BY LD CIT(A) SHOULD BE REVERSED. AS REGARDS OTHER ITEMS OF INCOME, HE SUBMITTED THAT THEY WERE NOT IN THE NATURE OF INCOME FROM SUPPLY OF COMMODITY OR SERVICE AND THEREFORE THEY WERE ALSO LIABLE TO BE ASSESSED AS BUSINESS INCOME. 6. IN REPLY, THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS WHICH READ AS UNDER: - 1. YOUR RESPONDENT ASSESSEE IS A LOCAL AUTHORITY AND AS PER PROVISION OF SECTION 10(20), THE INCOME OF A LOCAL AUTHORITY WHICH IS CHARGEABLE UNDER T HE HEAD HOUSE PROPERTY, CAPITAL GAIN OR INCOME FROM OTHER SOURCES OR FROM TRADE OR BUSINESS CARRIED ON BY IT WHICH ACCRUES OR ARISES FROM THE SUPPLY OF A COMMODITY OR SERVICE (NOT BEING WATER OR ELECTRICITY) WITHIN ITS JURISDICTION AREA OR FORM THE S UPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSIDE ITS JURISDICTION AREA IS EXEMPT. 2. DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2005 - 06, THE ASSESSING OFFICER HAD FINALIZED THE ASSESSMENT DETERMINING TOTAL INCOME AS UNDER: ANNEXURE: A DESCRIPT ION OF INCOME AMT. RS. (IN LACS) GROSS RECEIPTS: INCOME FROM COMMUNITY HALL MARKET BUILDING RENT BUILDING RENT PLANETARIUM RENT 8.11 6.90 12.00 0.08 5 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION STADIUM RENT DISNEY LAND RENT MISC. LAND INCOME INCLUDING HOARDINGS MARKET LAND RENT 3. 90 10.25 76.42 1.66 GROSS INCOME: LESS: 75% EXPENDITURE 119.32 89.49 TOTAL INCOME 29.83 3. THE HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS), IN HIS ORDER HAS DELETED THE ENTIRE ADDITION ON THE GROUND THAT NONE OF SUCH INCOME ARE TAXABLE UNDER SECTION 10(20) OF THE INCOME TAX ACT, 1961. 4 . TOTAL INCOME OF THE ASSESSEE IS EXEMPT ON THE GROUND THAT THEY ARE EITHER FROM INCOME FROM HOUSE PROPERTY OR FROM INCOME FROM OTHER SOURCES AS PER DETAILS GIVEN HEREUNDER: ANNEXURE: B SR. NO. DESCR IPTION OF INCOME AMT. RS. (IN LACS) HEAD OF INCOME 1. 2. 3. 4. 5. 6. 7. 8. GROSS RECEIPTS: INCOME FROM COMMUNITY HALL MARKET BUILDING RENT BUILDING RENT PLANETARIUM RENT STADIUM RENT DISNEY LAND RENT MISC. LAND INCOME INCLUDING HOARDINGS MARKET LAND R ENT 8.11 6.90 12.00 0.08 3.90 10.25 76.42 1.66 INCOME FROM HOUSE PROPERTY INCOME FROM HOUSE PROPERTY INCOME FROM HOUSE PROPERTY INCOME FROM HOUSE PROPERTY INCOME FROM HOUSE PROPERTY INCOME FROM HOUSE PROPERTY INCOME FROM OTHER SOURCES INCOME FROM OTHER SOURCES 5. YOUR HONOUR, YOUR RESPONDENT PERFORMS FUNCTIONS AS LAID DOWN IN THE BOMBAY PROVINCIAL MUNICIPAL CORPORATION ACT, 1949 AND EARNS REVENUES ACCORDINGLY. IN THE NORMAL COURSE OF ITS OPERATION, IT DOES NOT CARRY O UT ANY BUSINESS ACTIVITY PER SE. 6. SIR, SO FAR AS ITEM NO.1 TO 6 ARE CONCERNED, THEY CLEARLY FALL UNDER INCOME FROM HOUSE PROPERTY. 7. SIR, SO FAR AS ITEM NO.7 MISC. LAND INCOME INCLUDING HOARDINGS IS CONCERNED, IT IS SUBMITTED THAT, INCOME FROM HOA RDINGS DOES NOT TANTAMOUNT TO BUSINESS. IT IS MERELY A LICENSE FEE PAID BY LICENSEE WHO UTILIZES THE SPACE FOR PUTTING UP HOARDING. THE ADVERTISERS APPROACH THIS LICENSEE AND NOT THE RMC FOR PUTTING UP THE ADVERTISEMENT. RMC ONLY PROVIDE ITS SPACE/ASSETS F OR PAYMENT OF LICENSE FEE TO THE LICENSEE. THE ASSETS ARE USED FOR THE PURPOSE OF PUTTING UP HOARDINGS AND CREATED FOR THE SERVICE WHICH RMC IS UNDER 6 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION OBLIGATION TO PERFORM UNDER THE BPMC ACT, 1949. FURTHER THESE FEES FORM A SMALL PART OF SUCH ASSETS AND AR E NOT IN THE REGULAR COURSE OF ITS OPERATION. ALSO RMC DOES NOT CARRY OUT THESE ACTIVITIES ON REGULAR BASIS AND WITH BUSINESS INTENTION. THEREFORE IT CANNOT BE SAID TO BE BUSINESS ACTIVITY OF THE RMC. IT CAN ONLY BE PUT UNDER THE HEAD INCOME FROM OTHER SO URCES. ALSO SUCH INCOMES ARE FAR LESS THAN 1% OF THE TOTAL REVENUE OF THE RMC. FURTHER, THE HONOURABLE ITAT, RAJKOT BENCH IN THE CASE OF JAMNAGAR MUNICIPAL CORPORATION HAS CLEARLY LAID DOWN THAT INCOME FROM HOARDING IS ASSESSABLE UNDER INCOME FROM OTHER SOURCES. THEREFORE IT IS COMPLETELY EXEMPT UNDER SECTION 10(20) OF THE INCOME TAX ACT, 1961. 8. IN SO FAR AS ITEM NO.8 MARKET LAND RENT IS CONCERNED, IT IS RESPECTFULLY SUBMITTED THAT THIS INCOME IS EARNED FROM SPACE OWNED BY THE RMC AND PROVIDED TO VEGETABLE HAWKERS WHO ARE CHARGED A TOKEN FEE OF AROUND RS.20 TO 25 A DAY. THIS ALSO IS A PART OF FUNCTION THAT IS TO BE PERFORMED BY MUNICIPAL CORPORATION AS LAID DOWN IN THE BPMC ACT, 1949. FURTHER, THE INTENSION BEHIND CARRYING OUT THIS FUNCTION IS NOT TO CARRY ON ANY BUSINESS ACTIVITY BUT TO PROVIDE SPACE TO SMALL HAWKERS IN ORDER TO CARRY OUT THEIR ACTIVITY. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. IT NEEDS TO BE NOTED AT THE OUTSET THAT THE ASSESSEE - CORPORATION ITSELF IS A STATUTORY BODY BUT IT HAS SHOWN NO REGARD TO THE STATUTORY NOTICE ISSUED BY ANOTHER STATUTORY AUTHORITY, NAMELY, THE ASSESSING OFFICER , BY WHICH IT WAS CALLED UPON TO FURNISH ITS RETURN OF INCOME . THE ASSESSEE HAS FAILED TO DISCHARGE ITS STATUT ORY OBLIGATIONS. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE COULD ALSO NOT GIVE ANY SATISFACTORY EXPLANATION IN THIS BEHALF AT THE TIME OF HEARING. 8. SECTION 10 OF THE INCOME - TAX ACT ENUMERATES THE INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME. SU B - SECTION ( 20 ) OF SECTION 10 EXEMPTS INCOME OF A LOCAL AUTHORITY TO THE EXTENT MENTIONED THEREIN. SUB - SECTION ( 20 ) OF SECTION 10 READS AS UNDER: - 7 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION 10. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED - (20) T HE INCOME OF A LOCAL AUTHORITY WHICH IS CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', 'CAPITAL GAINS' OR 'INCOME FROM OTHER SOURCES' OR FROM A TRADE OR BUSINESS CARRIED ON BY IT WHICH ACCRUES OR ARI SES FROM THE SUPPLY OF A COMMODITY OR SERVICE (NOT BEING WATER OR ELECTRICITY) WITHIN ITS OWN JURISDICTIONAL AREA OR FROM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSIDE ITS OWN JURISDICTIONAL AREA. 9 . IT IS QUITE APPARENT ON PERUSAL OF SUB - SECTION ( 20 ) OF SECTION 10 THAT INCOME OF THE LOCAL AUTHORITIES IS EXEMPT FROM TAX IF IT IS (I) INCOME FROM HOUSE PROPERTY; (II) CAPITAL GAIN; (III) INCOME FROM OTHER SOURCES; OR (IV) INCOME FROM A TRADE OR BUSINESS CARRIED ON BY LOCAL AUTHORITIES WHICH ACCRUES OR ARISES FROM (A) THE SUPPLY OF COMMODITY OR SERVICE WITHIN ITS OWN JURISDICTIONAL AREA OR (B) FROM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSIDE OF ITS OWN JURISDICTIONAL AREA. IT IS THEREFORE QUITE CLEAR THAT PROFITS AND GAINS FROM BUSINESS OR PROF ESSION WOULD NOT BE EXEMPT FROM TAX IN THE HANDS OF A LOCAL AUTHORITY UNLESS IT IS SHOWN TO BE EITHER IN THE NATURE OF INCOME FROM SUPPLY OF A COMMODITY OR SERVICE WITHIN ITS OWN JURISDICTIONAL AREA OR FROM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTS IDE ITS OWN JURISDICTIONAL AREA. THE LIMITED ISSUE THAT WE HAVE TO CONSIDER IS WHETHER THE IMPUGNED ITEMS OF INCOME ARE IN THE NATURE OF INCOME FROM THE SUPPLY OF COMMODITY OR SERVICE OR IN THE NATURE OF INCOME EXEMPT U/S 10(2). 10 . THE LD . CIT(A) HAS HE LD THAT THE RENTAL INCOME FROM THE COMMUNITY HALL (RS.8.11 LA KHS ), MARKET BUILDING (RS.6.90 LA KHS ), BUILDING (RS.12 LA KHS ), PLANETAR IUM INCOME (RS.0.08 LA KHS ), STADIUM RENT (RS.3.90 LA KHS ) AND MARKET LAND (RS.1.66 LA KHS ) WOULD BE EXEMPT EITHER ON THE GROUN D THAT THEY ARE IN THE NATURE OF INCOME FROM HOUSE PROPERTY OR ON THE GROUND THAT THEY ARE INCOME FROM THE SUPPLY OF COMMODITY OR SERVICE WITHIN THE JURISDICTIONAL AREA OF THE ASSESSEE - CORPORATION . THE LD CIT(A) HAS GIVEN DETAILED REASONING IN THIS BEHALF IN PARA 4.1 AND 4.2 OF HIS APPELLATE ORDER. WE HAVE PERUSED THEM. THE AFORESAID INCOME FROM PROVIDING 8 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION FACILITIES LIKE COMMUNITY HALL, MARKET BUILDING, BUILDING, PLANETAR IUM AND STADIUM ARE IN THE NATURE OF PROVIDING SUCH SERVICES WHICH A MUNICIPAL B ODY IS RE QUIRED TO PROVIDE WITHIN ITS OWN JURISDICTIONAL AREA IN A CIVILIZED SOCIETY OR ALTERNATIVELY IN THE NATURE OF INCOME FROM HOUSE PROPERTY . IN THIS VIEW OF THE MATTER, WE HOLD THAT THE AFORESAID ITEMS OF INCOME ARE EXEMPT U/S 10(20) OF THE INCOME - TAX ACT AS BEING EITHER IN THE NATURE OF INCOME FROM HOUSE PROPERTY OR INCOME FROM THE SUPPLY OF A SERVICE WITHIN THE LIMITS OF ITS OWN JURISDICTION . 1 1 . AS REGARDS THE INCOME OF RS.76.42 LA KHS RECEIVED IN CONSIDERATION OF GRANTING PERMISSION/LICENCE TO THE PART IES FOR PUTTING HOARDINGS AT VARIOUS PLACES IN THE CITY , THE SUBMISSIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE ARE FIVE - FOLD. ONE, TH E INCOME ARISING FROM GRANTING SUCH PERMISSIONS/ LICENCES IS IN THE NATURE OF PROFITS AND GAINS FROM WELL ORGANIZED BUSINES S BEING CARRIED ON BY THE ASSESSEE - CORPORATION. ACCORDING TO HIM, T HE ACTIVITY OF ALLOWING HOARDINGS AT VARIOUS PLACES IN THE CITY IS A SYSTEMATIC BUSINESS ACTIV ITY UNDERTAKEN BY THE ASSESSEE - CORPORATION WITH A VIEW TO EARN PROFITS. IT HAS ALL THE FEATURES OF BUSINESS AND THEREFORE INCOME FROM SUCH ACTIVITY WOULD BE BUSINESS INCOME U/S 28 AND NOT INCOME FROM OTHER SOURCES U/S 56 . TWO, PERMISSION TO PUT HOARDINGS AT VARIOUS SITES DOES NOT AMOUNT TO PROVIDING ANY SERVICE. IT IS MERE COMMERCIAL EXPLOITATION OF THE RIGHT TO GRANT PERMISSION TO PUT HOARDINGS. IT MAY BE A SOURCE OF REVENUE TO THE ASSESSEE - CORPORATION BUT NOT A SOURCE OF SERVICE TO THE PEOPLE. THREE, SUCH HOARDINGS EXPOSE PEOPLE TO SEVERAL RISKS AND ARE AVOIDABLE CAUSE OF INJURY AND LOSS SUFFERED B Y INNOCENT PEOPLE DUE TO SUCH HOARDINGS IN RESIDENTIAL / COMMERCIAL AREAS OR ON THE STREETS AND HIGHWAYS. THEY ARE NOT EVEN ECO - FRIENDLY. FOUR, ALLOW ING HOARDINGS TO BE PUT AT VARIOUS SITES IS NOT IN THE NATURE OF SUPPLYING A COMMODITY OR SERVICE. IT IS SIMP LY IN THE NATURE OF GRANTING PERMISSION TO PUT HOARDINGS. FIVE, THE INCOME FROM HOARDINGS IS LIABLE TO BE ASSESSED AS BUSINESS INCOME U/S 28 AND THAT THE SAID INCOME IS NOT EXEMPT U/S 10(20) OF THE INCOME - TAX ACT AS IT HAS NOT ACCRUED OR ARISEN FROM THE SU PPLY OF A COMMODITY OR SERVICE. THE SUBMISSIONS MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE ARE NOT ONLY CONVINCING BUT ALSO CARRY SUFFICIENT FORCE. WE ARE HOWEVER OBLIGED BY THE RULE OF CONSISTENCY TO FOLLOW THE DECISIONS OF CO - 9 320 - RJT - 2011 RAJKOT MUNCIPAL CORPORATION ORDINATE BENCHES OF THIS TR IBUNAL. A C O - ORDINATE BENCH OF THIS TRIBUNAL HAS TAKEN THE FOLLOWING VIEW IN DCIT V. JAMNAGAR MUNICIPAL CORPORATION IN ITA NO.372 AND 373/RJT/2009 FOR ASSESSMENT YEARS 2004 - 05 AND 2005 - 06. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSEE IS A MUNICIPAL CORPORATION AND IT IS LOCAL AUTHORITY AND SO FAR AS THE INCOME OF THE LOCAL AUTHORITIES ARE CONCERNED IT IS EXEMPT BUT THE ONLY INCOME FROM SUPPLY OF COMMODITY AND SERVICES WITHIN ITS JURISDICTION IS EXEMPT INCOME. WE FIND THAT LEASING OUT OR ARISING FROM LETTING OUT THE PLACE FOR HOARDING / ADVERTISEMENT IS CONCERNED IT IS NOT DISPUTED THAT THIS INCOME HAS BEEN ARISING OUT IN THE JURISDICTION AREA OF THE ASSESSEE, THEREFORE, THIS INCOME IS AN INCOME FROM OTHER SOUR CES. THEREFORE, WE ARE OF THE VIEW THAT AO IS JUSTIFIED IN TREATING THIS INCOME AS INCOME FROM OTHER SOURCES. 1 2 . AS STATED EARLIER, RULE OF CONSISTENCY REQUIRES US TO FOLLOW THE ORDERS OF THE C O - ORDINATE BENCH ES . W E FIND THAT THE LD CIT(A) HAS ALSO F OLLOWED THE AFORESAID JUDGMENT OF THIS TRIBUNAL. IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD CIT(A) IS CONFIRMED. 1 3 . IN VIEW OF THE FOREGOING, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 12 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 12 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT ITO, WARD 2(2), RAJKOT 2 . RESPONDENT - RAJKOT MUNICIPAL CORPORATION, DR. AMBEDKAR BHAVAN, DHEBAR ROAD, RAJKOT 3 . CONCERNED CIT - II, RAJKOT 4 . CIT (A) - III, RAJKOT 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITA T, RAJKOT