Cache Properties Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(2), Hyderabad

ITA 366/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5986 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 19-01-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 19-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Business income; Set aside
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 366/HYD/2019 ASSESSMENT YEAR: 2012-13 CACHE PROPERTIES PRIVATE LIMITED, HYDERABAD [PAN: AABCC8341C] VS DCIT, CIRCLE-1(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING : 19-01-2021 DATE OF PRONOUNCEMENT : 04-02-2021 O R D E R PER BENCH : THIS ASSESSEES APPEAL FOR AY.2012-13 ARISES FROM TH E CIT(A)-1, HYDERABADS ORDER DATED 11-01-2019 PASSED IN APPEAL NO.0009/17-18/DCIT, CIRCLE-1(2)/CIT(A)-1/HYD /18-19 INVOLVING PROCEEDINGS U/S.143(3) R.W.S.263 OF THE IN COME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE NOTICE AT THE OUTSET THAT THE ASSESSEES INSTANT APPEA L DESERVES TO BE ACCEPTED ON THE SHORT POINT OF THE ASSESSI NG OFFICERS ORDER UNDER CHALLENGE DT.11-04-2017 HAVING NO LEGS TO STAND. THERE IS NO DISPUTE THAT THE SAID ASSESSMENT HAD ITA NO. 366/HYD/2019 :- 2 -: BEEN FRAMED IN FURTHERANCE TO THE PR.CITS SECTION 263 REVISION DIRECTIONS DT.31-03-2017. THE ASSESSEE FILED ITS APP EAL ITA NO.689/HYD/2017. THIS TRIBUNALS CO-ORDINATE BENCHS ORDER DT.31-10-2017 HAD DEALT WITH THE ISSUE AS FOLLOWS: 7.1 IN OUR CONSIDERED VIEW, THE ASSESSEE OUGHT TO HAVE SUBMITTED RELEVANT INFORMATION BEFORE THE AO TO SUBSTANTIATE THAT THE INCOME EARNED ON LEASING OUT THE PROPERTIES IS ASSESSABLE TO TAX UNDER THE HEAD PROPERTY INCOME. THE AO HAD NOT INDICATED TH AT HE HAS ACTUALLY CALLED FOR ANY INFORMATION TO SEEK CLARIFI CATION AS TO WHETHER THE IMPUGNED INCOME IS ASSESSABLE UNDER THE HEAD I NCOME FROM HOUSE PROPERTY OR UNDER THE HEAD BUSINESS INCOME . LD. COUNSEL RELIED UPON SEVERAL CASES TO CONTEND THAT INCOME DE RIVED BY ASSESSEE COMPANY FROM TENANTS OF SHOPS AND STALLS, UNDER SUC H CIRCUMSTANCES, IS ASSESSABLE TO TAX UNDER THE HEAD INCOME FROM HO USE PROPERTY AND IT COULD NOT BE ALTERED MERELY BECAUSE ASSESSEE COMPANY HAS BEEN CONFERRED WITH THE OBJECT OF SETTING UP AND DE VELOPING LANDED PROPERTIES (EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LTD., [1961] 42 ITR 49 (SC) ). HOWEVER, THE FACT REMAINS THAT THIS CAN BE SETTLED ONLY WHEN THE AO APPLIES HIS MIND TO THE IS SUE. IN THE BACKDROP OF THE AVAILABLE RULINGS OF THE HONBLE SU PREME COURT, AS RIGHTLY POINTED OUT BY THE CIT, THE HONBLE SUPREME COURT IN THE RECENT PAST OBSERVED (M/S RAYALA CORPORATION PVT. L TD. VS. ACIT, 386 ITR 500) THAT IN THE EVENT OF LEASING OUT PROPERTY BY A COMPANY, SUCH INCOME SHOULD BE TREATED AS ITS BUSINESS INCOME. SI MILAR VIEW HAS TAKEN IN THE CASE OF CHENNAI PROPERTIES & INVESTMEN TS LTD. VS. CIT (373 ITR 673). SINCE SUCH MATTERS HAVE TO BE CONSID ERED BY ANALYSING UNDER BROADER ASPECTS OF LAW BY REFERRING TO THE FA CTS OF EACH CASE, IT IS THE DUTY OF THE AO TO HAVE OBTAINED THE RELEVANT INFORMATION, BUT, THE RECORD DOES NOT INDICATE THAT THE AO APPLIED HI S MIND. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CA SE LAW RELIED UPON BY THE ASSESSEE (MALABAR INDUSTRIAL CO. LTD., 243 I TR 83 (SC) AND OTHER SUCH CASES TAKING A SIMILAR VIEW) HAVE NO APP LICATION TO THE INSTANT CASE; IN THE AFORECITED CASES, ONLY AO HAS TAKEN A SPECIFIC STAND UPON APPLICATION OF MIND, IT IS ONE OF THE VI EWS POSSIBLE IN THE CIRCUMSTANCES AND THOSE CASE LAW CANNOT BE APPLIED WHERE THE AO HAS NOT APPLIED HIS MIND. HAVING REGARD TO THE CIRC UMSTANCES AND FOR THE DETAILED REASONING GIVEN BY THE REVISIONAL AUTH ORITY, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE AO IS ERRONEOUS A ND PREJUDICIAL TO THE INTERESTS OF REVENUE. HOWEVER, IN OUR CONSIDERE D VIEW, THE ISSUE AS TO WHETHER THE SAID INCOME IS ASSESSABLE UNDER T HE HEAD INCOME FROM HOUSE PROPERTY OR INCOME FROM BUSINESS HAS TO BE CONSIDERED IN THE BACKDROP OF THE CASE LAW ON THE ISSUE AND TH EREFORE, THE MATTER DESERVES TO BE SET ASIDE TO THE FILE OF THE AO INST EAD OF DIRECTING THE AO TO TREAT THE INCOME AS INCOME FROM BUSINESS. ACC ORDINGLY, WE ITA NO. 366/HYD/2019 :- 3 -: MODIFY THE ORDER OF REVISIONAL AUTHORITY AND DIRECT THE AO TO RECONSIDER THE MATTER IN ACCORDANCE WITH LAW BY PRO PERLY ANALYSING THE FACTS AND CONSIDER THE ISSUE ON THE TOUCHSTONE OF THE CASE LAW AVAILABLE ON THE ISSUE OF INCOME EARNED BY A COMPAN Y BY LEASING OUT THE PROPERTIES. ACCORDINGLY, WE MODIFY THE ORDER OF THE REVISIONAL AUTHORITY, THOUGH IN PRINCIPLE, WE AGREE THAT IT IS A FIT CASE OF INVOCATION OF SECTION 263. 3. BOTH THE LEARNED REPRESENTATIVES FAIRLY INFORM US THA T TRIBUNALS ORDER HAS FOLLOWED YET ANOTHER ROUND OF CONSEQUENTIAL ASSESSMENT DT.31-12-2018 (PAGE 118 OF TH E PAPER BOOK). THAT BEING THE CASE, WE HOLD THAT THE IMPUG NED ROUND OF CONSEQUENTIAL PROCEEDINGS IN FURTHERANCE TO S ECTION 263 DIRECTIONS HEREUNDER FINALISED BEFORE THE LEARNED CO-ORDINATE BENCHS ABOVE DIRECTIONS; DESERVES TO BE TR EATED AS A NULLITY. WE THEREFORE ACCEPT THE ASSESSEES INSTANT AP PEAL FOR THIS PRECISE REASON ALONE. NEEDLESS TO SAY, ALL OTHER DEVELOPMENTS HAVING TAKEN PLACE SUBSEQUENT TO THE TRIBU NALS DIRECTIONS; INCLUDING THE ASSESSMENT DT.31-12-2018, SH ALL CONTINUE TO HOLD GROUND. 4. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH FEBRUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.GO DARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 04-02-2021 TNMM ITA NO. 366/HYD/2019 :- 4 -: COPY TO : 1.CACHE PROPERTIES PRIVATE LIMITED, C/O. P.MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2.THE DCIT, CIRCLE-1(2), HYDERABAD. 3.CIT(APPEALS)-1, HYDERABAD. 4.PR.CIT-1, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.