M/s. Banwarilal Goel & Sons, Kolkata V. I.T.O. Ward 31(1)/Kolkata,

ITA 374/KOL/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75078 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 15-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2009
• Court: TRIBUNAL
• Department Lawyers: APURBA KR DAS
• Assessee Lawyers: S K TULSIYAN
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) BEFORE , /AND . , ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] ! ! ! ! / I.T.A NO. 374/KOL/2009 '# '# '# '# $% $% $% $% / ASSESSMENT YEAR: 2005-06 M/S. BANWARILAL GOEL & SONS VS. INCOME-TAX OFFIC ER, WD-31(1), KOLKATA (PAN: AAFFB2689B) ( &' /APPELLANT ) ( ()&' / RESPONDENT ) DATE OF HEARING: 05.02.2014 DATE OF PRONOUNCEMENT: 13.02.2014 FOR THE APPELLANT: SHRI S. K. TULSIYAN, ADVOCATE FOR THE RESPONDENT: SHRI APURBA KR. DAS, JCIT, D R * / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIX, KOLKATA IN APPEAL NO. 180/CIT(A)-XIX/ITO,WD-31(1),KOL/07-08 DATED 04.02.2 009. ASSESSMENT WAS FRAMED BY ITO, WARD-31(1), KOLKATA U/S. 143(3) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER D ATED 31.12.2007. 2. FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS, WHETH ER OR NOT, CIT(A) WAS JUSTIFIED IN HOLDING THAT INCOME FROM INDUSTRIAL SH EDS AND GODOWNS RECEIVED BY ASSESSEE WAS TAXABLE AS INCOME FROM HOUSE PROPERTY. ASSESSEE HAS RAISED 7(SEVEN) GROUNDS OF APPEAL FOR THIS ISSUE, SAME ARE REPRODUCED AS UNDER:- (1)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) ON BOTH LAW AND FACTS ERRED IN ENHANCING THE ASSESSMENT TO TREAT THE LEAVE AND LICENSE CHARGES R ECEIVED BY THE APPELLANT ON LET OUT OF ITS FACTORY, GODOWN AND WAREHOUSES AND SHEDS TO BE INCOME FROM HOUSE PROPER TY AND ALSO BY TREATING THE INTEREST INCOME TO BE INCOME F ROM OTHER SOURCES, AS AGAINST THE CLAIM THAT SUCH INCOME WAS INCOME FROM BUSINESS AND ALSO ASSESSED AS INCOME FROM BUSI NESS BY THE AO AND THEREBY COMPOSITELY ENHANCING THE INCOME FOR THE YEAR BY RS.982534/- AS PER PARA 5.1 OF THE APPELLAT E ORDER ON ACCOUNT OF INCOME FROM HOUSE PROPERTY AND DIRECTING THE AO TO RECOMPUTED THE INTEREST INCOME AS INCOME FROM OT HER SOURCES. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE ASSESSMENT FRAMED BY THE AO CORRECTLY TREATING THE LEAVE AND 2 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 LICENCE CHARGES RECEIVED BY THE APPELLANT TO BE INC OME FROM BUSINESS, THE ACTION OF THE CIT(A) TO CHANGE THE HE AD OF INCOME AND TREAT THE LEAVE AND LICENSE CHARGES TO B E INCOME FROM HOUSE PROPERTY IS NOT CONTEMPORANEOUS TO THE F ACTS OF THE CASE AND THE SUBMISSIONS MADE BEFORE HIM. (3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE ACTION OF THE CIT(A) TO CHANGE THE HEAD OF INCOME F ROM BUSINESS INCOME TO HOUSE PROPERTY INCOME OF THE COM POSITE AMOUNT RECEIVED BY THE APPELLANT AS BUSINESS RECEIP T AND ALSO ASSESSED AS BUSINESS RECEIPT BY THE AO IS PERVERSE AND WITHOUT CONSIDERING THE MATERIAL FACTS AND EVIDENCE S. (4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) GROSSLY ERRED IN DISTINGUISHING THE JUDICIAL DECISIONS ON THE SUBJECT MATTER PLACED BEFORE HIM UNDER LYING THE PRINCIPALS OF TREATMENT OF THE COMPOSITE RECEIPT OF LEAVE AND LICENCE CHARGES AS WHEN TO BE ASSESSED AS INCOME FR OM BUSINESS AND OR INCOME FROM HOUSE PROPERTY AND THE CIRCUMSTANCES UNDER WHICH SUCH DISTINCTION COULD BE DRAWN. (5) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE A AND EVIDENCES ON RECORDS THE CIT(A) ERRED IN DIRECT ING THE AO TO ASSESS THE BUSINESS INCOME AS INCOME FROM HOU SE PROPERTY AND IGNORING THE MATERIAL FACTS ON RECORDS THAT THE APPELLANT HAD EXPLOITED THE FACTORY SHEDS AND GODOW NS WHICH WERE THE COMMERCIAL ASSETS TO EARN BUSINESS INCOME AND THAT SUCH INCOME WAS DERIVED AFTER PROVIDING VARIOUS AME NITIES AND FACILITIES TO THE LICENSEE, AND HIS DIRECTIONS TO ENHANCE THE INCOME BY CHANGING THE HEAD OF INCOME AND ITS CONSEQUENTIAL DISALLOWANCES IS NOT TENABLE IN LAW. (6) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND EVIDENCES ON RECORDS THE LEAVE AND LICENSE CHARGES RECEIVED BY THE APPELLANT AS COMPOSITE RENT AND ALSO ASSESSE D AS BUSINESS INCOME SINCE ITS INCEPTION, THE ACTION OF THE CIT(A) TO CHANGE OF HEAD OF INCOME IGNORING THE RULE OF CO NSISTENCY IS UNJUST, ILLEGAL, ARBITRARY AND EXCESSIVE. (7) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) ERRED IN ENHANCING THE COMPUTATION OF INCOME FILED BY THE APPELLANT AND THE ASSESSMENT ORDER BY DIRECTING THE AO TO TREAT THE INTEREST INCOME TO BE INCOME FROM OTHER S OURCES WITHOUT PROVIDING OPPORTUNITY FOR TAKING RECOURSE T O SUCH ENHANCEMENT, AS AGAINST THE CLAIM THAT THE SAID INC OME WAS INCOME FROM BUSINESS AND ACCORDINGLY SO ASSESSED BY THE AO FOR THE YEAR AND EARLIER ASSESSMENT YEARS ALSO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WA S CARRYING ON ITS BUSINESS AT 81, NILGUNJ ROAD, AGARPARA, 24-PARGANAS (N) A MA NUFACTURING UNIT OF PIPES AND PIPE FITTINGS AND THE ENTIRE PREMISES WAS UTILI ZED BY THEM FOR THE PURPOSES 3 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 OF THEIR BUSINESS. THIS LARGE AREA OF INDUSTRIAL CO MPLEX AND COMPRISES OF SEVERAL INDIVIDUALS SHEDS AND GODOWNS OF DIFFERENT SIZES, HAVING INTERNAL ROADS, SEWERAGE LINES, DRAINS, WATER TANKS (OVERHEAD), DRI NKING & INDUSTRIAL USAGE WATER SUPPLY LINES, PUMPS, TRANSFORMER, LATRINES WI TH SEPTIC TANKS, FIRE HYDRANTS, HT/LT ROOM CABLING, SWITCHES, STREET LIGH TING ETC. THE FACTORY SHEDS AND GODOWNS ARE LET OUT TO DIFFERENT PERSONS IN VER Y ORGANIZED BUSINESS MANNER BY RENDERING ALL AMENITIES AND FACILITIES. THE ASSE SSEE ENTERED INTO LEAVE & LICENCE AGREEMENT WITH USERS OF PREMISES AND EARNED INCOME FROM THAT ACTIVITY. BUT INCOME SO EARNED WAS TAXED AS BUSINESS INCOME A ND WAS ACCEPTED AS SUCH IN PREVIOUS YEAR AND ALSO SUBSEQUENT YEARS. IN THE PRESENT YEAR ALSO, ASSESSING OFFICER ACCEPTED THE SAID INCOME AS PART OF BUSINES S INCOME. WHEN THIS ISSUE CAME BEFORE CIT(A) IN CONNECTION WITH SOME OTHER IS SUES, HE WAS OF THE VIEW THAT THIS INCOME NEEDS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. ACCORDINGLY, A SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE CALLING UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE INCOME SHOULD NOT BE TREATED AS INCOME FROM HOUSE PROPERTY AS IT IS EVIDENT FROM THE PERUSAL OF THE ORDER OF CIT(A) ITSELF. THE ASSESSEE MADE SUBMISSIONS IN SUPPORT OF ITS CON TENTION THAT IT IS NOT A CASE OF RENT SIMPLICITER BUT IT IS A PART OF COMPLEX COM MERCIAL ACTIVITY AND BY PROVIDING SEVERAL AMENITIES AND FACILITIES THESE CO MMERCIAL ASSETS OWNED BY ASSESSEE HAS BEEN ALLOWED TO BE USED BY ENTREPRENE URS UNDER A LEAVE & LICENCE AGREEMENT. ASSESSEES CONTENTION WAS THAT THE ASSET WHICH WAS SO ALLOWED TO BE USED WAS A COMMERCIAL ASSET, THAT THE ACTIVITY O F ALLOWING THESE ASSETS TO BE USED AND OF PROVIDING AMENITIES AND OTHER FACILITIE S WAS A COMPLEX COMMERCIAL EXERCISE AND THAT, THEREFORE, INCOME IN QUESTION DE SERVES TO BE TREATED AND WAS RIGHTLY TREATED ALL ALONG AS INCOME FROM BUSINESS. ASSESSEE BEFORE CIT(A) REFEREED THE CASE OF THE HONBLE SUPREME COURTS IN RADHASOAMI SATSANG V CIT (1992) 193 ITR 321(SC), WHEREIN PRINCIPLE OF CO NSISTENCY WAS EMPHASIZED UPON. HOWEVER, CIT(A) WAS OF THE VIEW THAT THE PRIM E OBJECT IN THIS CASE WAS TO LET OUT PROPERTY CONSISTING OF GODOWNS AND FACTO RY SHEDS TO VARIOUS OCCUPANTS. HE WAS ALSO OF THE VIEW THAT THE SOLE MOTIVE OF THE APPELLANT IS TO LET OUT THE PROPERTY TO VARIOUS PERSONS AND IT HAS NOT CARRIED OUT ANY COMPLEX COMMERCIAL ACTIVITIES TO EXPLOIT THE PROPERTY CIT(A) FURTHER OBSERVED THAT DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F SHAMBHU INVESTMENT PVT. LTD. V CIT (2003) 263 ITR 143(SC) HELD THAT COMPOSI TE RENT RECEIVED BY ASSESSEE IS TAXABLE UNDER THE HEAD INCOME FROM HOU SE PROPERTY AND NOT AS 4 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 BUSINESS INCOME AS DECLARED BY ASSESSEE IN THE RE TURN OF INCOME. ACCORDINGLY, THE INCOME IN QUESTION WAS HELD TO BE TAXABLE AS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE US. 4. LD. COUNSEL FOR ASSESSEE MADE SUBMISSIONS IN SUP PORT OF THE CONTENTION THAT THE ASSET WHICH WAS ALLOWED TO BE USED AND THE CONSIDERATION FOR WHICH HAS BEEN OFFERED TO TAX AS BUSINESS INCOME WAS A CO MMERCIAL ASSET AND WHOLE PROCESS OF PROVIDING AMENITIES AND SERVICES IS A CO MPLEX COMMERCIAL ACTIVITY. LD. COUNSEL STATED THAT WHETHER THE INCOME DERIVED FROM UTILIZATION OF PROPERTIES IS BUSINESS INCOME OR RENTAL INCOME. IT WAS POINTED OUT THAT IN THE PRESENT CASE, CIT(A) HIMSELF OBSERVED AT PARA 3.3 I N PAGE 12 OF HIS ORDER AS UNDER :- 3.3. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND GONE THROUGH THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY HIM. THE MAIN CONTENTIONS OF THE APPELLANT IN SUPPORT OF ITS CLAIM ARE AS UND ER :- (I) THE INCOME HAS BEEN DERIVED BY EXPLOITATION OF ITS COMMERCIAL ASSETS. (II) SINCE BEGINNING, THE APPELLANT HAS SHOWN THE R ECEIPT OF COMPOSITE RENT AS BUSINESS RECEIPT WHICH WAS ACCEPTED BY THE DEPARTME NT. (III) THE APPELLANT HAS RENDERED VARIOUS SERVICES F OR PROVIDING ALL FACILITIES AND AMENITIES TO THE HIRER, I.E. INTERNAL ROADS, SE WERAGE LINES, LATRINES, SEPTIC TANKS, DRINKING AND INDUSTRIAL USAGE WATER SUPPLY, DRAINS, WATER TANK PUMPS, TRANSFORMER AND ELECTRIC SUPPLY ETC. (IV) THE BUILDING UNDER QUESTION IS VERY OLD AND RE QUIRES REGULAR REPAIRS AND MAINTENANCE. LD COUNSEL FOR THE ASSESSEE REFERRED TO THE HONBLE CALCUTTA HIGH COURT JUDGMENT IN THE CASE OF CWT V SUN JUTE PRESS (P) LT D. (1993) 203 ITR 350 (CAL), WHEREIN IT IS HELD THAT INCOME EARNED FROM C OMMERCIAL ASSETS WAS TREATED AS BUSINESS INCOME. OUR ATTENTION WAS ALSO INVITED TO HONBLE SUPREME COURTSS RECENT JUDGMENT IN THE CASE OF CIT V PFH M ALL & RETAIL MANGT.P. LTD.DATED 04.09.2012(UNREPORTED) WHEREIN ONCE AGAIN EMPHASIZED ON THE PRINCIPLE OF RULE OF CONSISTENCY. LD. COUNSEL ALSO POINTED OUT THAT EVEN AFTER THE ORDER WAS PASSED BY THE CIT(A), ASSESSING OFFIC ER IN ASSESSMENT ORDER U/S143(3) OF THE ACT CONTINUED TO TREAT THE INCOME FROM THIS EXERCISE AS INCOME FROM BUSINESS. IT WAS STATED THAT IN PRECEDING YEAR S AS ALSO IN SUCCEEDING YEARS, DEPARTMENT WAS ALL ALONG TREATED THIS INCOME FROM BUSINESS. HIS CONTENTION WAS THAT HONBLE SUPREME COURT IN THE CA SE OF RADHASOAMI SATSANG 5 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 (SUPRA), HAS OBSERVED THAT IF PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, THE PRINCIPLE OF CONSISTENC Y MUST APPLY. EACH ASSESSMENT YEAR BEING A UNIT, WHAT WAS DECIDED IN O NE YEAR MIGHT NOT APPLY IN THE FOLLOWING YEAR; WHERE A FUNDAMENTAL ASPECT PERM EATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POS ITION TO BE CHANGED. 5. LD. D.R. SUBMITTED THAT THE PROPERTY IN QUESTION WAS GIVEN ON RENT AND THE RENT WAS A COMPOSITE RENT. HE STATED THAT INCOM E IS FIXED AND, THEREFORE, IT CANNOT BE TREATED AS BUSINESS INCOME. HE RELIED ON DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHAMBHU INVESTME NT (P) LTD. V CIT [2001] 249 ITR 47 (CAL), WHICH HAS SINCE BEEN APPROVED BY HONBLE SU PREME COURT WHEREIN IT IS HELD THAT WHEN PRIMARY OBJECT OF ASSE SSEE IS LETTING OUT THE PROPERTY, THE INCOME EARNED FROM THE SAME MUST BE C ONSIDERED AS INCOME FROM HOUSE PROPERTY. THE BENCH DIRECTED LD. D.R. TO FIND OUT WHETHER THE CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER HIMSELF HAS TREATED THE INCOME AS BUSINESS INCOME IN THE SUBSEQUENT YEARS IS CORRECT. IT IS REVEALED FROM RECORDS THAT LD. D.R. SPECIFICALLY REQUIRED ASSESEE TO CONF IRM WHETHER THE INCOME IN QUESTION DERIVED FROM HOUSE PROPERTY HAS BEEN TREAT ED AS INCOME FROM BUSINESS IN ANY ASSESSMENT SUBSEQUENT TO ASSESSMENT YEAR 200 5-06. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. W E FIND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SHAMBHU INVESTME NT HELD THAT THE MERE FACT OF ATTACHMENT OF INCOME TO ANY IMMOVABLE PROPE RTY CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM HOUSE PROPERTY. IT IS NECESSARY TO FIND OUT THE PRIMARY OBJECT OF ASSESSE E WHILE EXPLOITING THE PROPERTY. IF IT IS FOUND THAT THE MAIN INTENTION IS FOR LETTING OUT THE PROPERTY OR ANY PORTION THEREOF THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM HOUSE PROPERTY. IN CASE, IT IS FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, IN THAT EVENT IT MUST BE HELD AS BUSINESS INCOME. THE VIEW WAS EXPRESSED BY HONBLE CALCUTTA HIGH COURT AND APPROVED BY HONBLE SUPREME COURT IN CASE OF SHAMBHU INVESTMENT (P) LTD.(SUPRA) IN THIS VIEW OF THE MATTER, IT IS CLEAR THAT 6 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 WHAT IS TO BE REALLY SEEN IS WHETHER THE PROPERTY I S EXPLOITED BY WAY OF COMPLEX COMMERCIAL ACTIVITY OR NOT. IN THIS BACKDRO P, IT IS QUITE APPROPRIATE TO REFER TO THE OBSERVATIONS MADE BY THE HONBLE SUPRE ME COURT IN THE LANDMARK JUDGMENT OF RADHASOAMY SATSANG (SUPRA), REFRRING TO THE CASE LAW OF HOYSTEAD V COMMISSIONER OF TAXATION [1926] AC 155 (PC), WHER EIN IT IS OBSERVED AS UNDER :- PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO NS BECAUSE OF NEW VIEWS THEY MAY ENTERTAIN OF THE LAW OF THE CASE , OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHE R OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERT AIN CIRCUMSTANCES. IF THIS WERE PERMITTED LITIGATION WO ULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT I S A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED, AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIRDLY, THE SAME PRINCIPLE NAMELY, THAT OF A SETTING TO REST RIGHTS OF LITIG ANTS, APPLIES TO THE CASE WHERE A POINT, FUNDAMENTAL TO THE DECISION , TAKEN OR ASSUMED BY THE PLAINTIFF AND TRAVERSABLE BY THE DEF ENDANT HAS NOT BEEN TRAVERSED. IN THAT CASE ALSO A DEFENDANT I S BOUND BY THE JUDGMENT ALTHOUGH IT MAY BE TRUE ENOUGH THAT SU BSEQUENT LIGHT OR INGENUITY MIGHT SUGGEST SOME TRAVERSE WHIC H HAD NOT BEEN TAKEN. HONBLE SUPREME COURT ALSO REFERRED TO THEIR OWN JU DGMENT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. V ITO [1977] 106 ITR 1 (SC), WHEREIN AT PAGE 10 IT WAS STATED THAT AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINA LITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. HONBLE SUPREME COURT WAS OF THE VIEW THAT THE ASSESSMENTS ARE CERT AINLY QUASI-JUDICIAL AND OBSERVATIONS SO MADE IN THE CASE OF PARASHURAM POTT ERY WORKS CO. LTD. (SUPRA) WOULD APPLY TO THE ASSESSMENT PROCEEDINGS. IN THE C ASE OF PARASHURAM POTTERY WORKS CO. LTD. IT WAS OBSERVED THAT RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS AND EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS H AS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSI TION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPRO PRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR . 7 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 THIS PRINCIPLE HAS BEEN UPHELD AND RE-STATED BY HON BLE SUPREME COURT RECENTLY IN THE CASE OF PFH MALL & RETAIL MANGT. P. LTD. DATED 04.09.2012, WHEREIN REITERATED THE RULE OF CONSISTENCY AND APPL IED THE SAME ON THE VERY ISSUE, THAT IS WHETHER THE INCOME IN QUESTION IS TO BE TREATED AS INCOME FROM BUSINESS OR AS INCOME FROM HOUSE PROPERTY. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND THE FACT THAT IT WAS A CASE OF RENT AL OR COMMERCIAL UTILIZATION OF PROPERTIES, WHICH HAS BEEN ACCEPTED, WE ARE OF T HE CONSIDERED VIEW THAT THERE IS NO REASON TO UPHOLD THIS DEVIATION. IN VIE W OF THE ABOVE DISCUSSIONS, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO TREAT THE INCOME IN QUESTION AS INCOME FROM BUSINES S AS HAS BEEN IN PRECEDING AND SUBSEQUENT ASSESSMENT YEAR. THIS ISSUE OF ASSE SSEES APPEAL IS ALLOWED. 7. IN RESPECT TO SECOND ISSUE IT IS TO BE STATED THAT THIS WAS HEARD ON MERITS AS A COVERED MATTER. THE ISSUE IS APPLICABILITY OF SECTION 40(A )(IA) OF THE ACT TO THE AMOUNT PAID DURING THE YEAR. THE RELEVANT GROUND NO. 8 READS AS UNDER: 8) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN MAKING AN ADDITIO N OF RS.184462/- U/S. 40(A)(IA) WITHOUT DIRECTING THE AO TO ALLOW THE CLA IM IN THE YEAR OF PAYMENT AS PER THE PROVISIONS OF SECTION 40(A)(IA). 8. AT THE OUTSET, IT IS TO BE MENTIONED THAT ASSESS EES LD COUNSEL SHRI S. K. TULSIYAN ALREADY CONCEDED AS NOT PRESSED. SINCE THERE IS A NOTING IN THE GROUND AND THE NOTINGS ARE SIGNED BY THE COUNSEL FOR THE ASSESSEE, WE ARE OF T HE VIEW THAT THIS SHOULD NOT BE ADJUDICATED ON MERITS AS THE ASSESSEE HAS HIMSELF CONCEDED THE SAM E AS NOT PRESSED. HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 9. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF MUNICIPAL TAXES. FOR THIS, ASSESSE E HAS RAISED FOLLOWING GROUND NO.9: 9.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN ALLOWING MUNICIPA L TAXES PAYMENTS ONLY TO THE EXTENT OF RS.351051/- AS AGAINST THE CLAIM OF RS.42 2569/- AND ALSO BY TREATING THE INTEREST PAID TO THE CALCUTTA MUNICIPAL CORPORATION AS A DISALLOWABLE EXPENDITURE AND HIS ACTION IN RESTRICTING THE DIS ALLOWANCE IS ERRONEOUS AND NOT AS PER THE PROVISIONS OF LAW. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE AO HAS MADE DISALLOWANCE OF MUNICIPAL TAXES BY OBSERVING THAT THE RECEIPT OF RS.43,373/- DATED 14.08.2003 DOES NOT PERTAIN TO THE RELEVANT Y EAR. THE RELEVANT FINDING OF THE AO READS AS UNDER: 8 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 MUNICIPAL TAX RECEIPTS IN RESPECT OF THE WAREHOUSE WERE SUBMITTED WHILE PERUSING THE SAME IT WAS FOUND THAT ONE RECEIPT AMO UNTING TO RS.43,373/- IS DATED 14/08/2003 (PAYMENT MADE BY CHEQUE NO.981632 DATED 30/07/2003). AS THIS AMOUYNT PERTAINS TO EARLIER PERIOD IT IS THEREFORE DISALLOWED. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). BEFORE HIM, THE ASSESSEE CONTENDED THAT THE AO HAS WRONGLY DISALLOWED THIS AMOUNT OF RS.43, 373/- DUE TO OVERSIGHT BEING ONE CHALLAN OF THE EARLIER YEARS AND CIT(A) DELETED THIS ADDITI ON BY DIRECTING THE AO TO ALLOW THE CLAIM TO THE EXTENT OF RS.56,523/- AS UNDER: I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE COPY OF LEDGER ACCOUNT AS WELL AS MUNICIPAL TAX RECEIPTS. IT IS OBSERVED THAT THE PAYMENTS WERE MADE FOR FOUR QUARTERS OF FY 2004-05 ON 28.4.2004, 26.7.04, 8.12.04 AND 27.1.05. THE CONTENTION OF THE APPELLA NT IS CORRECT AND NO CLAIM OF EARLIER YEARS PAYMENT HAS BEEN MADE BY HIM. THE DI SALLOWANCE OF RS.43,373/- MADE BY THE AO IS REQUIRED TO BE DELETED. THE A.O. IS DIRECTED TO ALLOW THE CLAIM OF THE APPELLANT WHILE COMPUTING THE INCOME U NDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, THE TOTAL CLAIM ALL OWABLE IS RS.56,523/- AS OUT OF PAYMENT OF RS.1,75,774/- THE APPELLANT HAS RECOV ERED AN AMOUNT OF RS.1,19,257/- FROM VARIOUS TENANTS. THE GROUND NO. 4 IS ALLOWED. 11. BEFORE US, NOW LD. COUNSEL FOR THE ASSESSEE SHR I S. K. TULSIYAN ARGUED THAT THE DEDUCTION QUA INTEREST SHOULD BE ALLOWED TO THE ASS ESSEE AND HE STATED THAT THE ADDITION OF RS.64,389/- PERTAINS TO PENALTY AND INTEREST AND TH E PENALTY IS TO THE EXTENT OF RS.10,455/- BUT INTEREST IS TO THE EXTENT OF RS.53,934/-. LD. COUN SEL FOR THE ASSESSEE MADE SUBMISSION THAT THIS SHOULD BE ALLOWED. ON QUERY FROM THE BENCH, THE LD . SR. DR STATED THAT THIS ISSUE NEEDS TO BE SET ASIDE AS TO THE VERIFICATION OF FACTS BY AO. O N THIS, LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT THE ISSUE CAN BE SET ASIDE. IN VIEW OF THE ABOVE CONCESSION FROM BOTH THE SIDES, WE SET ASIDE THE ISSUE TO THE FILE OF AO FOR VERIFI CATION, WHETHER THIS INTEREST PERTAINS TO THE MUNICIPAL AUTHORITIES OR NOT AND DECIDE ACCORDINGLY . THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED P ARTLY FOR STATISTICAL PURPOSES. 13. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13 TH FEB., 2014 SD/- SD/- . , , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH FEBRUARY, 2014 +, '- . JD.(SR.P.S.) 9 ITA NO.374/K/2009 M/S. BANWARILAL GOEL & SONS , AY:2005-06 * / ( 0$1 - COPY OF THE ORDER FORWARDED TO: 1. M/S. BANWARILAL GOEL & SONS, 17, S. P. MUKHERJEE R OAD, KOLKATA-700 025 2 ()&' / RESPONDENT ITO, WARD-31(1), KOLKATA 3. *' ( )/ THE CIT(A), KOLKATA 4. 5. *' / CIT KOLKATA 2 3 (' / DR, KOLKATA BENCHES, KOLKATA ) ( / TRUE COPY, * '4 / BY ORDER, /ASSTT. REGISTRAR .