A.C.I.T.17(2), MUMBAI V. VIKRAM VITHALDAS VYAS, MUMBAI

ITA 4498/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70724 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 03-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH , MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI R.S.SYAL , A M TA NO. 44 98 / MUM / 20 1 2 ( ASSESSMENT YEAR : 200 7 - 2008 ) ACIT 17(2), MUMBAI VS. SHRI VIKRAM VITHALDAS VYAS, PROP. O F M/S FIBRE PRODUCTS, GANGA VIHAR, 7, R.A.K. ROAD, MATUNGA, MUMBAI - 400 019 PAN/GIR NO. : A AFPV 0294 E ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. ANURAG SHRIVASTAVA /ASSESSEE BY : MR. R.C.JAIN DATE OF HEARING : 6 TH AUGUST , 201 3 DATE OF PRONOUNCEMENT : 21 ST AUGUST , 2013 O R D E R P ER SHRI R.K.G UPTA, JM : TH IS APPEAL HA S BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER OF THE LEARNED CIT ( A) - 17 , MUMBAI , RELATING TO ASSESSMENT YEAR 200 7 - 08 . 2 . THE DEPARTMENT IS OBJECTING IN DIRECTING T HE AO TO TREAT THE WAREHOUSING CHARGES RECEIVED OF RS. 33,02,377/ - UNDER THE HEAD BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY AS HELD BY THE AO. 3 . BRIEF FACTS GIVING RISE TO THE APPEAL OF THE DEPARTMENT ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT THE I TA NO. 44 98 /20 1 2 2 ASSESSEE HAD RECEIVED WAREHOUSING CHARGES OF RS. 33,02,377/ - , WHICH HE HAD OFFERED FOR TAXATION AS BUSINESS INCOME. IN RESPONSE TO A QUERY FROM THE AO AS TO WHY THE INCOME FROM WAREHOUSING CHARGES SHOULD NOT BE TREATED AS INCOME FROM HOUSE PROPERTY. IT WAS SUBMITTED BY THE ASSESSEE THAT THE WAREHOUSING CHARGES DURING THE YEAR HAD BEEN RECEIVED BY VIRTUE OF A SUB LEASE AGREEMENT BETWEEN HIM AND M/S HYUNDAI MOTORS (I) LTD. THE SUB LEASED PREMISES HAD BEEN TAKEN ON LEASE BY THE ASSESSEE FROM M/S SHRIRAM COTTON PRESSING FACTORY PVT. LTD. ACCORDINGLY, THE ASSESSEE IS NOT DEEMED OWNER BY VIRTUE OF SECTION 22 R.W.S. 27(IIIB) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI VITHALDAS G. VYAS FOR ASSESSMENT YEAR 2000 - 01 TO 2002 - 03 . HOWEVER, THE AO WAS NOT SATISFIED AS IN HIS VIEW THE ASSESSEE IS DEEMED OWNER OF THE PROPERTY, THEREFORE, BY VIRTUE OF SECTION 27(IIIB) , THE WAREHOUSING CHARGES RECEIVED BY THE ASSESSEE IS TO BE ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 4 . ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) . DETAILED SUBMISSIONS WERE FILED BEFORE HIM, WHICH WERE FILED BEFORE THE AO. COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND M/S HYUNDAI MOTORS (I) LTD. WAS ALSO FILED. ON SIMILAR FACTS COPY OF THE ORDER OF CIT(A) IN THE CASE OF SHRI JANAK V. VYAS AND SHRI JAGAT V. VYAS WAS ALSO FILED ALONG WITH COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI VTHALDAS G. VYAS, DECIDED IN ITA NO. 7721/M/2003 , DATED 16 - 3 - 2007 , WERE ALSO FILED. A FTER EXAMINING THE SUBMISSION AND THE ORDER OF THE I TA NO. 44 98 /20 1 2 3 AO, THE CIT(A) FOUND THAT THE ASSESSEE IS NOT DEEMED OWNER OF THE PROPERTY, THEREFORE, THE SAME CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ACCORDINGLY, HE DIRECTED THE AO TO TREAT THE WA REHOUSING CHARGES AS INCOME FROM BUSINESS. NOW, THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . LEARNED DR PLACED RELIANCE ON THE ORDER OF AO. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A) . 6 . AFTER C ONSIDERING THE ORDER OF AO AND CIT(A) , WE FIND NO INFIRMITY IN THE FINDING OF THE LEARNED CIT(A) , WHO HAS ALLOWED THE APPEAL AFTER TAKING INTO CONSIDERATION THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI VITHALDAS G.VYAS (SUPRA) . THE FINDINGS OF THE LEAR NED CIT(A) HAVE BEEN RECORDED IN PARA 3.3 AT PAGES 2 & 3 ARE AS UNDER : - 3.3 I HAVE EXAMINED THE FACTS IN THIS CASE. THE RELEVANT FACTS ARE THAT THE ASSESSEE HAS TAKEN THE DEMISE PREMISES ON LEASE FROM M/S SRCP, VIDE AGREEMENT DATED 21.9.1984. AS PER THIS AGREEMENT THE AFORESAID PREMISES WERE LEASED TO THE ASSESSEE, ALONG WITH SHRI VITHALDAS V. VYAS, SHRI JANAK V. VYAS AND SHRI JAGAT V. VYAS FOR A PERIOD OF 6 YEARS COMMENCING FROM 21.9.1984. THE AGREEMENT WAS EXTENDABLE BY A PERIOD OF ANOTHER 5 YEARS. THE AFORESAID LEASE PERIOD CAME TO AN END AFTER AN EXPIRY OF 11 YEARS, IN MARCH 1996. THE ORIGINAL AGREEMENT DOES NOT APPEAR TO HAVE BEEN RENEWED, THEREAFTER, NOR ANY FRESH LEASE DEED APPEARS TO HAVE BEEN EXECUTED BETWEEN THE ASSESSEE AND M/S. SRCP. AT LEAS T, NO SUCH EVIDENCE HAD BEEN BROUGHT ON RECORD BY THE AO. HOWEVER, THE ASSESSEE HAS CONTINUED TO OCCUPY THE IMPUGNED PREMISES AND IS PAYING A MONTHLY RENT TO SRCP. NOW THE CONTENTION OF THE AO IS THAT THE ABOVE FACTS AMOUNT TO EXTENSION OF THE LEASE AGREE MENT. IN THE CIRCUMSTANCES, THE AO WAS OF THE VIEW THAT THE LEASE WOULD CONFER OWNERSHIP RIGHTS UNDER THE PROVISIONS OF SECTION 27(IIIB), READ WITH CLAUSE (F), TO SECTION 269UA, AS THE PERIOD OF LEASE WAS MORE THAN 12 YEARS. HENCE, THE PROVISIONS OF SECTIO N 22 WOULD APPLY TO THE SUB LEASE INCOME OF THE ASSESSEE. I TA NO. 44 98 /20 1 2 4 I FIND THAT SIMILAR FACTS AND POINT OF LAW CAME UP BEFORE THE TRIBUNAL IN THE CASE OF SHRI VITHALDAS G. VYAS, THE ASSESSEE'S FATHER AND CO - LESSEE, FOR A.Y. 2000 - 01 TO A.Y. 2002 - 03. THE TRIBUNAL, AF TER EXAMINING THE FACTS, WHICH ARE IDENTICAL TO THOSE OF THE ASSESSEE, HELD THAT AFTER THE EXPIRY OF LEASE PERIOD OF 11 YZ YEARS, BETWEEN THE APPELLANT AND M/S. SRCP, THE PREMISES WERE OCCUPIED BY THE ASSESSEE AS A MONTHLY TENANT WITHOUT ANY FRESH AGREEMEN T. THE TRIBUNAL FURTHER HELD THAT, THE DEEMING PROVISIONS OF SECTION 27(IIIB) READ WITH 269UA(F) HAVE TO BE CONSTRUED STRICTLY AND THEREFORE, THE ASSESSEE CANNOT BE SAID TO HAVE ACQUIRED ANY RIGHTS AS CONTEMPLATED U/S. 27(IIIB). ACCORDINGLY, THE TRIBUNAL D IRECTED THE AO TO ASSESS THE SUB LEASE INCOME AS BUSINESS INCOME. THE ABOVE JUDGMENT OF THE JURISDICTIONAL TRIBUNAL BEING BINDING ON THE UNDERSIGNED, AND THE AO NOT HAVING BROUGHT ON RECORD ANY DISTINGUISHING FACTS, THE AO IS DIRECTED TO ASSESS THE WAREHOU SING CHARGES OF RS. 33,02,377/ - UNDER THE HEAD BUSINESS INCOME. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. THE ABOVE FINDINGS OF LEARNED CIT(A) REMAINED UNCONTROVERTED, THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDINGS OF THE LEARNED CIT(A), WHIC H ARE IN CONSONANCE WITH THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI VITHALDAS V. VYAS (SUPRA) . ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A). 7 . RESULTANTLY , APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF AUG . 201 3 . SD/ - ( ) ( R.S.SYAL ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 21/08/ 2013 /PKM , PS I TA NO. 44 98 /20 1 2 5 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE C I T(A) , MUMBAI . 4. / C I T 5. / DR, ITAT, MUMBAI . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( /ASSTT. REGISTRAR) / ITAT, MUMBAI