MAHENDRA SINGHG, Jaipur V. DCIT, Jaipur

ITA 484/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99272 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DILIP SHARMA JCIT DHK
• Assessee Lawyers: N S VYAS
• Keywords: Business income; Depreciation; Business expenditure; Rule of consistency; Reason to believe
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 484/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI MAHENDRA SINGH 6, HARI BHAWAN JACOB ROAD, JAIPUR CUKE VS. THE DCIT CIRCLE- 2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AGCPS 3348 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI N.S. VYAS, C.A. JKTLO DH VKSJ LS@ REVENUE BY: SHRI DILIP SHARMA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/07/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11 /08/2015 VKNS'K@ ORDER PER T.R. MEENA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 25-02-2013 FOR THE ASSESSME NT YEAR 2008-09 WHEREIN THE SOLE GROUND RAISED BY THE ASSESSEE REVO LVES AROUND DISALLOWANCE OF THE CLAIM U/S 24(A) OF THE I.T. ACT , 1961 AMOUNTING TO RS. 5,41,326/- AND RS. 4,77,061/- AGAINST THE RENTAL IN COME SHOWN FROM HARI MAHAL AND SPICE COURT. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED THE RETURN OF INCOME ON 29-07-2008 DECLARING INCOME OF RS. 33,55, 080. THE CASE OF ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 2 THE ASSESSEE WAS SCRUTINIZED U/S 143(3) OF THE ACT. IN THIS CASE, THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN RENTAL INCOME AS UNDER:- 1. HARI MAHAL RS. 18,04,420/- 2. SPICE COURT RS. 15,90,204/- THE ASSESSEE HAD CLAIMED DEDUCTION U/S 24(A) OF THE ACT AT RS. 5,41,326/- AND RS. 4,77,061/- ON BOTH THE PROPERTIES RESPECTIV ELY. THE AO VERIFIED THE RENT/ LEASE DEED AND IT WAS NOTICED THAT BOTH T HE ABOVE MENTIONED CASES, RECEIPT IS DEPENDED ON CERTAIN PERCENTAGE OF TURNOVER OF THE LESSEE. THE AO REPRODUCED THE RELEVANT CLAUSE OF LEASE AGRE EMENT PERTAINING TO HARI BHAWAN AS UNDER:- 3. THE TOTAL LICENSE FEE PAYABLE BY THE LICENSEE TO THE LICENSOR WOULD 20% OF GROSS RECEIPT IN RESPECT OF THE LICENSED PORTION IN EACH FINANCIAL YEAR ON PRESENT ROOMS. THIS WOULD INCREASE TO 25% WHEN THE NUMBER OF ROOMS IS INCREASED TO MORE THAN 7 ROOMS. 20. THE LICENSEE SHALL PAY THE LICENSE FEES EVERY MONTH BY PREPARING A STATEMENT OF TURNOVER WHICH CA N BE CHECKED BY LICENSOR AT ANY TIME. HE MAY POST/ SEND A PERSON TO CHECK THE TURNOVER STATEMENT AND THE SALES OF T HE HOTEL AT ALL THE TIMES. THE STATEMENT SHALL BE AUDITED BY T HE AUDITOR APPOINTED BY THE LICENSOR. FURTHER THE TITLE LEASE DEED OF HARI BHAWAN SAYS H OTEL OPERATING LICENSE AGREEMENT. THE AO HELD THAT THIS CLEARLY SAYS THAT IT IS IN THE NATURE OF AGREEMENT TO OPERATE THE HOTEL NOT SIMPLY A RENT AG REEMENT. FURTHER ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 3 SUPPLEMENT, HOTEL OPERATING LICENSING AGREEMENT WA S EXECUTED ON 5-09- 2003 WHEN THE LICENSEE WAS CONVERTED INTO A FIRM. I N THE SAID AGREEMENT, RELEVANT CLAUSE AS MENTIONED BY THE AO IN HIS ORDER IS REPRODUCED AS UNDER:- THAT THE PROPERTY WHICH LEASED OUT BELONGING TO SH RI MAHENDRA SINGH S/O SHRI HARI SINGH AND SHRI SHASHAN K NATH SINGH AND SHRI TIRATHRAJ NATH SINGH AND SMT. S UNITA SHISHODIA AGREED TO TAKE ACTIVE PART IN LOOKING AFT ER THE WORK OF HOTEL ON BEHALF OF THE LICENSOR. THE AO OBSERVED THAT THE ASSESSEE EVEN APPOINTED O NE SUPERVISOR OR AN AGENT TO LOOK AFTER THE WORK OF HOTEL. HENCE, IT WA S CERTAINLY NOT MERELY LETTING OUT OF A BUILDING BUT BUILDING WAS LET OUT WITH CLAUSE OF SUPERVISION OF THE ASSESSEE (LESSER). FURTHER AS PE R THE LEASE AGREEMENT REGARDING SPICE COURT, IT IS MENTIONED AS UNDER- 3. THAT IN VIEW OF TAKING THE DEMISED PREMISES ON LICENSE THE PARTY ON THE SECOND PART I.E. THE LICEN SEE HEREBY AGREES TO PAY 10% OF THE TOTAL TURNOVER OF THE MON TH OF THE RESTAURANT AS LICENSEE FEE AND THE SAME SHALL BE PA ID BY THE 10 TH DAY OF SUCCESSIVE MONTH. 4. THAT THE LICENSOR SHALL ALWAYS BE FREE TO CHECK CASH MEMOS, BILLS, EXPENSES VOUCHERS AND BOOKS OF ACCOUNTS OF THE LICENSEE PERTAINING TO THE RESTAURANT BUSINE SS AND LICENSEE SHALL PROVIDE DAY TODAY SALE FIGURES TO TH E LICENSOR IF DEMANDED BY HIM. ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 4 THE AO FURTHER HELD THAT BOTH THE CASES IS NOT FIXE D RATHER IT IS CERTAIN PERCENTAGE OF GROSS RECEIPT OF THE LESSEE WHICH IMP LIES THAT ASSESSEE SHARE OF RECEIPT FLUCTUATES WITH CHANGES OR FLUCTUATION O F GROSS RECEIPT OF THE LESSEE. THEREFORE, THE AO HELD THAT SUCH INCOME CAN NOT BE CATEGORIZED AS RENTAL INCOME, RATHER IT SHOULD BE TREATED AS BUSIN ESS INCOME AND HENCE DEDUCTION U/S 24(A) OF I.T. ACT WOULD NOT BE ALLOW ED. MOREOVER, THE ASSESSEE IS NOT MERELY LETTING OUT THE PROPERTY BUT HAS RESERVED HIS RIGHTS TO INSPECT AND EXAMINE THE BOOKS OF THE LICENSEE. T HEREFORE, THE AO ASKED THE ASSESSEE AS TO WHY INCOME SHOULD NOT BE T REATED AS BUSINESS INCOME. THE ASSESSEE REPLIED VIDE HIS LETTER DATED 6-09-2011 WHICH HAS BEEN REPRODUCED BY THE AO AT PAGE 4 OF THE ASSESSME NT ORDER. 2.2 AFTER CONSIDERING THE ASSESSEE'S REPLY, THE AO CONCLUDED THAT IN THE CASE GIVEN, TO ASCERTAIN WHETHER INCOME FROM LEASE OF A COMMERCIAL ASSET IS BUSINESS INCOME OR INCOME FROM HOUSE PROPERTY IS TO BE DECIDED BY THE FACT THAT WHETHER DECISION TO LEASE THE COMMERCIAL PROPERTY WAS MOTIVATED BY DESIRE TO DERIVE INCOME FROM THE ASSET AS A MERE OWNER THEREOF. IN THE CASE GIVEN ASSESSEE ENTERED INTO AS SESSEE LEASE AGREEMENT WITH THE LESSEE BUT MERELY DID NOT EARN FROM HOUSE PROPERTY AS AN ASSET. RATHER ASSESSEE WAS HAVING PERCENTAGE SHARE IN THE GROSS RECEIPT OF INCOME. IN THIS CASE, THE ASSESSEE LEASED THE HOTEL TO OTHER PARTY WOULD ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 5 HAVE MADE IT AS A BRAND WHEREIN ASSESSEE WAS HAVING ITS RIGHTS RESERVED TO RECEIVE CERTAIN PERCENTAGE OF GROSS RECEIPT. MOREOV ER, AS PER CLAUSES OF THE LEASE AGREEMENT, ASSESSEE MADE HIMSELF ENTITLED FOR INTERFERING AND EXAMINING THE BOOKS OF ACCOUNT AND BILLS AND VOUCHE R OF THE LESSEES BUSINESS. THEREFORE, ASSESSEE LEASED OUT ITS UNIT F OR COMMERCIAL PURPOSES WHEREIN HE KEPT HIS RIGHTS RESERVED TO EXAMINE AND INTERFERE IN THE BUSINESS OF LESSEES BUSINESS. THUS BASIC MOTIVE OF THE ASSESSEE WAS NOT MERELY TO USE HIS ASSET AS OWNER BUT RATHER IT WAS SORT OF BUSINESS ADVENTURE. WHILE DECIDING THE HEAD OF INCOME FROM L ETTING OUT OF HOUSE PROPERTY, IT WAS TO BE SEEN THAT WHETHER THE ASSET WAS BEING EXPLOITED COMMERCIALLY BY LETTING OUT OR WHETHER IT WAS BEING LET OUT FOR THE PURPOSE OF ENJOYING THE RENT. THE DISTINCTION BETWE EN THE TWO IS A NARROW ONE AND HAS TO DEPEND ON CERTAIN FACTS PECULIAR TO EACH CASE. SO LONG AS THE ASSETS ARE USED AS BUSINESS ASSETS, IT IS IRREL EVANT WHETHER BUSINESS ASSETS ARE EXPLOITED AND USED BY THE ASSESSEE HIMSE LF OR SOMEONE ELSE AND WHERE INSTEAD OF CARRYING ON THE BUSINESS ITSELF, T HE ASSESSEE PERMITTED SOMEONE ELSE TO USE THE ASSETS AND TO CARRY ON THE IDENTICAL BUSINESS, THEN THE ACTIVITY OF THE ASSESSEE WOULD BE JUDGED AS A BUSINESS ACTIVITY. THE AO RELIED ON THE FOLLOWING CASE LAWS. ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 6 (I) CIT VS. G.V. RATTAIAH & CO. (2001) 256 ITR 351 (A.P.) (II) CIT VS. MIHIDIN HOTELS (P) LTD. 282 ITR 229 (MUM.) (III) CIT VS. PATESHWARI ELECTRICAL & ASSOCIATED I NDUSTRIES (P) LTD. 197 CTR 353 (ALL.) THUS BY CONSIDERING THE ABOVE CASE LAWS, THE AO HEL D THAT THE ASSESSEE CLAIMED THE DEDUCTION U/S 24(A) OF THE ACT ON BOTH THE PROPERTIES AT RS. 10,18,387/- WHICH IS NOT ALLOWABLE. HOWEVER, THE AO ALLOWED DEPRECIATION ON PROPERTIES AT RS. 1.00 LAC AND NET ADDITION OF RS. 9,18,387/- WAS MADE IN THE INCOME OF THE ASSESSEE. 2.3 BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 4.5 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE A.R. GIVEN THE FACTS OF THE CASE, THE CASE LAWS RELIED ON BY THE A.R. ARE DISTINGUISH ED FROM THE FACT OF THE CASE OF THE APPELLANT BECAUSE IN TH E CASE OF THE APPELLANT, THE HOTEL OPERATING LICENSE AGREEMENT AN D RESTAURANT LICENSE AGREEMENT CATEGORICALLY MENTION THAT THE APPELLANT WAS NOT MERELY OBTAINING RENT FROM LEASIN G OUT THESE PROPERTIES BUT OBTAINING SHARE OF PROFITS. TH US THE LICENSE FEE WAS NOT A FLAT RATE BUT LINKED TO THE P ERCENTAGE OF THE GROSS RECEIPTS FROM THE EARNING OF THE HOTEL. S IMILARLY, IN THE CASE OF RUNNING OF THE RESTAURANT, IT WAS MENTI ONED THAT THE LICENSEE HAD TO PAY 10% OF THE TOTAL TURNOVER O F THE MONTH OF RESTAURANT. IN THIS CLAUSE OF THE AGREEMEN T, IT WAS FURTHER MENTIONED THAT THE LICENSOR IS FREE TO CHEC K THE CASH MEMO, BILLS, EXPENSES AND VOUCHERS AND BOOKS OF ACC OUNT OF THE LICENSEE PERTAINING TO THE RESTAURANT BUSINESS. THE ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 7 LICENSEE WAS REQUIRED TO PROVIDE DAY TODAY SALE FIG URES OF THE LICENSOR. THUS AS PER THE CLAUSE OF THE AGREEME NT BETWEEN THE LICENSOR AND THE LICENSEE, IT IS CLEAR THAT THIS WAS NOT SIMPLE RENTAL INCOME BUT WAS PERCENTAGE OF THE PROFITS FROM RUNNING A HOTEL AND RESTAURANT. THEREFORE, THE DECISION OF THE AO TO TREAT THIS INCOME AS BUSINESS INCOME O F THE APPELLANT AND TO DISALLOW THE CLAIM U/S 24(A) IS UP HELD. THUS, THE FIRST TWO GROUNDS OF APPEAL ARE DECIDED AGAINST THE ASSESSEE. REGARDING THE ALLOWANCE OF DEPRECIATION, IT IS PERTINENT TO NOTE THAT AS PER THE OBSERVATION OF TH E AO IN THE ASSESSMENT ORDER IN SPITE OF REPEATED OPPORTUNITY, THE ASSESSEE FAILED TO FILE ANY DETAILS REGARDING ITS C LAIM OF DEPRECIATION. SIMILARLY, DURING THE COURSE OF APPEL LATE PROCEEDINGS, NO DETAILS WERE FURNISHED REGARDING TH E DEPRECIATION ALLOWABLE TO THE APPELLANT. THEREFORE, THE DEPRECIATION OF RS. 1 LAC ALLOWED BY THE AO APPEARS TO BE REASONABLE AND IS CONFIRMED. THUS THE GROUNDS OF AP PEAL NO. 3,4, & 5 ARE DECIDED IN FAVOUR OF THE DEPARTMENT. 2.4 NOW THE ASSESSEE IS BEFORE US. THE LD. AR OF TH E ASSESSEE REITERATED THE ARGUMENTS AS MADE BEFORE THE LD. CIT(A) AND FUR THER ARGUED THAT THESE PROPERTIES WHICH LEASED OUT BELONGED TO SHRI MAHE NDRA SINGH, SHRI SHASHANK NATH SINGH, SHRI TIRTATH RAJ SINGH AND SMT . SUNITA SISODIA WAS LOOKING AFTER THE COLLECTION AND IT IS THE BASIS OF THE LEASE RENT. THERE IS NO REASON TO BELIEVE THAT THE RENT RECEIVED WAS TO BE TREATED AS BUSINESS INCOME. EARLIER THE SAID BUILDING WAS USED BY THE P ETITIONER FOR HIS RESIDENCE PURPOSES. THERE IS NO INTERFERENCE IN THE HOTEL ACTIVITIES BUT ONLY TO CHECK THE COLLECTION FOR CALCULATING THE LE ASE MONEY ONLY. THE ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 8 PETITIONER RIGHTLY CLAIMED THE INCOME FROM LEASE RE NT AS PROPERTY INCOME. IN THE EARLIER YEARS, THE SAME INCOME WAS SHOWN AS RENTAL INCOME AND WAS ACCEPTED BY THE AO. IN THE CASE OF SPICE COURT WHO IS RUNNING RESTAURANT, THE PETITIONER HAD NO INTERFERENCE IN THE DAY TODAY BUSINESS ACTIVITIES OF THE RESTAURANT. THE ASSESSEE VIDE LETTER DATED 01- 12-2010 REPLIED THE QUERY OF THE AO. HE FURTHER DREW OUR ATTENTION TO T HE DEFINITION OF BUSINESS. AS PER SECTION 2(3) OF THE ACT, WAS ALSO NOT JUSTIFIED IN ALLOWING DEPRECIATION AT RS. 1.00 LAC FOR BOTH THE PROPERTIE S DURING ASSESSMENT PROCEEDINGS. THE LD. AR OF THE VIDE LETTER DATED 14 -12-2010 HAD SUBMITTED BEFORE THE AO THAT IF THE SOURCE OF THE I NCOME FROM HOUSE PROPERTY IS ASSESSED AS BUSINESS INCOME BY THE AO T HEN THE EXPENSES INCURRED ON ACCOUNT OF DEPRECIATION AT RS. 16,14,3 91/- AND OTHER EXPENSE LIKE ON REPAIRS, REMUNERATION AND SALARY, TELEPHON E, CONVEYANCE, ELECTRICITY ETC. SHOULD HAVE BEEN ALLOWED IN COMPUT ING BUSINESS INCOME HE FURTHER RELIED ON DECISION OF HON'BLE PATNA HIG H COURT IN THE CASE OF CIT AND ANR VS. SARAN HOLDINGS (P) LTD. (2011) 58 D TR 82 WHEREIN IT WAS HELD THAT WHERE THE LET OUT PROPERTY IS NOT IN THE POSSESSION OF THE A NOR ANY BUSINESS WAS DONE THERE AND ASSESSEE HAS LE T OUT THE SAME TO OTHERS FOR RENT, INCOME HAS TO BE TAXED UNDER THE H EAD INCOME FROM HOUSE PROPERTY. THE LD. AR OF THE ASSESSEE FURTHER RELIED ON THE CASE OF ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 9 ITAT LUCKNOW BENCH IN THE CASE OF ACIT VS. HARBILAS COLD STORAGE & FOOD PRODUCTS, (2011) 52 DTR (TRIB) 107 WHEREIN IT HAS BEEN HELD THAT LETTING OUT OF COLD STORAGE BUILDING FOR WAREHOUSIN G/ OFFICE PREMISES BUSINESS OF RUNNING OF A COLD STORAGE BY ASSESSEE W AS DISCONTINUED IN THE YEAR 1989- ALTERATIONS AND ADDITIONS IN THE COLD ST ORAGE BUILDINGS WERE CARRIED OUT AND VARIOUS PORTIONS THEREOF GIVEN TO D IFFERENT PARTIES ON RENT FOR THE USE OF THE WAREHOUSES AS WELL AS OFFICE PRE MISES. THE AO CHANGED THE HEAD OF INCOME LETTING OUT OF THE PROPERTY FROM INCOME FROM HOUSE PROPERTY TO INCOME FROM HOUSE ON THE GROUND THAT PREMISES UNDER CONSIDERATION IS A WAREHOUSE, WHICH IS BASICALLY A COMMERCIAL ASSET OF THE ASSESSEE NOT JUSTIFIED THERE WAS NO REAS ON TO DEPART FROM THE STAND TAKEN IN THE EARLIER YEARS PARTICULARLY WHEN THERE WAS NO MATERIAL CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE PRESEN T CASE AS COMPARED TO EARLIER YEARS. EVEN THOUGH, PRINCIPLE OF RES JUDICA TA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS, BUT AT THE SAME TIME PRINCI PLES OF CONSISTENCY HAVE TO BE FOLLOWED WHILE ADMINISTERING JUSTICE. TH EREFORE, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO TAX WAREHOUSIN G CHARGES UNDER THE HEAD INCOME FORM HOUSE PROPERTY AND ALLOW DEDUCTI ON AS PER SECTION 24 AFTER VERIFICATION. THE LD. AR OF THE ASSESSEE FURT HER RELIED ON THE CASE OF SHAMBHU INVESTMENTS (P) LTD. VS. CIT , 249 ITR 47 ( CAL.) WHEREIN THE ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 10 HON'BLE HIGH COURT CONSIDERED THE ISSUE OF FURNISHE D PREMISES LET OUT ON MONTHLY RENT BASIS TO VARIOUS PARTIES ALONGWITH FUR NITURE, FIXTURES, LIGHT, AIR-CONDITIONERS ETC. FOR BEING USED AS TABLE SPAC E. THE ASSESSEE WAS ALSO PROVIDING SERVICES LIKE WATCH AND WARD STAFF, ELECT RICITY, WATER AND OTHER COMMON AMENITIES TO THE OCCUPIERS. THESE SERVICES A RE NOT SEPARATELY CHARGED. ENTIRE COST OF PROPERTY ALREADY RECOVERED BY WAY OF INTEREST FREE ADVANCE BY THE ASSESSEE. ONLY INTENTION WAS TO LET OUT THE PORTION OF PREMISES TO RESPECTIVE OCCUPANTS. INCOME DERIVED FR OM LETTING IS ASSESSABLE AS INCOME FROM PROPERTY AND NOT BUSINESS INCOME. THUS THE LD. AR OF THE ASSESSEE REQUESTED TO TREAT THE INCOME DI SCLOSED BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 2.5 AT THE OUTSET, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE'S FACTS AND CIRCU MSTANCES OF THE CASE HAS NOT BEEN CHANGED DURING THE ASSESSMENT YEAR UND ER CONSIDERATION. THE AO IN ASSESSMENT YEAR 2006-07 HAS ALREADY ACCEP TED THIS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER , DURING THE YEAR UNDER CONSIDERATION, THE AO ASSESSED THE INCOME UND ER THE HEAD BUSINESS AND PROFESSION. AS PER COPY OF THE LICENS E AGREEMENT DATED 5- ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 11 09-2003, THIS PROPERTY WAS OWNED BY SHRI MAHENDRA S INGH S/O SHRI HARI SINGH, DRR. SUNITA SHISHODIA, SHRI SHASHANK NATH SI NGH AND SHRI TIRATHRAJ NATH SINGH (LICENSOR) AND M/S. SHREE HARI MAHAL THROUGH MRS. MADHU SINGH W/O SHRI RAJENDRA SINGH (LICENSEE) VIDE SUPPLEMENT HOTEL OPERATING LICENSE AGREEMENT DATED 5-09-2003 MADE AM ONGST THEM. THE TOTAL RECEIPTS ARE SHARED BY 4 OWNERS OF THIS PROPE RTY AS MENTIONED ABOVE IN THEIR RESPECTIVE SHARES INDICATE IN THE SUPPLEME NT AGREEMENT. IT IS A FACT THAT OTHER CO-OWNERS HAVE ALSO DISCLOSED THEIR SHAR E OF INCOME IN THEIR RESPECTIVE RETURNS. THE AO HAS NOT VERIFIED THE OTH ER CO-OWNERS INCOME AS TO REMAINING 50% INCOME FROM SAID PROPERTY. THE CASE RELIED ON BY THE LD. AR OF THE ASSESSEE SUPPORT ASSESSEE'S CLAIM THA T THE CLAIM OF THE ASSESSEE IN PAST HAS BEEN ACCEPTED AS INCOME FROM H OUSE PROPERTY. THERE IS NO REASON TO CHANGE HEAD OF INCOME FROM HOUSE PR OPERTY TO BUSINESS INCOME. IT IS A TRITE THAT RULE OF RES JUDICATA DOE S NOT APPLY IN INCOME-TAX PROCEEDINGS BUT THE PRINCIPLE OF CONSISTENCY HAS TO BE FOLLOWED WHILE DELIVERING JUSTICE. FURTHER THE AO HAD NOT ALLOWED THE ASSESSEE'S CLAIM OF BUSINESS EXPENSES CLAIMED DURING THE ASSESSMENT PRO CEEDINGS. HE SIMPLY OBSERVED THAT THE ASSESSEE HAS FAILED TO SUBMIT THE DETAILS OF EXPENDITURE INCURRED AND DEPRECIATION ALONGWITH EVIDENCE BUT TH E ASSESSEE HAS FURNISHED THE DETAILS BEFORE THE AO VIDE LETTER DAT ED 14-12-2010 WHICH ITA NO. 484/JP/2013 SHRI MAHENDRA SINGH VS. DCIT, CIRCLE- 2, JAIPUR . 12 HAS NOT BEEN ADJUDICATED BY THE AO PROPERLY. EVEN T HE LD. CIT(A) ALSO IGNORED THE ASSESSEE'S CLAIM AT THE APPELLATE STAGE . THUS IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE'S INCOME IS TREATED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ALLOW DED UCTION U/S 24(A) OF THE ACT. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOW ED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 / 08/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 /08/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MAHENDRA SINGH, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE- 2, JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.484JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR