M/s. Agache Associates, New Delhi V. ITO, New Delhi

ITA 5008/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5626 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 22-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DLEHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO.5008/DEL/2016 ASSESSMENT YEAR: 2012-13 M/S AGACHE ASSOCIATES, VS INCOME-TAX OFFICER, C/O M/S S.P. JAIN & ASSOCIATES, COMPANY WARD 1(2), 303-305, BHANOT HOUSE, NEW DELHI. 17 YUSUF SARAI COMMERCIAL COMPLEX, NEW DELHI. (PAN: AAACA9911H) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI ANIL JAIN, ADVOCATE DEPARTMENT BY: MS ASHIMA NEB, SR. DR DATE OF HEARING: 28.01.2019 DATE OF PRONOUNCEMENT: 30.01.2019 ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDER DATED 2.08.2016 IN APPEAL NO.150/15-16 FOR THE ASSTT. YEAR 2012-13 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, NEW DELHI {FOR SHORT LD. CIT(A)}, ASSESSEE PREFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND IS ENGAGED IN THE BUSINESS 2 OF PROVIDING WAREHOUSING AND ALLOWED SERVICE FACILITIES TO DIFFERENT BUSINESS HOUSES. FOR THE ASSTT. YEAR 2012-13, THEY HAVE FILED THEIR RETURN OF INCOME ON 24.3.2014 DECLARING AN INCOME OF RS.8,50,360/-. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) BY ORDER DATED 13.03.2015 DETERMINING TOTAL INCOME AT RS.58,54,390/-. IN THIS PROCESS, LEARNED AO HAD TREATED THE WAREHOUSE INCOME AS INCOME FROM HOUSE PROPERTY WHEREAS, ACCORDING TO THE ASSESSEE, IT WAS THE BUSINESS INCOME BEING THE SERVICE CHARGED RECEIVED AMOUNT TO RS.82,07,192/- FROM THE GODOWNS AT KOLKATA. LEARNED AO DID NOT ALLOW THE EXPENSES EARNED AND CLAIMED BY THE ASSESSEE BUT, ON THE OTHER HAND, ALLOWED THE DEDUCTION 30% FOR REPAIRS AND MUNICIPAL CHARGES ETC. 3. WHEN THE ASSESSEE PREFERRED APPEAL, LEARNED CIT(A) BY WAY OF IMPUGNED ORDER CONFIRMED THE FINDINGS OF THE LEARNED AO. HENCE, THE ASSESSEE IS IN THIS APPEAL BEFORE US CONTENDING THAT THE AUTHORITIES BELOW HAVE NOT APPRECIATED THE MAIN OBJECTS OF THE ASSESSEE COMPANY WHICH ARE TO PROVIDE THE SERVICES OF THE WAREHOUSES AND GODOWNS AND NON APPRECIATION OF THIS FACT RESULTED IN MISCARRIAGE OF JUSTICE AND CONSEQUENT TREATING THE BUSINESS INCOME AS INCOME FROM HOUSE PROPERTY. 4. IT IS THE SUBMISSION OF THE LEARNED AR THAT THE LEARNED AO IN HIS ORDER OBSERVED THAT THE LEARNED CIT(A)-IV, NEW DELHI CONFIRMED THE FINDINGS OF THE LEARNED AP FOR THE ASSTT. YEARS 2008-09 AND 2011-12, WHERE THE INCOME IS GIVEN THE SAME TREATMENT AND TOOK SUPPORT OF THE SAME. HOWEVER, IT IS FURTHER SUBMITTED THAT IN THE APPEAL PREFERRED AGAINST THE ORDER OF THE CIT(A) FOR THE ASSTT. YEARS 2008-09 AND 2011-12, THE TRIBUNAL PASSED A COMMON ORDER INCLUDING THE ASSTT. YEAR 2005-06 ALSO OBSERVING THAT THE AUTHORITIES BELOW HAVE NOT DONE THEIR PROPER GROUND WORK TO DETERMINE THE 3 NATURE OF RENTAL INCOME AND, THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER REQUIRES A DETAILED ENQUIRY FOR DETERMINATION OF THE NATURE OF RENTAL INCOME OF THE ASSESSEE AND FURTHER DIRECTING THE AO TO GIVE ADEQUATE OPPORTUNITY TO THE ASSESSEE FOR REBUTTAL OF INQUIRY REPORT OF ANY EVIDENCE COLLECTED BY HIM. 5. IT IS FURTHER SUBMITTED BY THE LEARNED AR THAT LD. AO IGNORING THE DIRECTIONS OF THE TRIBUNAL, COMPLETED THE REMAND CASES FOR THREE YEARS REPEATING THE OLD ORDERS. THE LD. AR FURTHER SUBMITTED THAT IN THE MEANWHILE FOR THE ASSTT. YEAR 2014-15, LD. CIT(A) AFTER CONSIDERING THE ORDER OF THE ITAT AND THE CASE LAWS, VIDE ORDER DATED 10.10.2017 HAS HELD THAT THE INCOME OF THE ASSESSEE IS TO BE ASSESSED AS INCOME FROM BUSINESS AS THERE IS NO OTHER ACTIVITY OF THE COMPANY OTHER THAN HIRING OF THE GODOWNS. AGGRIEVED BY THIS ORDER, DEPARTMENT IS IN APPEAL BEFORE THE ITAT IN ITA NO.1805/DEL/2018. 6. THE LD. AR RELIED ON THE ORDERS OF (I) RAYALA CORPORATION P. LTD. VS ACIT, SC, CIVIL APPEAL NO.6437 OF 2016 DT. 11.8.2016; (II) CHENNAI PROPERTIES AND INVESTMENT LTD. VS CIT (2015) 373 ITR 673 (SC); (III) SULTAN BROS (P) LTD. VS CIT (1964) 51 ITR 353 (SC); (IV) NEW SAVAN SUGAR & GUR REFINING CO. LTD. (1969) 74 ITR 7 (SC); AND (V) CIT VS SHAMBHU INVESTMENTS 263 ITR 143 (SC) FOR THE PROPOSITION THAT INTENTION OF THE TAXPAYER, EITHER EXPRESSED OR GATHERED FROM THE CIRCUMSTANCES, MAY PROVIDE A GUIDING TEST THAT THE INCOME ARISING FROM LETTING OUT OF THE PROPERTY WOULD BE TREATED AS BUSINESS INCOME OR INCOME ASSESSABLE UNDER THE HEAD OTHER SOURCES. THERE WAS NO SUCH THING AS A NATURALLY BORN COMMERCIAL ASSET BECAUSE AN ASSET BECOMES A COMMERCIAL ASSET ON ACCOUNT OF THE USE TO WHICH IT WAS PUT TO USE IN A BUSINESS AND NOT BECAUSE OF ANY INHERENT QUALITIES. 4 7. FURTHER, IT IS REPRESENTED BY THE LD. AR THAT ON THE SAME ISSUE FOR ASSTT. YEAR 2014-15 VIDE ORDER DATED 10.10.2017 LEARNED CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT INCOME BE ASSESSED AS INCOME FROM BUSINESS AS THERE IS NO OTHER ACTIVITY OF THE COMPANY OTHER THAN HIRING OF THE GODOWNS. 8. ON THE OTHER HAND, LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. SHE RELIED UPON THE DECISIONS OF THE (I) RAJ DADARKAR AND ASSOCIATES VS ACIT (2017-TIOL-222-SC-IT) FOR THE PROPOSITION THAT THE ENTRY IN THE OBJECT CLAUSE OF THE BUSINESS SHOWING A PARTICULAR OBJECT, WOULD NOT BE THE DETERMINATIVE FACTOR TO ARRIVE AT A CONCLUSION THAT THE INCOME FROM HOUSE PROPERTY IS TO BE TREATED AS INCOME FROM BUSINESS; AND (II) SHAMBHU INVESTMENT VS CIT (2003), 263 ITR 143 (SC) FOR THE PROPOSITION THAT SINCE A SPECIFIC HEAD IS PROVIDED FOR INCOME FROM THE OWNERSHIP OF HOUSE PROPERTY, IT CANNOT BE TAXED UNDER ANY OTHER HEAD. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. AS CAN BE SEEN FROM ABOVE FOR ASSTT.2005-06, 2008-09 AND 2011-12 ON SIMILAR ISSUE, A COORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 17.8.2017 REMANDED THE MATTER BACK TO THE AO WITH THE DIRECTION TO DETERMINE THE NATURE OF RENTAL INCOME THROUGH ENQUIRY AS WELL AS OTHER EVIDENCES AND ALSO PROVIDED OPPORTUNITY TO THE ASSESSEE TO REBUT THE EVIDENCE SO COLLECTED BY THE AO. AFTER DISPOSING THE MATTERS AFRESH BY THE LD. AO, THE ASSESSEE PREFERRED APPEAL AGAINST THE SAME AND THE APPEALS ARE PENDING BEFORE THE LD. CIT(A). IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE NECESSARY TO SET ASIDE THE IMPUGNED ORDER AND SET ASIDE THE MATTER TO THE FILE OF THE LD. CIT(A) TO ENABLE HIM TO DISPOSE OF ALL THESE MATTERS OF THE ASSESSEE FOR THESE YEARS CONSISTENTLY. 5 10. FOLLOWING THE VIEW TAKEN BY A COORDINATE BENCH OF THIS TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT IT IS IN THE FITNESS OF THE THINGS THAT THIS MATTER HAS TO BE REMANDED TO THE FILE OF THE LD. CIT(A) FOR CONSIDERING THE MATTER ALONG WITH OTHER APPEALS PENDING FOR THE AY 2005-06, 2008-09 AND 2011-12 ON SIMILAR ISSUE INVOLVING A SIMILAR ISSUE, AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 11. WITH THIS VIEW OF THE MATTER, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES, ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2019. SD/- SD/- (R.K. PANDA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JANUARY , 2019. VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSTT. REGISTRAR, ITAT 6 DRAFT DICTATED ON 28.01.2019 DRAFT PLACED BEFORE AUTHOR 29.01.2019 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 30.01.2019 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 30.01.2019 APPROVED DRAFT COMES TO THE SR.PS/PS 30.01.2019 KEPT FOR PRONOUNCEMENT ON 30.01.2019 DATE OF UPLOADING ORDER ON THE WEBSITE 30.01.2019 FILE SENT TO THE BENCH CLERK 30.01.2019 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.