DCIT, Panchkula V. M/s Polo Hotels Ltd., Panchkula

ITA 532/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5365 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Set aside
• Section: 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 532/CHANDI/2011 ASSESSMENT YEAR: 2008-09 D.C.I.T. CIRCLE, PANCHKULA V M/S POLO HOTELS LTD VILLAGE CHOWKI PANCHKULA PAN: AABCP 0940 L (APPELLANT-ASSESSEE) (RESPONDENT) APPELLANT BY: SHRI BINOD KUMAR RESPONDENT BY: SHRI VINEET KRISHAN ORDER D K SRIVASTAVA : THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AG AINST THE ORDER PASSED BY THE LD. CIT(A) ON 15.3.2011, ON THE FOLLOWING GROUNDS: 1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS RIGHT BY HOLDING THAT THE LEASE MONEY OF RS. 43,26,290/- DECLARED BY THE ASSESSEE IS BUSINESS INCOME AND NET INCOME FROM HOUSE PROPERTY. 2 IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. AT THE TIME OF HEARING, BOTH THE PARTIES SUBMITT ED THAT THE ISSUE IS COVERED BY THE ORDER DATED 9.12.2010 PASSED BY THIS TRIBUNAL I N ASSESSEES OWN CASE FOR AY 2007-08. 3. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. IN ORDER DATED 9.12.2010 IN ASSESSEES OWN CASE OF AY 2007-08, THIS TRIBUNAL HAS HELD AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES. IT IS NOT IN D ISPUTE THAT THE ASSESSEE HAS LEASED OUT THE ENTIRE HOTEL BUILDING T OGETHER WITH EQUIPMENTS, FURNITURE ETC. FOR A PERIOD EXCEEDING 1 5 YEARS TO M/S HOT MILLIONS FOODS PVT.LTD. AND THAT THE ASSESSEE H AS RECEIVED LEASED RENT OF RS.62,10,000/- IN THE YEAR UNDER APP EAL. IT IS HOWEVER THE CASE OF THE LEARNED COUNSEL FOR THE APP LICANT THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05. THE AFORESAID FACT IS ALSO NOT DISPUTED BY THE LEARNED DEPARTMENT D.C.I.T, CIRCLE, PANCHKULA V. POLO HOTELS LTD ITA NO. 532/CHANDI/2011 REPRESENTATIVE. LEARNED DEPARTMENT REPRESENTATIVE HOWEVER RELIED UPON THE DECISIONS REFERRED TO BY THE ASSESS ING OFFICER IN HIS ASSESSMENT ORDER. 8. THE ASSESSING OFFICER HAS REFERRED TO THE JUDGEM ENT IN SULTAN BROTHERS PVT.LTD. V CIT, 51 ITR 353 (S.C). PERUSAL OF THE AFORESAID JUDGEMENT SHOWS THAT IT HAS BEEN RENDERED BY A BENCH OF 5 JUDGES OF THE HON'BLE SUPREME COURT. THEREFOR E THE PRINCIPLES LAID DOWN IN THE AFORESAID JUDGEMENT WOU LD CONTINUE TO BE A BINDING TILL THEY ARE MODIFIED OR OVER-RULED B Y A LARGER BENCH OF THE HON'BLE SUPREME COURT. IN THAT CASE THE CAS E, A PRIVATE COMPANY, HAD CONSTRUCTED A BUILDING ON A CERTAIN PL OT OF LAND, FITTED IT UP WITH FURNITURE AND FIXTURES AND LET IT OUT ON LEASE FULLY EQUIPPED AND FURNISHED FOR THE PURPOSE OF RUNNING A HOTEL. THE ISSUE THAT AROSE WAS WHETHER THE LEASE RENTAL WAS L IABLE TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY OR AS INCOME FROM BUSINESS. THE HON'BLE SUPREME COURT NOTED THAT THE ASSESSEE AND LESSEE HAD INSISTED IN THAT CASE THAT THE BUILDING AND THE FIXTURES AND FURNITURE WERE TO BE USED FOR THE PURPOSE OF RU NNING A HOTEL AND THEREFORE, THE LEASE SATISFIED ALL THE CONDITIO NS FOR APPLICABILITY OF SECTION 12(4) OF THE OLD ACT OF 1922 AND THE REN T FROM THE BUILDING HAD TO BE COMPUTED UNDER SECTION 12 AFTER PROVIDING FOR THE ALLOWANCES MENTIONED IN SUB-SECTION 4 THEREOF, AND THAT SECTION 9 DID NOT APPLY. IN THE PRESENT CASE ALSO THE VERY FACT THAT THE LEASE OF HOTEL BUILDING HAS BEEN GIVEN FOR AS LONG AS 15 YEARS MAKES IT ABSOLUTELY CLEAR THAT THE ASSESSEE A ND THE LESSEE INTEND TO USE THE BUILDING TOGETHER WITH FIXTURES, FURNITURE AND EQUIPMENTS FOR ONLY ONE PURPOSE I.E. FOR THE PURPOS E OF LEASING OUT A HOTEL AND RUNNING THE HOTEL THEREAFTER. 9. IN SHAMBOO INVESTMENT PVT. LTD. V CIT, 263 ITR 1 43 (S.C) THE ASSESSEE HAD OWNED IMMOVABLE PROPERTY A PART OF WHICH IT LET OUT FOR USE AS TABLE SPACE TO OCCUPANTS WITH FIXTUR ES, FURNITURE, LIGHTS AND THE AIR CONDITIONERS. ASSESSEE PROVIDED SERVICES LIKE WATCH AND WARD STAFF, ELECTRICITY, WATER AND OTHER COMMON AMENITIES. ON THESE FACTS, THE HON'BLE HIGH COURT HELD THAT THE RENTAL INCOME FROM LETTING OUT THE SPACE WAS CHARGE ABLE TO TAX AS INCOME FROM HOUSE PROPERTY. APPEAL FILED BY THE AS SESSEE AGAINST D.C.I..T CIRCLE, PANCHKULA V. POLO HOTELS LTD ITA NO. 532/CHANDI/2011 3 AFORESAID JUDGEMENT OF HON'BLE HIGH COURT WAS DISMI SSED BY THE SUPREME COURT. 10. NOT-WITHSTANDING THE RELIANCE CORRECTLY PLACED BY THE ASSESSING OFFICER ON THE AFORESAID JUDGEMENTS FOR C OMING TO THE CONCLUSION THAT LEASE RENTAL WAS ASSESSABLE AS INCO ME FROM HOUSE PROPERTY, THE FACT HOWEVER REMAINS THAT A BENCH OF THIS TRIBUNAL HAS TAKEN A VIEW IN THE ASSESSEE'S OWN CASE FOR ASS ESSMENT YEAR 2004-05 THAT RENTAL INCOME WAS LIABLE TO BE ASSESSE D AS INCOME FROM BUSINESS. JUDICIAL DISCIPLINE REQUIRES AN ASSE SSEE TO FOLLOW THE DECISION OF THE CO-ORDINATE BENCHES; UNION OF I NDIA V PARAS LAMINATES PVT. LTD., 186 ITR 722, 726-727 (S.C). IN THIS VIEW OF THE MATTER WE CONFIRM THE ORDER PASSED BY THE CIT(A PPEALS) IN THE CASE BEFORE US FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S CASE FOR ASSESSMENT YEAR 2004-05. 11. APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 4. RESPECTFULLY FOLLOWING THE SAME, THE APPEAL FILE D BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED ON JUNE 2011 (SUSHMA CHOWLA) (D K SRIVA STAVA) JUDICIAL MEMBER ACCOUNTANT MEM BER CHANDIGARH: THE JUNE 2011 SURESH COPY TO: 1. THE APPELLANT, D.C.I.T. CIRCLE, PANCHKULA 2. THE RESPONDENT, M/S POLO HOTELS LTD. PANCHKULA 3. THE CIT(A), PANCHKULA 4. THE LD. CIT, PANCHKULA 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH D.C.I..T CIRCLE, PANCHKULA V. POLO HOTELS LTD ITA NO. 532/CHANDI/2011 4