M/s. Lalwani Warehousing(Registered firm), Pune V. ITO, Wd.-2(3), Pune

ITA 569/PUN/2010

• Counselvise Citation: 56924514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2001-2002
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Assessee Lawyers: CHETAN R P RAKASH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER S.NO . ITA NO ASSTT.YEAR 1. 569/PN/10 2001-02 2. 570/PN/10 2002-03 3. 571/PN/10 2003-04 4. 572/PN/10 2004-05 5. 573/PN/10 2005-06 6. 574/PN/10 2006-07 M/S LALWANI WAREHOUSING, .. AP PELLANT PLOT NO 79, LALWANI HOUSE, ABOVE AXIX BANK, SAKORE NAGAR, VIMAN NAGAR, PUNE PAN AAAFL4294K VS. INCOME-TAX OFFICER, .. RESPONDENT WARD 2(3), PUNE APPELLANT BY: SHRI CHETAN R P RAKASH RESPONDENT BY: SHRI S K AMBASTHA ORDER PER BENCH SINCE A COMMON ISSUE IS INVOLVED IN ALL THE SIX CAPTIONE D APPEALS PERTAINING TO SAME ASSESSEE, THE APPEALS WERE HEARD TOGE THER AND ARE BEING DISPOSED OFF BY A COMBINED ORDER FOR THE SAKE OF CONVEN IENCE AND BREVITY. 2. IN ALL THESE APPEALS THE ONLY SUBSTANTIVE ISSUE INVOL VED RELATES TO TAXABILITY OF INCOME RECEIVED BY THE ASSESSEE ON LETTING OUT WARE HOUSES/GODOWNS. THE ASSESSEE IS A PARTNERSHIP FIRM AND THE ONLY SOURCE OF ITS IN COME IS FROM LETTING OUT OF GODOWNS/WAREHOUSES. THE ASSESSEE TREATED THE INCOM E FROM LETTING OUT OF GODOWNS/WAREHOUSES AS INCOME FROM BUSINESS, WHEREAS THE ASS ESSING OFFICER HAS HELD THAT SUCH INCOME WAS LIABLE TO BE ASSESSED UNDER T HE HEAD INCOME 2 FROM HOUSE PROPERTY AS PER PROVISIONS OF SECTION 22 O F THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALSO UPHELD TH E STAND OF THE ASSESSING OFFICER BY RELYING UPON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NUTAN WAREHOUSING CO. P. LTD. 106 TTJ 137 (PUNE), WHEREIN IT WAS HELD THAT INCOME FROM LETTING OUT OF WAREHOUSES IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT AS BUSINESS INC OME. 3. AGAINST THE AFORESAID, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF NUTAN WAREHOUSING CO. P LTD (SUPRA) WAS CONSIDERED BY THE HONBLE BOMBAY HIGH COURT IN ITA NO 1269 OF 2007 DATED 18.2.2010 WHEREIN THE ORDER OF THE TRIBU NAL HAS BEEN SET ASIDE ON THIS ISSUE AND THE MATTER REMANDED BACK TO THE FILE OF T HE ASSESSING OFFICER FOR A FRESH DETERMINATION AND ASSESSMENT IN ACCORDANCE WITH L AW. IT HAS ALSO BEEN POINTED OUT THAT SUBSEQUENTLY, THE TRIBUNAL IN THE CAS E OF M/S NUTAN WAREHOUSING CO. P LTD FOR THE ASSESSMENT YEARS 1999-2000 , 2000-01, 2002-03 TO 2004-05 HAS REMANDED THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER FOLLOWING THE JUDGMENT OF THE HONBLE HIGH COURT AN D IN THIS REGARD COPY OF THE ORDER OF THE TRIBUNAL 31.10.10 HAS ALSO BEEN PLACED O N RECORD. ACCORDINGLY, IT WAS SUBMITTED THAT THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR A DETERMINATION AFRESH IN TERMS OF THE JUDGMENT OF TH E HONBLE BOMBAY HIGH COURT DATED 18.2.2010 (SUPRA). 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE, SUBMITTED THAT BEFORE THE LOWER AUT HORITIES THE ASSESSEE HAS NOT SUBMITTED THAT THE TERMS OF LETTING OUT OF THE G ODOWN/WAREHOUSES WERE SUCH SO AS TO BE CONSIDERED AS A BUSINESS ACTIVITY AND THEREFORE, THE ISSUE DOES NOT REQUIRE ANY FRESH APPRECIATION BY THE LOWER AUTHORIT IES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. TH E ISSUE IN THIS APPEAL IS AS TO WHETHER THE INCOME RECEIVED BY THE ASSESSEE FROM LETTING OUT ITS GODOWNS/WAREHOUSES SHOULD BE TREATED AS INCOME FROM HOUSE PROPERTY OR AS 3 INCOME FROM BUSINESS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NUTAN WAREHOUSING CO P. LTD. (SUPRA) CONSIDERED A SIMILAR ISSUE AND OBSERVED THAT WHAT IS MATERIAL IN SUCH CASES IS TO ASCERTAIN THE PRIMARY OBJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY . AS PER THE HONBLE HIGH COURT, IF THE PRIMARY OR THE DOMINANT OBJECT IS TO LEASE OR LET OUT PROPERTY, T HE INCOME WHICH IS DERIVED FROM THE PROPERTY WOULD HAVE TO BE REGARDED AS INCOME FROM HOUSE PROPERTY. CONVERSELY IF THE DOMINANT INTENTION OF THE ASSESSEE IS TO EXPLOIT A COMMERCIAL ASSET BY CARRYING ON A COMMERCIAL ACTIVITY, THE INCOME THAT IS RECEIVED WOULD HAVE TO BE TREATED AS INCOME FROM BUSINESS. WHAT HAS TO BE DEDUCED IS TO WHETHER THE LETTING OUT OF THE PROPERTY CONSTITUTES A DOMINANT ASPECT OF THE TRANSACTION OR WHETHER IT WAS SUBSERVIENT TO THE MAIN BUSI NESS OF THE ASSESSEE OF CARRYING OUT WAREHOUSING ACTIVITIES. 6. THE HONBLE HIGH COURT OBSERVED THAT THE TERMS OF THE WAREHOUSING AGREEMENT WERE NOT CONSIDERED BY THE TRIBUNAL AND IT WAS EMPHASIZED THAT IN ORDER TO DETERMINE THE NATURE OF THE TRANSACTION, IT WAS NECESSARY TO DETERMINE AS TO WHETHER THE TRANSACTION WAS A BARE LETTING OUT OF THE ASSET OR WHETHER THE ASSESSEE WAS CARRYING ON A COMMERCIAL ACTIVITY INVOLVING WAR EHOUSING OPERATIONS. IN THE ABSENCE OF SUCH AN EXERCISE EMERGING F ROM THE ORDER OF THE TRIBUNAL, THE HONBLE HIGH COURT FOUND IT APPROPRIA TE TO SET ASIDE THE DECISION OF THE TRIBUNAL AND TO REMAND THE PROCEEDINGS BACK TO THE ASSESSING OFFICER FOR A FRESH DETERMINATION IN ACCORDANCE WITH LAW. 7. IN THE AFORESAID BACKGROUND, WE HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BELOW. IT IS QUITE EVIDENT THAT NEITHER O F THE AUTHORITIES BELOW HAS CULLED OUT THE TERMS AND CONDITIONS OF LETTING OUT OF G ODOWNS/WAREHOUSES SO AS TO DETERMINE THE NATURE OF THE TRANSACTIONS. THEREFO RE, FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NUTAN WAREHOUSING P. LTD. (SUPRA) IT WOULD APPROPRIATE AND PROPER TO SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND R EMAND THE 4 PROCEEDINGS BACK TO THE ASSESSING OFFICER FOR A FRESH DETE RMINATION AND ASSESSMENT IN ACCORDANCE WITH LAW, KEEPING MIND THE TESTS LA ID DOWN BY THE HONBLE HIGH COURT. NEEDLESS TO MENTION IN ORDER TO FACILITATE SUCH EXERCISE, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPOR TUNITY OF BEING HEARD AND THEREAFTER PASS AN ORDER AFRESH IN ACCORDANCE W ITH LAW. RESULTANTLY, WE ARE NOT EXPRESSING ANY VIEW ON THE MERITS OF THE GR OUNDS OF APPEAL RAISED BEFORE US. 8. IN THE RESULT, THE APPEALS ARE TREATED AS ALLOWED F OR STATISTICAL PURPOSES ONLY. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (I C SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 30 TH AUGUST, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT(A)-II PUNE 4. THE CIT-II, PUNE 5. THE D.R, A BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE