DCIT, Circle - 12, Kolkata, Kolkata V. M/s. Woodside Fashions Ltd., Kolkata

ITA 655/KOL/2011

• Counselvise Citation: 65523514 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-12-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: S L KOCHAR
• Keywords: Business income; Rule of consistency
• Section: 143(3); 263

Judgement Text

I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO.: 655 & 656/KOL./2011 ASSESSMENT YEARS : 2004-2005 & 2005-2006 DEPUTY COMMISSIONER OF INCOME TAX,................. .........APPELLANT CIRCLE-12, KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 7 TH FLOOR, KOLKATA-700 069 -VS.- M/S. WOODSIDE FASHIONS LIMITED,.................... ...............RESPONDENT 11/1, SARAT BOSE ROAD, KOLKATA-700 020 [PAN : AAACW 3995 R] APPEARANCES BY: SHRI D.J. MEHTA, JCIT, SR. D.R., FOR THE APPELLANT S/SHRI S.L. KOCHAR, ADVOCATE & ANIL KOCHAR, ADVOCAT E FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 18, 2014 DATE OF PRONOUNCING THE ORDER : JUNE 27, 2014 O R D E R PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE REVENUE ARE ARISING OUT OF DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- XII, KOLKATA IN APPEAL NOS. 188/CIT(A)-XII/ACIT-12/06-07 AND 598/CIT(A)-XI I/WD-12(2)/07-08 DATED 17.02.2011 AND 21.02.2011 FOR ASSESSMENT YEAR S 2004-05 AND 2005-06 RESPECTIVELY. ASSESSMENTS WERE FRAMED BY ACIT AND D CIT, CIRCLE-XII, KOLKATA UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2 004-05 AND 2005-06 VIDE HIS ORDER DATED 29.12.2006 AND 27.12.2007. 2. THE ONLY COMMON ISSUE INVOLVED IN BOTH THE APPEA LS OF REVENUE IS AS REGARD TO THE ORDER OF LD. CIT(APPEALS) DIRECTING T HE ASSESSING OFFICER TO I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 2 OF 9 TREAT THE INCOME DECLARED BY THE ASSESSEE AS BUSINE SS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY. WE WILL DISCUSS THE FAC TS FROM ASSESSMENT YEAR 2004-05. 3. BRIEFLY STATED THE FACTS ARE THAT ASSESSING OFFI CER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSED THE RECEIPT DECLARE D BY THE ASSESSEE ON ACCOUNT OF BUSINESS ARRANGEMENT FEES UNDER THE HEAD BUSINESS AS INCOME FROM HOUSE PROPERTY. ONCE THE ASSESSING OFFICER HAS TREATED THE BUSINESS INCOME AS INCOME FROM HOUSE PROPERTY, CONSEQUENTLY HE DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE. THE ASSESSING OFF ICER DISCUSSED THAT THE ASSESSEE IN ITS PROFIT & LOSS A/C. HAS CREDITED AN AMOUNT OF RS.2,05,57,201/- UNDER THE HEAD BUSINESS ARRANGEMENT FEES AND THIS WAS COMPUTED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. ON QUERY FROM THE ASSESSING OFFICER AS TO WHY THE RECEIPT SHOULD NOT BE ASSESSE D UNDER THE HEAD INCOME FROM HOUSE PROPERTY, ASSESSEE REPLIED THAT THE ASS ESSEE-COMPANY AS AN MOU WITH WOODSIDE PARKS LIMITED, WHICH OWN SEVERAL DIVI SIONS LIKE GARMENT DIVISION, RENTAL AND LEASING DIVISION, CONSULTANCY DIVISION AND FRANCHISING DIVISION WITH INDEPENDENT UNITS OF BUILDING AT 22, CAMAC STREET, KOLKATA, HAS ENTERED INTO A JOINT RETAIL VENTURE I.E. BUSINESS A RRANGEMENT AGREEMENT WITH M/S. TRENT LIMITED BY AN AGREEMENT DATED 14.08.2000 FOR CARRYING ON RETAIL BUSINESS IN JOINT VENTURE. ONE MORE FACT THAT HIGH LIGHTED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE THAT THE DIFFEREN T BUSINESS OF FIVE UNITS OF M/S. WOODSIDE PARK LIMITED WAS DEMERGED UNDER AN OR DER OF HONBLE KOLKATA HIGH COURT UNDER FIVE INDEPENDENT CORPORATE BODIES W.E.F. 1 ST FEBRUARY, 2001. VIDE THIS DEMERGER ORDER THE ENTIRE FRANCHISE DIVISION OF M/S. WOODSIDE PARK LIMITED CARRYING ON BUSINESS WIT H M/S. TRENT LIMITED WAS TRANSFERRED TO M/S. WOODSIDE FASHIONS LIMITED, I.E. THE ASSESSEE- COMPANY, WITH ALL ASSETS AND LIABILITIES. ACCORDING LY, WOODSIDE FASHIONS LIMITED, I.E. THE ASSESSEE-COMPANY ON ITS PART MADE AVAILABLE ITS SPACE TO M/S. TRENT LIMITED FOR CARRYING ON THE RETAIL BUSIN ESS AS JOINT VENTURE. THE ASSESSEE-COMPANY COMPLETED THEIR PART OF OBLIGATION WITHIN THE TIME FRAMED AND MADE AVAILABLE THE SPACE TO M/S. TRENT LIMITED FOR OPERATION DURING FEBRUARY, 2001. THE BUSINESS ARRANGEMENT AGREEMENT DATED 23.08.2002 THE I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 3 OF 9 ASSESSEE WAS ENTITLED TO A FIXED CONSIDERATION OF R S.68,68,980/- PER ANNUM AND THE CONSIDERATION SHALL BE INCREASED BY 15% FRO M 07.06.2004 AND THEREAFTER, AFTER EVERY THREE YEARS, THE FEE SHALL BE INCREASED. SIMILARLY, A SUBSEQUENT SUPPLEMENTARY AGREEMENT DATED 23.08.2002 WAS ENTERED BETWEEN ASSESSEE AND M/S. TRENT LIMITED, BY VIRTUE OF WHICH ASSESSEE IS GRANTED MINIMUM TOTAL PAYMENT OF RS.2,05,57,200/- PER ANNUM , WHICH WILL BE INCREASED BY 15% AFTER EVERY THREE YEARS. IN FACT, ASSESSEE WAS TO RECEIVE MINIMUM GUARANTEED AMOUNT OF RS.2,05,57,200/- WHICH HAVE BEEN CREDITED TO THE PROFIT & LOSS A/C. UNDER THE HEAD BUSINESS ARR ANGEMENT FEES. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS ALSO NOTICED THAT M/S. TRENT LIMITED HAS DEDUCTED TAX UNDER SECT ION 194(I) OF THE ACT TREATING THE NATURE OF PAYMENT AS RENT. ACCORDINGLY ASSESSING OFFICER ASSESSED THE INCOME AS RENTAL INCOME. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(APPEALS), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND OBSERVATIONS OF THE ASSESSING OFFICER, TREATED THE INCOME AS BUSINESS I NCOME VIDE PARAS 6.5, 6.6, 6.7 AT PAGES 19, 20, 21, 22, 23 & 24 OF THE APPELLA TE ORDER, WHICH READS AS UNDER:- 6.5. ON CAREFUL CONSIDERATION OF THE FACTS, I AM O F THE OPINION THAT THE VIEW TAKEN BY THE A.O. CANNOT BE A PPROVED. THE NATURE OF BUSINESS ARRANGEMENT AGREEMENT AND IT S VARIOUS PROVISIONS CANNOT BE IGNORED MERELY FOR THE REASON THAT THE RECEIPT IS ATTACHED TO THE IMMOVABLE PROPERTY. BUT, IN ADDITION OF PROVIDING THE SPACE THE APPELLANT HAS PROVIDED A HOSE OF IMPROVEMENTS IN THE PROPERTY, FACILITIES AND THE SE RVICES AS SPECIFIED IN THE AGREEMENTS. THE AO WAS OF THE OPIN ION THAT WHATEVER HAS BEEN DONE BY THE APPELLANT FOR M/S. TR ENT LTD., IT WAS IN THE CAPACITY OF A LANDLORD. HOWEVER, THIS VI EW OF THE AO CANNOT BE ACCEPTED. THE AO HAS MENTIONED THAT NE ITHER M/S. TRENT NOR THE APPELLANT COMPANY HAS PRODUCED A NY EVIDENCES ABOUT THE SERVICES RENDERED BY M/S. WOODS IDE FASHIONS. HOWEVER, THE AO HAS NOT SPECIFIED THE EVI DENCES WHICH REQUIRED TO BE PRODUCED BEFORE HIM. THE FACT REMAINS THAT BOTH M/S. TRENT LTD., TIME AND AGAIN AND M/S. WOODSIDE FASHIONS LTD. EXPLAINED BEFORE THE AO THE NATURE OF SERVICES RENDERED BY THE APPELLANT TO M/S. TRENT LTD. I AM O F THE OPINION THAT IT IS NOT ALWAYS NECESSARY THAT AN EXP ENDITURE WOULD BE ATTACHED FOR RENDERING THE SERVICES. IF TH E DIRECTOR OF I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 4 OF 9 THE APPELLANT COMPANY HAD CONFIRMED THAT HE HIMSELF WAS RENDERING SERVICES TO M/S. TRENT LTD AS SPECIFIED I N BUSINESS ARRANGEMENT AGREEMENT AND ALSO CONFIRMED BY M/S. TR ENT LTD., THE RECIPIENT OF THE SERVICES, THE CONTENTION CANNO T BE REJECTED BY SAYING THAT THE APPELLANT HAD NOT INCURRED ANY E XPENDITURE FOR RENDERING THE SERVICES OR THAT THE BUSINESS ARR ANGEMENT AGREEMENT IS ONLY A COLOURABLE DEVISE DESIGNED TO M ASK THE NATURE OF INCOME RECEIVED BY THE ASSESSEE. I AM OF THE OPINION THAT BEFORE ARRIVING THE AFORESAID CONCLUSION IT CA NNOT BE IGNORED THAT M/S. TRENT LTD. IS A TATA GROUP COMP ANY AND THAT M/S. TRENT LTD. AND M/S. WOODSIDE FASHIONS HAD NO RELATIONSHIP AT ALL SO THAT THE BUSINESS ARRANGEMEN T AGREEMENT MAY BE VIEWED ADVERSELY AS A COLOURABLE D EVISE. IT CAN ALSO NOT BE IGNORED THAT M/S. TRENT LTD. HAD EN TERED INTO SIMILAR TYPE OF AGREEMENT ALL OVER THE COUNTRY WITH VARIOUS PARTIES AND PAYMENT MADE TO THEM HAS BEEN DEBITED A S COMMISSION ON SALE. AS MENTIONED ABOVE, THE AO HA S ALSO RELIED ON THE FACT THAT M/S. TRENT LTD. HAS DEDUCTE D THE TAX U/S 194I OF THE ACT. HOWEVER, I AM OF THE OPINION THAT THIS COULD NOT BE A DECISIVE FACTOR TO ARRIVE ON CONCLUSION TH AT THE RECEIPT IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY . THE AO WAS OF THE OPINION THAT THE APPELLANT WAS GETTING F IXED AMOUNT PER ANNUM WHICH IS IN THE NATURE OF RENT. HOWEVER, HE HAS IGNORED THE FACT THAT IN THE SUPPLEMENTAL AGREEMENT S, THOUGH MINIMUM GUARANTEE COMMISSION WAS PROVIDED BUT IT HA S ALSO PROVIDED THE COMMISSION ON CERTAIN PERCENTAGE OF NE T RETAIL SALES OF VARIOUS PRODUCTS AND IT WAS ALSO CLARIFIED THAT THE APPELLANT WOULD GET HIGHER OF THE TWO. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, M/S. TRENT LTD. SENT STATEM ENT OF NET RETAIL SALES OF VARIOUS PRODUCTS TO THE AO. SINCE, THE COMMISSION ON NET RETAIL SALES WAS LESS THAN THE MI NIMUM GUARANTEE COMMISSION, AS PER AGREEMENT, THE APPELLA NT GOT THE SAID AMOUNT OF COMMISSION OR BUSINESS ARRANGEMENT F EES. HENCE IT CANNOT BE SAID THAT BEING A FIXED AMOUNT, THE RECEIPT IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY. THE FA CTS OF JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE AO ARE DISTINGUISHABLE FROM THE FACTS OF APPELLANTS CASE. IN THE CASE OF CIT VS.- NEW INDIA MARITIME AGENCIES (P) LTD. 2 56 ITR 513 (MAD) RELIED UPON BY AO THE ASSESSEE WAS HAVING INCOME FROM BUSINESS BEING A MARITIME AGENT. A SMALL PORTI ON OF ITS PREMISES WAS GIVEN ON RENT TO OTHER PERSON. IN THAT CASE, IT WAS HELD THAT THE ASSESSEE HAD EARNED RENTAL INCOME WHICH IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY AND NOT IN COME FROM BUSINESS. IN THE CASE OF INDIAN OVERSEAS BANK LTD.-VS.- CIT [246 ITR 206] ALSO THE BANK RECEIVED AN AMOUNT ON THE LETTING OUT OF A PORTION OF ITS PREMISES WHICH WAS HELD TO BE ASSESSABLE AS RENTAL INCOME. IN THE CASE OF MITHILA PROPERTIES AND CONTRACTOR ENTERPRISES PVT. LTD. 228 ITR 173, T HE ASSESSEE CONSTRUCTED GODOWNS AND LET OUT THE SAME T O FOOD I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 5 OF 9 CORPORATION OF INDIA ON MONTHLY RENTAL BASIS. IT WA S HELD THAT INCOME SO DERIVED FROM RENTALS IS ASSESSABLE AS INC OME FROM HOUSE PROPERTY AND NOT BUSINESS INCOME. HOWEVER, TH E FACTS IN THE CASE OF APPELLANT ARE TOTALLY DIFFERENT. 6.6. IN MY CONSIDERED OPINION THE APPELLANT COMPANY DEVELOPED THE PROPERTY AS A BUSINESS CENTRE AND PRO VIDED VARIOUS FACILITIES AND SERVICES. HENCE, THE PROPERT Y UNDER QUESTION WAS EXPLOITED COMMERCIALLY BY THE APPELLAN T COMPANY AND ENTERED INTO A BUSINESS ARRANGEMENT AGREEMENT. THUS, THE INCOME SO DERIVED IS AN INCOME FROM BUSINESS AND NO T INCOME FROM HOUSE PROPERTY. THE APPELLANT COMPANY HAS NOT SIMPLY LET OUT ITS PREMISES TO M/S. TRENT LTD. TO EARN THE RENTAL INCOME BUT THE PROPERTY IS ATTACHED WITH A HOST OF SERVICES AND FACILITIES LIKE PROVIDING ADEQUATE LIGHT, INSTALLA TION AND MAINTENANCE OF LIFTS, INSTALLATION AND MANAGEMENT O F CENTRAL AIR CONDITIONING SYSTEM, INSTALLATION AND MANAGEMEN T OF GENERATORS, COMMUNICATION FACILITIES, PROVISION AND MANAGEMENT OF PARKING SPACE, PROVIDING TILED/GRANIT E FLOORING, PROVIDING FALSE CEILING, ELECTRICAL CONNE CTED LOAD AND PROVIDING APPROPRIATE QUALITY TOILETS, ETC. BES IDES, THE APPELLANT COMPANY ALSO PROVIDED MARKETING ASSISTANC E TO M/S. TRENT LTD. WHICH INCLUDES SELECTION OF RANGE OF PRO DUCTS, PRICING OF RANGE OF THE PRODUCTS, PERSONNEL POLICIE S OF THE RETAIL BUSINESS, MARKETING STRATEGIES, PROCUREMENT POLICIES AND DOCUMENTATION AND INFORMATION SYSTEMS ETC. THUS , IN THE CASE OF APPELLANT THERE IS MUCH MORE THAN MERE LETT ING OUT OF THE PROPERTY SIMPLICITER INASMUCH AS A HOST OF SERV ICES BEING PROVIDE TO THE USER BY THE APPELLANT, THE INCOME AR ISING THEREFROM CANNOT BE CONSIDERED AS INCOME FROM HOUSE PROPERTY. 6.7. IN THE CASE OF PFH MALL AND RETAIL MANAGEMENT LTD. VS.- ITO REPORTED IN [2008] 298 ITR (AT) 371 (KOLKA TA), THE ASSESSEE CONSTRUCTED SHOPPING MALLS AND BUSINESS CE NTRES IN VARIOUS CITIES IN INDIA. THE ASSESSEE, AS OWNER OF THE PROPERTIES ENTERED INTO SERVICE AGREEMENTS WITH PEN TALOON INDUSTRIES LTD, AND PANTALOON (RETAIL) INDIA LTD. F OR USE OF PROPERTY BY THEM TO CARRY ON THE BUSINESS OF RETAIL ING OF VARIOUS PRODUCTS LIKE READYMADE GARMENTS FOR MEN, W OMEN AND CHILDREN, HOUSEHOLD ITEMS, ACCESSORIES, COSMETI CS, JEWELLERY AND OTHER PRODUCTS ETC. THE ASSESSEE PROV IDED A NUMBER OF SERVICES AND FACILITIES TO THE USERS OF T HE PREMISES VIZ. SECURITY SYSTEM, PROVIDING CLEANING AND MAINTE NANCE STAFF, PROVIDING ADEQUATE LIGHTING, INSTALLATION AND MAINT ENANCE OF LIFTS/ESCALATORS/ELEVATORS, PROVISION OF PARKING SP ACE, PROVISION OF GENERATOR SET, PROVIDING TILED FLOORIN G, ROLLING SHUTTERS, ELECTRICAL CONNECTED LOAD, AIR HANDLING U NITS, TELEPHONE AND FAX LINE AND INTERNET LINES ETC. IN L IEU THE I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 6 OF 9 ASSESSEE HAD RECEIVED SERVICE CHARGES FROM M/S. PAN TALOON. THE ASSESSEE DECLARED THE RECEIPT AS ASSESSABLE UND ER THE HEAD BUSINESS INCOME. THE AO ACCEPTED THE STAND TAK EN BY THE ASSESSEE BUT THE CIT, KOLKATA-II ASSUMED JURISDICTI ON U/S 263 OF THE ACT AND THE AO WAS DIRECTED TO ASSESSEE THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT B USINESS INCOME. ON FACTS AND IN LAW IT WAS HELD BY THE HONBLE ITAT , KOLKATA THAT MERE FACT THAT INCOME IS ATTACHED TO I MMOVABLE PROPERTY, CANNOT BE THE SOLE CRITERION FOR ASSESSME NT OF SUCH INCOME AS INCOME FROM HOUSE PROPERTY. IT IS NECESSA RY FURTHER TO FIND OUT THE PRIMARY OBJECT OF THE ASSESSEE WHIL E EXPLOITING THE PROPERTY IF THE MAIN INTENTION IS SIMPLY LETTIN G THE PROPERTY OR ANY PORTION THEREOF, THE RESULTANT INCO ME MUST BE ASSESSED AS INCOME FROM HOUSE PROPERTY. IF, ON THE OTHER HAND, THE MAIN INTENTION IS EXPLOITATION OF THE IMMOVABLE PROPERTY BY WAY OF COMMERCIAL ACTIVITIES, THEN THE RESULTANT INCOME MUST BE HELD TO BE BUSINESS INCOME. JUST AS UTILIZA TION OF ACCOMMODATION FOR PROVIDING CUSTOMERS WITH BOARD AN D LODGING IS A COMMERCIAL ACTIVITY, UTILIZATION OF SP ACE FOR PROVIDING SHOPPING FACILITIES TO CUSTOMERS IS ALSO A COMMERCIAL ACTIVITY. THAT THE ASSESSEE IS THE OWNER OF THE PROPERTIES DEVELOPED AS SHOPPING MALLS/BUSINESS CEN TRES AND IT HAS PROVIDED A HOST OF SERVICES AND FACILITIES T O THE USERS AS PER AGREEMENTS. FURTHER, THE AGREEMENTS SPECIFICALL Y STIPULATED THAT THE USER WAS ONLY GRANTED PERMISSIO N TO USE THE SERVICES AND FACILITIES PROVIDED IN THE PREMISES AN D USER WOULD NOT BE VESTED WITH OR ENJOY AND RIGHT, TITLE OR INTEREST OF ANY KIND IN THE SERVICES AND FACILITIES PROVIDED BY THE ASSEESSEE. THE USERS DID NOT ENJOY ANY TENANCY RIGH T. THE SERVICE CHARGES PAYABLE BY THE USERS WERE DETERMINE D AT A FIXED RATE. THE ASSESSEE WAS RESPONSIBLE FOR PAYMEN T OF GROUND RENT, MUNICIPAL TAXES AND CASES ETC. IT WAS HELD BY THE HONBLE TRIBUNAL THAT THE ASSESSEE HAD DIRECTED ALL ITS ACTIVITIES IN AN ORGANIZED MANNER WHICH COULD BE CA TEGORIZED AS CONTINUOUS ORGANIZED ACTIVITIES FOR A SET PURPOS E WHICH COULD NOT BE REGARDED AS MERELY EARNING RENTAL INCO ME. THE INCOME OBTAINED WAS NOT MERELY BECAUSE OF BARE LETT ING OF PREMISES BUT ALSO BECAUSE OF THE FACILITIES AND SER VICES RENDERED. THUS, THE INCOME DERIVED BY THE ASSESSEE WAS NOT SIMPLY FROM THE EXERCISE OF PROPERTY RIGHT. RATHER THE INCOME WAS DERIVED BY THE ASSESSEE FROM COMPLEX OPERATIONS OF A TRADING NATURE. THE PRIMARY OBJECT OF THE ASSESSEE WAS TO EARN INCOME BY COMMERCIAL EXPLOITATION OF THE PROPERTY. ACCORDINGLY, THE INCOME DERIVED BY THE ASSESSEE FRO M BUSINESS CENTRES WAS TO BE ASSESSED AS BUSINESS INCOME AND N OT AS INCOME FROM HOUSE PROPERTY. THE HONBLE ITAT WHILE HOLDING AS ABOVE, APPLIED THE RATIO AND PRINCIPLE LAID DOWN BY THE I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 7 OF 9 HONBLE CALCUTTA HIGH COURT IN THE CASE OF EVEREST HOTELS LTD. VS.- CIT REPORTED IN 114 ITR 779 (CAL.). IN THE CASE OF APPELLANT COMPANY THE FACTS ARE ALMO ST SIMILAR TO THE FACTS IN THE CASE OF PFH MALL AND RE TAIL MANAGEMENT LTD. (SUPRA). IN THIS CASE ALSO THE COMMISSION/BUSINESS AGREEMENT FEES RECEIVED BY THE ASSESSEE WAS NOT ONLY FOR BARE LETTING OUT OF THE PROPERTY B UT IT WAS RECEIVED BY COMMERCIAL EXPLOITATION OF PROPERTY BY DEVELOPING THE SAME AS BUSINESS CENTRE /DEPARTMENTAL STORE. TH E EXPLOITATION OF THE PROPERTY WAS ATTACHED WITH A HO ST OF FACILITIES AND SERVICES. HENCE, IN VIEW OF ABOVE FA CTS AND THE PRINCIPLES LAID DOWN IN VARIOUS JUDICIAL PRONOUNCEM ENTS AS DISCUSSED EARLIER AND ABOVE, IT IS TO BE HELD THAT THE AO WAS NOT JUSTIFIED IN ASSESSING THE BUSINESS ARRANGEMENT FEES AS INCOME FROM HOUSE PROPERTY. HE IS DIRECTED TO ASSES S THE COMMISSION/BUSINESS ARRANGEMENT FEES UNDER THE HEAD INCOME FROM BUSINESS AND ALLOW THE EXPENSES CLAIMED BY THE APPELLANT. THE GROUND NOS. 2, 3 AND 4 ARE ALLOWED. BEING AGGRIEVED REVENUE CAME IN APPEAL BEFORE US IN BOTH THE YEARS. 5. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MAT ERIAL ON RECORD AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CAS E. WE HAVE GONE THROUGH THE FACTS OF THE CASE AND FIND THAT THE ASSESSEE HA S DECLARED THE RECEIPTS ON ACCOUNT OF BUSINESS ARRANGEMENT FEE UNDER THE HEAD BUSINESS AND COMPUTED ON THE BASIS OF PERCENTAGE. THE BUSINESS ARRANGEMEN T AGREEMENT DATED 23.08.2002 ENTITLED THE ASSESSEE TO RECEIVE A FIXED CONSIDERATION PER ANNUM WITH AN INCREASE EVERY YEAR @ 15% AND THEREAFTER EV ERY THREE YEARS THE FEE SHALL BE INCREASED WITH MUTUAL CONSENT. THE ASSESSI NG OFFICER IN EARLIER YEARS AND SUBSEQUENT YEARS HAS ACCEPTED THE POSITION AS I T IS AND TREATED THE RECEIPTS DECLARED AS BUSINESS INCOME. THE ASSESSEE S LD. COUNSEL BEFORE US HAS REITERATED THE RULE OF CONSISTENCY AND CITED TH E CASE LAWS, WHICH WE WILL DISCUSS IN NEXT PARA. 6. HONBLE KOLKATA HIGH COURT IN THE CASE OF SHAMBH U INVESTMENT HELD THAT THE MERE FACT OF ATTACHMENT OF INCOME TO ANY IMMOVABLE PROPE RTY CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM HOUSE PROP ERTY. IT IS NECESSARY TO FIND OUT THE PRIMARY OBJECT OF ASSESSEE WHILE EXPLOITING THE PRO PERTY. IF IT IS FOUND THAT THE MAIN INTENT ION IS FOR LETTING OUT THE PROPERTY OR ANY PORT ION THE REOF THE SAME MUST BE CONSIDERED AS RENTAL I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 8 OF 9 INCOME OR INCOME FROM HOUSE PROPERTY. IN CASE, IT I S FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX CO MMERCIAL ACTIVITIES, IN THAT EVENT IT MUST BE HELD AS BUSINESS INCOME. THE VIEW WAS EXPRESSED BY HONBLE CALCUTTA HIGH COU RT AND APPROVED BY HONBLE SUPREME COURT IN CASE OF SHAMBH U INVESTMENT (P) LTD. (SUPRA) IN THIS VIEW OF THE MATTER , IT IS CLEAR THAT WHAT IS TO BE REALLY SEEN IS WHETHER THE PROPERTY IS EXPLOITED BY WAY OF COMPLEX COMMERCIAL ACTIVITY OR NOT . IN THIS BACKDROP, IT IS QUITE APPROPRIATE TO REFER TO THE OBSERVATIONS MADE BY TH E HONBLE SUPREME COURT IN THE LANDMARK JUDGMENT OF RADHASOAMY SATSANG (SUPRA) , REFERRING TO THE CASE LAW OF HOYSTEAD V COMMISSIONER OF TAXATION [1926] AC 155 (PC) , WHERE IN IT IS OBSERVED AS UNDER :- PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO NS BECAUSE OF NEW VIEWS THEY MAY ENTERTAIN OF THE LAW OF THE CASE, OR NEW VERSIO NS WHICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT O F THE LEGAL RESULT EITHER OF THE CONSTRUCT ION OF THE DOCUMENTS OR THE WEIGHT OF CERTAIN CIRCUMSTANCES. IF THIS WERE PERMITTED LITIGATION WOULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT IS A PRINCIPLE OF LAW THAT THIS CANNO T BE PERMITTED, AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIR DLY, THE SAME PRINCIPLE NAMELY, THAT OF A SETTING TO REST RIGHTS OF LITIGAN TS, APPLIES TO THE CASE WHERE A POINT, FUNDAMENTAL TO THE DECISION, TAKEN OR ASSUME D BY THE PLAINTIFF AND TRAVERSABLE BY THE DEFENDANT HAS NOT BEEN TRAVERSED . IN THAT CASE ALSO A DEFENDANT IS BOUND BY THE JUDGMENT ALTHOUGH IT MAY BE TRUE ENOUGH THAT SUBSEQUENT LIGHT OR INGENUITY MIGHT SUGGEST SOME TR AVERSE WHICH HAD NOT BEEN TAKEN. HONBLE SUPREME COURT ALSO REFERRED TO THEIR OWN JU DGMENT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. V ITO [1977] 106 ITR 1 (SC), WHEREIN AT PAGE 10, IT WAS STATED THAT AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE IS SUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI JUDICIAL CONTROVERSIES AS IT MUST IN OTHER S PHERES OF HUMAN ACTIVITY. HONBLE SUPREME COURT WAS OF THE VIEW THAT THE ASSESSMENTS ARE CERTAINLY QUASI -JUDICIAL AND OBSERVATIONS SO MADE IN THE CASE OF PARASHURAM POTT ERY WORKS CO. LTD. (SUPRA) WOULD APPLY TO THE ASSESSMENT PROCEEDINGS. IN THE CASE OF PARAS HURAM POTTERY WORKS CO. LTD. IT WAS OBSERVED THAT RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDI NGS AND EACH ASSESSMENT YEAR BEING A UNIT , WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERE NT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT I.T.A. NOS.: 655 & 656/KOL. / 2011 ASSESSMENT YEARS : 2004-05 & 2005-06 PAGE 9 OF 9 CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPRO PRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR . THIS PRINCIPLE HAS BEEN UPHELD AND RE-STATED BY HON BLE SUPREME COURT RECENTLY IN THE CASE OF PFH MALL & RETAIL MANGT. P. LTD. DATED 04.09.2012, WHEREIN REITERATED THE RULE OF CONSISTENCY AND APPLIED THE SAME ON THE VERY ISS UE, THAT IS WHETHER THE INCOME IN QUESTION IS TO BE TREATED AS INCOME FROM BUSINESS OR AS INCO ME FROM HOUSE PROPERTY. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND THE FACT THAT IT WA S A CASE OF RENTAL OR COMMERCIAL UTILIZATION OF PROPERTIES, WHICH HAS BEEN ACCEPTED, WE ARE OF T HE CONSIDERED VIEW THAT THERE IS NO REASON TO UPHOLD THIS DEVIATION. IN VIEW OF THE ABOVE DISC USSIONS, WE CONFIRM THE ORDER OF THE LD. CIT(APPEALS). 7. IN THE RESULT, THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH DAY OF JUNE, 2014. SD/- SD/- SHAMIM YAHYA MAHAVIR SINGH (ACCOUNTANT MEMBER) (JUDICIAL M EMBER) KOLKATA, THE 27 TH DAY OF JUNE, 2014 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-12, KOLKATA, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAWAN, 7 TH FLOOR, KOLKATA-700 069 (2) M/S. WOODSIDE FASHIONS LIMITED, 11/1, SARAT BOSE ROAD, KOLKATA-700 020 (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.