Income Tax Officer, Ward - 3, Belgavi V. Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit, Belagavi

ITA 66/PAN/2020

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the decision of the CIT(A) which allowed Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit (the assessee) to set off brought forward business losses against lease rental income. The Revenue contended that the lease rental income should be classified under 'Income from Other Sources' and not eligible for set off against business losses. The CIT(A) had previously ruled in favor of the assessee for a similar issue in the Assessment Year 2014-15, which was based on a decision by the Hon'ble Allahabad High Court in CIT Vs Translam Limited. The Tribunal upheld the CIT(A)'s decision, emphasizing the consistency in legal reasoning and the absence of new facts or evidence presented by the Revenue to challenge the previous rulings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136863 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 27-05-2020
• Other Referred Cases: CIT Vs Translam Limited, M/s. Chennai Properties and Investments Ltd. vs CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BADRINATH YAMAJI
• Assessee Lawyers: PRAVIN GHALI
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH :: PANAJI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER (Through virtual hearing) ITA No.66/PAN/2020 (A.Y. 2013-14) ITO, Ward-3, Belagavi. vs Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit, Kuppatgiri, Khanapur, Belagavi. PAN: AAAAS 6744 C Appellant/Revenue Respondent / Assessee Assessee by : Shri Pravin Ghali, AR Revenue by : Shri Badrinath Yamaji Chavan, DR Date of hearing : 16/08/2023 Date of pronouncement : 22/08/2023 O R D E R Per PARTHA SARATHI CHAUDHURY, JM: This appeal preferred by the Revenue emanates from the order of Commissioner of Income Tax [Appeals], Belagavi (for short, ‘CIT(A)’), dated 14.01.2020 for A.Y.2013-14 as per the following grounds of appeal:- “1. The ld.CIT(A) erred in not appreciating the fact that the assessee had itself declared its income under the head “Income from Other Sources” and hence it cannot claim set off of brought forward business losses per law. 2. The ld. CIT(A) also erred holding that since the identical issue was decided in favor of the appellant for the Asst Year 2014-15 by the CIT(A) vide ITA No. CIT(A)/BGM/10599/2016-17, dated 03.10.2018 hence allowed assessee’s appeal made by the then ld. CIT(A) for the Asst year 2014-15 wherein the Order was relying up on the decision of the Hon'ble Allahabad High Court in the case of CIT Vs Translam Limited as the issue before. the Hon'ble Allahabad High Court was different in the sense that the rental income will be business or not ITA No.66/PAN/2020 Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit 2 in case of deriving income by exploiting commercial asset by way of leasing. However in this case the assessee had its income under the head “Income from Other Sources”, the ratio of the above decision of the Hon'ble Allahabad High Court in the case of CIT vs. Translam Limited will not apply. 3. The ld. CIT(A) also erred in not appreciating the fact that as per the Bye-laws of the assessee, letting of the properties/ assets is not at all the business of the assessee. If the business of the 'assessee is letting of properties, then it was to be assessed as Business Income as held by the Hon'ble Supreme Court in the case of M/s. Chennai Properties and Investments Ltd. vs CIT in the Civil appeal Nos. 4491 to 4994 of 2004. Hence, the income derived out of lease of sugar factory is correctly treated as 'Income from other Sources" by the Assessing Officer and has rightly denied the assessee's claim of set off of brought forward business loss against Income from Other Sources. . 4. The department has on gone of further appeal before the Hon'ble ITAT Bench Panaji vide ITA 460/PAN/2018 dated 26/12/2018 for the Asst Year 2014-15 which is still pending. For these and other grounds that may be adduced during the time of hearing of the Order of the ld. CIT(A) may be set aside and that the order of the Assessing Officer be restored.” 2. There is a delay of 40 days in filing the present appeal. The Revenue has filed an application dated 16/06/2020 for condonation of delay. We find that there is a sufficient reason in not filing the appeal on time. Therefore, we condone the delay in filing the appeal and the matter was heard on merits. 3. The brief facts in this case are that assessee filed its return of income for A.Y. 2013-14 on 31/07/2013, declaring total income of Rs.NIL after setting off of brought forward losses. The assessee’s main source of income is lease rent received from M/s. Laila Sugars Pvt. Ltd. and interest on deposits. The Assessing Officer (AO) had passed an elaborate assessment order u/sec. 143(3) r.w.s. 263 of the Income ITA No.66/PAN/2020 Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit 3 Tax Act, 1961 (for short, 'the Act') by denying the carry forward of earlier business loss claimed against income from other sources (lease rental income) of Rs. 6,07,72,418/-. In the instant case, the AO has treated the lease rent income as ‘income from other sources’ and thereby denied setting off of brought forward losses against the income on the ground of brought forward of business loss has to be set off of against income from same head. 4. During the first appellate proceedings, the assessee submitted that identical issue was decided in favour of the assessee for the A.Y. 2014-15 by ld. CIT(A) dated 03/10/2018. Thereafter, on perusal of the said order, ld. CIT(A) has held that since identical issue was involved in the present assessment year also and therefore, following the detailed reasoning recorded in the order of the erstwhile ld. CIT(A) in A.Y. 2014-15, he held that assessee was entitled for setting off of its brought forward business loss against income being treated as income from other source since it is attributable to the business activities of the assessee society even though the leasehold rights have been given to M/s. Laila Sugars Pvt. Ltd. Accordingly, appeal of the assessee was allowed. 5. At the time of hearing, ld.DR reiterated the submissions as on record supporting the assessment order. 6. Ld.DR could not bring any contrary facts and decision on the ITA No.66/PAN/2020 Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit 4 issue already decided in favour of the assessee as held by the ld.CIT(A). There were no materials/evidences placed on record by ld.DR to controvert the fact on record that the income being treated as income from other source is actually attributable to the business activities of the assessee-society. We do not find any infirmity with the findings of the ld. CIT(A) which has been passed on following the principles of consistency on the same facts and circumstances and parity of reasoning. We uphold the order of the ld. CIT(A) and dismiss the grounds of appeal raised by the Revenue. 7. In the result, appeal of the Revenue is dismissed. Order pronounced in open Court on 22 nd August, 2023. Sd/- Sd/- (INTURI RAMA RAO) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 22 nd August, 2023 vr/- Copy to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT concerned. 4. DR, ITAT, Panaji Bench, Panaji. 5. Guard File. By Order // TRUE COPY // Senior Private Secretary ITAT, Pune. ITA No.66/PAN/2020 Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit 5