ASIATIC STORES & SODA FOUNTAIN, MUMBAI V. ITO 17(1)(2), MUMBAI

ITA 6757/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7190 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SINCE FACTS ARE IDENTICAL; ISSUES
• Keywords: Business income; Question of law
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS.6757/MUM/2017 ASSESSMENT YEAR: 2012-13 ITA NO.123/MUM/2018 ASSESSMENT YEAR: 2013-14 ASIATIC STORES & SODA FOUNTAIN 73, INDUSTRIAL ASSURANCE BUILDING, VEER NARIMAN ROAD, CHURCHGATE, MUMBAI-400020 / VS. ITO - 17(1)(2), 1 ST FLOOR, ROOM NO.116, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( /ASSESSEE) ( / REVENUE) P.A. NO.AAAFA8467D / DATE OF HEARING : 03/04/2019 / DATE OF ORDER: 10/04/2019 / O R D E R PER G. MANJUNATHA, (ACCOUNTANT MEMBER) THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE LD. CIT(A)-52, MUMBAI, DATE D 24/07/2017 & 13/02/2017 AND THEY PERTAINS TO ASSESSMENT YEARS 2012-13 AND 2013-14. SINCE FACTS ARE IDENTICAL AND ISSUES / ASSESSEE BY SHRI SANJAY KAPADIA / REVENUE BY MS. HARKAMAL SOHI 2 ASIATIC STORES & SODA FOUNTAIN ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPE ALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS FILED COMMON GROUN DS OF APPEAL FOR BOTH ASSESSMENT YEARS. FOR THE SAKE OF BREVITY, GROUNDS OF APPEAL TAKEN FOR ASSESSMENT YEAR 2012-13 ARE REPRODUCED HEREUNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE HON'BLE CIT(A) ERRED IN NOT ACCEPTING THE PRINCIPLES OF CONSISTENC Y BEING FOLLOWED BY APPELLANT AND ACCEPTED BY DEPARTMENT YEAR AFTER YEAR IN THE ABSEN CE OF ANY MATERIAL CHANGE OR NEW EVIDENCE AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE INCOME TAX AND RULES MADE THERE UNDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HON'BLE CIT(A) ERRED IN NOT ADJUDICATING THE GROUND THAT APPELLANT IS A PARTNERSHIP FIRM, THE MAIN BUSINESS IS THAT OF RUNNING A DEPARTMENTAL STORES T HEREFORE THE INCOME THERE FROM SHOULD HAVE BEEN TAXED AS BUSINESS INCOME ONLY ET N OT RENTAL INCOME AS DONE BY THE LD AO AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE INCOME TAX AND RULES MADE THERE UNDER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HON'BLE CIT(A) ERRED IN NOT ADJUDICATING THE GROUND OF APPELLANT A DMITTING THAT IT IS RUNNING A DEPARTMENTAL STORE. BY VIRTUE OF WHICH CERTAIN TYPE OF INCOME LIKE FOREIGN EXCHANGE GAIN, ADVERTISEMENT INCOME ETC ARE COMMON AND IN TU RN HAS TO INCUR VARIOUS EXPENSES LIKE SALES PROMOTION, PACKING MATERIAL, EL ECTRICITY ETC WHICH ARE NORMAL HENCE BY NO IMAGINATION THE INCOME CAN BE TREATED A S RELATED TO EARNING RENT AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CON TRARY TO THE INCOME TAX AND RULES MADE THERE UNDER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HON'BLE CIT(A) ERRED IN NOT ADJUDICATING THE GROUND OF THE APPELLA NT IN RESPECT OF COMMISSION RECEIVED ON ACCOUNT OF PROVIDING SPACE AND FACILITY TO SELL VARIOUS COMMODITIES AS BUSINESS INCOME AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE INCOME TAX AND RULES MADE THERE UNDER. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HON'BLE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD AO OF SEPAR ATELY TAXING THE INCOME FROM FOREIGN EXCHANGE DIFFERENCE OF RS. 2,66,339/-, INCO ME FROM MONEY TRANSFER OF RS.23,162/ AND ALSO INTEREST INCOME OF RS.4,43,040/ - AS INCOME FROM OTHER SOURCES AND THE REASONS ASSIGNED FOR DOING SO ARE W RONG AND CONTRARY TO THE INCOME TAX AND RULES MADE THERE UNDER. 3. THE BRIEF, FACTS OF THE CASE ARE THAT THE ASSESS EE IS PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF RUNNING DEPARTMENT STORE, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 3 ASIATIC STORES & SODA FOUNTAIN 2012-13 ON 28/09/2012, DECLARING TOTAL INCOME AT RS . 11,00,370/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) ON 28/03/2015, DETERMIN ING TOTAL INCOME AT RS 1,13,08,730/-, WHERE THE AO ASSESSED RENTAL INCOME DERIVED FROM DE PARTMENTAL STORE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, AS AGAINST ADMISSION U NDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. SIMILARLY, THE AO HAS MADE ADDITIO NS TOWARDS INCOME DERIVED FROM FOREIGN EXCHANGE GAIN UNDER THE HEAD INCOME FROM O THER SOURCES. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A), AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE, FOR DETAILED REASONS RECORDED IN HIS APPELLATE ORDER O N 24/07/2013, DISMISSED THE APPEAL FILED BY THE ASSESSEE AND CONFIRMED THE ACTION OF T HE AO IN ASSESSING INCOME DERIVED FROM DEPARTMENTAL STORES UNDER THE HEAD INCOME FRO M HOUSE PROPERTY AS AGAINST ASSESSEE ADMISSION UNDER THE HEAD INCOME FROM BUSI NESS OR PROFESSION. SIMILARLY, THE LD. CIT(A) HAS CONFIRMED THE ADDITIONS MADE TOWARDS FOREIGN EXCHANGE GAIN DIFFERENCE INCOME AND INCOME FROM WESTERN MONEY TRANSFER UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. THE FIRST ISSUE THAT CAME UP FOR CONSIDERATION F ROM GROUND NO. 1 TO 4 IS TOWARDS ASSESSMENT OF INCOME DERIVED FROM DEPARTMENTAL STOR E UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS AGAINST ASSESSEE ADMISSION UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. THE FACTS WITH REGARD TO THE IMPUGNED DISPUTE ARE THAT THE ASSESSEE BEING A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF RUNN ING DEPARTMENTAL STORE IN THE NAME OF 4 ASIATIC STORES & SODA FOUNTAIN ASIATIC DEPARTMENTAL STORES. THE ASSESSEE HAS CONSI DERED INCOME DERIVED FROM RUNNING DEPARTMENTAL STORE INCLUDING RENTAL INCOME UNDER TH E HEAD INCOME FROM BUSINESS OR PROFESSION. THE AO HAS ASSESSED RENTAL INCOME RECE IVED FROM THE DEPARTMENTAL STORE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND AL SO DETERMINED THE QUANTUM OF SUCH INCOME BASED ON THE PREVAILING MARKET RATE. 6. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF THE HEARING, SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY A DECISION OF ITAT, MUMBAI, A BENCH IN ASSESSEES OWN CASE FOR AY 201 0-11 IN ITA NO.398/MUM/2017, WHERE UNDER IDENTICAL SET OF FACTS THE TRIBUNAL HEL D THAT INCOME EARNED BY THE ASSESSEE FROM RUNNING OF DEPARTMENTAL STORE IS ASSESSABLE UN DER THE HEAD INCOME FROM BUSINESS AS CLAIMED BY THE ASSESSEE. THE FACTS BEING IDENTIC AL FOR THE YEAR UNDER CONSIDERATION, THE ADDITIONS MADE BY THE AO TOWARDS INCOME COMPUTED UN DER THE HEAD INCOME FROM HOUSE PROPERTY MAY BE DELETED. 7. THE LD. DR, ON THE OTHER HAND, FAIRLY ACCEPTED T HAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT FOR AY 200 6-07 TO 2010-11. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIALS A VAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ISSUE INVOLVED IN THE PRESENT APPEAL I.E. WHETHER INCOME EARNED FROM RUNNING DEPARTMENTAL STO RE IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AS CLAIMED BY TH E ASSESSEE OR INCOME FROM HOUSE PROPERTY AS ASSESSED BY THE AO IS A SUBJECT MATTER OF CONSIDERATION BY THE MUMBAI TRIBUNAL A BENCH IN ASSESSEES OWN CASE FOR AY 20 10-11. THE TRIBUNAL AFTER CONSIDERING 5 ASIATIC STORES & SODA FOUNTAIN THE RELEVANT FACTS HELD THAT INCOME EARNED BY THE A SSESSEE FROM RUNNING DEPARTMENTAL STORE IS ASSESSABLE UNDER THE HEAD INCOME FROM BUS INESS. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 9. HAVING CONSIDERED THE RIVAL STANDS AND PERUSING THE RESPECTIVE ORDERS OF THE INCOME-TAX AUTHORITIES AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE PROCEED TO ADJUDICATE THE CONTROVERSY IN THE FOLLOWING MANNER. PERTINENTLY, THE ISSUE AS TO WHETHER AN INC OME IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR AS BUSINESS INCOME IS A MIXED QUESTION OF LAW AND FACTS, AND EACH CASE HA S TO BE DECIDED IN THE LIGHT OF ITS OWN FACTS AND THE APPLICABLE PRINC IPLES OF LAW. IN THE PRESENT CASE, THE ASSESSEE IS A PARTNERSHIP FIRM WH OSE OBJECT IS TO CARRY ON THE BUSINESS OF DEPARTMENT STORE. IT IS CA RRYING ON THIS BUSINESS THROUGH DIFFERENT COUNTER HOLDERS WHO OWN THE GOODS THAT ARE SOLD WHEREAS THE ASSESSEE IS RESPONSIBLE FOR COLLEC TION OF SALES PROCEEDS AS WELL AS PACKAGING AND DELIVERY OF GOODS . THE ASSESSEE IS EARNING INCOME BY WAY OF COMMISSION RELATABLE TO TH E QUANTUM OF SALES EFFECTED BY EACH OF THE COUNTER HOLDERS APART FROM EARNING FROM THE PACKAGING OF GOODS, AS ALSO THE DIFFERENCE IN R ATE OF FOREIGN EXCHANGE WHEREVER THE CLIENTS HAVE PAID FOR THE SAL ES IN FOREIGN EXCHANGE. THE MOOT QUESTION IS WHETHER THE AFORESAI D STREAMS OF INCOME, WHICH OSTENSIBLY ARE FLOWING FROM RUNNING O F THE DEPARTMENTAL STORE CAN BE SAID TO BE ASSESSABLE AS BUSINESS INC OME, AS CONTENDED BY THE ASSESSEE. 10. BEFORE PROCEEDING FURTHER, WE MAY REFER TO THE SEMINAL FEATURES OF THE CASE WHICH WOULD HAVE A BEARING ON THE DETERMIN ATION AS TO WHETHER THE AFORESAID INCOME DERIVED BY THE ASSESSE E-FIRM IS TO BE TREATED AS INCOME FROM BUSINESS OR IT IS TO BE TREA TED AS RENTAL INCOME FROM HOUSE PROPERTY. AT THE TIME OF HEARING, IT HAS BEEN EXPLAINED BY THE LEARNED REPRESENTATIVE THAT THE ASSESSEE-FIRM H AS ENTERED INTO SEPARATE BUT SIMILAR AGREEMENTS WITH THE DIFFERENT COUNTER HOLDERS AND ONE SUCH AGREEMENT WAS ALSO PLACED BEFORE US IN THE PAPER BOOK AT PAGE 1-4. A PERUSAL OF THE SAID AGREEMENT, WHICH IS ENTERED WITH ONE M/S. RASOOL ENTERPRISES DATED 28.03.2006, REVEALS T HE MANNER IN WHICH THE BUSINESS OF DEPARTMENT STORE IS BEING CARRIED O UT. IN THE RECITAL OF THE SAID AGREEMENT, ASSESSEE IS REFERRED TO AS OWNE R OF ASIATIC DEPARTMENT STORE. THE CURRENCY OF THE AGREEMENT IS FOR A PERIOD OF 12 MONTHS FROM 01.04.2006 TO 31.03.2007. IT IS PROVIDE D THAT THE OTHER PARTY SHALL BRING THE GOODS/PRODUCTS FOR MARKETING AND SALE TO THE CUSTOMERS. IT IS ALSO PRESCRIBED THAT IN CASE ANY/A LL GOODS BROUGHT BY THE OTHER PARTY ARE UNSALABLE OR DAMAGED OR OTHERWI SE NOT FIT FOR TRADING, THE SAME WOULD BE REMOVED FROM THE PREMISES OF THE ASSESSEE-FIRM OR THAT OF THE CUSTOMERS AT OWN COST BY THE PARTY/COUN TER HOLDER. CLAUSE (7) OF THE AGREEMENT PRESCRIBES THAT AS AND WHEN TH E PRODUCTS/GOODS ARE SOLD BY THE COUNTER HOLDER, THE SALE PROCEEDS S HALL BE COLLECTED BY THE CASH COUNTER WHICH IS MANAGED BY THE ASSESSEE-F IRM AND THE 6 ASIATIC STORES & SODA FOUNTAIN PROCEEDS SHALL BE PAID TO THE COUNTER HOLDER AT THE END OF EVERY WEEK AFTER DEDUCTION OF ITS COMMISSION BY THE ASSESSEE-F IRM. IT IS ALSO PRESCRIBED THAT THE ASSESSEE WILL BE ENTITLED TO DE DUCT ANY OTHER COSTS, CHARGES AND EXPENSES PAYABLE BY THE COUNTER HOLDER. THE NECESSARY FURNITURE REQUIRED TO DISPLAY AND SELL THE PRODUCTS SHALL BE PROVIDED BY THE ASSESSEE-FIRM. IT IS FURTHER PROVIDED THAT THE KEYS OF THE COUNTERS OR THE CUPBOARDS OR RACKS WHERE THE PRODUCTS OR GOODS BROUGHT IN BY THE COUNTER HOLDER ARE KEPT FOR SALE SHALL REMAIN WITH THE ASSESSEE-FIRM ONLY. ON THE BASIS OF THE ARRANGEMENT WITH THE COUN TER HOLDERS SOME FACTUAL INFERENCES WHICH CAN BE DRAWN ARE AS FOLLOW S. THAT THE ASSESSEE-FIRM IS PROVIDING FACILITIES TO DIFFERENT PERSONS FOR SELLING DIFFERENT COMMODITIES AND SERVICES THROUGH DIFFEREN T COUNTERS, WHICH ARE PROVIDED AND ARE FURNISHED BY THE ASSESSEE; THA T THE INDIVIDUAL PARTIES CONDUCT THE PURCHASE AND SALE OF THE COMMOD ITIES AT DIFFERENT COUNTERS IN THE DEPARTMENT STORE RUN BY THE ASSESSE E; THAT THE AGREEMENT WITH EACH OF THE PARTY IS FOR A TEMPORARY PERIOD OF 12 MONTHS; THAT THE KEYS OF THE COUNTERS OF THE CUPBOA RDS WHEREIN THE GOODS BROUGHT BY THE PARTY ARE KEPT ARE IN THE POSS ESSION OF THE ASSESSEE AS PER THE TERMS OF THE AGREEMENT. ONE OF THE CLAUSES IN THE AGREEMENT ALSO SPECIFIES THAT THE ARRANGEMENT IS FO R THE SALE OF GOODS IN THE MANNER LAID DOWN IN THE AGREEMENT AND IT DOE S NOT CONFER ANY RIGHT OF TENANCY OR SUB-TENANCY ON THE COUNTER HOLD ERS. AS PER THE AGREEMENT, IT IS THE DUTY OF THE ASSESSEE TO PROVID E THE NECESSARY FURNITURE AT SUCH PLACE AS IS APPROPRIATE TO RUN TH E DEPARTMENT STORE. APART FROM THE AFORESAID FEATURES, THE ASSESSEE ALS O MADE A DETAILED NOTE ON THE ACTIVITIES CARRIED OUT BY IT, WHICH HAV E INDEED BEEN REPRODUCED BY THE ASSESSING OFFICER IN PARA 5.3 OF HIS ORDER. THE RELEVANT DISCUSSION THEREIN REVEALS THAT THE ACTIVI TIES AND RESPONSIBILITIES OF THE ASSESSEE IN CONDUCTING THE BUSINESS OF DEPAR TMENT STORE; THAT THE CASH COLLECTION COUNTERS FOR RECEIVING THE SALE PROCEEDS WAS MANNED BY THE STAFF OF THE ASSESSEE; THAT THE ASSES SEE WAS PROVIDING THE FACILITY FOR PACKING THE GOODS AND DELIVERY; TH AT THE ENTIRE PACKAGING MATERIAL WAS BEING SUPPLIED BY THE ASSESSEE AT ITS OWN COST; AND, THAT THE PACKAGING FACILITY IS MANAGED BY THE STAFF OF T HE ASSESSEE. ASSESSEE IS ALSO PROVIDING PRINTED BILL BOOKS TO EA CH OF THE COUNTER HOLDER AT ITS OWN COST. ASSESSEE IS ALSO PROVIDING THE WATCH AND WARD FACILITY, INCLUDING OPENING AND CLOSING THE DEPARTM ENT STORE IS DONE BY ITS STAFF. THE TELEPHONE FACILITY IS ALSO PROVIDED BY THE ASSESSEE-FIRM. IT IS THE STAFF OF THE ASSESSEE WHO RECORDS THE ENTIRE SALE COLLECTION AND THE EXPENDITURE INCURRED IN MANAGING THE STORE IN C ONNECTION WITH EACH COUNTER HOLDER. THE WEEKLY STATEMENT OF SALES AND T HE CORRESPONDING COMMISSION PAYABLE TO THE ASSESSEE IS TABULATED BY THE ASSESSEE AND PROVIDED TO EACH OF THE COUNTER HOLDERS. THE SALES PROCEEDS AFTER BEING COLLECTED ARE DEPOSITED IN THE BANK BY THE STAFF OF THE ASSESSEE. THE SECURITY AS WELL AS THE MANAGER OF THE DEPARTMENT S TORE IS PROVIDED BY THE ASSESSEE AT ITS OWN COST. ASSESSEE IS ALSO HIRI NG STAFF AT ITS OWN COST TO LOOK AFTER THE FACILITIES PROVIDED BY THE A SSESSEEFIRM TO THE DIFFERENT COUNTER HOLDERS TO EFFECT SALES. THE REPA IRS AND MAINTENANCE OF THE BUSINESS ARE UNDERTAKEN BY THE ASSESSEE AT I TS OWN COST. THE ASSESSEE-FIRM HAS ARRANGED AND INSTALLED THE CENTRA L AIRCONDITIONING 7 ASIATIC STORES & SODA FOUNTAIN FACILITY IN THE DEPARTMENT STORE, WHICH IT IS MAINT AINING. ALL OTHER AMENITIES SUCH AS WATER SUPPLY, TOILET FACILITIES, MAINTENANCE OF CLEANLINESS, ETC. ARE UNDERTAKEN BY THE ASSESSEE AT ITS OWN COST. THE AFORESAID FEATURES OF THE ARRANGEMENT OF THE ASSESS EE WITH THE COUNTER HOLDERS HAVE BEEN DULY NOTED BY THE LOWER AUTHORITI ES AND ARE NOT IN DISPUTE. 11. IN THE ABOVE BACKGROUND, WE MAY NOW TOUCH UPON SOME OF THE JUDICIAL PRONOUNCEMENTS WHICH WOULD PROVIDE THE NEC ESSARY BENCHMARK TO DECIDE AS TO WHETHER IN THE INSTANT FACTS AND CI RCUMSTANCES, THE INCOME EARNED BY THE ASSESSEE IS TO BE TREATED AS BUSINESS INCOME OR IT IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY . AT THE OUTSET, WE MAY REFER TO THE JUDGMENT OF THE HON'BLE SUPREME CO URT IN THE CASE OF KARNANI PROPERTIES LTD., 82 ITR 547 (SC), WHICH LAY S DOWN CERTAIN TESTS IN ORDER TO DETERMINE WHETHER THE SERVICES RENDERED BY THE ASSESSEE TO ITS TENANTS ARE IN THE NATURE OF BUSINESS ACTIVITY SO AS TO ASSESS THE RESULTANT INCOME AS BUSINESS INCOME OR NOT? ONE OF THE ESSENTIAL FACTORS LAID DOWN BY THE HON'BLE SUPREME COURT WAS THAT IN CASE THE SERVICES RENDERED BY THE ASSESSEE ARE THE RESULT OF ACTIVITIES BEING CARRIED OUT CONTINUALLY IN AN ORGANISED MANNER, WIT H A SET PURPOSE AND WITH A VIEW TO EARN PROFITS, THE SAME WOULD CONSTIT UTE BUSINESS ACTIVITIES AND THE INCOME ARISING THEREFROM IS LIABLE TO BE AS SESSED AS BUSINESS INCOME. IN FACT, WE MAY ALSO REFER TO THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF KARANPURA DEVELOPMENT CO. LTD., 44 ITR 362 (SC) WHEREIN HON'BLE SUPREME COURT ASSERTED THA T THE DECIDING FACTOR IS NOT THE OWNERSHIP OF THE PROPERTY IN QUES TION, BUT THE MANNER OF ACTIVITIES CARRIED OUT BY THE ASSESSEE AND THE N ATURE OF OPERATIONS UNDERTAKEN BY THE ASSESSEE IN RELATION TO THE PROPE RTY. WE MAY REPRODUCE THE FOLLOWING PASSAGE FROM THE AFORESAID JUDGMENT WHICH HAS ALSO BEEN REFERRED BY THE HON'BLE SUPREME COURT IN ITS LATER JUDGMENT IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD., [2015] 56 TAXMANN.COM 456 (SC) : AS HAS BEEN ALREADY POINTED OUT IN CONNECTION WIT H THE OTHER TWO CASES WHERE THERE IS A LETTING OUT OF PREMISES AND COLLECTION OF RENTS THE ASSESSMENT ON PROPERTY BASIS MAY BE CORRECT BUT NOT SO, WHERE THE LETTING OR SUB-LETTING IS PART OF A TRADING OPERATI ON. THE DIVING LINE IS DIFFICULT TO FIND; BUT IN THE CASE OF A COMPANY WIT H ITS PROFESSED OBJECTS AND THE MANNER OF ITS ACTIVITIES AND THE NATURE OF ITS DEALINGS WITH ITS PROPERTY, IT IS POSSIBLE TO SAY ON WHICH SIDE THE O PERATIONS FALL AND TO WHAT HEAD THE INCOME IS TO BE ASSIGNED. 12. IF ONE IS TO KEEP THE AFORESAID PRINCIPLES IN M IND, IT WOULD BE EVIDENT THAT CONSIDERING THE ACTIVITIES UNDERTAKEN BY THE A SSESSEE RELATING TO THE CONDUCT OF THE BUSINESS OF DEPARTMENT STORE, TH E INCOMES EARNED BY THE ASSESSEE IS LIABLE TO BE TREATED AS INCOME F ROM BUSINESS AND NOT AS INCOME FROM HOUSE PROPERTY. OSTENSIBLY, THE PROF ESSED AND STATED OBJECT OF THE ASSESSEE IS TO RUN THE DEPARTMENT STO RE, AS IS EVIDENCED BY ITS PARTNERSHIP DEED. THE MANNER OF CARRYING OUT ITS ACTIVITIES, AND THE NATURE IN WHICH IT HAS DEALT WITH THE PROPERTY IN QUESTION CLEARLY SHOWS THAT IT IS NOT A CASE OF EXPLOITING THE PROPE RTY SIMPLICITER, BUT A CASE WHERE THE OBJECTIVE OF EARNING PROFITS BY COND UCTING OF THE 8 ASIATIC STORES & SODA FOUNTAIN DEPARTMENT STORE IS MERELY FACILITATED BY THE USE O F THE PROPERTY. AT THIS STAGE, WE MAY ALSO REFER TO TWO ASPECTS WHICH HAVE BEEN BROUGHT OUT BY THE LEARNED REPRESENTATIVE BEFORE US. IT HAS BEE N POINTED OUT THAT ASSESSEE EARNS INCOME BY WAY OF COMMISSION FROM VAR IOUS COUNTER HOLDERS AND SUCH COMMISSION IS BASED ON THE ACTUAL SALES EFFECTED BY THE DIFFERENT COUNTER HOLDERS. FOR THE YEAR UNDER C ONSIDERATION, THE TOTAL COMMISSION EARNED FROM THE VARIOUS COUNTER HOLDERS WAS REFERRED TO, WHICH SHOWS THAT THE AMOUNT OF COMMISSION IS NOT CO NSISTENT OR CONSTANT ACROSS THE COUNTER-HOLDERS. EVEN THE MONTH -TO-MONTH COMMISSION EARNINGS OF THE ASSESSEE FROM THE DIFFER ENT COUNTER HOLDERS ARE NOT CONSTANT, BUT IT VARIES WITH THE LE VEL OF SALES EFFECTED. IT IS A MATTER OF COMMON KNOWLEDGE THAT IN A TYPICAL R ENTAL ARRANGEMENT, INCONSISTENT LEVEL OF COMPENSATION WOULD BE CLEARLY MISSING. THEREFORE, IN OUR VIEW, THE LOWER AUTHORITIES ERRED IN TREATIN G THE INCOME EARNED BY THE ASSESSEE FROM RUNNING THE DEPARTMENTAL STORE AS RENTAL INCOME ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPER TY. 13. ONE ASPECT WHICH HAS BEEN EMPHASISED BY THE LOW ER AUTHORITIES IS THAT THE ASSESSEE WAS HOLDING THE PROPERTY ON RENT FROM LIC OF INDIA FOR MORE THAN 50 YEARS AND, THEREFORE, IN VIEW OF SEC. 27(IIIB) R.W.S. 269UA(F) OF THE ACT, IT IS DEEMED TO BE THE OWNER O F THE PROPERTY FOR THE PURPOSE OF TAXATION. WHETHER OR NOT INVOKING OF SEC . 27(IIIB) R.W.S. 269UA(F) OF THE ACT IS CORRECT IN LAW, IN OUR VIEW, IT IS NOT DETERMINATIVE OF THE ISSUE AS TO WHETHER THE INCOME IS TO BE TREA TED AS BUSINESS INCOME OR INCOME ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. AS LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE CASE OF KARNANI PROPERTIES LTD. (SUPRA) AND KARANPURA DEVEL OPMENT CO. LTD. (SUPRA), WHAT IS OF IMPORTANCE IS TO EXAMINE THE MA NNER OF ITS ACTIVITIES AND THE NATURE OF ITS DEALING WITH THE PROPERTY SO AS TO DETERMINE THE QUESTION OF ASSESSING THE INCOME UNDER THE HEAD HO USE PROPERTY OR BUSINESS INCOME, AND NOT MERELY THE OWNERSHIP OF THE PROPERTY. 14. ANOTHER ASPECT WHICH HAS BEEN CANVASSED BY THE ASSESSING OFFICER IS THAT THE SALE AND PURCHASE OF THE GOODS HAVE BEE N UNDERTAKEN BY THE RESPECTIVE COUNTER HOLDERS AND NOT BY THE ASSESSEE. IT HAS ALSO BEEN EMPHASISED BY THE ASSESSING OFFICER THAT THE INCOME HAS BEEN EARNED BY THE ASSESSEE ESSENTIALLY FROM LETTING THE COUNTE R HOLDERS USE THE PREMISES; THUS, IT IS ASSESSABLE AS INCOME FROM HO USE PROPERTY. IN OUR CONSIDERED OPINION, IT WOULD BE INAPPROPRIATE TO DI SREGARD THE MANNER IN WHICH THE ASSESSEE IS CARRYING OUT THE ACTIVITIES B EFORE DECIDING THE ISSUE. THE VIEW OF THE ASSESSING OFFICER THAT THE S ALE AND PURCHASE HAS BEEN UNDERTAKEN BY THE COUNTER HOLDERS IS NO GROUND TO SAY THE ACTIVITIES BEING UNDERTAKEN BY THE ASSESSEE ARE NOT IN THE REALM OF BUSINESS. IN THIS CONTEXT, WE MAY REFER TO THE JUDG MENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RUNWAL DEVELOPERS (P.) LTD., [2011] 15 TAXMANN.COM 196 (BOM.), WHEREIN ASSESSEE WAS IN THE BUSINESS OF BUILDING AND DEVELOPING RESIDENTIAL AND COMMERCIAL COMPLEXES AND WAS ALSO RUNNING A MALL. IT HAD CONSTRUCTED AN AREA, PA RT OF WHICH WAS SOLD TO VARIOUS PERSONS AND MAJOR PORTION OF THE REMAINI NG AREA WAS GIVEN ON LEASE TO PERSONS WHO WERE RUNNING SHOPS, CINEMA HALLS, EATING PLACES, ETC. IN THE MALL. THE INCOME STREAMS OF THE ASSESSEE, INTER-ALIA, 9 ASIATIC STORES & SODA FOUNTAIN INCLUDED MAINTENANCE CHARGES FROM THE LESSEES, AS A LSO THE PERSONS TO WHOM THE PREMISES WERE SOLD TOWARDS PROMOTION AND U PKEEP OF THE MALL AND SUCH INCOME WAS OFFERED AS BUSINESS INCOM E. THE ASSESSING OFFICER HELD THAT SUCH INCOME ALSO ORIGINATED FROM THE PROPERTY ITSELF AND, THEREFORE, WAS TO BE TAXED AS INCOME FROM HOU SE PROPERTY. THE HON'BLE HIGH COURT DISAGREED WITH THE VIEW OF THE R EVENUE AND NOTED THAT THE BUSINESS CONDUCT AGREEMENT SHOWED THAT THE MAINTENANCE CHARGES COLLECTED BY THE ASSESSEE NOT ONLY RELATED TO THE OPEN AREA/COMMON AREAS, BUT RELATED TO REPAIRS AND MAINT ENANCE OF EQUIPMENT, TRANSFORMERS, FIRE-FIGHTING EQUIPMENT, A IR-CONDITIONING PLANT, ETC. AND OTHER SERVICES IN THE COMMON AREA OF THE C OMPLEX LIKE COST OF SECURITY SERVICES AND OVERALL HOUSE-KEEPING OF THE COMMON AREA. CONSIDERING THE FACTUAL MATRIX, THE HON'BLE HIGH CO URT UPHELD THE PLEA THAT THE INCOME WAS ATTRIBUTABLE TO CONDUCT OF BUSI NESS ACTIVITY OF RENTING THE MALL AND ACCORDINGLY, THE STAND OF THE ASSESSEE FOR TREATING THE RECEIPTS AS BUSINESS INCOME WAS NOT FAULTED. IN THE PRESENT CASE TOO, THE FACT THAT THE ASSESSEE WAS NOT ACTUALLY SE LLING THE GOODS OR THAT IT WAS UNDERTAKING A SET OF ORGANISED ACTIVITIES IN SUPPORT OF THE COUNTER HOLDERS WHO WERE EXECUTING THE SALE AND PURCHASE OF GOODS, WOULD NOT DISTRACT FROM THE FACT THAT THE RECEIPTS FROM THE C OUNTER HOLDERS WERE BUSINESS RECEIPTS LIABLE TO BE ASSESSED UNDER THE H EAD INCOME FROM BUSINESS. 15. IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIE S HAVE ERRED IN ASSESSING THE INCOME EARNED BY THE ASSESSEE FROM RU NNING OF DEPARTMENTAL STORE AS INCOME FROM HOUSE PROPERTY AS AGAINST THE CLAIM OF THE ASSESSEE OF TREATING IT AS BUSINESS I NCOME. THUS, ON THIS ASPECT, ASSESSEE SUCCEEDS. 9. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH V IEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER PERIOD, WE DIRECT THE AO TO ASSESSEE INCOME EARNED FROM RUNNING DEPARTMENT STORE UNDER T HE HEAD INCOME FROM BUSINESS OR PROFESSION AS CLAIMED BY THE ASSESSEE. 10. THE NEXT ISSUE CAME UP FOR CONSIDERATION IS ASS ESSMENT OF FOREIGN EXCHANGE GAIN AT RS.2,66,339/- ASSESSED UNDER THE HEAD INCOME FR OM OTHER SOURCES. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, MUMBAI, A BENCH FOR AY 2010-11, WHERE, THE TRIBUNAL HELD THAT INCOME FROM FOREIGN EXCHANGE DIFFERENCE, INCOME FROM MONEY TRANSFER AND ALSO INTEREST INCOME IS 10 ASIATIC STORES & SODA FOUNTAIN PART OF INCOME DERIVES FROM DEPARTMENTAL STORE WHIC H SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AS CLAIMED BY THE ASSESSEE. 11. HAVING HEARD ARGUMENTS OF BOTH SIDES, WE FIND T HAT THE ITAT, MUMBAI, A BENCH FOR AY 2010-11, HAD AN OCCASION TO CONSIDER IDENTIC AL ISSUE IN THE LIGHT OF FACTS BROUGHT OUT BY THE AO AND AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE HELD THAT INCOME FROM FOREIGN EXCHANGE DIFFERENCE, WESTERN MONEY TRANSFER AND ALSO INTEREST INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AS CLAIMED BY THE ASSESSEE, BUT NOT ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS ASSESSED BY THE LD. AO. THE RELEVANT FINDING OF THE TRIBUNAL IS AS UNDER:- 21. THE LAST GROUND OF APPEAL IN THIS APPEAL, I.E. GROUND OF APPEAL NO. 6 READS AS UNDER :- 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE HON'BLE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD AO OF SEPARATELY TAXING THE INCOME FROM FOREIGN EXCHANGE DIFFERENCE OF RS.2.53 LACS AND INCOME FROM MONEY TRANSFER OF RS. 70,186/- AND ALSO INTEREST OF RS.11,400/- AS INCOME FROM OTHER SOURCES AND THE RE ASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE INCOME TAX A ND RULES MADE THERE UNDER. 22. THE GRIEVANCE RAISED IN THE AFORESAID GROUND I S CONSEQUENTIAL TO OUR DECISION HOLDING THE INCOME EARNED FROM DEPARTMENTA L STORE TO BE ASSESSABLE AS BUSINESS INCOME. THE ASSESSING OFFICER IS DIRE CTED TO TREAT THE AFORESAID AMOUNTS IN LINE WITH OUR DECISION OF TREATING THE I NCOME FROM DEPARTMENTAL STORE AS BUSINESS INCOME. THUS, ON THIS ASPECT, ASSESSE E SUCCEEDS. 12. IN THIS VIEW OF THE MATTER, AND CONSISTENT WITH VIEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL, WE DIRECT THE AO TO ASSESS OTHER I NCOME BEING INCOME FROM FOREIGN EXCHANGE DIFFERENCE, MONEY TRANSFER AND ALSO INTERE ST INCOME UNDER THE HEAD INCOME FROM BUSINESS AS CLAIMED BY THE ASSESSEE. 11 ASIATIC STORES & SODA FOUNTAIN ITA NO.123/MUM/2018 13. THE FACTS AND ISSUES INVOLVED IN THIS APPEAL IS IDE NTICAL TO THE FACTS AND ISSUES WHICH WE HAVE ALREADY DECIDED IN ITA NO.6757/MUM/20 17 FOR ASSESSMENT YEAR 2012-13. THE REASONS GIVEN BY US IN PRECEDING PARAGRAPH IN I TA NO.6757/MUM/2017 SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL ALSO, THEREFORE, FOR DETAILED REASONS GIVEN IN PRECEDING PARAGRAPH, WE DIRECT THE AO TO ASSESS THE INCOME EA RNED BY THE ASSESSEE FROM RUNNING DEPARTMENTAL STORE INCLUDING OTHER INCOME BEING DIF FERENCE FROM FOREIGN EXCHANGE, INCOME FROM MONEY TRANSFER AND ALSO INTEREST EARNED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AS CLAIMED BY THE ASSESSEE. 14. IN THE RESULT, BOTH APPEALS FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/04/2019. SD/- SD/- ( MAHAVIR SINGH ) (G. MANJUNATHA) ! ' /JUDICIAL MEMBER # ' / ACCOUNTANT MEMBER MUMBAI; DATED : 10/04/2019 F{X~{T? P.S / /. .. $!%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT (RESPECTIVE ASSESSEE) 2. #$%!' / THE RESPONDENT. 3. &% &% ' ( ) / THE CIT, MUMBAI. 4. &% &% ' / CIT(A)- , MUMBAI, 5. )*+ % # , , &% % ,. , / DR, ITAT, MUMBAI 6. +/ 0 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI