SHIBANI S. BHOJWANI, MUMBAI V. DCIT CEN CIR 24 & 26, MUMBAI

ITA 7573/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9808 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 07-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Business income; Depreciation; Search and seizure; Rule of consistency; Block assessment
• Section: 143(3); 56(2); 153A; 56; 132; 15

Judgement Text

SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A(S). NO.7573, 7574 & 7575/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10, 2010 - 11 & 2011 - 12) SHIBANI S. BHOJWANI SAMIR COMPLEX, FIRST FLOOR, ST. ANDREWS ROAD, BANDRA (WEST), MUMBAI - 400 050 / VS. DEPUTY COM MISSIONER OF INCOME TAX - CENTRAL CIRCLE - 24 & 26, AAYAKAR BHAVAN , M.K. ROAD MUMBAI - 400 020 ./ ./ PAN/GIR NO. AABP6649R ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI YOGESH THAR SHRI CHAITANYA JOSHI / RESPONDENT BY : SHRI ALOK JOHRI (D.R.) / DATE OF HEARING : 22 /06/2017 / DATE OF PRONOUNCEMENT : 26 /0 7 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT SET OF THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE CIT(A) - 39, MUMBAI, EACH DATED 05.09 . 2014, PERTAINING TO A.Y(S): 2009 - 10, 2010 - 11 AND 2011 - 12 , RESPECTIVELY, WHICH IN ITSELF ARISES FROM THE RESPECTIVE ORDERS PASSED SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 2 BY THE A . O U/S 143(3 ) R.W.S.153A OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) FOR A.Y(S) 2009 - 10 AND 2010 - 11, AND UNDER SEC. 143(3) FOR A.Y. 2011 - 12 . THAT AS COMMON ISSUES ARE INVOLVED IN ALL THE THREE APPEALS, THEREFORE, FOR THE SAKE OF CONVENIENCE THEY ARE BEING TAKEN UP AND DISPOSED OF BY WAY OF A CONSOLIDATED ORDER. WE HEREIN FIRST TAKE UP THE APPEAL FOR A.Y. 2009 - 10, MARKED AS ITA NO. 7573 /MUM/20 14 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) , HAD THEREIN RAISED THE FOLLOWING GROUNDS OF APPEAL: - GROUND I: LICENSE FEES ASSESSABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND NOT INCOME FROM HOUSE PROPERTY. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME TAX, RANGE - 24 & 26, MUMBAI (THE A.O') IN ASSESSING THE LICENSE FEES RECEIVED FROM THE COMPOSITE LETTING OF PROPERTY UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. 2. SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT: A. THE AFORESAID PROPERTY HAS BEEN LET OUT ALONG WITH FURNITURE, FIXTURES AND OTHER AMENITIES FROM THE A.Y. 2002 - 03 AND HAVE SINCE BEEN ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. THERE HAS NOT BEEN ANY CHANGE IN THE ACTIVITY OF THE APPELLANT DURING THE CAPTIONED ASSESSMENT YEAR. IN ABSENCE OF C HANGE IN FACTS, THE LICENSE FEES CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY; B. THE MERE FACT THAT THE APPELLANT HAS NOT EXPANDED HER BUSINESS ACTIVITY CANNOT BE A BASIS TO TREAT THE INCOME AS INCOME FROM HOUSE PROPERTY; 3. THE APPELLANT, PRAYS THAT THE LICENSE FEES BE TREATED AS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION INSTEAD OF INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. GROUND II: DEPRECIATION DISALLOWANCE 1. ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW, THE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 3 LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O IN DISALLOWING THE CLAIM OF DEPRECIATION ON FULLY FURNISHED FLATS. 2. SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT ONCE THE FLATS ARE USED FOR THE PURPOSES OF THE BUSIN ESS OF COMPOSITE LETTING, THEY FORM PART OF THE BLOCK OF ASSETS AND IN VIEW OF EXPLANATION 5 TO SECTION 32, ALLOWANCE OF DEPRECIATION IS MANDATORY AND HENCE CANNOT BE DISALLOWED. 3. THE APPELLANT, THEREFORE, PRAYS THAT THE DISALLOWANCE ON DEPRECIATION BE DELETED. WITHOUT PREJUDICE TO GROUND I & II GROUND III : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, AND WITHOUT PREJUDICE TO THE FOREGOING GROUNDS, THE INCOME BY WAY OF LICENSE FEES FOR COMPOSITE LETTING OUT OF FURNITURE/FITTING ETC. TOGETHER WITH THE RESIDENTIAL PREMISES OUGHT TO BE TAXED AS INCOME FROM OTHER SOURCES IF NOT AS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 2. SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT THE CLEAR MANDATE OF SECTION 56 IS THAT SUCH INSEPARABLE LETTING INCOME WOULD HAVE TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES IF NOT UNDER THE HEAD PROFITS AND GAINS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION. WITHOUT PREJUDICE TO GR OUND I, II & ILL GROUND IV 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O IN DISALLOWING THE CLAIM FOR DEDUCTION IN COMPUTING ANNUAL LETTING VALUE AND IN COMPUTING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY ON FULLY FURNISHED FLATS. 2. SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT EVEN IF THE INCOME FROM THE AFORESAID FLATS IS TREATED AS INCOME FROM HOUSE PROPERTY, VARIOUS DEDUCTIONS IN COMPUTING ANNUAL L ETTING VALUE THAT ARE PERMISSIBLE IN LAW OUGHT TO HAVE BEEN GRANTED. 3. THE APPELLANT, THEREFORE, PRAYS THAT ALL ELIGIBLE DEDUCTIONS SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 4 IN COMPUTING ANNUAL LETTING VALUE AND IN COMPUTING INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY BE ALLOWED. GROUND V: GENERAL THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY/ALL OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 24,14,498/ - ON 30.09 .2009, WHICH WAS PROCESSED AS SUCH U/S. 143(1) OF THE ACT. THAT PURSUANT TO THE SEARCH & SEIZURE PROCEEDINGS CONDUCTED AT THE RESIDENTIAL/BUSINESS PREMISES OF THE ASSESSEE AND HER GROUP CONCERNS ON 30.11.2010, THE ASSESSEE IN COMPLIANCE TO NOTICE U/S. 15 3A FILED HER RETURN OF INCOME FOR A.Y. 2009 - 10 ON 05.03.2012, DECLARING TOTAL INCOME AT RS. 32,44,002/ - . 3. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE WHO WAS IN RECEIPT OF RENTAL INCOME FROM LETTING OF FLATS ALONGWITH FURNITURE AND FIXTURE, WAS SHOWING THE SAME AS HER BUSINESS INCOME UNDER THE HEAD LEAVE AND LICENSE INCOME. IT WAS FURTHER OBSERVED BY THE A.O THAT NO BIFURCATED DETAILS IN RESPECT OF THE RENT CHARGED BY THE ASSESSEE FOR FLATS AND FU RNITURE & FIXTURE WAS SEPARATELY AVAILABLE. THE A.O NOT BEING SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT THE INCOME FROM LETTING OF THE FLATS WAS LIABLE TO BE BOOKED UNDER THE HEAD BUSINESS INCOME, THEREIN CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SAME IN THE BACKDROP OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. VS. CIT (2003) (263 ITR 143) (SC), MAY NOT BE BROUGHT TO TAX UNDER THE HEAD INCOME FR O M HOUSE PROPERTY . THE ASSESSEE IN HER REPLY SUBMITTED BEFORE T HE A.O THAT HER CLAIM THAT THE COMPOSITE LETTING RECEIPTS WERE LIABLE TO BE ASSESSED UNDER THE HEAD BUSINESS INCOME WAS DELIBERATED UPON AND ACCEPTED SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 5 BY HIS PREDECESSOR WHILE FRAMING THE ASSESSMENT IN HER CASE FOR A.Y. 2006 - 07. IT WAS SUBMITTED BY THE AS SESSEE THAT THE A.O WHILE SCRUTINISING HER CASE FOR A.Y. 2006 - 07 HAD THOROUGHLY VETTED THE CLAIM OF THE ASSESSEE AS REGARDS THE HEAD OF INCOME UNDER WHICH THE RENTAL RECEIPTS WERE OFFERED BY HER FOR TAX, AND ONLY AFTER THOROUGH DELIBERATIONS HAD CONCLUDED THAT THE CLAIM OF THE ASSESSEE WAS FOUND TO BE IN ORDER. THE ASSESSEE FURTHER SUBMITTED BEFORE THE A.O THAT HER AFORESAID CLAIM WAS THEREAFTER CONSISTENTLY ACCEPTED AND ASSESSED BY THE DEPARTMENT UPTO A.Y. 2008 - 09, AND THE COMPOSITE RENTAL RECEIPTS CONTINU ED TO BE ASSESSED AS BUSINESS INCOME, AS CLAIMED BY HER. THE ASSESSEE THUS TAKING FORCE FROM THE FACT THAT NOW WHEN THE DEPARTMENT AFTER THOROUGH VERIFICATIONS HAD CONSISTENTLY ACCEPTED HER CLAIM THAT THE INCOME DERIVED FROM COMPOSITE LETTING ACTIVITY WA S LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM BUSINESS, THEREFORE, IN THE ABSENCE OF ANY NEW FACTS EMERGING DURING THE YEAR UNDER CONSIDERATION, A DEPARTURE FROM THE SAID VIEW WHICH WAS CONSISTENTLY BEING FOLLOWED FOR YEARS AT STRETCH , WOULD N OT BE PERMISSIBLE IN THE EYES OF LAW. THE ASSESSEE APART FROM FOCUSING ON HER CONTENTION THAT IT WAS NOT PERMISSIBLE ON THE PART OF THE DEPARTMENT TO ADOPT AN INCONSISTENT APPROACH AND IN THE ABSENCE OF THERE BEING ANY SHIFT IN THE FACTS, THEREIN ASSESS TH E RENTAL RECEIPTS UNDER THE HEAD INCOME FROM HOUSE PROPERTY, FURTHER FORTIFIED HER CLAIM ON MERITS THAT THE COMPOSITE LETTING RECEIPTS WERE LIABLE TO ASSESSED AS BUSINESS INCOME, BY STRESSING ON CERTAIN INDEPENDENT FACTORS, VIZ. (I). THE ACTIVITY OF CO MPOSITE LETTING OUT OF FLATS BY THE ASSESSEE, BEING IN THE NATURE OF A REGULAR, SYSTEMATIC AND ORGANISED ACTIVITY, THUS COULD SAFELY BE CHARACTERISED AS A BUSINESS ACTIVITY; (II). THE UTILIZATION OF INTEREST BEARING BORROWED FUNDS BY THE ASSESSEE FOR MAKIN G OF INVESTMENT TOWARDS PURCHASE, CONSTRUCTION AND CARRYING OUT INTERIORS OF THE PROPERTY, WAS IN ITSELF A STRONG INDICATOR THAT THE ASSESSEE WAS SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 6 CARRYING ON A BUSINESS VENTURE; (III). THE COMPOSITE LETTING OF PROPERTY ALONGWITH SERVICES/FACILITIES, FURNIT URE, FIXTURE AND WHITE GOODS ETC., COULD NOT BE ASSESSED AS INCOME FROM HOUSE PROPERTY; (IV). T HE FACTS INVOLVED IN THE CASE OF THE ASSESSEE WERE DISTINGUISHABLE AS AGAINST THOSE WHICH WERE INVOLVED IN THE CASE BEFORE THE HONBLE APEX COURT IN SHAMBU INV ESTMENT (SUPRA) ; AND (V) . THAT EVEN IF THE RECEIPTS FROM COMPOSITE LETTING WERE NOT TO BE ASSESSED AS BUSINESS INCOME, THEN THE SAME CO U LD ONLY BE BROUGHT TO TAX UNDER SEC. 56(2)(III). 4 . THE A.O AFTER DELIBERATING ON THE CONTENTIONS OF THE AS SESSEE, HOWEVER, DID NOT FIND FAVOUR WITH THE SAME. THE A.O HOLDING A STRONG CONVICTION THAT THE INCOME RECEIVED BY THE ASSESSEE BY WAY OF LICENSE FEES FROM THE COMPOSITE LETTING ACTIVITY WAS LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PR OPERTY, THUS REJECTED THE CLAIM OF THE ASSESSEE THAT THE SA ME WAS RIGHTLY REFLECTED BY HER UNDER THE HEAD BUSINESS INCOME. THE A.O REBUTTING THE CLAIM OF THE ASSESSEE THAT THE DEPARTMENT IN THE BACKDROP OF THE RULE OF CONSISTENCY WAS THEREIN PRECLUDED T O TAKE A DIFFERENT VIEW ON THE SAME SET OF FACTS DURING THE YEAR UNDER CONSIDERATION, THEREIN HELD A CONVICTION THAT AN E RRONEOUS AND MISTAKEN VIEW ARRIVED IN THE PAST CANNOT FETTER AND THEREIN COMPEL THE ASSESSING AUTHORITY TO REPEAT THE SAME. IT WAS THUS OBSERVED BY THE A.O THAT AS AN ERRONEOUS VIEW COULD NOT BE ALLOWED TO PERPETUATE IN LIGHT OF CONSISTENCY, THEREFORE , THE ASSESSING AUTHORITY WAS VESTED WITH THE RIGHT TO UNDO SUCH AN ERRONEOUS VIEW BY DEPART ING FROM THE EARLIER VIEW. THE A.O IN ORDER TO F ORTIFY HIS AFORESAID CON VICTION , THEREIN OBSERVED THAT AS THE PRINCIPLE OF RESJUDICATA WAS NOT APPLICABLE TO INCOME TAX PROCEEDINGS, AS EACH ASSESSMENT YEAR WAS AN INDEPENDENT UNIT, THEREFORE A DECISION FOR ONE YEAR CANNOT OPERATE AS RESJUDICATA IN ANOTHER YEAR. THE A.O WHILE CONCLUDING THAT THE INCOME DERIVED BY THE ASSESSEE FROM COMPOSITE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 7 LETTING ACTIVITY WAS LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THEREIN PRIMARILY TOOK SUPPORT OF THE FOLLOWING FACTS : - (I). THAT AS N O D OCUMENTS PERTAINING TO VARIOUS SERVICES FORMING PART OF LEAVE AND LICENSE AGREEMENT , AS CLAIMED BY THE ASSESSEE, WERE S EIZED DURING THE COURSE OF THE SEARCH & SEIZURE OPERATIONS CONDUCTED ON THE ASSESSEE UNDER SEC. 132 OF THE ACT, THEREFORE, THERE WAS NO EVIDENCE THAT THE RENTAL RECEIPTS IN THE HANDS OF THE ASSESSEE WERE RELATABLE TO ANY SERVICES PROVIDED BY THE ASSESSEE. (II). TH AT THOUGH THE ASSESSEE HA D CL AIMED THAT SHE WAS PROVIDING A NUMBER OF SERVICES , WHICH INCLUDE D USE OF GYMNASIUM, SWIMMING POOL, HOUSEKEEPING FACILITIES, GARDENERS ETC . , HOWEVER, THERE WAS NO MENTION OF EITHER OF THE SAID SERVICES IN THE LEAVE AND LICENSE AGREEMENT S . THAT STILL FURTHER , NEITHER D URING THE COURSE OF SEARCH AND SEIZURE ANY DOCUMENTS INDICATING THE PROVISION OF THE AFORESAID SERVICES TO THE OCCUPANTS OF THE PROPERTY WERE FOUND, NOR DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAD PLACED ON RECORD ANY DOCUMENT ARY EVIDENCE IN SUPPORT OF HER AFORESAID CLAIM . (III). THAT T HOUGH IT WAS CLAIMED BY THE ASSESSEE THAT AT THE TIME OF EXECUTING FRESH LICENSES THE FLATS WERE REFURBISHED, HOWEVER, NO MATERIAL EVIDENCING THE SAID CLAIM WAS EITHER FOUND DURING THE COURSE OF TH E SEARCH PROCEEDINGS, NOR THE SAME WERE EVER PRODUCED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 8 (IV). THAT T HOUGH THE ASSESSEE HA D STATED THAT THE LICENSE FEE S RECEIVED BY HER ON ACCOUNT OF COMPLEX COMMERCIAL SERVICES PROVIDED TO THE LESSEES WAS FAR GREATER THAN THE LICENSE FEES WHICH WAS BEING RECEIVED BY ANY PERSON IN THE LOCALITY , HOWEVER , EXCEPT FOR THE SAID HOLLOW STATEMENT OF THE ASSESSEE, NO SUPPORTING DOCUMENTS WERE PLA CED ON RECORD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS . (V). THAT AS PER THE LEAVE AND LICENSE AGREEMENT , THE LICENSEE WAS ALLOWED TO BRING FURNITURE AND FIXTURE AND MAKE ALTERATIONS AND REPAIRS , THEREFORE , THE CLAIM OF THE ASSESSEE THAT THE ACTIVITIES CARRIED ON BY HER WERE AKIN TO A STAR CATEGORY HOTEL, WERE CLEARLY DISLODGED. (VI). TH AT T HOUGH THE ASSESSEE HA D CLAIMED THAT COMPLEX COMMERCIAL ACTIVITIES WERE BEING PROVIDED BY HER , HOWEVER, AS NO EVIDENCE WAS PLACED ON RECORD TO SUBSTANTIATE THE SAID FACTUAL POSITION, THEREFORE THE ASSESSEE FAILED TO CLEAR THE TEST LAID DOWN IN THE CASE OF SHAMBU INVESTMENT (SUPRA). (V II ). THAT THOUGH THE LEAVE AND LICENSE A GREEMENT REVEALED THAT THE ASSESSEE WAS RECEIVING RENT IN LIEU OF FURNITURE & FIXTURES AND HOME APPLIANCES PROVIDED TO THE LESSEES , HOWEVER, AS NEITHER ANY EVIDENCE IN SUPPORT OF R EFURBISHING OF THE FLATS BY THE ASSESSEE, AS PER THE REQUIREMENT OF THE OCCUPANTS WAS PLACED ON RECORD, NOR ANY MATE RIAL WHICH COULD GO TO EVIDENCE THE FACTUM OF PROVISION OF SERVICES , SUCH AS SERVICES OF GARDENER, PLUMBING ETC. WAS BROUGHT ON RECORD, THEREFORE , THE RELIANCE PLACED BY THE ASSESSEE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS (SUPRA) WAS FOUND TO BE MISPLACED. SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 9 (VI II ). THAT A PERUSAL OF THE WEALTH T AX R ETURNS OF THE ASSESSEE REVEALED THAT THE FLATS WERE SHOWN BY THE ASSESSEE AS A C APITAL ASSET , AND NOT AS STOCK - IN - TRADE. ( IX ). THAT THE CLAIM OF THE ASSESSEE THAT IF THE LICENSE FEE RECEIVED BY HER WAS BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY , THE SAME WOULD RENDER THE PROVISION OF SEC. 56(2) NUGATORY , WAS FOUND TO BE MISCONCEIVED . THAT AS PER THE A.O SEC. 56(2) CONTEMPLATES SUBJECTING TO TAX INCOM E WHICH IS EARNED BY AN ASSESSEE ON LETTING OUT O F MACHINERY, PLANT OR FURNITURE AND ALSO BUILDINGS . THE A.O HELD A CONVICTION THAT AS THE WORDS AND ALSO BUILDINGS IS FOLLOWED BY THE WORDS ' LETS OUT ON HIRE THE MACHINERY, PLANT AND FURNITURE ' , THEREFORE IT COULD SAFELY BE CONCLUDED THAT THE PR EDOMINANT OBJECT IN THE CASES CONTEMPLATED UNDER THE AFORESAID STATUTORY PROVISION SHOULD BE TO EARN INCOME FROM LETTING OUT OF PLANT, M A CHINERY, FURNI TU RE ETC. , AND NOT BUILDINGS. THE A.O THUS IN THE BACKDROP OF HIS AFORESAID VIEW, THEREIN OBSERVED THAT AS THE A SSESSEE IN THE PRESENT CASE HAD BASICALLY LET OUT BUILDINGS AND WHITE GOODS , SUCH AS T. V., REFRIGERATORS ETC. , WHICH WERE ONLY IN THE NATURE OF TEN E MENTS , THEREFORE HER INCO ME COULD NOT BE BROUGHT WITHIN THE SWEEP OF SEC. 56(2) OF THE ACT . 5 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O, THEREIN CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THAT BEFORE THE CIT(A) IT WAS EMPHASIZED BY THE ASSESSEE THAT AS SINCE INCEPTION THE INCOME OF THE ASSESSEE FROM THE AFORESAID ACTIVITY OF COMPOSITE LETTING OUT WAS BEING ASSESSED TO TAX AS BUSINESS INCOME, THEREFORE, IN THE ABSENCE OF ANY NEW FACTS DURING THE YEAR UNDER CONSIDERATION, THE A.O HAD ERRED IN TAKING AN INCONSI STENT VIEW AND WRONGLY SUBJECT ED THE RENTAL SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 10 RECEIPTS TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE FURTHER ON MERITS TRIED TO IMPRESS UPON THE CIT(A) THAT AS THE ACTIVITY UNDER CONSIDERATION WAS BEING CARRIED OUT BY HER REGULARLY, CONSI STENTLY AND IN ANY ORGANIZED MANNER, WITH THE PURPOSE TO EARN PROFITS, THEREFORE, THE SAME CLEARLY CONSTITUTED A BUSINESS ACTIVITY, AND RESULTANTLY THE INCOME THEREFROM WAS LIABLE TO BE ASSESSED AS BUSINESS INCOME. THE ASSESSEE REITERATING THE SUBMISSI ONS RAISED BEFORE THE A.O, THEREIN AVERRED THAT AS THE UTILIZATION OF INTEREST BEARING BORROWED FUNDS WAS A STRONG INDICATOR OF BUSINESS TRAIT, THEREFORE, THE ACTIVITY OF CONSTRUCTION OF FLATS ETC. BY THE ASSESSEE BY USING INTEREST BEARING FUNDS, THEREIN F ORTIFIED HER CLAIM THAT SHE WAS CARRYING ON A BUSINESS VENTURE. THE ASSESSEE FURTHER IN ORDER TO DRIVE HOME HER CONTENTION THAT THE INCOME FROM THE COMPOSITE LETTING OUT HAD RIGHTLY BEEN REFLECTED BY HER AS BUSINESS INCOME, THEREIN SUBMITTED BEFORE THE CIT (A) THAT THE ACTIVITIES RELATING TO ACQUISITION OF LEASEHOLD RIGHTS IN LAND/ENTERING INTO DEVELOPMENT AGREEMENT, PURCHASING TDR, ENGAGING CONTRACTORS, CONSTRUCTING BUILDING, FURNISHING THE FLATS, PROVIDING SEVERAL FACILITIES AND AMENITIES, THEREIN CLEARLY PLACED HER ON AN ABSOLUTE DIFFERENT FOOTING, AS IN COMPARISON TO A LANDLORD WHO WOULD BE DERIVING RENTAL INCOME FROM THE SIMPLICIT E R LETTING OUT OF PROPERTY. THE ASSESSEE FURTHER CONTENDED THAT THE INCOME FROM COMPOSITE ACTIVITY COULD NEVER BE BROUGHT TO TAX AS I NCOME FROM HOUSE PROPERTY, AND IN SUPPORT THEREOF RELIED ON THE PROVISIONS OF SECTION 56(2)(III) OF THE ACT . THE CIT(A) HOWEVER NOT BEING PERSUADED TO SUBSCRIBE TO THE CONTENTIONS OF THE ASSESSEE, THEREIN DISMISSED HER APPEAL, BY OBSERVING AS U NDER: - 7. I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER, ARGUMENTS / CONTENTIONS MADE IN THE WRITTEN SUBMISSIONS AND ALSO ARGUMENTS OF THE APPELLANT DURING THE APPELLATE PROCEEDINGS AND ALSO THE RATIO OF THE VARIOUS DECISIONS ON THE SUBJEC T. THE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 11 APPELLANT IS THE OWNER OF THREE RESIDENTIAL FLATS AND THE SAID FLATS ARE LET OUT ALONGWITH FURNITURE AND FIXTURES AND ALSO ALONGWITH WHITE GOODS SUCH FURNITURE, T.V. ETC. AS CAN BE SEEN FROM THE COPY OF THE LEAVE AND LICENSE AGREEMENT. IT HAS ALSO BEEN SUBMITTED THAT THE APPELLANT PROVIDES VARIOUS AMENITIES AND FACILITIES. THE QUESTION TO BE EXAMINED IS WHETHER, IN THE ABOVE FACTUAL BACKGROUND, THE SAID INCOME IN THE NATURE OF LICENSE FEES IN RESPECT OF THE COMPOSITE ACTIVITY CARRIED ON BY THE AP PELLANT CAN BE REGARDED AS BUSINESS. IT IS TRITE TO MENTION THAT BUSINESS CONNOTES AN ACTIVITY WHICH IS CARRIED ON REGULARLY, SYSTEMATICALLY AND IN AN ORGANIZED MANNER. THE APPELLANT OWNS 3 FULLY FURNISHED RESIDENTIAL FLATS. THESE FLATS HAVE BEEN GIVEN O N LEAVE AND LICENSE BASIS FOR A COMPOSITE LICENSE FEE. THE ACTIVITY IS CLAIMED TO HAVE BEEN COMMENCED SINCE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2002 - 03. IT IS OBSERVED THAT EVER SINCE THEN THERE IS NO INCREASE IN THE NUMBER OF FLATS OWNED BY THE APPELLANT. THUS, THE BASIC TEST OF BUSINESS BEING REGULARLY CARRIED ON WITH FREQUENCY OF TRANSACTIONS IS NOT MET. THE APPELLANT HAS CLAIMED THAT SHE HAS CONSTRUCTED THESE FLATS WITH BORROWED FUNDS AND BORROWINGS ARE A STRONG INDICATOR THAT THE ACTIVITY IS A BUSINESS ACTIVITY. IN THE COURSE OF HEARING IT HAS BEEN GATHERED THAT THE BORROWINGS WERE FROM HER FATHER - IN - LAW AND LATER FROM HER HUSBAND. THE APPELLANT IS NOT CARRYING ON THE BUSINESS ACTIVITY BUT CAN BE SAID TO HAVE INVESTED INTO THE FLATS SINCE THE NUMBER OF FLATS ARE THE SAME SINCE MORE THAN A DECADE. IF THE APPELLANT WERE INTO A BUSINESS THEN THE ACTIVITY SHOULD HAVE GROWN Q UANTITATIVE1Y. FURTHER THOUGH THE APPELLANT HAS STATED THAT SHE PROVIDES NUMBER OF SERVICES WHICH INCLUDES USE OF GYMNASIUM, SWIMMING POOL, H OUSEKEEPING FACILITIES, GARDENERS ETC AND ALSO PROVIDES THE SERVICES OF P LUMBER, GARDENER, LIFTMAN AND SO ON, IT IS A FACT THAT NO EVIDENCE DOCUMENTARY OR OTHERWISE HAVE BEEN PROVIDED TO E VIDENCE THE PROVISION OF SUCH SERVICES. NEITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR DURING THE COURSE OF APPELLATE PROCEEDINGS COULD THE APPELLANT PRODUCE ANY MATERIAL TO PROVE THE PROVISION OF VARIOUS SERVICES AND AMENITIES AS CLAIMED. THEREFO RE, I CONCUR WITH THE FINDING OF THE A.O. THAT THE APPELLANT FAILS THE TEST OF EXPLOITATION OF IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES. IN THIS CONTEXT IT IS PERTINENT TO REFER TO THE ORDER OF THE HONBLE ITAT IN PFH MALL AND RETAIL MANA GEMENT LTD. VS. ITO (2008) 298 ITR (80)( KOL) WHERE ON THE BASIS OF FINDING OF FACT THAT THE ASSESSEE WAS PROVIDING VARIOUS SERVICES AND FACILITIES FOR THE OCCUPANT SUCH AS SECURITY SYSTEM, CLEANING AND MAINTENANCE ETC., DIESEL GENERATORS, TELEPHONES ETC. AND SIMILAR OTHER AMENITIES, IT WAS HELD THAT INCOME FROM LETTING OUT SHOPPING MALL IS ASSESSABLE AS BUSINESS INCOME. EVIDENTLY, IN THE CASE OF THE APPELLANT, IN THE ABSENCE OF ANY PROOF, IT IS CLEAR THAT NO SUCH SERVICES OR AMENITIES ARE BEING PROVIDED. IN VIEW OF THE SAID FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE INCOME BY WAY OF LICENSE FEES IN RESPECT OF THE COMPOSITE LETTING ACTIVITY CARRIED OUT BY THE APPELLANT IS SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 12 CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND NOT AS INCOME FROM BUSINESS AS IS BEING CLAIMED. GROUNDS I & II STAND DISMISSED. 6 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THE LD . AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT AS THE INCOME FROM COMPOSITE LETTING ACTIVITY HAD CONSISTENTLY BEEN ACCEPTED AND ASSESSED BY THE DEPARTMENT AS BUSINESS INCOME IN THE HANDS OF THE ASSESSEE IN THE PRECEDING YEARS, VIZ. A.Y. 2003 - 04 TO 2008 - 09, THEREFORE , THE A.O. IN THE ABSENCE OF ANY NEW FACTS EMERGING DURING THE YEAR UNDER CONSIDERATION, HAD THUS ERRED IN ADOPTING AN INCONSISTENT APPROACH AND ASSESSING THE SAID INCOME UNDER THE HEAD INCOME FR OM HOUSE PROPERTY. THE LD. A.R. IN ORDER TO SUPPORT H IS AFORESAID CONTENTION, THEREIN DREW OUR ATTENTION TO THE ORDER PASSED BY A COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2008 - 09, MARKED AS ACIT CENTRAL CIRCLE - 3(4), MUMBAI VS. M/S. SHIBANI S. BHOJWANI, MUMBAI (ITA NO. 7365/MUM/2014, DATED 22.07.2015) . THE LD. A.R. TAKING US THROUGH PAGE 2 - PARA 6 OF THE AFORESAID ORDER OF THE TRIBUNAL, THEREIN SUBMITTED THAT THE TRIBUNAL WHILE DISMISSING THE APPEAL OF THE DEPARTMENT, HAD OBSERVED THAT IN THE ABSENCE OF ANY NEW FACTS EMERGING DURING THE YEAR UNDER CONSIDERATION, THE CLAIM OF THE ASSESSEE THAT THE INCOME FROM THE COMPOSITE LETTING ACTIVITY DURING THE YEAR , AS IN THE PRECEDING YEARS WAS LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME IN LIGHT OF THE RULE OF CONSISTENCY, DID MERIT ACCEPTANCE. THE LD. A.R. IN ORDER TO SUPPORT HIS AFORESAID CONTENTION THAT IT WAS NOT PERMISSIBLE ON THE PART OF THE A.O TO ADOPT AN INCONSISTENT APPROACH, THEREIN RELIED ON THE JUDG MENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. NEO POLY PACK (P) LTD. (2000) 245 ITR 492 (DEL). IT WAS SUBMITTED BY THE LD. A.R THAT THE HONBLE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 13 HIGH COURT OF DELHI IN THE AFOREMENTIONED CASE HAD HELD THAT THOUGH EACH ASSESSMENT YEAR IS INDEPEN DENT OF THE OTHER AND THE DOCTRINE OF RES JUDICATA DOES NOT STRICTLY APPLY TO INCOME - TAX PROCEEDINGS, BUT WHERE AN ISSUE HA D BEEN CONSIDERED AND DECIDED CONSISTENTLY IN A NUMBER OF EARLIER ASSESSMENT YEARS IN A PARTICULAR MANNER, THEN FOR THE SAKE OF CONSI STENCY, UNLESS THERE IS SOME MATERIAL CHANGE IN THE FACTS, THE SAME VIEW SHOULD CONTINUE TO PREVAIL IN SUBSEQUENT YEAR S . IT WAS SUBMITTED BY THE LD. A.R THAT IN THE AFORESAID CASE THE HONBLE HIGH COURT OBSERVING THAT THERE WAS NOT A SINGLE DISTINGUISHING FEATURE IN THE ASSESSMENT YEAR IN QUESTION WHICH COULD HAVE PROMPTED THE A.O TO TAKE A VIEW DIFFERENT FROM THAT ARRIVED AT IN THE PRECEDING YEARS, HAD THUS DISMISSED THE APPEAL OF THE REVENUE . THE LD. A.R. FURTHER TOOK US THROUGH THE ORDER OF THE A.O AND SUBMITTED THAT AS IT REMAINED AS A MATTER OF A CONCEDED FACT THAT THE INCOME EARNED BY THE ASSESSEE FROM COMPOSITE LETTING OUT OF FLATS ALONGWITH FURNITURE & FIXTURES WAS ITS PREDOMINANT SOURCE OF INCOME, THUS IT COULD ONLY BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME. THE LD. A.R IN SUPPORT OF HIS CONTENTION THAT IN THE BACKDROP OF THE AFORESAID FACT UAL MATRIX , THE INCOME FROM COMPOSITE LETTING HAD RIGHTLY BEEN SHOWN BY THE ASSESSEE AS HER BUSINESS INCOME, THEREIN PLACED RELIANCE ON THE FOLLOWING J UDGMENTS OF THE HONBLE SUPREME COURT : - I. RAYALA CORPORATION (P) LTD. VS. ACIT (2016) 72 TAXMANN.COM 149 (SC) II. CHENNAI PROPERTIES AND INVESTMENT LTD. (2015) 373 ITR 673 (SC). THE LD. A.R FURTHER SUBMITTED THAT IN THE COURSE OF THE AFORESAID ACTIVITY THE ASS ESSEE HAD AVAILED INTEREST BEARING BORROWED FUNDS WHICH WERE UTILISED FOR MAKING OF INVESTMENT TOWARDS PURCHASE, CONSTRUCTION AND CARRYING OUT INTERIORS OF THE PROPERTY. IT WAS SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 14 SUBMITTED BY THE LD. A.R THAT THE UTILISATION OF INTEREST BEARING BORROWED FUND S BY THE ASSESSEE IN ITSELF WAS A STRONG INDICATOR THAT THE ASSESSEE WAS CARRYING ON A BUSINESS VENTURE, THEREIN RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF ORISSA IN THE CASE OF CIT VS. M.P. BAZAZ & ORS. (1993) 200 ITR 131 (ORISSA) , WHER EI N THE HONBL E HIGH COURT HAD OBSERVED THAT THE ACTIVITIES OF TAKING A LOAN ON INTEREST, USING THE BORROWED FUNDS FOR CONSTRUCTING A BUILDING, LETTING OUT ON HIRE THE BUILDING SO CONSTRUCTED , IN ITSELF WAS A STRONG INDICATOR OF THE TRAIT OF BUSINESS BEING CARRIED ON BY AN ASSESSEE. THAT WITHOUT PREJUDICE TO THE AFORESAID CONTENTIONS, IT WAS FURTHER AVERRED BY THE LD. A.R THAT EVEN IF THE INCOME FROM THE COMPOSITE LETTING ACTIVITY WAS NOT TO BE ASSESSED AS BUSINESS INCOME, THEN THE SAME COULD ONLY BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES AS PER SEC. 56(2)(III), AND THUS IN NO WAY COULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 7 . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) REBUTTING THE AFORESAID CONTENTIONS OF THE LD. A.R , THEREIN SUBMITTED THAT THE LATTERS RELIANCE ON SECTION 56(2)(III) WAS MISCONCEIVED, BECAUSE THE SAID STATUTORY PROVISION PRIMARILY DEALS WI TH A SITUATION WHERE THE ASSESSEE HAD LET ON HIRE MACHINERY, PLANT OR FURNITURE, BELONGING TO HIM, AND THE SAID ACTIVITY INVOLVED AN INCIDENTAL AND INSEPARABLE LETTING OF THE BUILDING. IT WAS THUS AVERRED BY THE LD. D.R THAT AS THE ASSESSEE IN THE PRESENT CASE HAD PREDOMINANTLY LET OUT THE PROPERTY, WHILE FOR THE FURNITURE & FIXTURE ETC. WERE THE TENEMENTS ATTACHED WITH SUCH LETTING, THEREFORE , THE PROVISIONS OF SEC. 56(2)(III) WERE NOT ATTRACTED. THE LD. D.R REL YING ON THE ORDERS OF THE LOWER AUTHORITIES, THEREIN SUBMITTED THAT THE INCOME FROM THE LETTING OF THE PROPERTY HAD RIGHTLY BEEN HELD TO BE ASSESSABLE IN THE HANDS OF THE ASSESSEE UNDER SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 15 THE HEAD INCOME FROM HOUSE PROPERTY. THE LD. D.R IN SUPPORT OF HIS CONTENTION THAT THE INCOME DERIVED BY THE ASS ESSEE FROM THE COMPOSITE LETTING OF THE PROPERTY WAS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THEREIN PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS (P) LTD. VS. CIT (1964) 51 ITR 35 3 (SC) , WHEREIN THE HONBLE APEX COURT HAD HELD THAT NOW WHEN THE COVENANTS OF THE LEASE DID NOT REVEAL THAT THE LESSOR WAS RENDERING ANY SERVICES OR DOING ANY BUSINESS AT ALL, BUT RATHER, THE SAME COULD SAFELY BE CHARACTERI Z ED AS ORDINARY COVENANTS USED I N THE CASE OF LEASE OF A FURNISHED BUILDING, THEREFORE , THE INCOME RECEIVED BY THE ASSESSEE COULD NOT BE BROUGHT TO TAX AS THE LATTERS BUSINESS INCOME. THE LD. D.R DRAWING FORCE FROM THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT, THEREIN SUBMITTED THA T AS OBSERVED BY THE LOWER AUTHORITIES, THOUGH THE ASSESSEE HA D CLAIMED THAT SHE WAS PROVIDING A HOST O F SERVICES , WHICH INCLUDE D USE OF GYMNASIUM, SWIMMING POOL, HOUSEKEEPING FACILITIES, GARDENERS ETC ., BUT HOWEVER, THERE WAS NO MENTION OF EITHER OF THE SAID SERVICES IN THE LEAVE AND LICENSE AGREEMENT S . IT WAS FURTHER AVERRED BY THE LD. D.R THAT NEITHER DURING THE COURSE OF THE SEARCH & SEIZURE PROCEEDINGS ANY SUCH DOCUMENT INDICATING THE RENDERING OF T HE AFORESAID SERVICES WAS FOUND, NOR DURING THE COU RSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAD PLACED ON RECORD ANY SUCH DOCUMENT IN SUPPORT OF THE FACT THAT ANY SUCH SERVICES WERE BEING PROVIDED TO THE OCCUPANTS OF THE PROPERTY. THE LD. D.R FURTHER SUBMITTED THAT EXCEPT FOR THE HOLLOW AND UNSUBSTANTIATE D CLAIM OF THE ASSESSEE THAT A HOST OF SERVICES WERE BEING PROVIDED TO THE OCCUPANTS OF THE PROPERTY, NO MATERIAL TILL DATE HAD BEEN BROUGHT ON RECORD TO FORTIFY THE SAID CLAIM. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT THE ASSESSEE THOUGH IN HER ATTEMP T TO CHARACTERIZE THE SIMPLICIT E R LETTING OF THE PROPERTY, AS A BUSINESS ACTIVITY, HAD THEREIN TRIED TO DISTINGUISH THE LETTING OF THE PROPERTY SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 16 CARRIED OUT BY HER, BY CLAIMING THAT THE FLATS WERE REFURBISHED AS PER THE REQUIREMENTS OF THE OCCUPANTS, BUT TH EN THE SA ID CONTENTION TOO REMAINED NOTHING BETTER THAN A CLAIM IN THE THIN AIR, AS NEITHER ANY MATERIAL SUPPORTING THE SAID CLAIM WAS FOUND DURING THE COURSE OF THE SEARCH & SEIZURE OPERATIONS, NOR ANY EVIDENCE IN SUPPORT OF THE SAME HAD EVER BEEN PLACED ON RECORD BY THE ASSESSEE TILL DATE. THE LD. D.R FURTHER SUBMITTED THAT THE ASSESSEE MERELY WITH THE INTENT TO GIVE A SIMPLICIT E R LETTING OF THE PROPERTY THE COLOR AS THAT OF A BUSINESS ACTIVITY, HAD THEREIN AVERRED BEFORE THE LOWER AUTHORITIE S THAT ITS ACTIVITY OF LETTING OF THE PROPERTY WAS AKIN TO THAT OF A STAR CATEGORY HOTEL, WHICH CLAIM OF THE ASSESSEE WAS IN ITSELF DISPROVED FROM THE FACT THAT AS PER THE LEAVE AND LICENSE AGREEMENT S THE LICENSEES WERE ALLOWED TO BRING FURNITURE AND FIX TURE AND MAKE ALTERATIONS AND REPAIRS TO THE PROPERTY. THE LD. D.R FURTHER SUBMITTED THAT THE VERACITY OF THE CLAIM OF THE ASSESSEE THAT IT WAS CARRYING ON A REGULAR, SYSTEMATIC AND ORGANIZED ACTIVITY OF CONSTRUCTING PROPERTIES AND LETTING OUT THE SAME ALO NGWITH HOST OF SERVICES, COULD BE WELL GATHERED FROM THE VERY FACT THAT THE ASSESSEE WHO OWN ED 3 FULLY FURNISHED RESIDENTIAL UNITS IN BHOJWANI ENCLAVE, VIZ. FLAT NO. 21, 41 AND 71, SITUATED ON GROUND FLOOR, 2 ND FLOOR AND 5 TH FLOOR, RESPECTIVELY, IN THE UNI T 1 OF BHOJWANI ENCLAVE, SINCE 31.03.2006, HAD THEREAFTER NOT ACQUIRED/CONSTRUCTED ANY NEW PROPERTY, WHICH FACT IN ITSELF DISLODGE D HER AFORESAID CLAIM. THE LD. D.R THUS IN THE BACKDROP OF HIS AFORESAID CONTENTIONS THEREIN SUBMITTED THAT THE INCOME OF THE ASSESSEE FROM THE LETTING OF THE PROPERTY, AS HELD BY THE LOWER AUTHORITIES, WAS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . IT WAS AVERRED BY THE LD. D.R THAT T HE APPEAL OF THE ASSESSEE LACKED ANY MERIT AND WAS LIABLE TO BE DISMISSE D. SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 17 8 . WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE AS SESSEE WHO OWNS 3 FULLY FURNISHED RESIDENTIAL UNITS IN BHOJWANI ENCLAVE, VIZ. FLAT NO. 21, 41 AND 71, SITUATED ON THE GROUND FLOOR, 2 ND FLOOR AND 5 TH FLOOR, RESPECTIVELY, IN THE UNIT 1 OF BHOJWANI ENCLAVE, THEREIN CLAIMS TO BE IN RECEIPT OF COMPOSITE RENTA L RECEIPTS FROM LETTING OF THE SAID RESPECTIVE FURNISHED PROPERTIES AND RENDERING OF CERTAIN SERVICES, VIZ. USE OF GYMNASIUM, SWIMMING POOL, HOUSEKEEPING FACILITIES, GARDENERS ETC . TO THE RESPECTIVE OCCUPANTS OF THE PROPERTY. WE FIND THAT IT REMAINS AS A M ATTER OF FACT THAT PURSUANT TO SEARCH CONDUCTED ON THE ASSESSEE WAY BACK ON 26.02.2003 , THE A.O WHILE FRAMING THE BLOCK ASSESSMENT IN THE HANDS OF T HE ASSESSEE FOR THE BLOCK PERIOD 1996 - 97 TO 2001 - 02 AND BROKEN PERIOD OF 01.04.2002 TO 26.02.2003 , HAD THE REIN VIDE HIS ORDER PASSED U/S. 158BC ON 28.02.2005 , AFTER DELIBERATING ON THE S EIZED MATERIAL , THEREIN CATEGORICALLY OBSERVED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LETTING OUT OF FULLY FURNISHED FLATS ON L EAVE AND LICENSE BASIS, ALONGWITH FURNITURE & FIXTURES, FACILITIES, AMENITIES, SERVICES ETC . , AND HAD ACCEPTED THE RETURNED INCOME AS SUCH. WE FURTHER FIND THAT THEREAFTER A SIMILAR VIEW HAD BEEN TAKEN BY THE A.O WHILE FRAMING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE FROM A.Y (S) . 2003 - 04 TO 2008 - 09, WHEREIN IN THE RESPECTIVE ASSESSMENT S FRAMED U/S. 143(3) , IT WAS TIME AND AGAIN , AS A MATTER OF CONSISTENT APPROACH OBSERVED BY THE A.O THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LETTING OUT OF FURNISHED FLATS ALONG WITH FURN ITURE & FIXTURES, FACILITIES, AMENITIES, SERVICES ETC. RATHER , WE FIND THAT THE A.O WHILE FRAMING THE RESPECTIVE ASSESSMENTS IN THE SAID RESPECTIVE YEARS , HAD AT A LENGTH EVEN DELIBERATED O N THE NATURE OF THE AFORESAID BUSINESS ACTIVITY OF SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 18 LETTING OUT OF F URNISHED FLATS BY THE ASSESSEE , AND HAD THEREIN OBSERVED THAT THE ASSESSEE WAS INVOLVED IN THE BUSINESS ACTIVITY OF LETTING OUT OF FLATS ON LEAVE AND LICENSE BASIS, WHICH WERE FURNISHED ACCORDING TO THE SPECIFICATION S OF THE LICENSEE S, AS WELL AS WAS PROVI DING FACILITIES AND SERVICES TO THE OCCUPANTS OF THE PROPERTY , IN LIEU W HEREOF HE WAS IN RECEIPT OF COMPOSITE RENTALS FROM THE OCCUPANTS . WE FIND THAT THE A.O IN THE BACKDROP OF THE AFORESAID OBSERVATIONS RECORDED IN THE ASSESSMENT ORDERS FOR THE AFORESAID RESPECTIVE YEARS , HAD AT CERTAIN OCCASIONS EVEN DWELLED UPON THE RESPECTIVE CLAIMS OF THE ASSESSEE IN RESPECT OF THE EXPENSES RELATABLE TO HER AFORESAID BUSINESS , AND ON THE BASIS OF SPECIFIC OBSERVATIONS RECORDED IN THE CONTEXT THERETO, VIZ. RATE OF DEPR ECIATION O N FURNITURE AND FIXTURE , DISALLOWANCE OF INTEREST ON BORROWED CAPITAL U/S. 36(1)( III ) ETC. , HAD THEREIN EVEN CARRIED OUT CERTAIN DISALLOWANCE S RELATABLE TO THE SAID BUSINESS OF THE ASSESSEE. T HUS TO BE BRIEF AND EXPLICIT, THE A.O BY RESORTING TO THE AFORESAID EXERCISE, HAD AFTER DELIBERATING AT LENGTH ON THE NATURE OF THE AFORESAID ACTIVITY OF THE ASSESSEE AS REGARDS LETTING OUT OF FURNISHED FLATS ALONGWITH RENDERING OF SERVICES TO THE OCCUPANTS, THUS CAN SAFELY BE CONCLUDED TO HAVE CONSISTENTLY A CCEPTED THE CLAIM OF THE ASSESSEE THAT SHE WAS CARRYING ON THE BUSINESS ACTIVITY OF COMPOSITE LETTING OUT OF FURNISHED FLATS , ALONGWITH RENDERING OF A HOST OF SERVICES TO THE OCCUPANTS . WE FURTHER FIND THAT IN THE REGULAR ASSESSMENTS FRAMED BY THE A.O U/S. 143(3) FOR THE YEAR UNDER CONSIDERATION , VIZ, A.Y. 2009 - 10 , AS WELL AS THE SUBSEQUENT YEARS , THE A.O HAD INITIALLY ACCEPTED THE CLAIM OF THE ASSESSEE AND THEREIN ASSESS ED THE ACTIVITY OF COMPOSITE LETTING OUT OF FURNISHED FLATS , AS THE BUSINESS INCOME OF THE ASSESSEE. WE FIND THAT PURSUANT TO THE SEARCH AND SEIZURE ACTION CONDUCTED U/S. 132 OF THE ACT ON 30.11.2010 AT THE PREMISES OF SAMEER BHOJWANI GROUP WHEREIN THE ASSESSEE WAS ALSO COVERED, ASSESSMENT IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY P RECEDING YEARS, VIZ. A.Y. 2008 - 09 SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 19 WAS FRAMED U/S. 143(3) R.W.S. 153A, WHEREIN THE A.O DEPARTING FROM THE VIEW AS WAS EARLIER ARRIVED AT BY HIM IN THE ASSESSMENT FRAMED U/S. 143(3) FOR THE SAID YEAR, VIZ. A.Y. 2008 - 09 , THEREIN CONCLUDED THAT THE INCOME FROM THE LETTING OUT OF THE FLATS WAS LIABLE TO BE ASSESSED UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. WE FIND THAT THE ASSESSEE CARRIED THE MATTER IN APPEAL AND A COORDINATE BENCH OF THE TRIBUNAL I.E. ITAT E BENCH, MUMBAI , VIDE ITS ORDER DATED 22.07.2016 PASSED IN ITA NO. 7365/MUM/2014, HAD OBSERV ED THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF THE SEARCH AND SEIZURE PROCEEDINGS WHICH COULD GO TO DISLODGE THE CLAIM OF THE ASSESSEE THAT THE COMPOSITE RENTAL RECEIPTS HAD WRONGLY BEEN ASSESSED UNDER THE HEAD BUSINESS INCOME , AND AS SUCH WERE LIABLE TO BE BROUGHT TO TAX UNDER THE HEAD I NCOME FROM HOUSE PROPERTY . WE FIND THAT THE TRIBUNAL IN THE BACKDROP OF ITS AFORESAID OBSERVATIONS, TAKING SUPPORT FROM THE RULE OF CONSISTENCY HAD THEREIN CO NCLUDED THAT NOW WHEN THE AFORESAID INCOME HAD BEEN ASSESSED UNDER SEC. 143(3) IN THE HANDS OF THE ASSESSEE AS BUSINESS INCOME, THEREFORE , IN THE ABSENCE OF ANY FRESH MATERIAL ON THE BASIS OF WHICH A DIFFERENT VIEW COULD JUSTIFIABLY BE TAKEN, IT WAS NOT PERMISSIBLE FOR THE A.O TO TAKE A DEPARTURE FROM THE CONSISTENT VIEW WHICH WAS ARRIVED AT BY HIM IN THE PAST, AND HENCE THE INCOME FROM THE COMPOSITE LETTING OUT OF THE FURNISHED FLATS BY THE ASSESSEE WAS LIABLE TO BE ASSESSED AS HER BUSINESS INCOME. THE TRIBUNAL WHILE ARRIVING AT THE AFORESAID VIEW HAD OBSERVED AS UNDER: - 6. WE HAVE HEARD THE RIVA L SUBMISSIONS AND PERUSED THE MATERIALS BEFORE US. WE FIND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS THAT COULD LEAD TO THE CONCLUSION THAT INCOME ASSESSED UNDER THE HEAD BUSINESS INCOME COULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IN ABSENCE OF INCRIMINATING /FRESH MATERIAL FOUND DURING THE ACTION CARRIED OUT UNDER 132(1) OF THE ACT, THE AO IS NOT AUTHORISED TO DISTURB THE FINDINGS OF THE EARLIER YEAR IF ON THE DATE OF SEARCH ASSESSMENTS OF - ) 1 ~ ~ SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 20 EARLIER YEARS HAVE BEEN COMPLETED. WE ARE UNABLE TO ENDORSE THE VIEW OF THE A O THAT RULE OF CONSISTENCY IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS. IN OUR OPINION A DIFFERENT STAND CAN HE TAKEN BY AN A . O ABOUT THE TA X LIABILITY OF AN ASSESSEE DURI NG THE SUBSEQUENT YEARS ONLY IF HE ESTABLISHES THAT FACTS FOR THAT PARTICULAR YEA R WERE DISTINGUISHABLE FROM THE FACTS OF THE EARLIER YEARS. IN ABSENCE OF A CATEGORICAL FINDING ABOUT THE DISTINGUISHING FACT THE AO'S CANNOT TAKE A NEW STAND. 9 . WE HAVE DELIBERATED ON THE ISSUE UNDER CONSIDERATION , AND ARE OF THE CONSIDERED VIEW THAT THOUGH IT REMAINS AS MATTER OF FACT THAT FOR ADJUDICATING AS TO WHETHER THE INCOME ARISING FROM THE LETTING OF A PRO PERTY IS LIABLE TO BE ASSESSED AS BUSINESS INCOME OR UNDER THE HEAD INCOME FROM HOUSE PROPERTY , CLE AR PARAMETER S HAD BEEN LAID DOWN BY THE CONSTITUTIONAL BENCH OF THE HONBLE SUPREME COURT IN THE CASE OF SULTAN BROTHERS (P) LTD. VS. CIT (1964) 51 ITR 353 , WHEREIN THE HONBLE APEX COURT HAD OBSERVED AS UNDER: - 12. WE HAVE EARLIER SAID THAT S. 12 CAN ONLY APPLY IF NO OTHER SECTION IS APPLICABLE, BECAUSE IT DEALS WITH THE RESIDUARY HEAD OF INCOME. NOW SUB - S. (4) OF S. 12 ONLY DEALS WITH CERTAIN ALLOWANCES AND IT OBVIOUSLY PROCEEDS ON THE BASIS THAT THE INCOME MENTIONED IN IT, NAMELY, THAT FROM THE BUILD ING WHEN INSEPARABLY LET WITH PLANT, MACHINERY OR FURNITURE, IS NOT INCOME FALLING UNDER ANY OF THE SPECIFIC HEADS DEALT WITH BY SS. 7 TO 11 AND IS, THEREFORE, INCOME FALLING UNDER THE RESIDUARY HEAD CONTAINED IN S. 12. THERE A PRELIMINARY DIFFICULTY ARISE S. IN RESPECT OF BUILDINGS AND WITH THEM ALONE SUB - S. (4) OF S. 12 IS CONCERNED AS ALREADY SEEN, THE OWNER IS LIABLE TO TAX UNDER S. 9 NOT ON THE ACTUAL INCOME RECEIVED FROM IT BUT ON ITS ANNUAL VALUE AND IN FACT QUITE IRRESPECTIVE OF WHETHER HE HAS LET IT OUT OR NOT. HOW THEN CAN IT BE SAID THAT THE RENT RECEIVED FROM A BUILDING COULD AT ALL COME UNDER S. 12 ? IN OTHER WORDS, WHY CAN IT NOT BE SAID THAT THE SPECIFIC SECTION, THAT IS, S. 9, COVERS THE CASE AND THE INCOME FROM THE BUILDING CANNOT BE ASSESSED UNDER S. 12 AND NO QUESTION OF GIVING ANY ALLOWANCES UNDER S. 12 (4) ARISES ? IT HAS SOMETIMES BEEN SUGGESTED AS A SOLUTION FOR THIS DIFFICULTY THAT SUB - S. (4) OF S. 12 APPLIES ONLY WHEN THE BUILDING IS LET OUT BY A PERSON WHO IS NOT THE OWNER BECAUSE SUC H A CASE WOULD NOT COME UNDER S. 9. COUNSEL FOR NEITHER PARTY HOWEVER WAS PREPARED TO ACCEPT THAT SUGGESTION. INDEED THAT SUGGESTION HAS ITS OWN DIFFICULTY. UNDER SUB - S. (4) OF S. 12 THE ASSESSEE BECOMES ENTITLED AMONG OTHERS TO AN ALLOWANCE IN ACCORDANCE WITH S. 10(2)(VI) WHICH IS ON ACCOUNT OF DEPRECIATION OF THE BUILDING 'BEING THE PROPERTY OF THE ASSESSEE' FROM WHICH IT FOLLOWS THAT SUB - S. (4) SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 21 OF S. 12 CONTEMPLATES THE LETTING OF THE BUILDING BY THE OWNER. SUB - S. (4) OF S. 12 MUST, THEREFORE, BE APPLICA BLE WHEN MACHINERY, PLANT OR FURNITURE ARE INSEPARABLY LET ALONG WITH THE BUILDING BY THE OWNER. IF SUB - S. (4) OF S. 12 IS TO HAVE ANY EFFECT AND IT IS THE DUTY OF THE COURT SO TO CONSTRUE EVERY PART OF A STATUTE THAT IT HAS EFFECT IT MUST BE HELD THAT THE INCOME ARISING FROM THE LETTING OF A BUILDING IN THE CIRCUMSTANCES MENTIONED IN IT IS AN INCOME WITHIN THE RESIDUARY HEAD. IF A PERSON CANNOT BE ASSESSED UNDER S. 12 IN RESPECT OF THE RENT OF A BUILDING OWNED BY HIM, SUB - S. (4) WILL BECOME REDUNDANT; THER E WILL BE NO CASE IN WHICH THE ALLOWANCES MENTIONED BY IT CAN BE GRANTED IN COMPUTING THE ACTUAL INCOME FROM A BUILDING. AN INTERPRETATION PRODUCING SUCH A RESULT IS NOT NATURAL. WE MUST, THEREFORE, HOLD THAT WHEN A BUILDING AND PLANT, MACHINERY OR FURNITU RE ARE INSEPARABLY LET, THE ACT CONTEMPLATES THE RENT FROM THE BUILDING AS A RESIDUARY HEAD OF INCOME. THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT WAS FURTHER DELIBERATED UPON BY THE COURT IN THE CASE OF SHAMBHU INVESTMENT (P) LTD. VS. CIT (2003) 263 ITR 143 (SC) , WHILE UPHOLDING THE ORDER OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. SHAMBHU INVESTMENT (P) LTD. (2001) 249 ITR 47 (CAL ) , WHEREIN LAYING DOWN THE PARAMETERS FOR ADJUDICATING AS TO WHETHER THE INCOME DERIVED BY AN ASS ESSEE FROM LETTING OUT OF FURNISHED PREMISES WAS LIABLE TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR AS BUSINESS INCOME, IT WAS HELD AS UNDER: - 7. TAKING A SUM TOTAL OF THE AFORESAID DECISIONS IF CLEARLY APPEARS THAT MERELY BECAUSE INCOME IS ATTACHED TO ANY IMMOVABLE PROPERTY CANNOT BE THE SOLE FACTOR FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM PROPERTY, WHAT HAS TO BE SEEN IS WHAT WAS THE PRIMARY O BJECT OF THE ASSESSEE WHILE EXPLOITING THE PROPERTY. IF IT IS FOUND APPLYING SUCH TEST THAT THE MAIN INTENTION IS FOR LETTING OUT THE PROPERTY OR ANY PORTION THEREOF THE SAME MUST BE CONSIDERED AS RENTAL INCOME OR INCOME FROM PROPERTY. IN CASE IT IS FOUND THAT THE MAIN INTENTION IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES IN THAT EVENT IT MUST BE HELD AS BUSINESS INCOME . WE FIND THAT THE HONBLE APEX COURT HAD IN UNEQUIVOCAL TERMS THEREIN CATEGORICALLY HELD THAT WHERE AN AS SESSEE IS INTO SIMPLICIT E R LETTING OUT O F PROPERTY OR ANY PORTION THEREOF, THE SAME IS LIABLE TO BE ASSESSED AS I NCOME FROM HOUSE PROPERTY , BUT HOWEVER , WHERE IT SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 22 EMERGES THAT THE MAIN INTENTION OF THE ASSESSEE IS TO EXPLOIT THE IMMOVABLE PROPERTY BY WAY OF COMPLEX COMMERCIAL ACTIVITIES, IN THAT EVENT THE INCOME IS LIABLE TO BE ASSESSED AS BUSINESS INCOME. WE FIND THAT AS OBSERVED BY US HEREINABOVE , IT REMAINS AS MATTER OF FACT THAT THE ASSESSEE SINCE INCEPTION, AS CONCEDED BY THE DEPARTMENT, WAS ENGAGED IN THE BUSINESS ACTIVITY OF LETTING OUT FURNISHED F LATS ALONGWITH PROVISION OF CERTAIN SERVICES TO THE OCCUPANTS . WE FURTHER FIND THAT DURING THE SEARCH AND SEIZURE PROCEEDINGS CONDUCTED ON THE ASSESSEE ON 30.11.2010, NO SUCH MATERIAL WAS FOUND WHICH COUL D GO TO DISLODGE AND RATHER DISPROVE THE CONSISTENT VIEW ARRIVED AT BY THE DEPARTMENT FOR YEARS AT STRETCH IN THE COURSE OF REGULAR ASSESSMENTS FRAMED IN THE HANDS OF THE ASSESSEE , AND THUS COULD PERSUADE THE AUTHORITIES TO CONCLUDE THAT THE RECEIPTS FROM THE COMPOSITE LETTING OUT OF THE F URNISHED FLATS BY THE ASSESSEE HAD WRONGLY BEEN BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME , AND WAS LIABLE TO BE ASSESSED AS THE LATTERS INCOME FROM HOUSE PROPERTY . WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR A.Y. 2008 - 09 AFTER APPRECIAT ING THE AFORESAID FACTUAL POSITION, HAD THEREIN CONCLUDED THAT IN THE ABSENCE OF ANY NEW FACTS, A DEPARTURE FROM THE EARLIER CONSISTENT VIEW OF THE DEPARTMENT THAT THE INCOME FROM TH E COMPOSITE LETTING OUT OF THE FURNISHED FLATS WAS LIABLE TO BE ASSESSED AS BUSINESS INCOME, AS CLAIMED BY THE ASSESSEE, WOULD NOT BE PERMISSIBLE IN THE EYES OF LAW. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE AFORESAID VIEW TAKEN BY THE COORDINATE BEN CH OF THE TRIBUNAL AND ARE OF THE CONSIDERED THAT THOUGH THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS , BUT THEN WE CANNOT ALSO BE OBLIVIOUS OF THE SETTLED POSITION LAW THAT IN THE ABSENCE OF ANY NEW FACTS, THE A.O CANNOT BE PER MITTED TO TAKE AN INCONSISTENT VIEW ON THE BASIS OF THE SAME SET OF FACTS WHICH WERE THERE BEFORE HIM IN THE EARLIER YEARS. WE FIND THAT OUR AFORESAID VIEW STAND FORTIFIED BY THE JUDGMENT OF THE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 23 HONBLE SUPREME COURT IN THE CASE OF RADHSOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC), WHEREIN THE HONBLE APEX COURT HAD OBSERVED AS UNDER: - 13. WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RESJUDICATA DOES NOT APPLY TO INCOME - TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR HUT WHERE A FUNDAMENTAL ASPECT PERMEATI NG THROUGH THE DIFFERENT ASSESS MENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHA LLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. WE FURTHER FIND THAT THE HONBLE HIGH COURT OF DELHI RELYING ON THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT , HAD TAKEN A SIMILAR VIEW IN THE CASE OF CIT VS. A.R.J. SECURITIES PRINTERS (2003) 131 TAXMANN 297 (DELHI) AND THEREIN HELD THAT WHERE THE FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASSESSMENT YEARS HAD BEEN FOUND AS A FACT ONE WAY OR THE OTHER , AND THE PART IES HAD ALLOWED THE POSITION TO SUSTAIN BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN THE SUBSEQUENT YEARS. THAT A SIMILAR VIEW HAD ALSO BEEN TAKEN BY THE HONBLE HIGH COURT OF MADHYA PRADESH IN THE C ASE OF CIT VS. GODAVARI CORPORATION LTD. (1985) 21 TAXMANN 279 (M.P.), WHEREIN IT WAS HELD THAT THOUGH THE PRINCIPLES OF RES JUDICATA DO ES NOT APPLY TO INCOME TAX PROCEEDINGS, BUT THE RULE OF CONSISTENCY DOES APPLY. WE FIND THAT THE HONBLE HIGH COURT WH ILE ARRIVING AT THE AFORESAID VIEW HAD RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF H.A. SHAH AND CO. VS. CIT (1956) (30 ITR 618) (BOM) AND JIVAT LAL PURTAPSHI VS. CIT (1967) (65 ITR 261) (BOM), AS WELL AS THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF ANNAMALAI REDDIAR VS.CIT (1964) (53 ITR 601) (KER) . WE FURTHER SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 24 FIND THAT THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT HAD ALSO BEEN FOLLOWED BY THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT, PATIALA VS. SOOD HARVESTER (2008) 304 ITR 279 (P&H) , WHEREIN THE HONBLE HIGH COURT EMPHASIZ ED ON THE FACT THAT THE REVENUE WAS STATUTORILY BOUND TO MAINTAIN CONSISTENCY , AND A DEPARTURE FROM A N EARLIER DECISION ON THE SAME QUESTION WOULD NOT BE PERMI SSIBLE, UNLESS SOME NEW FACTS INVOLVING MATERIAL DIFFERENCE WERE FOUND IN THE SUBSEQUENT YEARS. WE FURTHER ARE PERSUADED TO BE IN AGREEMENT WITH THE LD. A.R THAT THE JUDGMENT OF THE HONBLE H I GH COURT OF DELHI IN THE CASE OF CIT VS. NEO POLY PACK (P) LTD . (2000) 112 TAXMANN 363 (DELHI) , WHICH INVOLVED FACTS SIMILAR TO THE CASE OF THE PRESENT ASSESSEE , SEIZED THE ISSUE UNDER CONSIDERATION. WE FIND THAT THE HONBLE HIGH COURT IN THE AFOREMENTIONED CASE, THEREIN OBSERVING THAT NOW WHEN THE RENTAL INCOME IN THE HANDS OF THE ASSESSEE COMPANY WAS BEING ASSESSED TO TAX AS BUSINESS INCOME , THEREFORE , FOR THE SAKE OF CONSISTENCY, THE SAME VIEW SHOULD CONTINUE TO PREVAIL IN THE SUBSEQUENT YEARS , UNLESS THERE WAS SOME MATERIAL CHANGE IN FACTS. THE HONBLE HIGH CO URT ON THE BASIS OF ITS AFORESAID OBSERVATIONS HAD THUS SET ASIDE THE ASSESSING OF THE RENTAL INCOME BY THE A.O IN THE HANDS OF THE ASSESSEE UNDER THE HEAD I NCOME FROM HOUSE PROPERTY. 1 0 . WE HAVE DELIBERATED ON THE FACTS OF THE CASE AND AFTER GIVING A T HOUGHTFUL CONSIDERATION TO THE CONTENTIONS OF THE A UTHORIZED R EPRESENTATIVE S FOR BOTH THE PARTIES IN THE BACKDROP OF THE SETTLED POSITION OF LAW, ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW ARRIVED AT BY THE LOWER AUTHORITIES. WE ARE OF THE C ONSIDERED VIEW THAT NOW WHEN IT REMAINS AS A MATTER OF FACT THAT THE INCOME FROM THE COMPOSITE LETTING OF THE FURNISHED FLATS BY THE ASSESSEE , HAD AFTER THOROUGH VETTING AND SCRUTINIZING CONSISTENTLY ACCEPTED AND ASSESSED SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 25 AS BUSINESS INCOME BY THE DEPARTMENT IN THE EARLIER YEARS WHILE FRAMING REGULAR ASSESSMENTS , THEREFORE , IN THE ABSENCE OF ANY NEW FACTS EMERGING DURING THE YEAR UNDER CONSIDERATION, WHICH COULD IRREBUTTABLY DISLODGE THE AFORESAID VIEW AND THEREIN JUSTIFY A VIEW TO THE CONTR ARY, SUCH AN INCONSISTENT APPROACH ON THE PART OF THE A.O WOULD NOT BE PERMISSIBLE. WE FIND THAT THE RELIANCE PLACED BY THE DEPARTMENT ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF H.A. SHAH AND CO. VS. CIT(1956) 30 ITR 618 (BOM) IS D ISTINGUISHABLE ON FACTS. WE FIND THAT IN THE AFORESAID CASE THE HONBLE HIGH COURT HAD UPHELD THE VIEW ARRIVED AT BY THE A.O, FOR THE REASON THAT DURING THE YEAR UNDER CONSIDERATION CERTAIN DOCUMENTS JUSTIFYING TAKING OF SUCH CONTRARY VIEW WERE MADE AVAILA BLE ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT UNLIKE THE FACTS INVOLVED IN THE CASE BEFORE THE HONBLE HIGH COURT, NOW WHEN IN THE CASE OF THE PRESENT ASSESSEE NO SUCH MATERIAL HAD THEREIN EMERGED WHICH COULD GO TO JUSTIFY TAKING OF AN INCONSISTENT VIE W BY THE A.O, THEREFORE, THE INCOME RECEIVED BY THE ASSESSEE FROM COMPOSITE LETTING OF FURNISHED FLATS ON THE BASIS OF S A ME FACTS AS WERE THERE BEFORE HIM IN THE PRECEDING YEARS, CANNOT BE PERMITTED TO BE ASSESSED DURING THE YEAR UNDER THE HEAD I NCOME FR OM HOUSE PROPERTY . THAT BEFORE CULMINATING, WE MAY HEREIN OBSERVE THAT EXCEPT FOR RAISING OF ORAL AVERMENTS, NO MATERIAL HAD BEEN BROUGHT TO OUR NOTICE BY THE LD. D.R WHICH COULD PERSUADE US TO SUBSCRIBE TO THE CLAIM OF THE DEPARTMENT THAT CERTAIN NEW FAC TS HAD EMERGED DURING THE YEAR UNDER CONSIDERATION, WHICH CLEARLY MILITATED AGAINST THE VALIDITY AND LEGALITY OF ASSESSING OF THE COMPOSITE RENTAL RECEIPTS UNDER THE HEAD BUSINESS INCOME IN THE PRECEDING YEARS, AND WOULD THUS JUSTIFY A DEPARTURE FROM THE CONSISTENT APPROACH THAT HAD BE EN ADOPTED BY THE DEPARTMENT AT STRETCH FOR YEARS. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, THUS SET ASIDE THE ORDER OF THE CIT(A) AND THEREIN H O LD THAT THE COMPOSITE RENTAL RECEIPTS WERE LIABLE TO BE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 26 ASSESSED , AS CLAIMED BY THE ASSESSEE IN HER RETURN OF INCOME , A S HER BUSINESS INCOME. THE GROUND OF APPEAL NO. I IS ALLOWED. 11 . THAT AS WE HAVE HELD THAT THE COMPOSITE RENTAL RECEIPTS ARE LIABLE TO BE ASSESSED AS THE BUSINESS INCOME OF THE ASSESSEE, THEREFORE THE ASSAILING OF THE DISALLOWANCE OF DEPRECIATION BY THE ASSESSEE IS RENDERED AS CONSEQUENTIAL. WE THUS DIRECT THE A.O TO ALLOW THE CLAIM OF THE ASSESSEE TOWARDS CLAIM OF DEPRECIATION. THE GROUND OF APPEAL NO. II BEING CONSEQUENTIAL TO OUR ADJUDICATION OF THE HEAD OF INCOME UNDER WHICH THE COMPOSITE LETTING RECEIPTS WERE LIABLE TO BE ASSESSED, IS THUS ALLOWED. 1 2 . THAT AS WE HAVE HELD THAT THE INCOME FROM THE COMPOSITE RENTAL RECEIPTS ARE TO BE BROUGHT TO TAX AS THE BUSINESS INCOME OF THE ASSESSEE, THEREFORE THE GROUND OF APPEAL NO. III & GROUND OF APPEAL NO. IV HAVING BEING RENDERED AS INFRUCTUOUS, ARE THUS DISMISSED. 13 . THE GROUND OF APPEAL NO. V BEING GENERAL IN NATURE IS THUS DISMISSED AS NOT PRESSED. THE APPEAL OF THE ASSESSEE IS ALLOWED. I.T.A. NO. 7574/MUM/2014 ( / ASSESSMENT YEAR: 2010 - 11) 1 4 . WE NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 20 10 - 11 , MARKED AS ITA NO. 7574 /MUM/201 4. 1 5 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME FOR A.Y. 2010 - 11 ON 29.09.2010, DECLARING TOTAL INCOME OF RS. 5,18,605/ - . THAT SUBSEQUENT THERETO THE ASSESSEE IN COMPLIANCE TO NOTICE U/S. 153A ISSUED PURSUANT TO THE SEARCH & SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 27 SEIZURE PROCEEDINGS CONDUCTED AT HER RESIDENTIAL/BUSINESS PREMISES , THEREIN FILED HER RETURN OF INCOME ON 05.03.2012, DECLARING THE SAME INCOME OF RS. 5,18,60 5/ - . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT , WHEREIN THE A.O NOT BEING SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT THE INCOME FROM LETTING OF THE FLATS WAS LIABLE TO BE BOOKED UNDER THE HEAD BUSINESS INCOME, THEREIN BROUGHT THE SAME TO TAXES UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 27,65,470/ - . THE ORDER OF THE A.O WAS THEREAFTER UPHELD BY THE CIT(A). THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THUS CARRIED THE M ATTER IN APPEAL BEFORE US. 1 6 . THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. A.R THAT THE ISSUE S INVOLVED IN THE PRESENT APPEAL WAS IDENTICAL TO THAT INVOLVED IN THE AFOREMENTIONED APPEAL OF THE ASSESSEE IN SHIBANI S. BH OJWANI VS. DCIT, CENTRAL CIRCLE 24 & 26, MUMBAI FOR A.Y. 200 9 - 10 , MARKED AS ITA NO. 7573 /MUM/201 4 . THE LD. D.R HAD NOT DISPUTED THE AFORESAID FACTUAL POSITION. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE FIND THAT THE ISSUE S INVOLVED IN THE PRESENT APPEAL ARE IDENTICAL TO THE ISSUE S INVOLVED IN THE APPEAL BEFORE US IN THE CASE OF SHIBANI S. BHOJWANI VS. DCIT, CENTRAL CIRCLE 24 & 26, MUMBAI FOR A.Y. 2009 - 10 . THUS IN THE BACKDROP OF OUR AFORESAID OBSERVAT IONS, WE HEREIN ADJUDICATE THE PRESENT ISSUE S IN TERMS OF OUR ORDER PASSED WHILE DISPOSING OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE AFORESAID APPEAL, VIZ. SHIBANI S. BHOJWANI (SUPRA) , MARKED AS ITA NO. 7573 /MUM/201 4 , AND OUR DECISION PASSED IN CONTEXT OF THE ISSUE S UNDER CONSIDERATION IN THE SAID APPEAL, SHALL IN LIGHT OF OUR AFORESAID OBSERVATIONS APPLY MUTATIS MUTANDIS IN THE PRESENT APPEAL ALSO. WE THUS IN TERMS OF OUR O BSERVATIONS RECORDED WHILE DISPOSING OF THE SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 28 AFORE SAID APPEAL OF THE ASSESSEE, VIZ. SHIBANI S. BHOJWANI (SUPRA) , MARKED AS ITA NO. 7573 /MUM/201 4 , FOR A.Y. 200 9 - 10 , THEREIN SET ASIDE THE ORDER OF THE CIT(A) . 1 7 . THE APPEAL OF THE ASSESSEE IS ALLOWED. I.T.A. NO. 7575/MUM/2014 ( / ASSESSMENT YEAR: 2011 - 12) 1 8 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y. 2011 - 12, MARKED AS ITA NO. 7574/MUM/2014. 19 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT SEARCH & SEIZURE PROCEEDINGS WERE CONDUCTED AT THE RESIDENTIAL/BUSINESS PREMISES OF THE ASSESSEE ON 30.11.2010. THE ASSESSEE E - FILED HER RETURN OF INCOME FOR A.Y. 2011 - 12 ON 29.09.2011, DECLARING TOTAL INCOME OF RS. 43,27,248/ - . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT, WHEREIN THE A.O NOT BEING SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT THE INCOME FROM LETTING OF THE FLATS WAS LIABLE TO BE BOOKED UNDER THE HEAD BUSINESS INCOME, THEREIN INTER ALIA BROUGHT THE SAME TO TAXES UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND ASSESSED HER INCOME AT RS. 48,50,350/ - . THE ORDER OF THE A.O WAS THEREAFTER UPHELD BY THE CIT(A). THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THUS CARRIED THE MATTER IN APPEAL BEFORE US. 20 . THAT AT THE VE RY OUTSET OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. A.R THAT THE ISSUE S INVOLVED IN THE PRESENT APPEAL WAS IDENTICAL TO THAT INVOLVED IN THE AFOREMENTIONED APPEAL OF THE ASSESSEE IN SHIBANI S. BHOJWANI VS. DCIT, CENTRAL CIRCLE 24 & 26, MUMBAI FOR A.Y. 2009 - 10, MARKED AS ITA NO. 7573/MUM/2014. THE LD. D.R HAD NOT CONTROVERTED THE AFORESAID FACTUAL POSITION. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 29 BEFORE US. WE FIND THAT THE ISSUE S INVOLVED IN THE PRESENT APPEAL ARE IDENTICAL TO THE ISSUE S INVOLVED IN THE APPEAL BEFORE US IN THE CASE OF SHIBANI S. BHOJWANI VS. DCIT, CENTRAL CIRCLE 24 & 26, MUMBAI FOR A.Y. 2009 - 10 . THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, WE HEREIN ADJUDICATE THE PRESE NT ISSUE S IN TERMS OF OUR ORDER PASSED WHILE DISPOSING OF THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE AFORESAID APPEAL, VIZ. SHIBANI S. BHOJWANI (SUPRA) , MARKED AS ITA NO. 7573/MUM/2014, AND OUR DECISION PASSED IN CONTEXT OF THE ISSUE S UNDER CONSIDERATION IN THE SAID APPEAL, SHALL IN LIGHT OF OUR AFORESAID OBSERVATIONS APPLY MUTATIS MUTANDIS IN THE PRESENT APPEAL ALSO. WE THUS IN TERMS OF OUR OBSERVATIONS RECORDED WHILE DISPOSING OF THE AFORESAID APPEAL OF THE ASSESSEE, VIZ. SHIBANI S. BHOJWANI (SUPRA) , MARKED AS ITA NO. 7573/MUM/2014 , FOR A.Y. 2009 - 10, THEREIN SET ASIDE THE ORDER OF THE CIT(A). 2 1 . THE APPEAL OF THE ASSESSEE IS ALLOWED. 22 . THAT ALL THE APPEALS FILED BY THE ASSESSEE, I.E FOR A.Y(S). 2009 - 10 TO 201 1 - 1 2, MARKED AS ITA NO(S). 7573 TO 7575 /MUM/201 4 , RESPECTIVELY, ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 26 .07.2017 SD/ - SD/ - (SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 26 .07.2017 SHIBANI S. BHOJWANI ITA(S) NO. 7573,7574 & 7575/MUM/2014 30 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI