M/s Jyoti Limited, Srinagar V. The Dy. Commissioner of Income-tax, Srinagar

ITA 758/ASR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9612 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH TAKKYAR
• Assessee Lawyers: SATISH SACHDEVA
• Keywords: Business income; Principle of natural justice; Application of stay; Fair market value
• Section: 143(3); 147; 148; 263

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. ASSESSMENT YEAR 323(ASR)/2015 2006-07 757(ASR)/2014 2005-06 758(ASR)/2014 2008-09 369(ASR)/2015 2007-08 370(ASR)/2015 2009-10 371(ASR)/2015 2010-11 372(ASR)/2015 2011-12 373(ASR)/2015 2012-13 M/S. JYOTI LIMITED, VS. ASSTT. COMMR. OF INCOME TA X, GULAB BHAWAN PALACE, CIRCLE-3, SRINAGAR. GUPKAR ROAD, SRINAGAR. PAN:AABCJ5887G (APPELLANT) (RESPONDENT) ITA NO. ASSESSMENT YEAR 33(ASR)/2015 2005-06 34(ASR)/2015 2008-09 443(ASR)/2015 2006-07 480(ASR)/2015 2007-08 481(ASR)/2015 2009-10 482(ASR)/2015 2010-11 483(ASR)/2015 2011-12 484(ASR)/2015 2012-13 ASSTT. COMMR. OF INCOME TAX, VS. M/S. JYOTI LIMIT ED, CIRCLE-3, GULAB BHAWAN PALACE, SRINAGAR. GUPKAR ROAD, SRINAGAR. (APPELLANT) (RESPONDENT) PAN:AABCJ5887G APPELLANT BY: S/SH. AJAY VOHRA, SR.ADV.ALONGWITH GA URAV JAIN, KRISHAN KUMAR & SATISH SACHDEVA. RESPONDENT BY: SH.UMESH TAKKYAR, DR DATE OF HEARING: 01/06/2016 DATE OF PRONOUNCEMENT: 26/08/2016 ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 2 ORDER PER A.D. JAIN, JM: THESE ARE THE CROSS APPEALS EIGHT BY THE ASSESSE E AND EIGHT BY THE DEPARTMENT FILED AGAINST DIFFERENT ORDERS OF T HE LD. CIT(A), JAMMU FOR DIFFERENT ASSESSMENT YEARS, AS MENTIONED IN THE CAPTION OF THIS ORDER. AS THE ISSUES INVOLVED IN THESE APPEALS ARE ALMOST SIMILAR, THEY ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER FOR THE S AKE OF CONVENIENCE. 2. THE MAIN LEAD CASE IN THESE APPEALS IS ITA NO. 323(ASR)/2016 FOR THE ASSESSMENT YEAR 2005-06, WHERE THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ( CIT(A)) ERRED ON FACTS AND IN LAW IN NOT QUASHING THE ASSES SMENT ORDER, DATED 25.03.2014, PASSED BY THE ASSESSING OF FICER (AO) UNDER SECTION 147/143(3) OF THE INCOME TAX A CT, 1961 (THE ACT) ON THE GROUND OF BEING BEYOND JURISDICT ION, BAD IN LAW AND VOID AB INITIO. 1.1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN HO LDING THAT THE REASONS TO BELIEVE RECORDED BY THE AO HAD A D IRECT NEXUS WITH THE INCOME ESCAPING ASSESSMENT. 1.2 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN UP HOLDING THAT THE REVISIONARY ORDER DATED 02.01.2012 PASSED UNDER SECTION 263 FOR ASSESSMENT YEAR 2008-09, CONSTITUTE D FRESH MATERIAL FOR THE AO TO RE-OPEN THE CONCLUDED ASSESS MENT FOR THE IMPUGNED ASSESSMENT YEAR UNDER SECTION 147 OF T HE ACT. WITHOUT PREJUDICE 2. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN SUS TAINING THE ADDITION MADE BY THE AO TO THE EXTENT OF RS. 48,04, 138, ON ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 3 ACCOUNT OF NOTIONAL ANNUAL LETTING VALUE (ALV) OF THE LAND (SUBJECT PROPERTY) UNDER SECTION 23(1) OF THE ACT ON THE GROUND THAT ALV OF SAID PROPERTY EXCEEDED ACTUAL RE NT CHARGED BY THE APPELLANT. 2.1 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN HO LDING THAT THE ALV OF THE PROPERTY HAS TO BE INDEPENDENTLY DETERMI NED FOR EACH ASSESSMENT YEAR, NOTWITHSTANDING THE AMOUNT OF RENT AGREED FOR A FIXED PERIOD AT THE TIME OF ENTERING I NTO A LEGALLY BINDING RENTAL CONTRACT ON THE BASIS OF THE MARKET CONDITIONS PREVALENT AT THE TIME OF ENTERING INTO THE LICENSE AGREEMENT. 2.2 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN HO LDING THAT SUBSEQUENT ENHANCEMENT OF LICENSE FEE BY BOTH THE P ARTIES LEAD TO THE CONCLUSION THAT THE AGREED ANNUAL LICEN SE FEE WAS NOT THE FAIR RENTAL VALUE OF THE PROPERTY FOR THE Y EAR UNDER CONSIDERATION. FURTHER WITHOUT PREJUDICE 2.3 THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN DE TERMINING THE ALV OF THE SUBJECT PROPERTY BY ESTIMATING THE COST OF LAND AND BUILDING AT RS. 6,68,30,535 AND ADOPTING 10% TH EREOF AS THE ALV OF THE SUBJECT PROPERTY FOR THE YEAR UNDER CONSIDERATION, PURELY ON AD-HOC BASIS. 2.4. THAT THE CIT(A) ERRED ON FACTS AND IN LAW IN R EJECTING THE COMPARABLE INSTANCES BROUGHT ON RECORD BY THE APPEL LANT IN SUPPORT OF THE FAIR MARKET VALUE OF THE SUBJECT PRO PERTY. ADDITIONAL GROUND 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE RENTAL/LICENSE FEE OF RS. 5 LACS RECEIVED BY THE AP PELLANT IN RESPECT OF SUBJECT PROPERTY, GIVEN ON LEASE TO BHAR AT HOTELS LTD., IS LIABLE TO BE ASSESSED AS BUSINESS INCOME, INSTEAD OF INCOME FROM HOUSE PROPERTY ASSESSED BY THE LOWER AUTHORITIES. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO.443(ASR)/2015, FOR THE ASSESSMENT YEAR 2006-07, WHICH ARE IDENTICAL IN ALL OTHER APPEALS: ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 4 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS IN PASSING THE APPELLANT ORDER WITHOUT GIVING AN OPPORTUNITY OF J HEARD TO THE ASSESSING OFFICER WHICH IS MANDATORY AS PER THE PROVISIONS OF SECTION 250(1) AND 250(2) OF THE I.T. ACT, 1961. THUS, VIOLATING P RINCIPAL OF NATURAL JUSTICE AND THEREFORE, THE ORDER OF THE LD. CIT (A) SERVES TO BE DECLARED AS NULL AND VOID. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN REJECTING THE METHOD ADOPTED BY TH E ASSESSING OFFICER TO DETERMINE THE FAIR MENTAL VALU E OF THE PROPERTY AND ALLOWED RELIEF TO THE ASSESSEE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ADOPTING HIS OWN METHOD TO WORK OUT THE ALV OF THE PROPERTY WITHOUT APPRECIATING THE CORREC T METHOD ADOPTED BY THE ASSESSING OFFICER TO DETERMINE THE A LV. 4. THE APPELLANT CRAVES TO AMEND, ALTER OR ADD ANY GROUND OF THE APPEAL BEFORE THE APPEAL IS HEARD. 4. AS PER APPLICATION FILED BY THE ASSESSEE FOR AD MISSION OF ADDITIONAL GROUND, IN CHENNAI PROPERTIES AND INVESTMENT LIMIT ED VS. CIT 373 ITR 673 (SC), VIDE JUDGMENT DATED 09.04.2015, THE HON BLE SUPREME COURT HAS HELD THAT WHERE IN TERMS OF MEMORANDUM OF ASSO CIATION OF A COMPANY, THE MAIN OBJECT OF SUCH COMPANY IS TO ACQU IRE PROPERTIES AND EARN INCOME BY LETTING OUT THE SAME, SUCH INCOME I S TAXABLE AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PRO PERTY. IT IS THE CASE OF THE ASSESSEE, THAT THIS IS EXACTLY THE SITUATION IN THE ASSESSEES CASE ALSO AND IT IS, THEREFORE, THAT THE ADDITIONAL GROU ND, BEING ENTIRELY A LEGAL GROUND, IS ADMISSIBLE. ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 5 5. THE ABOVE POSITION IS PATENT ON RECORD. IN CHE NNAI PROPERTIES AND INVESTMENT LIMITED (SUPRA), THE HONBLE SUPREME CO URT HAS HELD WHERE IN TERMS OF MEMORANDUM OF ASSOCIATION OF A COMPANY , THE MAIN OBJECT OF SUCH COMPANY IS TO ACQUIRE PROPERTIES AND EARN I NCOME BY LETTING OUT THE SAME, SUCH INCOME IS TAXABLE AS BUSINESS INCO ME AND NOT AS INCOME FROM HOUSE PROPERTY. IN THE CASE OF THE AS SESSEE ALSO, THE MAIN OBJECT OF THE ASSESSEE IS TO ACQUIRE PROPERTIES AND TO LET OUT THE SAME. THE QUESTION IS AS TO IF IN SUCH A SITUATION, CHEN NAI PROPERTIES AND INVESTMENT LIMITED (SUPRA), IS OR IS NOT APPLICAB LE. THIS ISSUE IS ENTIRELY A LEGAL ISSUE, NOT REQUIRING ANYTHING FRESH TO BE GONE INTO. THEREFORE, THIS ADDITIONAL GROUND IS ADMITTED. 6. APROPOS THE MERITS OF THE ADDITIONAL GROUND, IT HAS BEEN CONTENDED AS FOLLOWS: THE ASSESSEE IS A PUBLIC LIMITED COMPANY. IT WAS I NCORPORATED ON 22.01.1964 WITH THE MAIN OBJECT OF, INTER-ALIA, ACQ UIRING AND LEASING PROPERTIES IN THE STATE OF JAMMU & KASHMIR AND FOR FURTHER LETTING OUT THE SAME. IN PURSUANCE OF THIS MAIN OBJECT, THE ASS ESSEE TOOK ON LEASE LAND MEASURING 222 KANALS AND 19 MARLAS UNDER AND A DJOINING GULAB BHAWAN PALACE FOR A PERIOD OF 40 YEARS, VIDE LEASE DEED, DATED 21.03.1973 AT AN ANNUAL RENT OF RS.22,897/- FROM SH RI VIKRAMADITYA SINGH. THIS LEASE WAS RENEWED FOR A PERIOD OF 99 Y EARS VIDE LEASE DEED, DATED 22.11.1997. THE SAID GULAB BHAWAN PALACE, I.E ., BUILDING/SUPER- ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 6 STRUCTURE THEREOF WAS RENOVATED BY THE ASSESSEE AN D IT WAS LET OUT TO BHARAT HOTELS LIMITED (BHL, FOR SHORT) VIDE LICEN CE AGREEMENT DATED 03.02.1998 FOR A PERIOD OF 99 YEARS, WHEREUNDER THE BHL WAS GIVEN A RIGHT TO USE, UPGRADE, RENOVATE AND RECONSTRUCT THE GULAB BHAWAN PALACE AND OTHER ADJOINING STRUCTURES, FOR THE PURP OSES OF COMMISSIONING A 5-STAR HOTEL, AT AN ANNUAL LICENSE FEE/RENT OF RS .5 LACS. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE FILED ITS R ETURN OF INCOME, ON 20.10.2006 DECLARING INCOME OF RS.28,76,910/- INCLU DING LICENSE FEE OF RS. 5 LACS. RECEIVED FROM BHL, UNDER THE HEAD OF BU SINESS INCOME. THIS WAS ACCEPTED UNDER SECTION 143(1) OF THE I.T.ACT, 1 961 AND THE RETURN OF INCOME WAS NOT SELECTED FOR SCRUTINY U/S 143(3). HO WEVER, A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 21.03.2013 FOR THE REASON ESCAPEMENT OF INCOME. THE ASSESSEE, VIDE LETTER DA TED 25.03.2013, IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A R EVISED RETURN AND THE RENT RECEIVED WAS OFFERED TO TAX AS INCOME FROM HO USE PROPERTY, AS PER THE PROVISIONS OF SECTIONS 22 R.W.S. 23 OF THE ACT . THIS STAND OF THE ASSESSEE WAS CONSISTENT WITH THAT TAKEN FOR ASSESS MENT YEAR 2008-09, THE ASSESSMENT FOR WHICH YEAR WAS COMPLETED UNDER S ECTION 143(3) OF THE ACT, VIDE ORDER DATED 08.12.2010. THEREAFTER, VIDE ORDER DATED 25.03.2014, REASSESSMENT UNDER SECTION 147 OF THE A CT WAS COMPLETED AT A TOTAL INCOME OF RS.4,29,34,930/-. IN THIS ORDER, ADDITION OF RS.5,70,94,694/- WAS MADE ON ACCOUNT OF ALLEGED NOT IONAL ANNUAL LETTING VALUE OF THE PROPERTY IN QUESTION UNDER SECTIONS 22 , 23(1) AND 24(A) OF ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 7 THE ACT. BY VIRTUE OF ORDER, DATED 29.05.2015, THE LD. CIT(A) CONFIRMED THE INITIATION OF ASSESSMENT PROCEEDINGS UNDER SECT ION 147 OF THE ACT. ON MERITS, THE ACTION OF THE AO IN COMPUTING TOTAL N OTIONAL ANNUAL LETTING VALUES UNDER SECTION 23(1) OF THE ACT WAS UPHELD BY THE LD. CIT(A). HOWEVER, THE METHOD OF DETERMINATION OF ALV, AS ADO PTED BY THE AO, WAS REJECTED. THE LD. CIT(A) ADOPTED 10% OF THE ESTIMAT ED COST OF LAND AND BUILDING AS ALV. AS SUCH, THE ADDITION MADE BY THE AO ON ACCOUNT OF ALV, WAS REDUCED TO AMOUNT OF RS.68,63,054/- AND DE DUCTION THEREFROM @ 30% WAS ALLOWED TO THE ASSESSEE U/S 24 OF THE ACT . THE CONTENTION ON BEHALF OF THE ASSESSEE IS THAT IN CHENNAI PROPERTI ES AND INVESTMENTS LIMITED VS. CIT, 373 ITR 673 (SC), IT HAS BEEN HEL D THAT WHERE IN TERMS OF THE MEMORANDUM OF ASSOCIATION OF COMPANY, THE MA IN OBJECT OF SUCH COMPANY IS TO ACQUIRE PROPERTIES AND TO EARN INCOM E BY LETTING OUT THE SAME, SUCH INCOME IS TAXABLE AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE COVERS THAT THIS RATIO HANDED DOWN BY THE HONBLE SUPREME COURT, IS DIRECTLY AND SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE, SINCE THE ASSESSEE TOO W AS INCORPORATED WITH THE MAIN OBJECT OF, INTER-ALIA, ACQUIRING AND LEASI NG OUT THE PROPERTIES IN THE STATE OF J & K, WHICH MAIN OBJECT WAS THE OBJEC T WHICH WAS CARRIED OUT BY THE ASSESSEE; AND THAT THEREFORE, THE RENTAL INCOME EARNED BY THE ASSESSEE FROM LETTING OUT THE PROPERTY IN QUESTION , IS THE ASSESSEES BUSINESS INCOME, WHICH WAS ALSO THE POSITION TAKEN BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME FILED BY IT AND IT IS NOT INCOME FROM HOUSE ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 8 PROPERTY, AS WRONGLY ASSESSED. IT HAS BEEN STATED THAT IT IS SETTLED LAW THAT THERE IS NO ESTOPPLES IN LAW AND WRONG POSITI ON TAKEN CAN LEGALLY ALWAYS BE RESILED FROM. 7. ON THE OTHER HAND, RELYINGE ON THE IMPUGNED ORDE R, THE LD. DR HAS CONTENDED THAT CHENNAI PROPERTIES AND INVESTMENTS LIMITED (SUPRA), IS NOT AT ALL APPLICABLE TO THE FACTS OF THE PRESENT CASE AND, THEREFORE, THE SAME HAS WRONGLY BEEN SOUGHT TO BE RELIED ON BY THE ASSESSEE. IN THAT CASE, AS PER THE LD. DR, THE ASSESSEE HAD ALSO MADE CLAIM UNDER ONE HEAD OF INCOME AND THE AO HAD APPLIED ANOTHER. THE LD. DR CONTENDS THAT THIS IS NOT SO IN THE PRESENT CASE. 8. WE HAVE HEARD THE RIVAL CNTENTIONS ON THIS ISSUE AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD WITH REGARD THERET O. INITIALLY, THE ASSESSEE HAD CLAIMED THE INCOME EARNED BY THE ASSES SEE FROM LETTING OUT THE SUBJECT PROPERTY, I.E., GULAB BHAWAN PALACE, AS BUSINESS INCOME. THIS POSITION WAS ACCEPTED U/S 143(1) OF THE ACT. H OWEVER, ON THE REOPENING OF THE COMPLETED ASSESSMENT, IN THE REVIS ED RETURN, THE INCOME WAS OFFERED AS INCOME FROM PROPERTY, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 22 READ WITH SECTION 23 OF THE ACT. THIS WAS CONSISTENT WITH THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 08.12.2010 FOR THE ASSESSMENT YEAR 2008-09. IN THE REASSESSMENT, THE INCOME WAS ASSESSED AS INCOME FROM HOUSE PROPERTY. 9. THE DECISION IN CHENNAI PROPERTIES AND INVESTME NTS LIMITED (SUPRA), RENDERED ON 09.04.2015, HAS PROMPTED THE A SSESSEE TO SEEK TO ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 9 REVERT TO ITS ORIGINAL STAND OF CONTENDING THAT THE INCOME REVERT TO ITS ORIGINAL STAND OF CONTENDING THAT INCOME IS TO BE T REATED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY. LET U S EXAMINE CHENNAI PROPERTY & INVESTMENT LIMITED (SUPRA). 10. THE ASSESSEE IN CHENNAI PROPERTIES AND INVESTM ENT LIMITED (SUPRA), WAS A COMPANY INCORPORATED WITH ITS MAIN O BJECT TO ACQUIRE PROPERTIES IN THE CITY OF MADRAS AND TO LET OUT THO SE PROPERTIES. THE ASSESSEE HAD RENTED OUT SUCH PROPERTY. THE RENTAL I NCOME RECEIVED THEREFROM WAS SHOWN AS INCOME FORM BUSINESS. HOWEV ER, THE AO WAS OF THE OPINION THAT SINCE THE INCOME WAS RECEIVED FRO M LETTING OUT THE PROPERTY, IT WAS IN THE NATURE OF RENTAL INCOME. TH EREFORE, THE AO TREATED THE INCOME AS INCOME FROM HOUSE PROPERTY. THE LD. C IT(A) REVERSED THE AOS ACTION AND DIRECTED THE INCOME TO BE TREATED AS BUSINESS INCOME. THE ITAT DISMISSED THE APPEAL FILED BY THE DEPARTME NT. THE HONBLE HIGH COURT, REVERSED THE TRIBUNAL ORDER, HOLDING THAT TH E INCOME DERIVED BY LETTING OUT THE PROPERTY WOULD NOT BE INCOME FROM BUSINESS, BUT, IT COULD BE ASSESSED ONLY AS INCOME FROM HOUSE PROPER TY. THE QUESTION BEFORE THE HONBLE SUPREME COURT, THEREFORE, WAS AS TO WHETHER THE INCOME DERIVED BY THE COMPANY FROM LETTING OUT THE PROPERTY WAS TO BE TREATED AS INCOME FROM BUSINESS, OR WHETHER IT WAS TO BE TREATED AS RENTAL INCOME FROM HOUSE PROPERTY. THE HONBLE SUPR EME COURT OBSERVED THAT THE MAIN OBJECT OF THE ASSESSEE COMPANY WAS TO ACQUIRE AND HOLD ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 10 PROPERTIES AND TO LET THEM OUT AS WELL AS MAKE AN ADVANCES UPON THE SECURITY OF LANDS AND BUILDING OR OTHER PROPERTY, O R ANY INTEREST THEREIN. IT WAS EMPHASIZED THAT THE HOLDING OF THE PROPERTI ES AND EARNING INCOME BY LETTING THEM OUT WAS THE MAIN OBJECT OF THE COM PANY. IN THE RETURN FILED, THE ENTIRE INCOME ACCRUED WAS FROM LETTING O UT THE PROPERTY. THE HONBLE HIGH COURT, WHILE HOLDING THE INCOME TO BE INCOME FROM HOUSE PROPERTY, HAD RELIED ON EAST INDIA HOUSING AND LAN D DEVELOPMENT TRUST LIMITED VS. CIT, 42 ITR 49 (SC). WHILE DISCUSSING EAST INDIA HOUSING AND LAND DEVELOPMENT TRUST LIMITED, (SUPRA), THE H ONBLE SUPREME COURT OBSERVED THAT THAT WAS A CASE WHERE THE COMPA NY HAD BEEN INCORPORATED WITH THE OBJECT OF BUYING AND DEVELOPI NG LANDED PROPERTIES AND PROMOTING AND DEVELOPING MARKETS; THAT THUS, TH E MAIN OBJECTIVE OF THE COMPANY WAS TO DEVELOP LANDED PROPERTIES INTO MARKETS; THAT THE COMPANY HAD RENTED OUT SOME SHOPS AND STALLS DEVELO PED BY IT AND THE INCOME DERIVED FROM THE RENTING OF THOSE SHOPS AND STALLS WAS IN QUESTION, I.E., AS TO WHETHER SUCH INCOME WAS INCOM E FROM HOUSE PROPERTY, OR THE INCOME FROM BUSINESS; THAT WHILE H OLDING THAT THE INCOME SHALL BE TREATED AS INCOME FROM HOUSE PROPER TY, THE HONBLE SUPREME COURT RESTED ITS DECISION ON THE CONTEXT O F THE MAIN OBJECTIVE OF THE COMPANY AND HAD TAKEN NOTE OF THE FACT THAT LET TING OUT OF THE PROPERTY WAS NOT THE OBJECT OF THE COMPANY AT ALL; AND THAT THE HONBLE SUPREME COURT WAS, THEREFORE, OF THE OPINION THAT THE CHARACTER OF THAT INCOME, WHICH WAS FROM THE HOUSE PROPERTY, HAD NOT ALTERED, BECAUSE IT ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 11 WAS RECEIVED BY THE COMPANY FORMED WITH THE OBJECT OF DEVELOPING AND SETTING UP OF PROPERTIES. DISCUSSING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KARANPURA DEVELOPMENT CO. LTD. VS. CIT, 44 ITR 362 (SC), THEIR LORDSHIPS OBSERVED THAT THAT WAS A LSO A CASE WHERE THE ASSESSEE COMPANY WAS FORMED WITH THE OBJECT, INTER- ALIA, OF ACQUIRING AND DISPOSING OF THE UNDERGROUND COAL MINING RIGHTS IN COAL FIELDS AND IT HAD RESTRICTED ITS ACTIVITIES TO ACQUIRING COAL MIN ING LEASES OVER HUGE AREAS, DEVELOPING THEM AS COAL FIELDS AND THEN SUB- LEASING THEM TO COLLIERIES AND OTHER COMPANIES; THAT THE BUSINESS O F THE ASSESSEE WAS TO LEASE OUT THE COAL FIELDS TO THE COLLIERIES AND OTH ER COMPANIES; THAT THE INCOME RECEIVED FROM LETTING OUT OF THOSE MINING LEASES WAS SHOWN AS BUSINESS INCOME; AND THAT THE DEPARTMENT TOOK THE P OSITION THAT IT WAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY. RECAPI TULATING KARANPURA DEVELOPMENT CO. LTD. (SUPRA), IT WAS OBSERVED THA T BEFORE INCOME, PROFITS AND GAINS CAN BE BROUGHT TO COMPUTATION, TH EY HAVE TO BE ASSIGNED TO ONE OR THE OTHER HEAD OF INCOME; THAT T HESE HEADS ARE INCLUSIVE OF ONE ANOTHER AND INCOME WHICH FALLS W ITHIN ONE HEAD CANNOT BE ASSIGNED TO, OR TAXED UNDER ANOTHER HEAD; THAT T HEREFORE, THE DECIDING FACTOR IS NOT THE OWNERSHIP OF LAND OR LEASES, BUT THE NATURE OF THE ACTIVITY OF THE ASSESSEE AND THE NATURE OF THE OPER ATIONS IN RELATION TO THEM; THAT THE OBJECTS OF THE COMPANY MUST ALSO BE KEPT IN VIEW TO INTERPRET THE ACTIVITIES; THAT WHERE THERE IS A LE TTING OUT OF PREMISES AND COLLECTION OF RENTS THE ASSESSMENT ON PROPERTY POSI TION MAY BE CORRECT, ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 12 BUT NOT SO, WHERE THE LETTING OUT IS PART OF A TRA DING OPERATION; THAT THE DIVIDING LINE IS DIFFICULT TO FIND, BUT IN THE CASE OF A COMPANY WITH ITS PROFESSED OBJECTS AND THE MANNER OF ITS ACTIVITIES AND THE NATURE OF ITS DEALINGS WITH THE PROPERTY, IT IS POSSIBLE TO SAY O N WHICH SIDE THE OPERATION FALLS AND TO WHAT HEAD THE INCOME IS TO B E ASSIGNED; AND THAT IN KARANPURA DEVELOPMENT CO. LTD. (SUPRA), APPLYI NG THESE PRINCIPLES TO THE FACTS OF THE CASE IT HAD BEEN CONCLUDED THAT TH E INCOME HAD TO BE TREATED AS INCOME FROM BUSINESS AND NOT AS INCOME FROM HOUSE PROPERTY. 11. AS COMPARED AND CONTRASTED WITH THE FACTS IN C HENNAI PROPERTIES AND INVESTMENTS LIMITED (SUPRA), IN THE PRESENT CA SE, THE MAIN OBJECT OF THE ASSESSEE COMPANY IS, INTER-ALIA, TO ACQUIRE LAN D AND BUILDING IN THE STATE OF J & K AND TO LET OUT THE SAME. THIS IS PA TENT ON RECORD AND NOT DISPUTED. IT WAS IN PURSUANCE OF THIS OBJECT THAT T HE LAND MEASURING 222 KANALS AND 19 MARLAS UNDER AND ADJOINING GULAB BHAW AN PALACE WAS TAKEN ON LEASE VIDE PERPETUAL LEASE DEED DATED 22. 11.1997. IT WAS FURTHER LET OUT FOR A PERIOD OF 99 YEARS. THE ASSE SSEE RETAINED THE RIGHT TO USE, UPGRADE, RENOVATE AND RECONSTRUCT GULAB BHAWA N PALACE AND OTHER ADJOINING STRUCTURES FOR THE PURPOSES OF COMMISSION ING. THE 5-STAR HOTEL, HAD AN ANNUAL LICENCE FEE/RENT OF RS.5 LACS. THE ASSESSEE OFFERED THE SAID RECEIPT AS BUSINESS INCOME. 12. THE ARGUMENT MIGHT BE RAISED THAT SINCE THE ASS ESSEE HAD ITSELF EARLIER OFFER THE INCOME FROM LETTING OUT THE PROPE RTY AS INCOME FROM ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 13 HOUSE PROPERTY, THE ASSESSEE CANNOT NOW BE TURNED A ROUND TO RESILE FROM THIS SELF-AVOWED AND ACCEPTED POSITION. TO THIS, IT IS TRITE THAT THERE IS NO ESTOPPLE AGAINST THE LAW. AN ASSESSEE CAN WELL RESI LE FROM A WRONG POSITION ORIGINALLY TAKEN. TO SUPPORT THIS POSITION , THE ASSESSEE HAS RIGHTLY RELIED ON THE FOLLOWING DECISIONS: I) CIT VS. BHARAT GENERAL RE-INSURANCE CO. LTD., 81 ITR 303 (DEL.) II) PT. SHEO NATH PRASAD SHARMA V. CIT, 66 ITR 64 7 (ALL.) III) SMT. SNEHLATA JAIN VS. CIT, 192 CTR 50 (J&K ) IV) S.R. KOSHTI VS. CIT, 276 ITR 16 (GUJ.) V) DCIT VS. SANMUKHDAS WADHWANI, 85 ITD 734 (NAG. ) VI) JYOTSANA HOLDING (P) LTD. VS. ITO, 37 ITD 430 (DEL.) VII) INDO JAVA & CO. VS. IAC, 30 ITD 161 (DELHI S B) VIII) ITO VS. GE HAWN, 21 ITD 553 (ALL.) IX) HCL TECHNOLOGIES, 278 CTR 9DEL.) 345 13. NOW, AS TO WHETHER THE POSITION ORIGINALLY TAKE N BY THE ASSESSEE IS WRONG OR RIGHT STANDS WELL ANSWERED BY OUR FORE-GO ING DISCUSSION, WHEREIN WE HAVE RESPECTFULLY FOLLOWED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CHENNAI PROPERTIES AN D INVESTMENT LIMITED (SUPRA), TO HOLD THAT INCOME EARNED BY THE ASSESSEE FROM LETTING OUT THE PROPERTIES ACQUIRED BY IT, IS TAXABLE AS BU SINESS INCOME AND NOT INCOME FROM HOUSE PROPERTY. THIS, AS CONSIDERED, IS ENTIRELY IN LINE WITH THE RATIO LAID DOWN BY THEIR LORDSHIPS IN CHENNAI PROPERTIES AND INVESTMENT LIMITED (SUPRA). ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 14 14. NOW, THE ISSUE AS TO WHETHER THE SAID INCOME IS TO BE TREATED AS BUSINESS INCOME OF THE ASSESSEE OR INCOME FROM HOUS E PROPERTY. CHENNAI PROPERTIES AND INVESTMENT LIMITED (SUPRA) , IS DIRECTLY AND SQUARELY APPLICABLE ON THIS POINT. IT HOLDS THAT S INCE THE MAIN OBJECT OF THE ASSESSEE WAS TO ACQUIRE AND LET OUT PROPERTIES, FROM WHICH LETTING OUT, INCOME WAS EARNED, SUCH INCOME IS TO BE TREATE D AS BUSINESS INCOME. THE RATIO LAID DOWN BY THE HONBLE APEX CO URT IS THAT THE NATURE OF THE ACTIVITY OF THE ASSESSEE AND THE NATU RE OF THE OPERATION IN RELATION TO THE LEASING OUT OF LAND, WHICH IS THE D ECIDING FACTOR AS TO UNDER WHICH HEAD THE PROFITS AND GAINS EARNED FROM LEASING OUT ARE TO BE ASSIGNED. THEIR LORDSHIPS HAVE HELD THAT SO AS TO I NTERPRET SUCH ACTIVITIES, THE OBJECTS OF THE COMPANY MUST ALSO BE KEPT IN VIEW. NOW, AS OBSERVED, IN THE PRESENT CASE, UNDISPUTEDLY, THE MA IN OBJECT OF THE ASSESSEE HAPPENED TO BE ACQUIRING LAND AND BUILDING S IN THE STATE OF J & K AND LETTING OUT THE SAME. THIS IS EXACTLY THE S AME OBJECT AS WAS THAT OF THE ASSESSEE IN CHENNAI PROPERTIES AND INVESTME NT LIMITED (SUPRA). THEREFORE, IN ACCORDANCE WITH CHENNAI PROPERTIES AND INVESTMENT LIMITED (SUPRA), WE HOLD THAT THE ASSESSEE IS CORR ECT IN CONTENDING BY WAY OF THE ADDITIONAL GROUND TAKEN THAT THE RENTAL/ LICENCE FEE RECEIVED BY THE ASSESSEE IN RESPECT OF THE SUBJECT PROPERTY GIV EN ON LEASE TO BHL IS LIABLE TO BE ASSESSED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE ITA NOS.323(ASR)/2015 AND OTHERS A.Y.2006-07 & OTHERS 15 PROPERTY, AS THE ASSESSED BY THE TAXING AUTHORITIES . THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE IS THUS, ACCEPTED. 15. IN VIEW OF THE ADDITIONAL GROUND HAVING BEEN AC CEPTED, ALL OTHER GROUNDS RAISED BECOME ACADEMIC AND, THEREFORE, THE Y ARE NOT REQUIRED TO BE GONE INTO. 16. THE FACTS IN ALL THESE APPEALS ARE MUTATIS- MUT ANDIS, EXACTLY THE SAME. THEREFORE, OUR ABOVE OBSERVATIONS, SHALL APPL Y EQUALLY, MUTATIS- MUTANDIS, TO ALL THE APPEALS. 17. AS REGARDS STAY APPLICATIONS FILED BY THE ASSES SEE, THE SAME HAVE BECOME INFRUCUTOUS SINCE WE HAVE DISPOSED OF THE AP PEALS OF THE ASSESSEE, HEREINABOVE. 18. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED AND ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/ 2 016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 26/08/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. JYOTI LIMITED, SRINGAR 2. THE ACIT, CIRCLE-3, SRINGAR. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.