M/S PAREEK SHREEVASTAVA & ASSOCIATES, Kota V. ITO, Kota

ITA 808/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1535 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 17-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Business income; Business expenditure; Charitable institution; Rule of consistency

Judgement Text

1 ITA 808-12 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH SMC JAIPUR BEFORE SHRI B.R. JAIN, ACCOUNTANT MEMBER ITA NO. 808/JP/2012 ASSTT. YEAR : 2007-08. PAREEK SHREEVASTAVA & ASSOCIATES, VS. THE INCOME-T AX OFFICER, OLD DHANMANDI, KOTA. WARD 2(1), PAN : AABFP 3841 G. KOTA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHENDRA GARGIEYA RESPONDENT BY : MS ROSHANTA MEENA DATE OF HEARING : 03.01.2013 DATE OF PRONOUNCEMENT : 31.01.2013 ORDER PER B.R. JAIN, A.M. THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 30 .08.2012 OF LD. CIT (APPEALS), KOTA RAISES THE FOLLOWING GROUNDS :- THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E THE HON'BLE CIT (A) ERRED IN :- (I) CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER TO ASSESS THE RENTAL INCOME AS PROPERTY INCOME AS AGAINST BUSINES S INCOME IGNORING PAST HISTORY OF THE CASE AND THEREBY IGNORING CONSI STENCY THEORY ; AND (II) CONFIRMING ACTION OF THE LEARNED ASSESSING OFF ICER AND THEREBY NOT ALLOWING BENEFIT OF DEDUCTION U/S 40(B) FOR INTERES T TO PARTNERS AND WORKING PARTNERS REMUNERATION WHICH ARE ALLOWABLE D EDUCTION, IN VIEW OF PROVISIONS OF PARTNERSHIP DEED, FROM TAXABLE INCOME OF THE FIRM. 2 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE A PARTNE RSHIP FIRM WAS CONSTITUTED THROUGH A DEED OF PARTNERSHIP DATED 13.12.1994. THE PARTNERS OF THE FIRM BEING OWNERS OF SHOPS CONTRIBUTED ROOF RIGHTS AS CAPITAL IN THE PARTNERSH IP FIRM. THE ASSESSEE CONSTRUCTED A BUILDING KNOWN AS SWAGAT MARKET AND LET OUT THE S AME TO BANK OF BARODA. THE ASSESSEE CLAIMED THIS INCOME AS INCOME FROM BUSINES S SINCE ASSESSMENT YEAR 1995-96 AND ASSESSMENTS WERE COMPLETED IN A SUMMARY MANNER UNDE R SECTION 143(1) OF THE ACT UPTO ASSESSMENT YEAR 2005-06. FOR THE IMPUGNED YEAR I.E . 2007-08 THE ASSESSING OFFICER BEING OF THE OPINION THAT LETTING OUT IS NOT THE BU SINESS OF THE ASSESSEE, PROCEEDED TO ASSESS THE SAME UNDER THE HEAD INCOME FROM HOUSE PR OPERTY AND DISALLOWED THE EXPENSES CLAIMED UNDER VARIOUS HEADS AS BUSINESS EXPENDITURE . THE LD. CIT (A) CONFIRMED THE ACTION AS NOTIONAL DEDUCTION UNDER SECTION 24 OF TH E ACT WAS FOUND DULY ALLOWED BY THE ASSESSING AUTHORITY. 3. ASSAILING THE IMPUGNED ORDER, LD. COUNSEL FOR TH E ASSESSEE SHRI MAHENDRA GARGIEYA MADE EXHAUSTIVE WRITTEN SUBMISSIONS AND AL SO CONTENDED ORALLY AS UNDER :- (I) AT THE OUTSET, IT IS SUBMITTED THAT SOME OF TH E ADMITTED FACTS, WHICH ARE HAVING A VITAL BEARING OVER THE ISSUE IN HAND, WERE NOT AT ALL CONSIDERED OR JUDICIOUSLY APPRECIATED. THE OBJECT AND INTENTION O F THE ASSESSEE, RIGHT SINCE INCEPTION, HAS BEEN TO RUN THE BASIS OF DEVELOPER, BUILDERS AND LESSORS, WHICH ACTIVITY, THE ASSESSEE CARRIED OUT IN THE PAST AND EVEN CONTINUED IN FUTURE INCLUDING THE SUBJECTED YEAR AS WELL. THIS OBJECT AND INTENTI ON, IS SELF EVIDENT FROM VARIOUS FACTS AND CIRCUMSTANCES AS SUBMITTED HEREINAFTER. (II) ALL THE PARTNERS OF THE FIRM OWNED POTS IN THE IR INDIVIDUAL NAMES AND OWNERSHIP. THEY CONSTRUCTED SHOPS OVER THEIR RESPEC TIVE PLOTS AND SOLD THE SAME RESERVING THE OWNERSHIP RIGHT OVER THE FIRST FLOOR. ALL THE PERSONS CAME TOGETHER WITH A VIEW TO EARN PROFIT, WORKING TOGETHER AS A D EVELOPER, BUILDERS AND LESSSORS 3 AND FOR THIS PURPOSE A PARTNERSHIP FIRM NAMELY M/S. PAREEK SHREEVASTAV & ASSOCIATES, WAS FORMED W.E.F. 01-10-1994. THE OBJEC T CLAUSE IN THE PARTNERSHIP DEED READ AS UNDER:- 3. THAT THE PARTNERSHIP BUSINESS SHALL BE THAT OF DEVELOPER, CONSTRUCTORS AND TAKING CARE OF THE PROPERTY INCLUD ING RECOVERY OF RENT ETC. FROM TENANT BUT THE PARTNERS SHALL BE LIBERTY TO EM BARK ON ANY NEW LINE OR LINES OF BUSINESS OR BUSINESS AS THEY MAY DECIDE FR OM TIME TO TIME. ALL THE PARTNERS CONTRIBUTED THEIR RESPECTIVE SHARE IN THE ROOF AT FIRST FLOOR AS THEIR CAPITAL CONTRIBUTION AND ACCORDINGLY THEIR RESPECTIVE CAPITAL ACCOUNTS WERE CREDITED. THEREAFTER, FROM THE COMMON A/C, A HALL W AS CONSTRUCTED. THE HALL WAS/IS BEING LET OUT FOR MARRIAGES, BIRTHDAY FUNCTIONS ETC . THEREAFTER, IN ABSENCE OF A CONCRETE PROPOSAL OF SALE IN THE OPEN MARKET AND TH IS OTHERWISE MEANS ONE OF THE OBJECTIVE ALSO, IN A SUITABLE OFFER, THE PARTNERS D ECIDED TO LET OUT THE PART OF FLOOR TO BANK OF BARODA, FOR OPENING ITS BRANCH. FOR THIS PU RPOSE SUITABLE CONSTRUCTION WAS GOT DONE BY THE ASSESSEE AND THIS ALSO INCLUDED SPE CIAL TYPE OF CONSTRUCTION LIKE CHEST ROOM. NEEDLESS TO MENTION THAT CHEST ROOM IS NOT A, SIMPLE ROOM. THE ASSESSEE IS REGULARLY UNDERTAKING REPAIR AND MAINTE NANCE KEEPING IN VIEW THE NATURE OF THE WORK OF THE TENANT AND HENCE ALSO EMP LOYED A SEPARATE GUARD FOR THE SAFETY OF THE BUILDING INCLUDING THE BANK PREMISES. THUS, EXTRA SERVICES ARE ALSO BEING PROVIDED. PART OF THE FLOOR WAS LET OUT AGAIN TO BANK OF BARODA, FOR OPENING ITS REGIONAL OFFICE. (III) LOCATION & LOOKING TO THE BUILDING: A BARE LO OK AT THE SUBJECTED BUILDING REVEALS THAT THE CONSTRUCTION WAS MEANT FOR COMMERC IAL USE ONLY. IT WAS A COMMERCIAL HALL AT 1 ST FLOOR WITH THE SHOPS AT GROUND FLOOR KNOWN AS SWAG AT MARKET. IT IS NOT A CASE OF RESIDENTIAL HOUSE A PAR T OF WHICH WAS LET OUT WHICH CAN BE A CASE OF HOUSE PROPERTY INCOME. THE PROPERTY IS SITUATED IN MAIN MARKET NAMELY OLD DHAN MANDI, ADJOINING THE RAMPURA MARKET . (IV) SUPPORTING CASE LAWS:- REFER CIT VS. GOEL BUILDERS (2010) 235 CTR 472 (A LL) HELD THAT BUSINESS INCOME VIS-A-VIS INCOME FROM HOUSE PRO PERTY RENTAL INCOME FROM COMMERCIAL COMPLEX CONSTRUCTIO N OF A COMMERCIAL 4 COMPLEX IN LEASE PREMISES DEPARTMENT ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE RENTAL INCOME WAS TABLE UNDER THE HEAD, PROFITS AND GAINS OF BUSINESS OR PROFESSION FROM ASSESSMENT YE ARS 1986-87 TO 192-93 AO TAXED THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY FOR ASSESSMENT YEAR 1993-94 AND 1994-95 WHICH WAS REVER SED BY THE CIT (A) SUBSEQUENTLY FOR THE ASSESSMENT YEARS 1996-97 TO 2000-01 (UNDER APPEAL), THE REVENUE ASSESSED THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY NOT JUSTIFIED A PLAIN READING O F SS. 22 TO 27 SHOWS THAT THE HOUSE PROPERTY MEANS PROPERTY CONSTRUCTED FOR DWELLING OR RESIDENTIAL PURPOSE, A PORTION OF WHICH OR WHOLE OF THE PROPERTY OR ITS APPURTENANT LAND IS LET OUT ON RENT TO EARN PROFIT . IT DOES NOT INCLUDE A PROPERTY OR BUILDING CONSTRUCTED OR PURCHASED UNDER THE PLANNED BUSINESS ACTIVITY PROVISIONS CONTAINED IN 28 TO 32 ABUNDAN TLY MAKE IT CLEAR THAT FOR THE PURPOSE OF ASSESSMENT UNDER THE HEAD PROFI T AND GAINS OF BUSINESS OR PROFESSION, IT SHALL BE NECESSARY THAT THE PROP ERTY ACQUIRED AND USED IS FOR COMMERCIAL PURPOSE UNDER BUSINESS ACTIVITY OW NER OF THE PROPERTY MUST HAVE ACQUIRED THE PROPERTY WITH INTENTION TO E ARN PROFIT UNDER COMMERCIAL ACTIVITY ASSESSEE CONSTRUCTED THE BUIL DING IN QUESTION EXCLUSIVELY FOR COMMERCIAL PURPOSE INVESTMENT MAD E BY THE ASSESSEE WHILE CONSTRUCTING THE COMMERCIAL COMPLEX SEEMS TO BE A BUSINESS INVESTMENT RENTAL INCOME EARNED FROM THE BUILDING AS A NATURAL CONSEQUENCE SHALL BE BUSINESS INCOME THAT APART, WHERE THERE IS A FUNDAMENTAL ASPECT PERMEATING THROUGH DIFFERENT ASS ESSMENT YEARS ALLOWED BY THE AUTHORITIES TO SUSTAIN, IT WOULD NOT BE APPROPRIATE TO CHANGE THE VIEW IN SUBSEQUENT YEAR EXCEPT ON JUSTIFIABLE G ROUND. IN ITO VS. INFORMATION TECHNOLOGY PARK (2012) 49 SO T 491 (BANG.) HELD THAT ASSESSEE HAD DEVELOPED A TECHNOLOGY PARK, AND LET OUT ITS BUILDING ALONGWITH OTHER AMENITIES AND FACILITIES. SINCE THE ASSESSEE IS CARRYING ON A COMMERCIAL COMPLEX ACTIVITY OF SETTING UP SOFTWARE TECHNOLOGY PARK WITH VARIOUS FACILITIES AND AMENITIES THE INCOME DERIVED FROM LE SSEES IS TO BE TAXED AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY (A.Y. 1999-2000 TO 2004-05) IN PFH MALL & RETAIL MANAGEMENT LTD. VS. ITO (2008) 112 TTJ 523 (KOL.) HELD THAT --AFTER CONSIDERING SHAMBHU INVESTMENT (P) LTD. IT WAS HELD THAT INCOME DERIVED BY ASSESSEE FROM SHOPPING MALLS/BUSINESS CE NTERS WAS ASSESSABLE AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPER TY. IT HELD THAT THJE FACT THAT THE APEX COURT HELD THAT THE INCOME EARNED BY SHAMBHU INVESTMENT (P) LTD. IS ASSESSABLE AS PROPERTY INCOME HAS NO RELEVANCE I N THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. BECAUSE IN THAT CASE THE FACT S SHOWED THAT THE MAIN INTENTION WAS TO EARN RENTAL INCOME. THAT WAS WHY THE ENTIRE COST OF THE PROPERTY WAS 5 RECOVERED FROM THE TENANTS BY WAY OF INTEREST-FREE ADVANCE. IN THE INSTANT CASE, ON THE OTHER HAND, THE ASSESSEE HAD TAKEN BANK LOANS T O FINANCE HIS PROJECTS LIKE ANY OTHER BUSINESSMAN. AS DISCUSSED HEREINABOVE, EVERY ACTION OF THE PRESENT ASSESSEE APPEARS TO BE WITH THE SOLE OBJECTS OF COMMERCIAL E XPLOITATION OF THE PREMISES. IN CIT VS. PATESHWARI ELECTRICAL & ASSOCIATED INDUS TRIES (P) LTD. (2006) 282 ITR 61 (ALL) HELD THAT (AFTER CONSIDERING SHAMBHU INVESTMENTS) LETTING OUT OF ALL THE ROOMS OF A PROPERTY, USED AS A GUEST-HOUSE, BY THE ASSESSEE TO A BANK TO BE USED AS A TRAINING CENTER, WAS A PART OF RUNNING OF THE LODGE BUSINESS AND, THEREFORE, INCOME FROM SUCH LEASING WAS ASSESSABLE AS BUSINESS INCOME AND NECESSARY EXPENDITURE INCURRED THEREON WAS ALLOWABLE AS BUSINESS EXPENDIT URE. IN CIT VS. SARABHAI (P) LTD. (2003) 263 ITR 197 (GU J.): WHEN PROPERTY HAS BEEN LET OUT NOT ONLY AS PROPERTY BUT WITH SERV ICES WHICH IS A COMPLEX LETTING, THE INCOME CANNOT BE SAID TO BE DERIVED FROM MERE O WNERSHIP OF HOUSE PROPERTY BUT MAY BE ASSESSABLE AS INCOME FROM BUSINESS. IF T HE OWNER OF A PROPERTY CARRIES UPON THE PROPERTY SOME ACTIVITIES WHICH RESULT IN P ROFITS AND GAINS, ARISING NOT FROM THE OWNERSHIP OF THE PROPERTY BUT FROM THE OWN ERS USE THEREOF, LETTING VARIOUS SERVICES TO THE TENANTS, THOSE PROFITS AND GAINS MAY BE CHARGEABLE U/S 28 AS INCOME FROM BUSINESS, APART FROM THE ASSESSMENT U/S 22 IN RESPECT OF INCOME FROM HOUSE PROPERTY. EXPLOITATION OF A COMMERCIAL ASSET : THE INCOME WHI CH THE SUBJECTED PROPERTY YIELDED WAS INCIDENTAL TO THE BUSINESS, IN AS MUCH AS IT WAS IN ACCORDANCE WITH THE MAIN OBJECT AND PURSUANT THERET O IT WAS ONLY A MANNER OF EXPLOITATION OF A COMMERCIAL ASSET. THEREFORE, THE ASSESSEE RIGHTLY CLAIMED THE SUBJECTED INCOME AS BUSINESS INCOME. KINDLY REFER C IT VS. NEHA BUILDERS (P) LTD. 207 CTR 231 (GUJ.) WHICH IS DIRECT DECISION. WHERE IT IS A CASE OF EXPLOITATION OF PROPERTY BY C OMPLEX COMMERCIAL ACTIVITIES, THE INCOME SHOULD BE TAXED AS BUSINESS INCOME, AS HELD IN HARVINDARPAL MEHTA (HUF) VS. DCIT (2009) 122 TTJ 163 (MUMBAI). IT IS ONLY THE INTENTION OF THE ASSESSEE TO BE SEEN WHILE DECIDING THE HEAD OF INCOME AS HELD IN CIT VS. SHAMBHU INVESTMENT (P) LTD. (2001) 263 ITR 143 (SC) RECENTLY FOLLOWED IN VIKRAM GOLCHA VS. DCIT (2009) 319 ITR 22 (JP). (V) RULE OF CONSISTENCY : IT IS SUBMITTED THAT THE ASSESSEE IS IN THIS BUSINESS SINCE A.Y. 1995-96 AND SINCE THEN THE DISCLOSURE OF THE INCOME AS BUSINESS INCOME IS BEING ACCEPTED BY THE DEPARTMENT. IT IS F OR THE FIRST TIME, THE ASSESSING OFFICER TOOK A DIFFERENT VIEW ALTHOUGH THE FACTS AN D CIRCUMSTANCES PREVAILED EXACTLY THE SAME AS WERE IN THE PAST. 6 ON RULE OF CONSISTENCY : THE SUPREME COURT HELD THAT WHEN THE REVENUE HAD NO T FILED ANY APPEAL IN OTHER ASSESSMENT YEAR ,IT WOULD BE PRECLUDED FRO M FILING THE APPEAL IN THE RELEVANT ASSESSMENT YEAR ON IDENTICAL FACTS CIT V S. J K CHARITABLE TRUST (2008) 220 CTR 105 (SC)/ 308 ITR 161 (SC). APPEAL (TRIBUNAL ) ORDER OF TRIBUNAL RULE OF CON SISTENCY EVEN THOUGH THE ALLEGED TRADE PRACTICE OF SPREADING COMM ISSION OVER THE PERIOD OF LEASE WAS NOT TRUSTWORTHY, ANOTHER BENCH OF THE TRIBUNAL HAVING APPROVED THE SAME, IT HAS TO BE ALLOWED APPLYING THE RULE OF CONSISTENCY CIT VS. K J BUSINESS CENTRE (2009) 24 DTR (DEL.) 98. ALSO REFER CIT VS. TRAVANCORE TITANIUM PRODUCTS LTD . (2003) 131 TAXMAN 705 (KER.) THIRANI CHEMICALS LTD. VS. DCIT (2006) 153 TAXMAN 45 (DEL.), DLF UNIVERSAL LTD. VS. CIT (2008) 306 ITR 271 (DEL.). ON RES. JUDICATA : KINDLY REFER SARDAR KEHAR SINGH VS. CIT & OTHERS , 195 ITR 769 (RAJ.) AND ITO VS. MANGALCHAND BHANWARLAL & CO. (1992) 43 TTJ 119 (JP.). (VI) SOME OF THE CASES, CITED BY THE AO AS COMPARAB LE CASE, IN FACT ARE NOT REALLY COMPARABLE FOR THE REASONS THAT ALL THESE CA SE WERE THE CASES OF RESIDENTIAL HOUSES/ SUITED IN DIFFERENT RESIDENTIAL LOCALITIES, OWNED BY SOME INVESTORS NOT ONLY ANY BUSINESS CONCERNS VIZ. FIRM, LTD. CO. ETC ENGAG ED IN THE BUSINESS OF REAL ESTATE. HENCE, THESE CASES ARE NOT COMPARABLE. IN ANY CASE, THE AO NEVER CONFRONTED THE ASSESSEE WIT THE INSPECTOR REPORT NO R WITH THE COMPARABLE CASE, NOW BEING USED AGAINST THE ASSESSEE AND THEREFORE, SUCH MATERIAL HAS TO BE IGNORED. (VII) LASTLY, ALSO REFER THE LETTER DATED 29-11-201 1 FILED BEFORE THE AO. THE SAME ARE AS UNDER:- 7 2. THAT WE CONSTRUCTED FIRST FLOOR OF THE PROPERT Y AND TILL 31- 03-2002 WE HAD EXPLOITED BUSINESS INCOME FROM OTHER MODES TOO TOGETHER WITH RENTAL INCOME FROM BANK OF BARODA BUT ITS FACT THAT SINCE ASSESSMENT YEAR 2003-04 OUR ONLY SOURCE OF IN COME IS RENT FROM BANK OF BARODA AND INTEREST FROM IT DEPARTMENT WHICH WE ARE SHOWING AS BUSINESS INCOME BECAUSE AS STATED EA RLIER OUR FIRMS BUSINESS IS TO DEVELOP, CONSTRUCT AND EXPLOITATION OF PROPERTY IN DIFFERENT WAYS INCLUDING SELLING OF PROPERTY AFTER CONSTRUCTION AND COLLECTION OF RENT ETC. 3. THAT WE HAVE GIVEN FIRST FLOOR OF PROPERTY ON RE NT TO BANK AND SECOND FLOOR IS OPEN. INCONSONANCE TO OUR LEA SE AGREEMENT IT IS OUR DUTY TO KEEP PROPERTY UPKEEP SO THAT BANK RE CORDS ARE SAFE FROM RAIN WATER. THIS NEEDS REGULAR REPAIRING. BESI DES WE HAVE TO SEE THAT OUR PROPERTY IS SAFE AND THAT SECOND FLOOR , WHICH IS OPEN, IT NOT TRESPASSED AND THEREFORE, WE NEED SECURITY. MAI NTENANCE AND SECURITY ARE THEREFORE, REGULAR FEATURE. (VIII) THE LD. CIT(A) HAS NOT AT ALL APPLIED HIS MI ND ON THE SUBMISSION MADE AND THE CASE LAWS CITED BEFORE HIM. HE APPEARS TO HAVE PROCEEDED WITH A PRECONCEIVED NOTION AS EVIDENT FROM HIS ORDE R WHEREIN HE HAS NOWHERE COMMENTED OR NEGATIVED THE CONTENTION OF TH E ASSESSEE. HENCE THE DECLARED INCOME KINDLY BE ASSESSED AS BUS INESS INCOME AND THE DEDUCTIONS AS CLAIMED KINDLY BE ALLOWED IN FULL. (IX) INTEREST ALLOWABLE U/S 24 OF THE ACT: ALTERNAT IVELY AND WITHOUT PREJUDICE TO ABOVE SUBMISSIONS, IT IS SUBMITTED THA T IF THE SUBJECTED INCOME IS HELD ASSESSABLE U/S 22 OF THE ACT, THE INTEREST PAID TO PARTNERS OF RS. 1,66,401/- ON THEIR CAPITAL USED HAS TO BE ALLOWED IN AS MUCH AS THE SAME AMOUNT TO INTEREST ON BORROWINGS USED FOR THE PURPO SE OF CONSTRUCTION, RENOVATION ETC. FALLING U/S 24 OF THE ACT AND ALLOW ABLE WITHOUT ANY LIMIT. THE AO HAVING HELD THAT THE ASSESSEE HAS HAD NO BUS INESS AND THE FACT OF PARTNERS CAPITAL UTILIZED FOR CONSTRUCTION OF THE LET OUT PROPERTY ONLY, IS NOT DISPUTED, THE DISALLOWANCE OF SUCH INTEREST IS CONTRADICTORY. 8 4. ON THE OTHER HAND, THE LD. D/R SUPPORTED THE FIN DINGS AND DECISION TAKEN BY THE AUTHORITIES BELOW. 5. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE IMMOVABLE PROPERTY IS NOT REGISTERED IN THE NAME OF THE APPELLANT FIRM. T HE PARTNERS ARE OWNERS OF LAND/SHOPS AND HAVE ONLY CONTRIBUTED ROOF RIGHTS AS SHARE OF T HEIR CAPITAL IN THE PARTNERSHIP FIRM. ADMITTEDLY, THE APPELLANT FIRM WITH ITS OWN RESOURC ES RAISED FROM THE PARTNERS ETC. CONSTRUCTED A BUILDING THEREON, AND BEING SEPARATE FROM BUILDING, THE ASSESSEE, THEREFORE, CAN BE ACCEPTED TO BE AN OWNER OF THE SAID BUILDING WHICH IT HAS LET OUT TO THE BANK ON A LONG TERM LEASE. THE INCOME-TAX STATUTE HAS PROVID ED A SEPARATE HEAD FOR ASSESSMENT OF INCOME OF AN OWNER OF A PROPERTY UNDER THE HEAD INC OME FROM HOUSE PROPERTY. ESSENTIALLY THEREFORE AND HAVING REGARD TO THE JUDG MENT RENDERED BY APEX COURT IN THE CASE OF SHAMBHU INVESTMENT PVT. LTD. VS. CIT, 263 I TR 143 (SC), I FIND NO INFIRMITY IN THE DECISION REACHED BY LD. CIT (A) IN ASSESSING TH E INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. MERELY BECAUSE THE INCOME CAME TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS IN EARLIER YEARS IN A SUMMARY MANNER THAT FACT ALONE WOULD NOT COMPEL THIS TRIBUNAL TO REQUIRE THE ASSESSING AUTHORITY TO DO T HE SAME WRONG AS HAS BEEN DONE IN THE PAST PARTICULARLY WHEN NO RIGHT CAN VEST IN THE WRO NG. UNDER SUCH FACT CIRCUMSTANCES RULE OF CONSISTENCY WILL NOT GOVERN THE ISSUE. I, HOWEVER, FIND THAT THE ASSESSEE HAS CLAIMED INTEREST DEDUCTION ON ACCOUNT OF PAYMENT MA DE TO ITS PARTNERS FOR THEIR CONTRIBUTION AS CAPITAL FOR RAISING THE BUILDING ON THE ROOF OF THE SHOPS. ESSENTIALLY, THEREFORE, DEDUCTION UNDER SECTION 24 OF THE ACT HA S TO BE ALLOWED FOR INTEREST SO PAID FOR CONSTRUCTION OF THE BUILDING ON CAPITAL BORROWED FO R THAT PURPOSE. THE ASSESSING OFFICER 9 SHALL VERIFY THE ACTUAL CAPITAL BORROWED FOR THIS P URPOSE AND ALLOW DEDUCTION ACCORDINGLY. GROUND NO.1 IN APPEAL, THEREFORE, STANDS PARTLY ALL OWED. 6. IN SO FAR AS GROUND NO. 2 IS CONCERNED, THE ASSE SSEES CLAIM IS THAT THE BUSINESS WAS SET UP IN THE ASSESSMENT YEAR 1995-96 AND UNDER THE CIRCUMSTANCES THE INCOME FROM BUILDING OWNED BY THE ASSESSEE IS ASSESSED AS INCOM E FROM HOUSE PROPERTY, THE LOSS PERTAINING TO BUSINESS ON ACCOUNT OF ADMINISTRATION AND OTHER EXPENSES INCURRED AS PAYMENT OF REMUNERATION TO PARTNERS OUGHT TO BE ASS ESSED UNDER THE HEAD INCOME FROM BUSINESS. THE LOSS ON THAT ACCOUNT IS REQUIRED TO B E SET OFF AGAINST INCOME FROM HOUSE PROPERTY. THE LD. CIT (A), HOWEVER, HAS NOT EXAMIN ED THIS ASPECT OF THE MATTER. I, THEREFORE, REMIT THE MATTER BACK TO THE LD. CIT (A) TO HEAR THE ASSESSEE ON THIS ISSUE AND RENDER DECISION BY WAY OF A SPEAKING ORDER THEREON IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.01.2013. SD/- ( B.R. JAIN ) ACCOUNTANT MEMBER JAIPUR, DATED : 31/01/2013. D/- COPY FORWARDED TO :- PAREEK SHREEVASTAVA & ASSOCIATES, KOTA. THE ITO WARD 2(1), KOTA. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 808/JP/2012) BY ORDER, AR ITAT JAIPUR. 10