Narmada Ginning & Pressing Factory, Khirkiya V. ACIT Circle-Itarsi, Bhopal

ITA 851/Ind/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0119 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT SOLI
• Keywords: Business income
• Section: 143(3); 142(1); 143(2)

Judgement Text

अपील य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.851/Ind/2019 Assessment Year:2013-14 Narmada Ginning & Pressing Factory, Khirkiya Hoshangabad बनाम/ Vs. ACIT, Circle Itarsi (Appellant) (Respondent ) P.A. No.AADFN0046J Appellant by Shri Ashish Goyal & N.D. Patwa, ARs Respondent by Shri Amit Soli, Sr. DR Date of Hearing: 11.11.2021 Date of Pronouncement: 17 .01.2022 आदेश / O R D E R PER MANISH BORAD: The above captioned appeal at the instance of Revenue is directed against the order of Ld. Commissioner of Income Tax(Appeals)-1, (in short ‘CIT(A)’), Bhopal dated 28.04.2016 which are arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 29.03.2016 framed by ACIT-Itarsi. M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 2 The Revenue has raised following grounds of appeal in ITANo. 851/Ind/2019: “1. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.2,80,881/- by adopting the income from warehouse as income from house property instead of business income as shown by the appellant. 2. That the appellant craves leave to add, to urge, to later or to amend any of the grounds of the appeal on or before the date of hearing. 2. 2. Short issue for adjudication is that whether the amount of Rs.2,80,881/- shown by the assessee as income from warehouse is Income from house property or Income from business. 3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm engaged in the business of trading of grains, ginning & pressing of cotton. Income of Rs.10,74,190 declared in the return of income filed on 27.09.2013. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. During the course of assessment proceedings Ld. AO observed that assessee has shown profit from warehouse operations at Rs.5,90,980/- as business income. The gross M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 3 rent received from warehouse at Rs.12,45,517/-. Ld. AO concluded the assessment holding that the gross receipts from warehouse operation at Rs.12,45,517/- is Income from house property and assessee is only eligible for deduction u/s 24(a) of the Act at Rs.3,73,655/- and the balance income of Rs.8,71,861/- is to be taxed as income from house property. The net effect of this action of the Ld. AO resulted into an addition of Rs.2,80,881/- (Income held to be income from house property at Rs.8,71,861/- less business income from warehouse shown by the assessee at Rs.5,90,980/-). Income assessed at Rs.13,55,070/-. 4. Aggrieved assessee preferred an appeal before the Ld. CIT(A) but failed to succeed, as Ld. CIT(A) confirmed the view taken by the Ld. AO holding that warehouse receipts are arising simply from letting out of property and there is apparently no activity incidental to running the warehouse. 5. Aggrieved assessee is now in appeal before this Tribunal. 6. Ld. counsel for the assessee vehemently argued referring to the written submissions and the paper book running from pages 1 to 38 and also submitted that the assessee entered M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 4 into an agreement with MP Warehousing & Logistic Corporation. As per the condition enumerated in the agreement, the assessee is required to perform various other functions for running the warehouse in a proper manner. It is also submitted that in subsequent assessment years from 2014-15 to 2017-18 similar income has been offered as business income and has been duly accepted by the revenue authorities. 7. Per contra, ld. DR vehemently argued supporting the order of lower authorities. 8. We have heard rival contentions and perused the records placed before us. The sole issue to be examined by us is that whether the gross receipts from M.P. Warehousing & Logistic Corporation received by the assessee are business receipt are rental income to be assessed as income from house property. The assessee has shown the gross receipts of Rs.12,45,517/- as business receipts and after claiming incidental expenses of Rs.6,54,537/- has shown the remaining amount as profit at Rs.5,90,980/- from the operation of the warehouse. Both the lower authorities have treated the gross receipts as income from letting out warehouse and taxable as M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 5 income from house property. 9. For examining this issue we have perused the agreement for letting out the warehouse placed at pages 11 to 24 which is an agreement entered into between M.P. Warehousing and Logistic Corporation and the assessee. Ongoing through clause (3) of this agreement we find that the assessee is required to maintain the 24 hours security arrangement, cleaning and fumigation of the premises on regular intervals provide labour on daily wages and also to ensure the compliance of labour Rules and is also responsible to compensate the labourers towards any liability under labour laws arising at the warehouse. Agreement also shows that the assessee is required to provide the equipment for storage of goods. 10. Ongoing through the above details and clauses of the agreement between the assessee and MP warehouse and Logistic Corporation we find merit in the contention of the Ld. counsel for the assessee that the alleged gross receipts are not in the nature of rental income from letting out the property but are business receipts received for carrying out warehouse operations as per the terms of the agreement. M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 6 11. We, therefore, under the given facts and circumstances of the case, set aside the finding of Ld. CIT(A) and hold that both lower authorities erred in treating the alleged receipts of Rs.12,45,517/- as rental income. Finding of Ld. CIT(A) is reversed and the net profit shown from operations of warehouse at Rs.5,90,980/- is directed to be treated as business income. Thus, the addition of Rs2,80,881/- is deleted. Ground no.1 of the assessee’s appeal is allowed and ground no.2 is general in nature which needs no adjudication. 12. In the result, appeal of the assessee in ITANo.851/Ind/2019 is allowed. Order pronounced as per Rule 34 of I.T.A.T., Rules 1963 on ... 17.01.2021. Sd/- (RAJPAL YADAV) Sd/- (MANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER Indore; दनांक Dated : 17/01/2022 Patel/PS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore