M/s Dutta Properties, Kolkata V. ITO,Ward-53(1), Kolkata, Kolkata

ITA 973/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92034 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 1999-2000
• Appeal Filed On: 19-06-2012
• Court: TRIBUNAL
• Department Lawyers: R P NAG JCITLD
• Assessee Lawyers: K K CHHAPARIA FCA LD
• Keywords: Business income; Period of limitation; Additional evidence; Question of law; Validity of assessment; Commercial expediency; Time period of passing order
• Section: 133(6); 148; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & HON BLE SHRI B.P.JAIN , AM ] I.T.A NO S . 973 TO 979/KOL /2012 A.Y S. 1999 - 2000 TO 2005 - 06 M/S. DUTTA PROPERTIES VS. I.T.O WARD 53( 1), KOLKATA PAN: AADFD 3453F ( APPELLANT) ( RESPONDENT ) I.T.A NO . 883 /KOL/2012 A.Y 1999 - 2000 I.T.O WARD 53(1), KOLKATA VS. M/S. DUTTA PROPERTIES P AN: AADFD 3453F ( APPELLANT) ( RESPONDENT ) FOR THE APPELLANT: S HRI K.K CHHAPARIA, FCA, LD.AR FOR THE RESPONDENT : SHRI R.P NAG, JCIT/LD.DR DATE OF HEARING: 1 8 - 06 - 2015 DA TE OF PRONOUNCEMENT: 01 - 07 - 2015 ORDER SHRI B.P.JAIN:AM TH ESE EIGHT APPEAL S OF THE ASSESSEE AND REVENUE ARISE FROM THE DIFFERENT ORDER S OF THE LD. CIT(A), XXXII I KOLKATA EACH DATED 23 - 03 - 201 2 FOR THE ASSESSMENT YEAR S 1999 - 2000 TO 2005 - 06. 2. T HE ASSESSEE HAS RAISED AS MANY AS COMMON GROUNDS IN ALL THE APPEALS FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 3. SHRI K.K CHHAPARIA, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS MOST OF THE GROUNDS EXCEPT COMMON GROUND NO.3 , WHICH IS IDENTICAL IN ALL THE APPEALS FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 4. GROUND NO.3 FOR THE ASSESSMENT YEAR 2003 - 04 IS REPRODUCED HEREIN BELOW: - 1. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.AO WAS UNJUSTIFIED IN TREATING THE BUSINES S INCOME OF THE ASSESSEE - FIRM AS INCOME FROM HOUSE PROPERTY. THE LD.CIT(A) WAS UNJUSTIFIED IN CONFIRMING THE ACTION OF THE AO. 5 . SINCE THE ASSESSEE HAS NOT PRESSED THE OTHER GROUNDS RAISED IN ALL THE APPEALS FOR ALL THE ASSESSMENT YEARS UNDER CONSI DERATION, THE SAME ARE DISMISSED BEING NOT PRESSED . 2 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES 6 . AS REGARDS GROUND NO.3 PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AS REPRODUCED HEREIN ABOVE AND WHICH IS COMMON ISSUE IN ALL THE APPEALS FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION, AT THE OUT SET THE LD. COUNSEL FOR THE ASSESSEE PRAYED BEFORE US TO ALLOW HIM TO ARGUE THE APPEAL FOR THE ASSESSMENT YEAR 2003 - 04, WHICH IS A LEAD CASE TO ALL THE APPEALS. THE LD. COUNSEL FOR THE ASSESSEE WAS ALLOWED TO ARGUE THE APPEAL FILED FOR THE ASSESSMENT YEAR 2003 - 04, WHERE THE FACTS OF THE CASE ARE NARRATED BY THE LD.CIT(A) IN HIS ORDER AT PAGES 6 - 10. THE SAME ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE. PAGE 6 - 10 OF THE LD.CIT(A) S ORDER FOR AY 2003 - 04 : - 5. GROUND NO.4 IS REGARDING CHANG E OF HEAD OF INCOME FROM NCOME FROM BUSINESS AND PROFESSION TO NCOME FROM HOUSE PROPERTY . THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD SHOWN RECEIPT OF RENT FROM VARIOUS PERSONS WHICH AGGREGATED TO R S.32,91,431/ - . SUCH RENT INCOME WAS SHOWN BY THE ASSESSEE AS ITS BUSINESS INCOME. THE ASSESSING OFFICER ASKED WHY THE SAME MAY NOT BE TREATED AS INCOME FROM HOUSE PROPERTY. IT WAS CLAIMED BY THE ASSESSEE, THAT IT WAS CARRYING OUT ITS BUSINESS OPERATION BY WAY OF GIVING GODOWN SPACE TO TENANTS. IT WAS A LSO STATED THAT IT WAS NOT A PURE RENTAL INCOME AND VARIOUS SERVICES WERE ALSO RENDERED TO THE TENANTS. THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) TO SEVERAL TENANTS. FROM THE REPLIES GIVEN BY THEM IT WAS FOUND THAT THEY HAD PAID SIMPLE RENT TO THE AS SESSEE AND NO SERVICES WERE PROVIDED . THE TDS FORM ISSUED BY THEM ALSO DESCRIBED THE PAYMENT AS RENT ONLY . IT WAS ALSO OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE FIRM WAS NOT CARRYING OUT ANY BUSINESS AND ONLY RECEIPTS CREDITED IN THE P & L WER E ON ACCOUNT OF RENT. CONSIDERING ALL THESE FACTS, THE ASSESSING OFFICER TREATED THE RENTAL INCOME RECEIVED BY THE ASSESSEE AS I NCOME FROM HOUSE PROPERTY . 5.1 THE APPELLANT AGITATED THE ISSUE BEFORE MY PREDECESSOR. BEFORE HIM IT WAS ARGUED THAT THE MA IN BUSINESS OF THE APPELLANT FIRM WAS TEA BLENDING AND PACKAGING FOR WHICH TRADE LICENSE WAS OBTAINED. AS THE FIRM WAS NOT GETTING BUSINESS IN THE INITIAL YEARS, IT GAVE SPACE IN ITS GODOWNS ON RENT TO VARIOUS PARTIES. THUS, THE ASSETS WHICH WERE LET OU T WERE THE COMMERCIAL ASSETS AND THE RENT WAS EARNED TO EXPLOIT THEM DURING LULL IN BUSINESS. SEVERAL CASE LAWS WERE CITED TO SUPPORT THE CONTENTION THAT UNDER SUCH CIRCUMSTANCES THE INCOME FROM HIRING OUT THE COMMERCIAL ASSETS IS TO BE TREATED AS BUSIN ESS INCOME. IT WAS ALSO INFORMED THAT SUBSEQUENTLY THE APPELLANT HAD CARRIED OUT TEA BLENDING ACTIVITY, INCOME FROM WHICH WAS SHOWN IN THE RETURN FROM A.Y 2006 - 07 . AFTER CONSIDERING THE SUBMISSION, MY PREDECESSOR ACCEPTED THE VIEW OF THE APPELLANT. IN TH IS HE WAS GUIDED BY THE DECISION OF CALCUTTA HIGH COURT IN THE CASE OF CIT 3 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES VS. AJMERA INDUSTRIES PVT. LTD 103 ITR 245 (CAL). HE ALSO DREW SUPPORT FROM THE DECISION OF DELHI HIGH COURT IN THE CASE OF ADDL. CIT, DELHI II VS. RAJENDRA FLOUR AND ALLIED INDU STRIES PVT. LTD 128 ITR 402 IN WHICH IT WAS HELD THAT PLANT AND MACHINERY WAS A COMMERCIAL ASSETS EVEN BEFORE ITS USE IN OWN MANUFACTURING WAS STARTED. THE DECISION OF KOLKATA BENCH OF TRIBUNAL IN THE CASE OF M/S. SAHELI TEA BLENDERS ITA NO.1548/KOL/2005 D TD. 19/04/2007 WAS ALSO RELIED UPON. 5.2 THE SAID ORDER OF MY PREDECESSOR HAS BEEN, AS STATED EARLIER, SET ASIDE BY THE TRIBUNAL TO BE RE - DECIDED ON MERITS. THEREFORE THE MATTER HAS BEEN RE - EXAMINED. MY LD. PREDECESSOR, VIDE LETTER NO.CIT(A) - XXXIII, KOL/D UTTA PROPERTIES/09 - 10 DTD 26/08/2009 HAD ASKED THE VIEW POINT OF THE DEPARTMENT IN THE MATTER. THE ASSESSING OFFICER HAS SUBMITTED HIS REPORT VIDE LETTER NO.ITO/W - 53(1)/KOL/APPEAL/09 - 10 DATED 03/09/2009. ON THE ISSUE UNDER CONSIDERATION, IT HAS BEEN STATED BY THE ASSESSING OFFICER THAT THE APPELLANT WAS OWNER OF THE GODOWN AND GODOWN SPACE WAS GIVEN ON RENT AND ACCORDINGLY REQUIRED TO BE TAXED UNDER THE HEAD NCOME FROM HOUSE PROPERTY . REGARDING THE APPELLANT S CLAIM OF BUSINESS INCOME, IT WA S STATED T HAT BUSINESS CONSISTS OF SOMETHING WHICH OCCUPIES ATTENTION AND LABOUR ON PART OF OWNER WITH PROFIT MOTIVE. HERE IT WAS CASE OF SIMPLE LETTING OUT AND THE APPELLANT DERIVED PERIODIC RENTS AS PER THE TENANCY AGREEMENTS SIGNED. THE ASSESSING OFFICER REFERR ED TO THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF SETH BANARASI DAS GUPTA VS. CIT 106 ITR 559,557 - 558(ALL) , I N WHICH HON BLE HIGH COURT HAD GIVEN GUIDING PRINCIPLES TO DETERMINE WHETHER AN ASSET IS COMMERCIAL ASSETS OR NOT. IT HAS BEEN EXPLAINED B Y THE HIGH COURT THAT EVERY ASSET WHICH IS ONCE USED AS BUSINESS ASSET OR CAPABLE OF BEING SO USED CANNOT BE REGARDED AS COMMERCIAL ASSET. FOR THAT THE ASSET MUST BE USED IN A RUNNING BUSINESS. IF THERE IS NO BUSINESS, THE ASSET CEASES TO BE COMMERCIAL AS SET. IN A SITUATION WHERE THE ASSET WAS LEASED OUT WITHOUT ACCEPTING IT IN BUSINESS, SUCH AN ASSET CANNOT BE TREATED AS COMMERCIAL ASSET. FURTHER RELIANCE HAS BEEN PLACED BY THE ASSESSING OFFICER ON ANOTHER DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS ALLAHABAD MILLING COMPANY PVT. LTD 195 ITR 325,327(ALL) AND OF MADRAS HIGH COURT IN THE CASE OF B NAGI REDDY VS CIT 199 ITR 451 (MAD) . IN THESE CASES, IT WAS HELD THAT WHAT IS RELEVANT IS THE INTENTION OF THE ASSESSEE ASSESSEE WHILE LEASING THE ASS ETS. THIS IS A QUESTION OF FACTS AND THERE CAN BE NO SUCH THING THAT AN ASSET IS NATURALLY BORN COMMERCIAL ASSET. THE ASSESSING OFFICER ALSO RELIED UPON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. NEW INDIA INDUSTRIES LTD 201 ITR 208(GUJ) . IT WAS HELD IN THAT CASE THAT WHEN AN ASSESSEE CEASES TO USE LAND OR BUILDING AS COMMERCIAL ASSETS EITHER HIMSELF OR EVEN THROUGH OTHERS THE INCOME DERIVED BY HIM BY LETTING OUT THE SAME WOULD MORE APPROPRIATELY FALL UNDER THE HEAD INCOME FROM HOUSE P ROPERTY , AS IT IS NOT FACTUM OF HIS 4 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES BUSINESS OR COMMERCIAL ACTIVITY WHICH BRING INCOME TO HIM BUT THE OWNERSHIP OF PROPERTY. 5.3 THE REPORT OF ASSESSING OFFICER WAS DISCUSSED WITH THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT. HE REITERATED THE CONTENTI ONS MADE AT THE TIME OF ORIGINAL APPELLATE PROCEEDINGS. 7 . THE LD.CIT(A) HAS DISPOSED OF THE CASE BY STATING AS UNDER: - 5.4 I HAVE CONSIDERED FACTS OF THE CASE. THE TENANCY AGREEMENTS SIGNED BY THE APPELLANT WITH VARIOUS TENANT HAVE ALSO BEEN GONE THRO UGH. IT IS SEEN THAT IN MAJORITY OF CASES, THE AGREEMENTS ARE FOR A FAIRLY LONG PERIOD OF TENANCY. FOR EXAMPLE, AGREEMENT WITH M/S. WRIGHT INDIA LTD , M/S. EUREKA FORBES LTD , M/S. LALJI MEHROTRA. M/S. PREMIER TRADING CO ARE FOR THE TENURE OF SIX, NINE, TE N AND EIGHT YEARS RESPECTIVELY. THE TERMS AND CONDITION OF THE AGREEMENTS DO NOT STATE THAT THE APPELLANT SHALL PROVIDE ANY SPECIALIZED SERVICE TO THE TENANTS. RATHER, THE AGREEMENTS APPEAR TO BE FOR SIMPLE LETTING OUT OF PROPERTY WITHOUT ANY ADD ON SERVIC ES. IN FACT, THE APEX COURT, WHILE DECIDING THE CASE OF SHAMBHU INVESTMENT (P) LTD. VS CIT 263 ITR 143(SC) , CONFIRMED THE DECISION OF CALCUTTA HIGH COURT REPORTED IN 249 ITR 47(CAL). , THAT EVEN IF CERTAIN SERVICES ARE PROVIDED WHICH ARE INCIDENTAL TO L ETTING OUT, IT COULD NOT BE SAID THAT THE RENTAL INCOME WOULD ASSUME NATURE OF BUSINESS INCOME AND THE INCOME IN SUCH CASE IS ESSENTIALLY INCOME FROM HOUSE PROPERTY . SO FAR AS THE DECISIONS REFERRED TO BY MY LD. PREDECESSOR ARE CONCERNED , THEY ARE ALL D ISTINGUISHABLE ON FACTS. OUT OF THE DECISIONS CITED IN HIS ORDER, THE CASE, WHOSE FACTS COME CLOSEST TO THE FACTS IN THE APPELLANT S CASE IS SAHELI TRADING CO. (SUPRA) . HOWEVER, A VITAL DIFFERENCE IS THAT, IN THAT CASE THE ASSESSEE WAS CARRYING OUT BUSINE SS AC TIVITY AND DURING THE PERIOD OF TEMPORARILY LULL IN THE BUSINESS, THE ASSET WAS GIVEN ON RENT. ON THE OTHER HAND, IN THE APPELLANT CASE, THE BUSINESS OF TEA BLENDING HAD ADMITTEDLY NOT COMMENCED TILL THE END OF THE YEAR UNDER CONSIDERATION AND I N FACT FOR SEVERAL SUBSEQUENT YEARS. IT COMMENCED ONLY IN THE FINANCIAL YEAR 2005 - 06 . WHILE THE APPELLANT MAY HAVE ACQUIRED LEASE HELD LAND AND CONSTRUCTED GODOWNS FOR PURPOSE OF ITS TEA BLENDING BUSINESS, BUT THE UNDISPUTED FACT IS THAT NO SUCH ACTIVITY WAS CARRIED OUT TILL AS LATE AS FY 2005 - 06 . FOR THAT REASON, LETTING OUT OF GODOWNS COULD NOT BE CALLED TO BE MADE IN THE PERIOD OF TEMPORARILY LULL IN BUSINESS. RATHER IT WAS DONE PRIOR TO THE COMMENCEMENT OF BUSINESS. IT IS WELL SETTLED THAT ANY INCOME IN THE PRE - COMMENCEMENT PERIOD IS TO BE TAXED ACCORDING TO ITS NATURE UNDER THE APPROPRIATE HEAD OF INCOME. FOR EXAMPLE INTEREST EARNED ON SURPLUS FUND DEPLOYED IN PRE - OPERATIVE PERIOD IS TAXED UNDER THE HEAD INCOME FOR OTHER SOURCES AS HELD BY THE A PEX COURT IN THE CASE OF TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD . VS. CIT 227 ITR 172(SC). 5 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES WHILE DELIVERING THE ABOVE DECISION, THE APEX COURT HAS CATEGORICALLY STATE THAT IF BEFORE COMMENCEMENT OF ITS BUSINESS AS ASSESSEE LETS OUT ITS HOUSE PROP ERTY, THE RENT INCOME SHALL BE TAXABLE U/S. 22 OF I.T ACT 1961. THE OTHER DECISIONS CITED BY MY LD. PREDECESSOR CAN ALSO BE SIMILARLY DISTINGUISHED ON FACTS. THE DECISION IN THE CASE OF RAJENDRA FLOUR AND ALLIED INDUSTRIES PVT. LTD (SUPRA) WAS GIVEN ON PECULIAR FACTS OF THAT CASE, SINCE THE ASSESSEE IN THAT CASE COULD NOT START OPERATION DUE TO CERTAIN EXTRANEOUS CIRCUMSTANCES LIKE INTRODUCTION OF A NEW REQUIREMENT OF OBTAINING INDUSTRIAL LICENCE, DEATH OF A KEY PERSON (MANAGING DIRECTOR) ETC. SO FAR A S THE DECISION IN THE CASE OF AJMERA INDUSTRIES PVT. LTD (SUPRA) IS CONCERNED, ITS RATIO, IN MY OPINION, DOES NOT ASSIST THE APPELLANT. IN THAT CASE, RENT WAS DERIVED FROM FACTORY AS WELL AS NON - FACTORY BUILDING. THE HON BLE COURT OBSERVED THAT SINCE MAN UFACTURING HAD NOT COMMENCED, THE RENT FROM FACTORY COULD NOT BE CALLED BUSINESS INCOME . HOWEVER, SINCE AS PER FINDING OF FACTS, THE BUSINESS WAS OTHERWISE BEING CARRIED OUT, RENT FROM NON - FACTORY BUILDING WAS TREATED AS BUSINESS INCOME. IN THE APPELL ANT S CASE, AS DISCUSSED ABOVE, NO BUSINESS HAD BEEN STARTED AT ALL. ALSO, THE GODOWNS LET OUT WERE CONSTRUCTED TO BE USED FOR CARRYING OUT PROCESS OF TEA BLENDING AND IN THAT SENSE WERE AKIN TO FACTORY BUILDING. THUS, THE RATIO OF THE DECISION ACTUALLY GOES AGAINST THE APPELLANT. SIMILARLY RATIO OF ANOTHER DECISION OF APEX COURT IN THE CASE OF UNIVERSAL PLAST LTD VS. CIT 237 ITR 454 (SC) REFERRED TO BY MY PREDECESSOR ALSO GOES AGAINST THE APPELLANT BECAUSE IT STRESSES ON THE INTENTION OF THE ASSESSEE WHI LE H I RING OUT THE ASSETS AND ALSO LISTS PERIOD FOR WHICH THE ASSETS ARE HIRED OUT TO BE A RELEVANT FACTOR IN ASCERTAINING THE INTENTION. AS MENTIONED EARLIER, IN THE APPELLANT S CASE THE TENANCY AGREEMENT ARE FOR FAIRLY LONG TENURE OF SIX TO TEN YEARS AND THUS THE INTENTION PRIMA - FACIE IS OF LETTING OUT OF OWNED PROPERTY AND NOT TEMPORARY EXPLOITATION OF COMMERCIAL ASSET. IN MY OPINION, THE DECISIONS CITED BY THE ASSESSING OFFICER IN HIS REPORT , VIZ. SETH BANARASI DAS GUPTA (SUPRA) AND NEW INDIA INDUSTRIES LTD (SUPRA) APPEAR TO BE MORE APPROPRIATE UPON THE FACTS OF THE APPELLANT S CASE. ANOTHER ARGUMENT MADE BY THE APPELLANT IN THIS REGARD WAS THAT IT WAS SYSTEMATICALLY CARRYING OUT CONSTRUCTION OF GODOWNS TO EXPLOIT DEMAND OF GODOWN SPACE IN THE AREA AN D THUS IT WAS A BUSINESS ACTIVITY. RELIANCE WAS PLACED IN THIS REGARD ON THE RATIO GIVEN IN THE DECISION OF ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. Y. NARAYAN MURTHY 270 ITR 275. IN THIS RE G ARD, ON GOING THROUGH THE ORIGINAL PARTNERSHIP DEAL (BEF ORE BEING AMENDED SUBSEQUENTLY), IT IS SEEN THAT THE BUSINESS ACTIVITY MENTIONED THEREIN IS TEA BLENDING AND PACKAGING AND NOT CONSTRUCTING AND LETTING OUT OF GODOWNS. THE SAME IS THE POSITION IN RESPECT OF THE ORIGINAL TRADE LICENSE OBTAINED BY THE APP ELLANT. THE ORIGINAL LICENSE WAS FOR TEA BLENDING & PACKAGING , WHICH WAS GOT 6 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES AMENDED TO TEA BLENDING, PACKAGING & WAREHOUSING DURING FY 2006 - 07 ONLY I.E AFTER THE END OF THE YEAR UNDER CONSIDERATION. THUS PRIMA FACIE IT CAN N OT BE SAID THAT THE APPELLA NT WAS IN THE BUSINESS OF COMMERCIALLY CONSTRUCTING, DEVELOPING AND LETTING OF PROPERTY. FURTHERMORE, EVEN IF FOR THE SAKE OF ARGUMENT IT IS ACCEPTED THAT THE APPELLANT WAS ENGAGED IN SUCH BUSINESS, THEN ALSO THE INCOME EARNED HAS TO BE TAXED UNDER THE APP ROPRIATE HEAD. IN THE CASE OF SULTAN BROTHERS P.LTD VS. CIT 51 ITR 353(SC), THE ASSESSEE WA S ENGAGED IN BUSINESS OF COMMERCIALLY DEVELOPING LAND AND LEASING THE DEVELOPED PROPERTY, EVEN THEN ITS INCOME FROM THE HOTEL BUILDING DEVELOPED BY IT AND GIVEN ON RENT WAS NOT CONSIDERED BY THE SUPREME COURT AS BUSINESS INCOME. 5.6 IN VIEW OF THAT DETAILED DISCUSSION MADE ABOVE, I AM CONSTRAINED TO DIFFER FROM THE VIEW TAKEN BY MY LD. P REDECESSOR AND HOLD THAT INCOME DERIVED F ROM LETTING OUT OF GODOWN IS TO BE TAX ED UNDER THE HEAD NCOME F ROM HOUSE PROPERTY . THE ACTION OF ASSESSING OFFICER IN THIS REGARD IS ACCORDINGLY UPHELD. FURTHER, SINCE THE INCOME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY, IT SHALL BE ENTITLED FOR STATUTORY DEDUCTION PROVIDED UNDER SECTION 24 AND NOT VARIOUS DEDUCTIONS CLAIMED BY THE APPELLANT AGAINST BUSINESS INCOME. THEREFORE, THERE IS NO NEED TO EXAMINE ADMISSIBILITY OF VARIOUS BUSINESS EXPENSE CLAIMED BY THE APPELLANT, ALTHOUGH THIS ISSUE WAS SET ASIDE BY MY PREDECESSOR TO THE FILE OF THE ASSESSING OFFICER IN HIS ORDER. 8 . THE LD. COUNSEL FOR THE ASESSEE AT THE OUTSET ARGUED THAT THE ISSUE RELATING TO THE INCOME EARNED BY THE ASSESSEE I.E WHETHER IT IS AN INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND PROFIT AND GA INS FROM BUSINESS OR PROFESSION HAS BEEN DECIDED BY THE LD. CIT(A) IN THE FIRST ROUND IN FAVOUR OF THE ASSESEE. MATTER TRAVELLED TO ITAT KOLKATA, WHO REMANDED THE MATTER TO THE LD.CIT(A) ON LEGAL ISSUE TO DECIDE THE LIMITATION POINT AFRESH IN VIEW OF T HE DECISION OF THE ITAT KOLKATA BENCHES. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE ISSUE RELATING TO THE INCOME EARNED BY THE ASSESSEE HAS ATTAINED FINALITY THAT THE INCOME EARNED BY THE ASSESSEE HAS TO FALL UNDER THE HEAD FROM BUSINESS OR PROFESSION. SECONDLY, THE ORDER PASSED BY THE LD. CIT(A) IN THE SECOND ROUND , WHO HELD THE SAME AS INCOME FROM HOUSE PROPERTY IS BAD IN LAW. THE LD. COUNSEL FOR THE ASSESSEE ON MERITS ARGUED THAT THE ASSESSEE TOOK THE LAND ON LEASE AND CONSTRUCTE D WAREHOUSE WITH AN INTENTION OF EXPLOITING THE ASSET ON COMMERCIAL B ASIS AND SUB - LET TING THE SAME. THE ASSESSEE HAD PROVIDED VARIOUS 7 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES SERVICES LIKE S ECURITY CHARGES, ELECTRICITY CHARGES, TRUCK PARKING, PLACE FOR TRUCK DRIVERS HALT ETC. THEREFORE, RELY ING ON THE DECISIONS OF VARIOUS COURTS OF LAW AND DISTINGUISHING THE DECISIONS BY THE LD.CIT(A) IN THE IMPUGNED ORDER PRAYED TO TREAT THE SAME AS INCOME UNDER THE HEAD BUSINESS OR PROFESSION . 9 . THE LD.DR ON THE OTHER HAND, HAS RELIED UP ON THE ORDER OF THE LD.CIT(A) AND THAT OF THE AO. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT WAS STATED THAT THE ASSESSEE ITSELF IS A PARTNERSHIP FIRM VIDE PARTNERSHIP DEED DATED 01 ST APRIL 1994. THE ASSESSEE FIRM WAS FORMED FOR CARRYING ON BUSINESS OF TEA BLENDING AND PACKAGING AND ALSO ACTING AS BUSINESS IMPORTER, EXPORTER, SUPPLIER AND COMMISSION AGENT. ADMITTEDLY, NO SIGNIFICANT ACTIVITIES WAS DONE IN THE ASSESEE FIRM UP TO AY 1998 - 99 . VIDE SUPPLEMENTARY PARTNERSHIP DEED DATED 01 ST APRIL 1998, THE ORIGINAL DEED W A S AMENDED TO CARRY ON LETTING OUT OF GODOWN SPACE ON RENTAL BASIS AND TO ACT AS IMPORTER AND EXPORTER, SUPPLIER, COMMISSION AGENT ETC. REFERENCE OF THE SAME CAN BE MADE FROM CIT(A) S ORDER DATED 25 - 06 - 07 , TRADE LICENSE ISSUED BY MAHESHTALA MUNICIPALITY AND RECONSTITUTED PARTNERSHIP DEED DATED 31 ST MAY 1998 , WHICH WERE SUBMITTED FOR AT ANNEXURES A(P 1 - 8), B(P 9) & C(P 10 - 21) RESPECTIVELY. IT IS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT M/S. DUTTA PROPE RTIES ARE THE LESSEE OF THE PROPERTY AND NOT THE ABSOLUTE OWNERS . FOR CARRYING ON THE BUSINESS AS PER SAID DEED 31 ST MAY 1998 , THE ASSESSEE TOOK ON LEASE LAND AT GOBINDAPUR, BBT ROAD, MAHESHTALA FROM ITS PARTNERS WITH AN INTENTION TO CONSTRUCT WAREHOUS ING SHEDS FOR ITS BUSINESS. THE PARTNERS IN THEIR INDIVIDUAL CAPACITY CONTINUED TO BE OWNER OF THE LAND. AFTER TAKING THE SAID LAND ON LEASE , THE ASSESSEE FIRM APPLIED TO MAHESHTALA MUNICIPALITY CORPORATION FOR TRADE LICENSE TO CARRY ON BUSINESS AS PER SAID RECONSTITUTED DEED. COPY OF TRADE LICENSE IS ENCLOSED MARKED ANNEXURE B PAGE 9. THUS IT IS EVIDENT FROM RECORDS THAT THE MAIN OBJECTS OF THE PARTNERSHIP FIRM WAS INTER - ALIA RENTING THE WAREHOUSE, WHICH WAS CONSTRUCTED ON LEASEHOLD LAND. THE LD. COU NSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THE FY 1998 - 99 RELEVANT TO AY 1999 - 2000, THE ASSESSEE FIRM TOOK A LOAN OF R S. 20 LAKHS FOR CONSTRUCTION OF GODOWN/SHED AND TO T AL COST INCURRED ON SUCH CONSTRUCTION 8 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES (ASBESTOS SHED) AS AT 31.03.1999 WHICH WAS RS.24,36,500/ - . REFERENCE WAS MADE TO AUDITED ACCOUNTS OF THE FIRM AS PER ENCLOSED ANNEXURE D PAGE 22 - 28 ) . IN THE SAID YEAR, IT HAD RECEIVED RENT OF RS.7,19,328/ - AND PAID INTEREST ON LOAN OF RS.3,25,048/ - AND OTHER EXPENSES. THE ASSESSEE FIRM, M/S. DUTT A PROPERTIES STARTED EXPLOITING THE PROPERTY FOR BUSINESS PURPOSES BY LETTING OUT THE SAME ON COMPOSITE RENTAL BASIS. BESIDES THIS, PROPERTY WAS NOT AT ALL A DWELLING UNIT AND IT COULD BE USED ONLY FOR WAREHOUSE. IT WAS CONSTRUCTED WITH ASBESTOS SHEET. T HUS, IT COULD NOT BE TECHNICALLY TREATED AS HOUSE. THE ASSESSEE FIRM ALSO PROVIDING OTHER FACILITIES LIKE SECURITY CHARGES, ELECTRICITY CHARGES, TRUCK PARKING, PLACE FOR TRUCK DRIVERS HALT ETC. THERE EXISTED ONLY ONE SINGLE ENTRANCE TO THE WAREHOUSE AND KEYS OF SUCH ENTRANCE GATE WAS LYING IN THE CUSTODY OF M/S. DUTTA PROPERTIES. THE ASSESSEE HAS SHOWN ALL ALONG SUCH RENTAL CHARGES AS PROFITS AND GAINS FROM BUSINESS AND PROFESSION SINCE 1999 - 2000. HOWEVER, FOR THE FIRST TIME WHILE PASSING ASSESSMENT ORD ER FOR A.Y 2003 - 04 , THE AO TOOK A VIEW THAT SUCH RENTAL CHARGES SHOULD HAVE BEEN TREATED AS INCOME FROM HOUSE PROPERTY INSTEAD OF PROFITS AND G AINS FROM BUSINESS AND PROFESSION . THEREAFTER, THE AO REOPENED ASSESSMENT PROCEEDINGS U/S. 148 FOR THE AY 19 99 - 2000, 2000 - 01, 2001 - 02, 2002 - 03, 2004 - 05 & 2005 - 06. AGAINST THE ORDER FOR A.Y 2003 - 04, THE ASSESSEE FILED AN APPEAL TO THE LD.CIT(A) AND THE LD.CIT(A) VIDE AN ORDER DATED 25 - 06 - 07 IN APPEAL NO.159/CIT(A) - XXXIII/W 53(1)CAL/06 - 07 DIRECTED THE AO TO TREAT GODOWN RENT AS BUSINESS INCOME OF THE OF THE ASSESSEE FIRM. EXTRACTS OF WHICH ARE REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE: - CONSIDERING THE ABOVE FACTS AND JUDICIAL PRONOUNCEMENTS, THE AO IS DIRECTED TO TREAT THE GODOWN RENT AS BUSINESS INCOME OF THE APPELLANT. IT IS HOWEVER FOUND THAT THE VARIOUS EXPENSES AS CLAIMED IN THE P/L ACCOUNT WERE NOT EXAMINED BY THE AO TO ASCERTAIN AS TO WHETHER ALL THESE EXPENSES WERE CORRECTLY CLAIMED AND WERE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF APPELLAN T S BUSINESS. FOR EXAMPLE, THE ASSESSEE WAS UNABLE TO EXPLAIN THE NECESSITY & RELEVANT OF COMMISSION & BROKERAGE EXPENSES VIS - - VIS THE EARNING OF RENTAL INCOME. HENCE, THE AO WOULD BE FREE TO EXAMINE AS TO WHETHER THE VARIOUS EXPENSES AS CLAIMED IN THE P/L ACCOUNT WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE APPELLANT S BUSINESS OR NOT AND TO TAKE NECESSARY ACTION IN THIS REGARD IN ACCORDANCE WITH LAW. 9 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES THUS FROM THE SAID ORDER OF THE LD.CIT(A) IT IS CLEAR THAT RENT FROM GODOWN SHOULD BE COVER ED UNDER INCOME FROM BUSINESS AND PROFESSION INSTEAD OF INCOME FROM HOUSE PROPERTY . HOWEVER, THE LD.CIT(A) HAS SET ASIDE THE CASE TO AO TO VERIFY THE GENUINENESS OF EXPENSES CLAIMED AGAINST THE BUSINESS INCOME. AGAINST THE SAID ORDER, THE ASSESSEE AND DEPARTMENT FILED APPEAL TO ITAT AND THE ITAT VIDE ORDER DATED 07 - 11 - 08 SET ASIDE THE AFORESAID ORDER OF CIT(A) TO VERIFY WHETHER THE ASSESSMENT ORDER WAS BARRED BY LIMITATION. THE ITAT DID NOT GO INTO THE ISSUE WHETHER THE RENTAL INCOME WILL BE COVERED UNDER INCOME FROM HOUSE PROPERTY OR UNDER PROFITS AND GAINS FROM BUSINESS AND PROFESSION . EXTRACTS OF SAID ITAT ORDER IS REPRODUCED HEREIN BELOW: - WE ARE ALSO OF THE CONSIDERED OPINION THAT WHETHER THE ASSESSMENT ORDER WAS PASSED AFTER THE STATUTOR Y DATE OF LIMITATION REQUIRES DETAILED EXAMINATION OF RELEVANT FACTS AND IF THE ORDER HAS BEEN PASSED BEYOND THE STATUTORY DATE OF LIMITATION, THE OBJECTION TO THE VALIDITY OF ASSESSMENT IS A QUESTION OF LAW AND EVEN IF THE ASSESSEE HAD NOT PRESSED IT BE FORE THE LD.CIT(A) FOR ANY OTHER REASON, IT IS OUR DUTY TO TAKE NOTE OF THE OBJECTION OF THE ASSESSEE TO THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. IT IS ALSO THAT THE REVENUE IN ITS APPEAL HAS CHALLENGED THE ORDER OF THE LD.CIT(A) ON THE GROUND THAT THE LD.CIT(A) HAD ACCEPTED ADDITIONAL EVIDENCE IN VIOLATION OF THE PROVISIONS OF RULE 46A OF THE I. T RULES. IT IS ALSO OBSERVED THAT THE LD.CIT(A) HAS REQUIRED THE AO TO EXAMINE THE CLAIM OF EXPENSES AND THUS HE RESTORED THE ISSUE TO THE AO WHICH IS NOT WITH IN HIS POWER U/S. 251 OF THE ACT AS AMENDED W.E.F 1 - 6 - 01 . WE, THEREFORE, CONSIDERER IT FAIR AND REASONABLE TO RESTORE THE ISSUE TO THE FILE OF THE LD.CIT(A) WITH THE DIRECTION THAT HE SHOULD ASCERTAIN WHETHER THE LD.CIT HAS DECIDED THE COMPLAINT OF THE ASS ESSEE IN THIS REGARD. HE SHOULD ALSO CONSIDER THE AFFIDAVIT OF THE A.R DISCUSSED ABOVE AND DECIDE THE ISSUE OF VALIDITY OF THE ASSESSMENT ORDER AFRESH AFTER EXAMININING THE FACTS AND GIVING PROPER OPPORTUNITY TO THE ASSESSEE AS ALSO TO THE ASSESSING OFFI CER. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD.CIT(A) WITH THE DIRECTION THAT THE VALIDITY OF THE ASSESSMENT ORDER ON THE GROUND OF LIMITATION SHOULD BE DECIDED AFRESH IN VIEW OF THE DISCUSSION ABOVE. SINCE THE MATTER IS BEING SET ASIDE TO ASCERTAIN THE VALIDITY OF THE ASSESSMENT ORDER ALL OTHER GROUNDS OF APPEAL BY THE ASSESSEE AND CROSS APPEAL BY THE R E VENUE CANNOT BE CONSIDERED BY US AT THIS STAGE. THE LD. CIT(A) IS, THEREFORE, DIRECTED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE AND PROVIDE PROP ER OPPORTUNITY TO THE A SSESSING O FFICER ON THE ADDITIONAL EVIDENCE ADMITTED BY HIM IF IT IS ASCERTAINED THAT THE ASSESSMENT ORDER WAS PASSED WITHIN THE LIMITATION PERIOD AND THE ORIGINAL ASSESSMENT WAS VALID. THE LD. CIT(A) SHOULD 10 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES ALSO DECIDE THE GROUNDS OF APPEAL BEFORE HIM HIMSELF AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE AND THE ASSESSING OFFICER AND SHOULD NOT RESTORE ANY OF THE ISSUES TO THE ASSESSING OFFICER. LATER ON CIT(A) PASSED AN ORDER ON 20 TH MARCH 2012 BY CONCLUDING THAT ASSESSMENT ORDER WAS PASSED WITHIN STATUTORY LIMIT AND FURTHER HELD THAT RENTAL INCOME RECEIVED BY THE ASSESSEE WAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY . 1 1 . WE FURTHER FIND THAT THE LD.CIT(A) IN THIS CASE HAS RELIED UPON THE DECISION S OF THE HON BLE APEX C OURT IN THE CASE OF SHAMBHU INVESTMENT (P) LTD VS. CIT REPORTED IN 263 ITR 143(SC) AND SULTAN BROTHERS P. LTD VS. CIT REPORTED IN 51 ITR 353(SC) AND CONCLUDED THAT RESPECTIVE INCOME SHALL BE TREATED AS INCOME FROM HOUSE PROPERTY. IN THE CASE OF SAMBHU INV ESTMENT (P) LTD (SUPRA) SECURITY DEPOSIT RECOVERED FROM TENANT WAS R S.4,25,000/ - WHEREAS COST OF PROPERTY WAS RS.5,42,443/ - I.E COST OF PROPERTY WAS MORE OR LESS RECOVERED FROM TENANT. THE HON BLE COURTS OBSERVED THAT SINCE THE ASSESSEE RECOVERED ALMOST E NTIRE VALUE OF LEASE PREMIUM BY WAY OF SECURITY DEPOSIT , IT WAS A CASE WHEREIN PRIMARY OBJECT IVE WA S LETTING OUT. HOWEVER, IN THE PRESENT CASE FACTORY SHED WAS CONSTRUCTED MAINLY WITH LOANS FUNDS AND LEASEHOLD LANDS, WHICH ITSELF INDICATE THAT THE AS SESSEE WAS COMMERCIALLY CARRYING ON BUSINESS. THEREFORE, THE CASE RELIED UPON BY THE LD.CIT(A) IN THE CASE OF SHAMBHU INVESTMENT (P) LTD (SUPRA) IS DISTINGUISHABLE AND CANNOT HELP THE REVENUE . 1 1 .1 THE HON BLE SC IN THE CASE OF SULTAN BROTHERS (SUPRA) H ELD THAT IN THAT CASE THE APPELLANT WAS NOT PROVIDED ANY SERVICE, BUT THAT WAS MERELY A CASE FOR LETTING OUT OF THE PROPERTY. BUT IN THE PRESENT CASE THE ASSESSEE HAS BEEN PROVIDING SECURITY CHARGES, ELECTRICITY CHARGES, TRUCK PARKING, PLACE FOR TRUCK DRIVERS HALT ETC. THEREFORE, THE DECISION OF THE HON BLE SC IN THE CASE OF SULTAN BROTHERS PVT. LTD (SUPRA) IS ALSO DISTINGUISHABLE ON FACTS AND CIRCUMSTANCES OF THE CASE AND IT CANNOT HELP THE REVENUE . FURTHERMORE, THE DECISIONS IN THE CASES OF SAMBHU I NVESTMENT (P) LTD (SUPRA) & M/S. SULTAN BROTHERS PVT. LTD (SUPRA) HAVE BEEN DISCUSSED IN SUBSEQUENT DECISIONS IN PFH MALL & RETAILS MANAGEMENT LTD VS. ITO REPORTED IN (2008) 110 ITD 337 (KOL) WHERE THE FACTS ARE THAT INCOME IS ATTACHED TO IMMOVABLE OF PROPERTY , CANNOT BE SOLE CRITER ION FOR ASSESSMENT OF SUCH INCOME AS INCOME FROM HOUSE PROPERTY AND IT IS 11 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES NECESSARY TO DIG FURTHER TO FIND OUT WHAT ARE THE PRIMARY OBJECT S OF THE ASSESSEE WHILE EXPLOITING PROPERTY. IF IT IS FOUND THAT MAIN INTENTI ON IS FOR SIMPLY LETTING OUT OF PROPERTY OR ANY PORTION THEREOF, THEN INCOME MUST BE ASSESSED AS INCOME FROM HOUSE PROPERTY BUT IF MAIN INTENTION IS FOUND TO BE EXPLOITATION OF IMMOVABLE PROPERTY BY WAY OF COMMERCIAL ACTIVITIES, THEN INCOME MUST BE HELD AS BUSINESS INCOME UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION . IT WAS HELD THAT THE ASSESSEE IN THAT CASE HAS BEEN PROVIDING HOST OF SERVICES/FACILITIES/AMENITIES IN SAID MALLS/BUSINESS CENTRES, IT COULD BE SAID THAT BASIC INTENTION OF ASSESSEE WAS COMMERCIAL EXPLOITATION OF ITS PROPERTIES BY DEVELOPING THEM AS SHOPPING MALLS/BUSINESS CENTRES AND, THEREFORE, THE SAME WAS HELD TO BE BUSINESS INCOME . 1 1 .2 IN THE CASE OF CHENNAI PROPERTIES & INVESTMENT LTD VS. CIT REPORTED IN 56 TAXMAN.COM 456(SC ) AS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US BY WAY OF HIS WRITTEN SUBMISSION , IT WAS HELD THAT WHERE THE MAIN OBJECTS OF THE COMPANY WAS TO ACQUIRE PROPERTIES AND TO EARN INCOME BY LETTING OUT SAME, THE SAID INCOME WAS TO BROUGHT TO T AX AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE PROPERTY . THE LD.DR WHILE ARGUING THE MATTER HAS RELIED UPON THE JUDGMENT S OF HON BLE SC IN THE CASE OF KARANPURA DEVELOPMENT CO. LTD VS. CIT REPORTED IN 44 ITR 362(SC) & EAST INDIA HOUSING & LAND D EVELOPMENT TRUST LTD VS. CIT REPORTED IN (1961) 42 ITR 49. IT WAS BROUGHT TO OUR NOTICE THAT BOTH THESE SAID JUDGMENTS WERE RELIED UPON THE HON BLE APEX COURT WHILE PASSING ORDER IN THE CASE OF CHENNAI PROPERTIES & INVESTMENTS LTD(SUPRA) . THE LD.DR HA S ALSO RELIED UPON THE DECISION IN THE C A SE OF JYOTI ESTATE VS. DCIT (54 TAXMANN.COM 410 (GUJ) , WHICH IS DISTINGUISHABLE IN FACTS OF THE PRESENT CASE. IN THIS CASE, SINCE THE ASSESSEE WAS NOT PROVIDING COMPLEX SERVICE ORIENTED FACILITIES AND THE INCOME WAS DERIVED BY WAY OF PROPERTY RIGHTS. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE WAS NEITHER ABSOLUTE OWNER NOR HAD SURPLUS OWN CAPITAL. IT WAS PROVIDING COMPLEX SERVICES. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE DECISIONS AS RELIED UPON BY THE LD. COUNSEL FOR THE ASESSEE MENTIONED HEREIN ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE BEING PARTNERSHIP FIRM WAS HAVING WAREHOUSING BUSINESS AND LOCAL TRADE LICENSE AUTHORITIES HAVE ACCEPTED THE ASSESSEE FIRM S BUSINESS 12 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES TO CARR Y OUT WAREHOUSING BUSINESS. TO DO SO THE ASSESSEE TOOK A LAND ON LEASE, WHICH PROVES THE INTENTION OF COMMERCIAL EXPEDIENCY BY THE ASSESSEE . ACCORDINGLY, WE HOLD THAT INCOME OF THE ASSESSEE SHOULD BE ASSESSED UNDER THE HEAD BUSINESS OR PROFESSION . THU S, THE GROUND NO.3 OF THE ASSESSEE S APPEAL FILED FOR THE FOR THE ASSESSMENT YEAR 2003 - 04 IS ALLOWED AND THE APPEALS FILED FOR THE ASSESSMENT YEARS 1999 - 2000 TO 2005 - 06 IN ITA NOS. 973 TO 979/KOL/2012 ON THE ISSUES ARE ALSO ALLOWED. ITA NO. 883/KOL/202 A. Y 1999 - 2000(BY THE REVENUE ) 1 2 . IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNSECURED LOAN OF RS.20 LACS WITHOUT THE FACTS OF THE CASE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF UNSECURED LOAN OF RS.20 LACS WITHOUT GIVING OPPORTUNITY TO THE AO AS PER RULE 46A OF THE IT RULE. 3. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR MODIFY ANY ONE OR ALL OF THE GROUNDS OF APPEAL MENTIONED ABOVE. 1 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE AO FOUND THAT THE SECURED LOAN OF RS. 20,00,000/ - WAS SHOWN AS RECEIVED ON THE LIAB ILITY SIDE OF THE BALANCE SHEET. THE ASSESSEE WAS ASKED TO PRODUCE DETAILS AND CONFIRMATION FOR THE SAME. THE ASSESSEE STATED THAT THE LOAN WAS OBTAINED FROM FOUR PERSONS NAMELY SRI K.DUTTA & SONS RS.6,00,000/ - , SRI SAROJ RANI BANSAL RS. 4,00,000/ - , R .D BANSAL RS.6,00,000 AND BAISALI BANSAL RS.4,00,000/ - . THE ASSESSEE HAS ALSO PRODUCED THEIR (SAID PERSONS) CONFIRMATIONS. BUT THE AO FOUND THAT AS PER CONFIRMATION ETTERS, THE SAID LOANS WERE NOT GIVEN TO THE ASSESSEE FIRM, IT WAS GIVEN TO M/S. DUTTA TE A BELNDERS. THUS, THE AO TREATED THE SAID LOAN OF RS.20 LAKHS AS UNEXPLAINED. 1 4 . THE LD.CIT(A) VIDE PARA 6.2 OF HIS ORDER HAS ALLOWED THE RELIEF TO THE ASSESSEE. 1 5 . T HE LD.DR HAS RELIED ON THE ORDER OF THE AO WHEREAS THE LD. COUNSEL FOR THE ASSESSEE H AS RELIED ON THE ORDER OF THE LD.CIT(A) IN ALLOWING RELIEF TO THE ASSESSEE. 13 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES 1 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. COUNSEL FOR THE ASSESSEE HAS ARGUED THAT M/S. DUTTA TEA BLENDERS IS A GROUP CONCERN OF THE ASSESSEE. THE SAID FOUR PERSONS VIZ. SRI K.DUTTA & SONS , SRI SAROJ RANIO BANSAL, R.D BANSAL & BAISALI BANSAL HAD INITIALLY GIVEN LOAN TO M/S. DUTTA TEA BLENDERS, WHICH HAD TRANSFERRED THE SAME TO THE ASSESSEE FIRM. THE SAID TRANSFE R WAS THROUGH BANKING CHANNEL AND WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS W E LL AS M/S. DUTTA TEA BLENDERS. IN SUPPORT , LEDGER ACCOUNT OF M/S. DUTTA TEA BLENDERS AND M/S. DUTTA PROPERTIES WERE ALSO PRODUCED FOR CROSS VERIFICATION. W E FURTHER FIND THAT THE AO HAS TREATED THE SAID LOANS AS UNEXPLAINED SOLELY ON THE GROUND THAT CONFIRMATIONS FROM THE SAID FOUR PERSONS WERE SHOWING THAT THE LOANS WERE GIVEN TO M/S. DUTTA TEA BLENDERS AND NOT THE ASSESSEE FIRM. WE FURTHER FIND THAT M/S. DUTTA TEA BELNDERS HAD TRANSFERRED THE SAID AMOUNT TO THE ASSESSEE FIR M . SO FAR AS THE ASSESSEE IS CONCERNED, IT HAS RECEIVED THE MONEY THROUGH M/S. DUTTA TEA BLENDERS. THEREFORE, THE SOURCE OF THE MONEY RECEIVED HAS BEEN FULLY EXPLAINED BY THE ASSESSEE BY WAY OF CONFIRMATIONS GIVEN BY SAID 4 PERSONS. UNDER SUCH CIRCUMSTANCES, THE LOAN OF RS. 20 LAKHS APPEARING IN THE BALANCE SHEET CANNOT BE TREATED AS UNEXPLAINED. THE LD.CIT(A) HAS RIGHTLY DELETED THE ADDITION SO MADE BY THE AO. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD.CIT(A). WE UPHOLD THE SAME. THE GROUNDS RAISED BY THE DEPARTMENT ARE D ISMISSED . 1 7 . IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NOS.973 TO 979/KOL/2012 FILED FOR THE ASSESSMENT YEARS 1999 - 2000 TO 2005 - 06 ARE PARTLY AL LOWED AND THE APPEAL OF THE REVENUE IN ITA NO.883/KOL/2012 FILED FOR THE ASSESSMENT YEAR 1999 - 2000 IS DISMISSED AS STATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 01 - 07 - 2015 SD/ - SD/ - ( MAHAVIR SINGH ) ( B.P.JAIN ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED : 01 - 07 - 2015 14 ITA NO S . 973 TO 979 & 883/KOL/12 - C - BPJ(AM) M/S. DUTTA PROPERTIES **PRADIP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT - M/S. DUTTA P ROPERTIES C/O CHHAPARAI & ASSOCIATES 8 CAMAC ST, SHANTINIKETAN BUILDING, 5 TH FL., SUIT NO.2, KOL - 17. 2 RESPONDENT I T O W 53(1), AAYKAR BHAWAN DAKSHIN 2 GARIAHA T ROAD, KOL - 68. 3 . THE CIT(A) CONCERNED 4. 5. THE CIT CONCERNED THE D.R 6. GUARD FILE TRUE COPY, BY ORDER ASSTT. REGISTRAR