VEERPRABHU COMMUNICATION PVT. LTD.,KOLKATA V. ACIT, CC - 2(4), KOLKATA, KOLKATA

ITA 1217/KOL/2024

AI Insights

The case involves two appeals by Veerprabhu Communications Private Limited against the orders of the CIT(A), Kolkata, for the assessment years 2015-2016 and 2016-2017. The primary issue was the classification of rental income received by the assessee, which was declared under 'business income' in the tax returns but was contested by the revenue to be classified under 'income from house property'. The tribunal considered the Memorandum of Association of the company and relevant Supreme Court precedents, particularly the Chennai Properties and Investment Ltd. case, to conclude that the income should be classified as 'income from house property'.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361008 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2016-2017
• Other Referred Cases: Chennai Properties and Investment Ltd. vs. 56 taxmann.com 456(SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAKASHNATH BARNWAL
• Keywords: Business income; TDS; Search and seizure; FORM 26AS

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER IT(SS)A No.51/KOL/2024 (निर्धारण वर्ा /Assessment Year : 2015-2016) Veerprabhu Communications Private Limited, 30, Jawaharlal Nehru Road, 2nd Floor, Block C, Kolkata-700016 Vs ACIT, CC-2(4), Kolkata PAN No. :AABCL 0051 A AND ITA No.1217/Kol/2024 (निर्धारण वर्ा /AYrs. : 2016-2017) Veerprabhu Communications Private Limited, 30, Jawaharlal Nehru Road, 2nd Floor, Block C, Kolkata-700016 Vs ACIT, CC-2(4), Kolkata PAN No. : AABCL 0051 A (अपीलधर्थी /Appellant) .. (प्रत्यर्थी / Respondent) निर्धाररती की ओर से /Assessee by : None रधजस्व की ओर से /Revenue by : Shri Prakash Nath Barnwal, CIT-DR सुनवाई की तारीख / Date of Hearing : 21/05/2025 घोषणा की तारीख/Date of Pronouncement : 21/05/2025 आदेश / O R D E R Per Bench : These are two appeals filed by the assessee against the separate orders passed by the ld. CIT(A), Kolkata-26, both dated 08.03.2024 for the assessment year 2015-2016 & 2016-2017. 2. None appeared on behalf of the assessee, however, adjournment applications have been filed by the assessee in both the appeals stating therein as under :- IT(SS)A No.51/Kol/2024 & ITA No.1217/Kol/2024 2 IT(SS)A No.51/Kol/2024 & ITA No.1217/Kol/2024 3 3. A perusal of the records shows that both the appeals have been filed on 28.5.2024. The appeals have been posted on multiple occasions on 29.08.24, 05.11.2024, 24.12.2025 19.02.2025, 21.04.2025 and even today. The adjournment applications filed by the assessee have been filed on all the occasions with same reasons that the ld AR was not available. A perusal of the records also shows that there is no authorization for representation nor Vakalatnama of any ld A.R. This being so, the adjournment applications filed by the assessee stands rejected and the appeals are being disposed of on merits. 4. The appeal in IT(SS)A No.51/Kol/24 is delayed by 21 days for which the assessee has filed necessary condonation application alongwith affidavits. Considering the explanation given by the assessee and also considering the fact that the delay is minimal, the delay in filing the appeals is condoned and appeals are being disposed off. 5. It was submitted by ld CIT DR that there was a search and seizure operation on the premises of the assessee on 9th September, 2015. Consequently, both the assessment years 2015-16 & 2016-17 are abated years. It was submitted that in the assessment, the Assessing Officer has brought to tax the rental income received by the assessee and offered by the assessee as business income under the head “income from house property”. It was the submission that on appeal, the ld CIT(A) has also considered the Memorandum of Association of the assessee company and also extracted the same in his order. It was the submission that the object of the assessee company itself was trading in agricultural produce. IT(SS)A No.51/Kol/2024 & ITA No.1217/Kol/2024 4 The assessee’s business was not for letting of the premises and consequently, the income therefrom would not be treated as income from business and the same was liable to be treated as income from house property only. He further vehemently relied on the decision of the Hon’ble Supreme Court in the case of Chennai Properties and Investment Ltd., 56 taxmann.com 456(SC), wherein, it has been held that where in the Memorandum of Association, the main object of the assessee company was to acquire properties and earn income by letting of the same, the said income was liable to be brought to tax as business income and not as “income from house property”. 6. We have considered the submissions of ld CIT DR and perused the records and the orders of lower authorities. A perusal of the assessment order shows that during the entire assessment proceedings, nor the assessee or ld AR of the assessee has ever attended the hearing. The Assessing Officer categorically mentions that in the return of income, the assessee has shown rental income of Rs.4,86,000/- and the assessee has not provided the details as to against which property, the rental income was derived or from any other source the said income was derived. Form 26AS also does not shows any TDS having been deducted against the rental income. However, on perusal of the assessment order it is clearly seen that the assessee in his return has shown rental income but has claimed the same under the head “business income”. The Income Tax Act provides for five heads of income and they are very clear and distinct. Multiple opportunities have been provided to the assessee to IT(SS)A No.51/Kol/2024 & ITA No.1217/Kol/2024 5 prove the source of rental income. Admittedly, if the rental income is from letting out of land and building, then until and unless such income is shown to be derived out the business activities of the assessee and the same would fall under the head “income from house property”. The possibility of rental income being derived from hiring of plant and machinery would admittedly not come under the head “income from other sources” but the assessee has been conscious that its income is rental income only. The assessee has consciously avoided the various opportunities granted to him to substantiate its claim that the rental income is from which source of income. This being so and considering the fact that the ld CIT(A) has given a clear and undisputed finding that the main object of the assessee is to do business in agricultural produce, respectfully following the decision of Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd (supra), we are of the view that there is no error in the order of ld CIT (A) which calls for any interference. 7. In the result, both the appeals of the assessee stand dismissed. Order dictated and pronounced in the open court on 21/05/2025. Sd/- (SANJAY AWASTHI) Sd/- (GEORGE MATHAN) लेखा सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य / JUDICIAL MEMBER कोलकाता Kolkata; ददनाांक Dated 21/05/2025 Prakash Kumar Mishra, Sr.P.S. IT(SS)A No.51/Kol/2024 & ITA No.1217/Kol/2024 6 आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशधिुसधर/ BY ORDER, (Assistant Registrar) Income Tax Appellate Tribunal, Kolkata 1. अपीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कोलकाता / DR, ITAT, Kolkata 6. गार्ड फाईल / Guard file. सत्यापपत प्रतत //True Copy// "