COMMISSIONER OF INCOME-TAX, KARNAL vs. M/S INDERJEET RELHAN AND ORS

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ITA/239/2011HC Punjab & HaryanaPHHC01095564201120 August 2013Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE JASPAL SINGH5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found that while the Tribunal, in its order dated 12.3.2010, had allowed the miscellaneous application to recall its earlier order for fresh adjudication, the subsequent order dated 25.10.2010, which was under challenge, failed to consider the amended grounds of appeal. The Court noted that the amended ground of appeal specifically questioned the CIT(A)'s decision to assess rental income under the head 'income from business and profession' and allow depreciation. Therefore, the High Court answered the questions of law accordingly. The operative direction was to set aside the Tribunal's order dated 25.10.2010 and remand the matter back to the Tribunal for passing an order afresh after considering the amended ground of appeal in accordance with law. No issue was expressly left undecided.

What were the facts?

The assessee, M/s Inderjeet Relhen and others, derived rental income of ₹36,69,803/- from letting out godowns to HAFED and CONFED for assessment year 2003-04. The assessee offered this income under the head 'Income from Business and Profession', declaring a loss. The Assessing Officer (AO), however, treated it as 'Income from House Property' and assessed total income at ₹25,77,818/-. The CIT(A) allowed the assessee's appeal, holding the income should be taxed under 'Income from Business and Profession' and allowing depreciation and expenses. The Tribunal initially dismissed the revenue's appeal. Subsequently, the revenue filed a miscellaneous application, which led the Tribunal to recall its earlier order for fresh adjudication. However, the Tribunal, by its order dated 25.10.2010, again dismissed the revenue's appeal, allegedly without considering the amended grounds of appeal filed by the revenue.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding the rental income as income from Business & Profession as against income from House Property assessed by the AO? (Question of law) 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in disposing of the Revenue's appeal by ignoring the amended grounds of appeal taken by the Revenue, which were allowed to be considered afresh by allowing the misc. application filed by the Revenue in view of the Income Tax Appellate Tribunal's Delhi Bench “F” Delhi's decision dated 12.3.2010 in IT appeal No. 4282 (Del) 2006 passed in the assessee's case for the A.Y. 2003-04 in Misc. Application No. 630 (Del)2008? (Question of mixed law and fact) Assessee's contentions: The assessee supported the order passed by the Tribunal. Revenue's contentions: The revenue argued that the Tribunal, in its order dated 25.10.2010, failed to consider the amended grounds of appeal filed by the revenue, despite its earlier order dated 12.3.2010 recalling the original order for fresh adjudication on these amended grounds.

Which sections of the Income-tax Act were involved?

Section 260A,Section 148,Section 143(3)/147

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 239 of 2011 (O&M) Date of Decision: 20.8.2013 Commissioner of Income Tax, Karnal ....Appellant. Versus M/s Inderjeet Relhen and others ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE JASPAL SINGH. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. C.M. No. 15388-CII of 2011 Allowed as prayed for.

1.

This appeal is filed by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) against the order dated 25.10.2010 passed by the Income Tax Appellate Tribunal, Delhi Bench “F”, New Delhi (in short “the Tribunal”) in ITA No. 4282/DEL/2006 for the assessment year 2003-04, claiming the following substantial questions of law:- “i) Whether on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right Singh Gurbachan 2013.09.03 16:02 integrity of this document High Court Chandigarh -2- in law in holding the rental income as income from Business & Profession as against income from House Property assessed by the AO? ii) Whether on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right in law in disposing of the Revenue's appeal by ignoring the amended grounds of appeal taken by the Revenue, which were allowed to be considered afresh by allowing the misc. application filed by the Revenue in view of the Income Tax Appellate Tribunal's Delhi Bench “F” Delhi's decision dated 12.3.2010 in IT appeal No. 4282 (Del) 2006 passed in the assessee's case for the A.Y. 2003-04 in Misc. Application No. 630 (Del)2008?”

2.

Put shortly, the facts necessary for adjudication of the present appeal as mentioned therein are that the assessee derived income from letting out of godowns to HAFED and CONFED amounting to ` 36,69,803/-. The said income was shown by the assessee under the head “Income from Business and Profession” and after claiming various expenses in profit and loss account, filed its return on 30.11.2003 declaring a loss of ` 4,29,685/-. Since the income declared by the assessee was from letting out of the godowns, the same falls under the head 'Income From House Property' and not under the head 'Profit and Gains of Business' as shown by the assessee, notice under Section 148 of the Act was issued on 8.6.2004 after recording reasons. Accordingly, the Assessing Officer, vide order dated 29.11.2004 Singh Gurbachan 2013.09.03 16:02 integrity of this document High Court Chandigarh -3- (Annexure A-1) assessed the income under Section 143(3)/147 of the Act at a total income of ` 25,77,818/- (including other income) as against the loss of ` 4,29,685/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [For brevity “the CIT (A)”]. The CIT(A) vide order dated 10.10.2006 (Annexure A-2) allowed

the appeal of the assessee holding that the income assessed under the head “Income from House Property” should be assessed under the head “Income from business and profession” and also allowed the depreciation on building and other expenses as claimed by the assessee. Against the order of the CIT(A), the revenue filed an appeal before the Tribunal who vide order dated 17.9.2007 (Annexure A-3) dismissed the appeal and affirmed the findings of the CIT(A). According to the revenue, the Tribunal had not considered the amended grounds of appeal filed by the revenue. Thereafter, the revenue filed misc. application before the Tribunal for rectifying the mistake apparent on the record. The Tribunal vide order dated 12.3.2010 (Annexure A-4) passed in the misc. application recalled its order dated 17.9.2007 for fresh adjudication of the matter. Again the Tribunal dismissed the appeal filed by the revenue vide order dated 25.10.2010 (Annexure A-5) relying on its own decision in the assessee's own case for the assessment years 2004-05 and 2005-06 passed in ITA Nos. 3932 and 3934/Del/2007 dated 11.4.2008. Hence, the present Income Tax Appeal.

3.

Learned counsel for the revenue submitted that before the Tribunal a misc. application was filed for recalling the order dated 17.9.2007 passed by the Tribunal as the Tribunal had failed to consider the amended ground of appeal filed by the then Income Tax Officer, Singh Gurbachan 2013.09.03 16:02 integrity of this document High Court Chandigarh -4- Ward No.4, Panipat vide letter No. 383 dated 25.4.2007, wherein the following amended ground had been raised:- “On the facts and in the circumstances of the case, the ld. Commissioner of Income-tax (Appeals) has erred in law by holding the rental income from plinths and go-downs is assessable under the head 'income from business and profession' as against the income from house property and directing the assessing officer to allow the depreciation on plinths and go- downs, at the rate of 10 per cent amounting to Rs.21,60,923/- as claimed by the assessee?”

4.

It was urged that the original order dated 17.9.2007 was recalled and the appeal was ordered to be decided afresh by taking the amended ground of appeal into consideration, still the Tribunal vide order dated 25.10.2010 (Annexure A-5) failed to consider the amended ground of appeal and had, thus, committed the same error while deciding the appeal again.

5.

Learned counsel for the assessee, on the other hand, supported the order passed by the Tribunal.

6.

After hearing learned counsel for the parties, we find that the amended ground of appeal filed on 25.4.2007 was allowed as has been noticed by the Tribunal in its order dated 12.3.2010 (Annexure A- 4). However, a perusal of the order dated 25.10.2010 which has been impugned in this appeal shows that the Tribunal failed to consider the amended ground of appeal which has been reproduced above.

7.

In view of the above, questions of law are answered Singh Gurbachan 2013.09.03 16:02 integrity of this document High Court Chandigarh -5-

accordingly and, consequently, the order dated 25.10.2010 passed by the Tribunal is set aside and the matter is remanded to the Tribunal for passing a order afresh after considering the amended ground of appeal in accordance with law. (AJAY KUMAR MITTAL) JUDGE August 20, 2013 (JASPAL SINGH) gbs JUDGE Singh Gurbachan 2013.09.03 16:02 integrity of this document High Court Chandigarh

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