PR COMMISSIONER OF IT KOTA vs. M/S BHIM SINGH

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ITA/283/2016HC RajasthanRJHC02090249201620 April 20173 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose in the present appeal. This conclusion was based on previous judgments of the same court in D.B. Income Tax Appeal No. 280/2016 and D.B. Income Tax Appeal No. 143/2009, which in turn relied on a Supreme Court decision dated 05.12.2016. The Supreme Court had held that income earned by a former ruler from the requisition of property is not taxable. Consequently, the High Court found that the issues concerning the taxability of income derived by the assessee were rendered academic, as the income was not taxable. Therefore, examining the other questions would serve no fruitful purpose. The appeal was dismissed on this basis.

What were the facts?

The Department (Principal Commissioner of Income Tax, Kota) appealed against an order of the Income Tax Appellate Tribunal (ITAT) which had dismissed the Department's appeal. The ITAT's decision was challenged on several substantial questions of law. The High Court noted that similar issues concerning the same assessee (M/s Bhim Singh) had been decided by this court in previous appeals, specifically D.B. Income Tax Appeal No. 280/2016 and D.B. Income Tax Appeal No. 143/2009. These prior decisions referenced a Supreme Court ruling on 05.12.2016 concerning the taxability of income earned by a former ruler from requisitioned property.

What were the issues?

The Tribunal had to decide five substantial questions of law framed by the Department: 1. Whether the Tribunal was justified in treating the assessee as an 'individual' instead of 'HUF', considering Sections 27(ii) of the Income Tax Act and Sections 4, 5 & 6 of the Hindu Succession Act. 2. Whether the Tribunal was justified in granting exemption under Section 10(19A) for the entire palace, despite a portion being let out, and whether the ex-ruler occupied the entire palace. 3. Whether the Tribunal was justified in restricting the disallowance of expenses, which the Department considered excessive, unreasonable, and lacking in genuineness or commercial expediency, and thus not allowable under Sections 37, 57, or 58. 4. Whether the Tribunal was justified in classifying income from ITC Ltd. as 'Business Income' under Section 28, rather than 'Income from Other Sources' under Section 56, given the assessee's lack of control over the hotel business. 5. Whether the Tribunal was justified in classifying rental income from a commercial complex as 'Business Income' under Section 28, instead of 'Income from House Property' under Section 22, when the assessee's motive was to earn rental income and not engage in business. The Department argued for the taxability of income as per its assessment. The assessee's arguments are not explicitly recorded but are implied by the Tribunal's decisions which the Department is challenging.

Which sections of the Income-tax Act were involved?

Section 27,Section 4,Section 5,Section 6,Section 10(19A),Section 37,Section 57,Section 58,Section 28,Section 56,Section 22

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 283 / 2016 Pr Commissioner Of It Kota ----Appellant Versus M/S Bhim Singh ----Respondent _____________________________________________________ For Appellant(s) : Mrs. Parinitoo Jain For respondent(s) : Mr. P.K. Kasliwal _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS

Judgment 20/04/2017

1.

By way of this appeal, the Department has assailed the judgment and order of the Tribunal whereby Tribunal has dismissed the appeal of the department.

2.

Counsel for the department has framed the following substantial questions of law:-

1.

Whether the Tribunal was legally justified in directing to adopt the status of the assessee as an “individual” and not as “HUF” as taken by Assessing Officer in the light of provisions of section 27(ii) of Income Tax Act and section 4,5 & 6 of the Hindu Succession Act?

2.

Whether the Tribunal was legally justified in holding the assessee entitled for exemption u/s. 10(19A) treating entire palace in occupation despite of the fact that part of the palace was let out and as such it cannot be said that entire palace was in occupation of ex-ruler?

3.

Whether the Tribunal was legally justified in restricting the disallowance of expenses without appreciating the same were excessive and unreasonable and the assessee had failed to furnish details and prove the genuineness and commercial expediency of such expenses and as such were not allowable u/s. 37 or 57 or 58 of the Act?

(2 of 3) [ITA-283/2016]

4.

Whether the Tribunal was legally justified in holding that the income earned from ITC Ltd. Be assesses ‘Business Income’ u/s. 28 as against assessed as “Income from Other Sources’ u/s. 56 by the Assessing Officer specifically when the assessee neither had any control over the running hotel business nor was a party in running the hotel business?

5.

Whether the Tribunal was legally justified in holding that the rental income received from commercial complex was assessable as “Business Income’ u/s. 28 instead of ‘Income from House Property’ u/s. 22 specifically when the motive of the assessee was to earn rental income and was not engaged any business activity?

3.

However, taking into consideration, the judgment of this court in the case of assessee himself in D.B. Income Tax Appeal No.280/2016 (Principal Commissioner of Income Tax, Kota vs. M/s Bhim Singh) decided on 28.3.2017 & D.B. Income Tax Appeal No.143/2009 decided on 14.12.2016 wherein Division Bench observed as under:- “3. However, the issue is covered by the decision of this Court in the case of same assessee in D.B. Income Tax Appeal No. 597/2009 (Commisioner of Singh & ors., decided on 14.12.2016, wherein it has been held as under:

“13. Identical issue in the case of same assessee was pending before the Supreme Court by way of Civil Appeal No.2812/2015 whereby recently in the decision of the Supreme Court rendered on 05.12.2016, it has been held that the income which has been earned by the former ruler as his income from the requisition of the property is not taxable and in view thereof, the question No.(iv) in relation to taxability of income on requisitioned property is covered by the decision of the Supreme Court.

14.

Consequently, the other questions which are framed with regard to section 147 and 148 of the Act in our view have been rendered academic inasmuch as the income which has been derived by the assessee is not taxable and no fruitful purpose would (3 of 3) be served by examining the issue. In that view of the matter, the appeals deserve to be dismissed.”

(3 of 3) [ITA-283/2016]

4.

In that view of the matter, no substantial question of law arises.

The appeal stands dismissed.

(VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Bm Gandhi/163.

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