PR COMMISSIONER OF INCOME TAX KOTA vs. BHIM SINGH

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 63/2018 Pr. Commissioner Of Income Tax , Kota. ----Appellant Versus Bhim Singh, Ummed Bhawan, Kota. ----Respondent Connected With D.B. Income Tax Appeal No.69/2018 Pr. Commissioner of Income Tax, Kota. ----Appellant Versus Bhim Singh, Ummed Bhawan, Kota ----Respondent For Appellant (s) For Respondent (s) : Mrs. Parinitoo Jain Mr. P.K. Kasliwal HON'BLE MR. JUSTICE KALPESH SATYENDRA JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 10/07/2018 1. In both these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeal of the revenue and cross objection of the assessee was dismissed. 3. Counsel for the appellant has framed following substantial questions of law:-

(2 of 5) [ITA-63/2018] 3.1 Appeal No.63/2018 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 deleting the addition of Rs.3,78,708/- and Rs.50,61,933/- by holding that the assessee was 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? 4. Whether the Tribunal was legally justified in holding that the income earned from ITC Ltd. For Rs.50,11,783/- be assessed '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?

(3 of 5) [ITA-63/2018] 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 in any business activity? 3.2 Appeal No.69/2018 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 deleting the addition of Rs.5,57,319/- and Rs.50,61,933/- by holding that the assessee was 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? 4. Whether the Tribunal was legally justified in holding that the income earned from ITC Ltd. For

(4 of 5) [ITA-63/2018] Rs.48,49,721/- be assessed '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 in any business activity? 4. The facts of the case are that return declaring income of Rs.45,92,100/- was filed by the assessee on 18.3.2014. This case was selected for scrutiny as per instruction under Manual scrutiny guidelines. First notice u/s 143(2) of I.T. Act 1961 was issued on 18.9.2014 which was duly served upon the assessee. Subsequently, notice u/s 142(1) issued to the assessee on 18.9.2014 which was duly served upon the assessee on 19.9.2014. Thereafter, notice u/s 142(1) alongwith questionnaire issued to the assessee on 18.9.2015 calling for information/documents required to finalize assessment proceedings. 5. Now, the issue is squarely covered by the decision of this court in D.B. ITA No.143/2009 in the case of same assessee decided on 14.12.2016, DBITA No.595/2009 decided on the same day wherein it has been held as under:- “4. Identical issue in the case of same assessee was pending before the Supreme Court by way

(5 of 5) [ITA-63/2018] 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. 5. 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 be served by examining the issue. In that view of the matter, the appeals deserve to be dismissed.” 6. The same view was followed in DB Civil Review 98/2017 and other connected matters decided on 2.11.2017 and DBITA No.282/2016 decided on 25.4.2017. 7. In view of the above, no substantial question of law arises in both these appeals. The issues are answered in favour of the assessee and against the department. 8. The appeals stand dismissed. (VIJAY KUMAR VYAS),J (K.S. JHAVERI),J Brijesh 13-14.