M/S.WARRIERS HOSPITAL & PANCHAKARMA CENTRE,KOLLAM vs. THE DCIT, ALAPPUZHA

Per CHANDRA POOJARI, AM:

These appeals of the assessee are directed against different orders of the

CIT(A), Kottayam dated 26/09/2017 and pertain to the assessment years 2011-

12 and 2014-15.

income received from letting out building along with inseparable furniture,

fittings, plant and machinery etc. under the head income from other sources

I.T.A. Nos.615 & 616 /Coch/2017 & 460&461/Coch/2018 instead of income from house property, they were clubbed together, heard

together and are being disposed of by this common order.

615/Coch/2017 for the assessment year 2011-12 which reads as follows:

For this assessment year, the assessee filed return of income on 30/09/2011

declaring total income of Rs.4,74,86,270/-. A portion of the income returned by

the assessee was assessed under the head income from house property which

was let out to sole distributor, Dhathri Ayurkendra (India) Private Limited. The

Assessing Officer assessed the same under the head income from house property

and he disallowed depreciation claimed by the assessee at Rs.14,29,528/- since

the assessee is only entitled for deduction u/s.24 of the I.T. Act.

CIT(A), the assessee reiterated the arguments. However, the CIT(A) decided the

issue against the assessee.

that the income of the assessee received from letting out building alongwith

various furniture, fittings, plant and machinery etc. which is to be assessed as

income from other sources in view of the provisions of section 56(2)(iii) of the

Act which reads as follows:

I.T.A. Nos.615 & 616 /Coch/2017 & 460&461/Coch/2018 “Section 56(2)(iii) Where an assessee lets on hire machinery, plant or furniture belonging to him and also buildings, and the letting of the buildings is inseparable from the letting of the said machinery, plant or furniture, the income from such letting, if it is not chargeable to income- tax under the head “Profits and gains of business or profession”.

4.1 Accordingly, it was submitted that the assessee is entitled for depreciation

on furniture, fittings, plant and machinery etc. in terms of section 57(iii) of the

I.T. Act which reads as under:

“Section 57(iii) In the case of income of the nature referred to in clauses (ii) and (iii) of sub-section (2) of section 56, deductions, so far as may be, in accordance with the provisions of sub-clause(ii) of clause (a) and clause (c) of section 30, section 31 and sub-sections (1) and (2) of section 32 and subject to the provisions of section 38”.

4.2 Further, the assessee filed additional evidence as follows:

I.T.A. Nos.615 & 616 /Coch/2017 & 460&461/Coch/2018 4.3 The above evidences were not filed before the Assessing Officer or the

CIT(Appeals), Kottayam since the authorities were firmly holding the view that

rental income earned by the assessee was taxable under the head "Income from

house property” and therefore the assessee was under the bonafide belief that

the above evidences would not be considered to be relevant by them. Hence, it

was submitted that the Bench may condone the omission and consider these

evidences to render justice. The assessee has also filed petition for admission of

additional evidence.

4.4 It was submitted that the assessee had bona fide belief that the income of

the assessee was wrongly offered under the head income from house property.

This was an inadvertent error. It was also submitted that when there is no

doubt regarding the head under which a particular income is to be taxed, there is

no option available for the assessee or for the department to change the head

with regard to this income. It does not matter in any way how the assessee has

chosen to show a particular income in the return of income submitted by it. The

assessee relied on the following judgments:

a) United Commercial Bank Limited vs. CIT (1957) 32 ITR 688 b) CIT vs. Basanth Rai Takhat Singh (1933) 1 ITR 197 c) Bihar State Co-operative Bank Limited vs. CIT (1960) 39 ITR 114

I.T.A. Nos.615 & 616 /Coch/2017 & 460&461/Coch/2018 6. We have heard the rival submissions and perused the record. In our

opinion, there was inadvertent error committed by the assessee in offering its

income under the head income from house property. The Assessing Officer must

have called for the documents mentioned above for verification. Neither the

Assessing Officer nor the CIT(A) had considered these documents. These

documents are very crucial for deciding whether the income is from other

sources or from house property. Accordingly, we admit the additional evidence.

In our opinion, it is appropriate to remit the entire issue in dispute for all the

assessment years to the file of the Assessing Officer for de nova consideration

and to take appropriate decision on this issue. Thus, this ground of appeal of

the assessee is allowed for statistical purposes.

disallowance of Rs.50,000/- towards expenses. At the time of hearing, the Ld.

AR had not put any argument on this issue for both the assessment years. Hence

this ground of appeals of the assessee for both the assessment years is

dismissed as not pressed. Thus, the appeals of the assessee in ITA Nos. 615 &

616/Coch/2017 & 460&461/Coch/2018 are partly allowed for statistical purposes.

I.T.A. Nos.615 & 616 /Coch/2017 & 460&461/Coch/2018 8. In the result, the appeals of the assessee are partly allowed for statistical

purposes. Order pronounced in the open Court on this 20th December, 2018.

sd/- sd/- (GEORGE GEORGE K.) ( CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: Kochi Dated: 20th December, 2018 GJ Copy to: 1. Warrier’s Hospital and Panchakarma Centre, Puthiyavila, Velanchira, Kayamkulam. 2. The Deputy Commissioner of Income-tax, Circle-1, Alappuzha. 3. The Commissioner of Income-tax(Appeals), Kottayam. 4. The Pr. Commissioner of Income-tax, Kottayam. 5. D.R., I.T.A.T., Cochin Bench, Cochin. 6. Guard File. By Order

(ASSISTANT REGISTRAR) I.T.A.T., Cochin