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

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ITA 1217/KOL/2024Status: DisposedITAT Kolkata21 May 2025AY 2016-20176 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal considered the submissions of the CIT-DR and perused the records. It noted that the assessee or its authorized representative never attended the assessment proceedings. The Assessing Officer observed that the assessee declared rental income of Rs. 4,86,000/- in its return but did not provide details of the property or source. Form 26AS also did not show any TDS deduction against this income. The assessee claimed this rental income under 'business income'. The Tribunal reiterated that the Income Tax Act provides distinct heads of income. Multiple opportunities were given to the assessee to prove the source of rental income. If the rental income is from letting out land and building, it falls under 'income from house property' unless shown to be derived from business activities. The Tribunal acknowledged that rental income from hiring plant and machinery would fall under 'income from other sources', but the assessee was conscious of it being rental income and avoided substantiating its claim. Given the CIT(A)'s finding that the assessee's main object is agricultural produce trading, and respectfully following the Supreme Court's decision in Chennai Properties and Investments Ltd., the Tribunal found no error in the CIT(A)'s order. Both appeals of the assessee were dismissed.

What were the facts?

The assessee, Veerprabhu Communications Private Limited, filed two appeals before the Income Tax Appellate Tribunal (ITAT), Kolkata, for assessment years 2015-2016 and 2016-2017, against separate orders of the CIT(A), Kolkata-26, both dated March 8, 2024. The appeals were filed on May 28, 2024. The assessee did not appear for the hearing, having filed adjournment applications stating their authorized representatives were out of Kolkata. The Tribunal noted that adjournment applications had been filed on multiple previous occasions with similar reasons and that no Vakalatnama was on record. Consequently, the adjournment applications were rejected, and the appeals were disposed of on merits. The IT(SS)A No.51/Kol/24 was delayed by 21 days, which was condoned.

What were the issues?

1. Whether the rental income earned by the assessee should be treated as business income or income from house property, as per Section 14 of the Income Tax Act, 1961. Assessee's contentions: Not recorded as the assessee did not appear. Revenue's contentions: The revenue, represented by the CIT-DR, argued that a search and seizure operation occurred on September 9, 2015, making both assessment years abated. The Assessing Officer brought to tax rental income offered by the assessee as business income under the head 'income from house property'. The CIT(A) also considered the Memorandum of Association (MOA), which stated the company's object was trading in agricultural produce, not letting premises. Therefore, the income should be treated as income from house property. The revenue relied on the Supreme Court decision in Chennai Properties and Investment Ltd. vs. CIT, 56 taxmann.com 456 (SC), which held that if the MOA's main object is acquiring properties and letting them, the income is business income.

Which sections of the Income-tax Act were involved?

Section 14

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI SANJAY AWASTHI

For Appellant: Shri Prakash Nath Barnwal, CIT-DR
For Respondent: Shri Prakash Nath Barnwal, CIT-DR
Hearing: 21/05/2025Pronounced: 21/05/2025

आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : अपीलार्थी / The Appellant- 1.

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