DCIT, NEW DELHI vs. M/S. MODI INDUSTRIES LTD., UTTAR PRADESH

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES ‘E’, NEW DELHI Before Sh. Bhavnesh Saini, Judicial Member Dr. B. R. R. Kumar, Accountant Member Asstt. Year : 2012-13 DCIT, Vs M/s Modi Industries Ltd., Circle-17(1), Modi Nagar, Ghaziabad Road, New Delhi U.P.-201204 (APPELLANT) (RESPONDENT) PAN No. AAACM2063Q Assessee by : Sh. Vibhu Gupta, CA Revenue by : Ms. Rinku Singh, Sr. DR Date of Hearing: 10.07.2019 Date of Pronouncement: 10.07.2019 ORDER Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by the Revenue against the order of the Ld. CIT(A)-6, Delhi dated 12.01.2017.

1. Whether in the facts and circumstances of the case, the Ld. CIT(A) is legally justified in holding that the income from letting out of some of business assets of the assessee company was in nature “Income from House property” by ignoring ratio decidendi of Hon’ble Supreme Court in case of Universal Plast Limited vs CIT (1999) 237 ITR 454?

2. Whether in the facts and on circumstances of the case, the Ld. CIT(A) is legally justified in allowing relief to the assessee on the basis of its earlier orders in the assessee’s own case by ignoring decision of Hon’ble Apex Court in case of Universal Plast Limited vs CIT (Supra) and despite the fact that principle of res-judicata is not applicable to Income Tax proceedings as each assessment year is a separate year?

3. Whether in the facts and on circumstances of the case, the Ld. CIT(A) is legally justified in restricting disallowance u/s 14A of the Income Tax Act, 1961 (the Act) by not considering the 2 Modi Industries Ltd. provisions of Section 14A of the Act which stipulate computation of disallowance u/s 14A of the Act mandatorily under Rule 8D(2) of the Income Tax Rules?”

3. Ground No. 1 & 2 are related which pertains to treatment of revenues under the head “income from house property” instead of income from “business or profession”. Before the Assessing Officer, the assessee submitted that the income derived out of letting up the property has always been assessed then the income from house property from the assessment year 2007-08 onwards. However, the Assessing Officer assessed the income under the head “business or profession” on the grounds that any income and on the assets shown in the balance sheet has to be treated as income from business and profession. He relied on Universal Plast Ltd. Vs CIT (1999) 237 ITR 454 (SC).

3 Modi Industries Ltd. Whereas from the years 2009-10 and 2010-11, the addition has been made treating this income under the head “business income” again which stands reversed by the ld. CIT(A). For the assessment year 2011-12, the ITAT has passed an order treating this income as income from house property considering the provisions of Sections 14, 22 & 28 of the Income Tax Act, 1961. The Hon’ble Punjab & Haryana High Court in the case of CIT Vs Haryana Tourism Corporation Ltd. 327 ITR 26 held specifically that rental income earlier assessed u/s 22 of the Act as income from house property could not be assessed u/s 28 of the Act as business income in a later year, in the absence of any fundamental facts. Since, the amount has been treated as income from house property and also the Co-ordinate Bench of the Revenue has allowed the appeal of the assessee for the assessment year 2011-12 and since, the deletion made by the ld. CIT(A) is based on the order of the ITAT and since there is no change in the facts and circumstances of the case during this year as compare to earlier years where the issue was decided in favour of the assessee, we hereby decline to interfere with the order of the ld. CIT(A) on this ground.