ITO, WARD - 13(1), KOLKATA , KOLKATA vs. M/S. ASHAMANGAL PORTFOLIO PVT. LTD., HOWRAH

Per Shri P.M. Jagtap, Vice-President (KZ):- This appeal filed by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-5, Kolkata dated 30.11.2017 and the solitary ground raised by the Revenue therein reads as under:- “Whether on the basis of facts and circumstances of the case and in law the ld. CIT(A), Kolkata erred in directing the AO to treat the income of the assessee from warehousing structure as income from business u/s 28 of the I.T. Act, 1961 and not income from house property u/s 22 as treated by the AO in the assessment proceedings”.

ITA No. 132/KOL/2018 Assessment Year: 2014-2015 M/s. Ashamangal Portfolio Pvt. Limited

the form of warehousing charges, etc. was declared by the assessee- company as its business income and after claiming deduction for the various expenses, net income was disclosed by the assessee. Keeping in view the stand consistently taken in the assessments completed in the case of the assessee of the earlier years on the similar issue, the Assessing Officer brought to tax the rental income received by the assessee in its hand under the head “Income from House Property” and after allowing deductions under sections 24(a) and 24(b), the assessment was completed by him under section 143(3) vide an order dated 30.12.2016 determining the total income of the assessee at Rs.1,82,87,751/-.

ITA No. 132/KOL/2018 Assessment Year: 2014-2015 M/s. Ashamangal Portfolio Pvt. Limited

“6. On careful analysis of the undisputed facts narrated supra in the light of the various judicial pronouncements that were relied on by the assessee in support of its claims. It is found that the assessee is neither the owner nor the lessor of the property that was exploited by the assessee by carrying on business after repairs and maintenance, giving on lease to others and by providing electricity connections, security etc. and derives income therefrom. The provision contained in section 22 of the I.T. Act clearly mentions that the annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income tax shall be chargeable to income tax under the head “income from house property”. In clear terms the provision says that the property must be owned by the assessee in order to charge the income derived from it or its portion other than that portion used for carrying on business activities as income from house property. In the present case on hand, by going through all the documents and material made available by the assessee before the departmental authorities and mentioned in the orders passed by thme nowhere it was pointed out that how the assessee became the proper owner or lessee thereof. On the other hand, the assessee has produced before the departmental authorities copies of the proceedings underwent between KPT and M/s. Binani Metals Limited which categorically discloses that the lease period with KPT and M/s. Binani Metals Limited has expired long ago and the assessee was not recognized by the KPT as even occupier of the property in question and there are no documents of any type to show that the assessee has acquired any right in the property in question from the true owner of the property i.e. KPT. Even the attempts made by the assessee to accept the ownership of the KPT in its turn and its recognition of the KPT as tenant of the property in question, was not accepted by the KPT for many reasons including that of mandatory requirement of sanction of approval by the Govt. Of India and in view of the pending eviction proceedings of the original tenant M/s. Binani Metals Ltd. whose lease has already expired. The only base that can be made is the bills charged by M/s. Binani Metals Ltd. to the assessee towards the property in occupation under various heads but nowhere in these documents it was mentioned that the asessee has been recognized as the sub-lessee of KPT. Therefore, respectfully following the decisions rendered by the various judicial forums that were relied on by the assessee such as by the Hon’ble Supreme Court in the case of R.B. Jodhamal Kuthalia

ITA No. 132/KOL/2018 Assessment Year: 2014-2015 M/s. Ashamangal Portfolio Pvt. Limited

vs. CIT 82 ITR 570, wherein it was held that “the owner must be the person, who can exercise, the rights of owner not on behalf of the owners but in his own right”. This Tribunals Bombay Bench as well as Hyderabad Bench reported in 110 ITD 331 and 337 and 99 ITD 18 is of the same view to the effect that “if the assessee is not the owner of the building, income from letting out the same, with amenities would have to be assessable either under head “Business” or “income from other sources” depending on the fact as to whether renting out of the building or land was appurtenant thereto was done in the course of business or not”. In the light of the ratio laid down by the judicial forums, we are of the considered view that the assessee is not the owner of the property in question and not having any right over it and is nothing but the business income but never be the income from house property. This issue raised by the assessee is accepted by directing the departmental authorities to treat the same accordingly”

ITA No. 132/KOL/2018 Assessment Year: 2014-2015 M/s. Ashamangal Portfolio Pvt. Limited

Copies to : (1) Income Tax Officer, Ward-13(1), Kolkata, 110, Shanti Pally, Aahayar Bhawan (Poorva), Kolkata-700 107

(2) M/s. Ashamangal Portfolio Pvt. Limited, 103/24/1, Foreshore Road, Shibpur, Howrah-711 102

(3) Commissioner of Income Tax (Appeals)-5, Kolkata,

(4) Commissioner of Income Tax- , (5) The Departmental Representative (6) Guard File By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.