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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’
Before: SHRI JASON P BOAZ & SHRI LALIT KUMAR
Per Shri Jason P Boaz, A.M. : This appeal by Revenue is directed against the order of Commissioner of Income Tax (Appeals)-I, Bangalore dt.20.12.2016 for the Assessment Year 2012-13.
Briefly stated, the facts of the case are as under :-
2.1 The assessee, a company engaged in the business of earning rental income from letting out of warehouses, filed its return of income for Assessment Year 2012-13 on 20.09.2012 declaring income of Rs.26,94,340. The return was processed under Section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was subsequently taken up for scrutiny. The Assessing Officer considered the rental income earned from letting out of warehouses to be the ‘Income from House Property’ rather than ‘Business Income’ as declared by the assessee. The assessment was accordingly completed under Section 143(3) of the Act vide order dt.10.3.2015 in which the assessee's income was determined at Rs.1,28,70,783, inter alia, by treating the rental income received from the letting out of warehouses as ‘Income from House Property’ and disallowing the business expenditure incurred and claimed by the assessee. On appeal, the learned CIT (Appeals) – I, Bangalore vide the impugned order dt.20.12.2016 upheld the assessee's claim that the warehouses constructed and let out by the assessee are commercial assets and the income earned thereon constitutes business income. In coming to this finding, the learned CIT (Appeals) followed the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2011-12 in dt.5.8.2016.
3.1 Aggrieved by the order of the CIT (Appeals) – I, Bangalore dt.20.12.2016 foray 2012-13, Revenue has filed this appeal before the Tribunal, wherein it has raised the following grounds :-
3.2 The learned Departmental Representative for revenue was heard in support of the grounds raised and placed strong reliance on the order of the Assessing Officer in treating the income earned by the assessee from letting out of warehouses to be ‘income from house property’. 3.3 Per contra, the learned Authorised Representative for the assessee submitted that there was no error in the impugned order of the learned CIT (Appeals) in upholding the assessee's claim that the lease rent earned by it from letting out of the warehouses, which are its commercial assets, constitutes business receipts and offered to tax as business income after claiming various expenses in the profit and loss account. It is submitted that this position has been upheld by the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2011
12. (supra). 3.3.1 We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the very same issue of whether the lease rent received by assessee from letting out of its warehouses, i.e. its commercial assets; is to be assessed as ‘Business Income’ as claimed by the assessee or as ‘Income from House Property’ as held by the Assessing Officer; has been considered and adjudicated in favour of the assessee and against revenue by the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2011-12. In its aforesaid order in at Paras 25 to 33 thereof, the co- ordinate bench has elaborately discussed and considered the facts of the case on hand on this issue and came to the finding that the warehouses constructed by the assessee are commercial assets and the income earned from leasing out the commercial property constitutes business income. The relevant portion is extracted hereunder :-
3.3.2 We find that the fact situation, on the issue before us, is the same in this year as in Assessment Year 2011-12, and therefore following the decision of the co-ordinate bench of this Tribunal in the assessee's own case (supra), we also hold that the warehouses constructed by the assessee are commercial assets and therefore the rental income earned by the assessee from leasing out these commercial properties constitutes ‘Business Income’. In this view of the matter, we uphold the order of CIT (Appeals) and consequently dismiss the grounds raised by revenue.
4. In the result, Revenue’s appeal for Assessment Year 2012-3 is dismissed. Order pronounced in the open court on the 19th day of Jan., 2018.