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Income Tax Appellate Tribunal, KOLKATA BENCH “D” KOLKATA
Before: Shri S.S.Godara & Dr. A.L. Saini
O R D E R
PER S.S.Godara, Judicial Member:
- This Revenue’s appeal for assessment year 2010-11 challenges correctness of Commissioner of Income Tax (Appeals)-5, Kolkata’s order dated 18.10.2017, passed in case No.44/CIT(A)-5/DCIT.Cir-13(1)/15-16, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.
The Revenue’s sole substantive ground raised in the instant appeal seeks to revive the Assessing Officer’s action treating the taxpayer’s income of ₹239,98,414/- from its warehousing facilities under the head house property income than from business in lower appellate proceedings. We notice at the outset that CIT(A)’s detailed discussion under challenge reads as under:-
ITO Wd-13(1), Kol. Vs. M/s Ashamangal Portfolio Pvt. Ltd. Page 2 “3. Grounds No.1 and 2:- Grounds No.1 and 2 relate to treatment of business income of warehouse charges as Income from House property (Rent) and disallowing expenses from business by the Ld. Assessing Officer. 3.1 The AO in his assessment order found that the assessee company derived income mainly from warehousing charges and services. The AO has held that the assessee is the owner of the warehousing structure in respect to which it has been claiming depreciation, all throughout clearly establishing the ownership claim of the assessee. The AO has disallowed a sum of Rs.2,39,98,414/- under the head ‘Income form House Property’ as follows: Warehousing charges : Rs.1,72,75,226/- Maintenance Charges : Rs. 14,30,268/- Ground Rent : Rs. 52,92,920/- Total : Rs.2,39,98,414/- 3.2. The AIR of the appellant in his submission had highlighted the following points:-
1. 1. It is submitted that income from warehousing charges, maintenance charges etc. received by the appellant has been accepted by the Hon'ble income Tax Appellate Tribunal, Kolkata "Business Income" in appellant's own case in order dated 04/04/2008 (copy enclosed) and also regarding business income the Hon'ble Income Tax Appellate Tribunal has given the finding on the basis of materials on record that the appellant is neither the owner of Land nor the Super Structure.
2. It is submitted that Hon'ble Income Tax Appellate Tribunal, Kolkata in the assessee's own case for the AY 2004-05 and AY 2005-06 has again decided that there is no factual change in these two assessment year from what were in the earlier year as decided by the Tribunal. Assessee's income is again pronounced to be "income from business" and not "Income from house property". Copy of the said order dated 19.02.2013 is enclosed for ready reference.
3. It is submitted that the Income Tax Appellate Tribunal, Kolkata has reiterated the above mentioned pronouncement in its order for the Assessment Year 2008-09 in the assessee's own case. Copy of the said dated 13.02.2014 is enclosed for ready reference.
4. But for the year the Ld. CIT (A)-l vide his order dated 10108/2008 being appeal No. 527/CIT (A)-lICir.-43/2007-08 has decided the issue fully in favor of the appellant and deleted all the additions made by the Ld. Assessing Officer on account of treatment of business income as rental income and corresponding disallowance of all the expense debited in Profit & Loss A/c as well as interest paid and depreciation.
5. Again for the assessment year 2010-11 the Ld. CIT (A)-5 vide his order dated 08/03/2016 being appeal No. 115/CIT(A)-5/C.-13(1)/13-14/14-15 has decided the issue fully in favor of the appellant and deleted all the additions made by the Ld. Assessing Officer on account of treatment of business income as rental income and corresponding disallowance of all the expense debited in Profit & Loss Alc as well as interest paid and depreciation (copy enclosed) 6. In Fact there has been no change in the business of the appellant company and also factual position of the case.
ITO Wd-13(1), Kol. Vs. M/s Ashamangal Portfolio Pvt. Ltd. Page 3 7. The finding given by the Ld. Assessing Officer in his order giving reasons for treating the business income as rental income is incorrect in view of the detailed finding given about ownership of land and super-structure by the Hon'ble Income Tax Appellate Tribunal as per copy of the order enclosed earlier.
It is a fact on record that the assesses is neither owner of Land nor super structure.
In view of the above the treatment of business income I loss by the assessing officer as rental income is bad in law and such treatment should be deleted in view of Honble Income Tax Appellate Tribunal's order. 3.3. I have gone through the submission of the appellant, and perused the relevant assessment records. The CIT.(Appeal)-5, Kolkata, on the same issue in his order for assessment year 2010-11, following the decision of the Hon'ble ITAT, Kolkata in the appellant's own case had allowed the appellant's plea, that income from warehousing is an income from business. On perusal of the records, it appears that the Hon'ble ITAT Kolkata in the appellant's own case for the assessment years 2000-01, 2001- 02, 2002-03, 2003-04, 2004-05, 2005-06 and 2008-09 has dismissed the appeal of revenue and upheld the appellant's contention that income from warehousing charges falls under the head 'Income from Business' and not 'Income from House Property'. The salient observations of the ITAT, Kolkata in their respective orders are reproduced in brevity as follows: "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 provisions contained in section 22 of the IT. 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 many 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 them nowhere it was pointed out that how the assessee became the property owner or lessee thereof." The ITAT, Kolkata has referred to the decision of the Hon'ble Supreme Court in the case of RB Jodhamal Kuthalia 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 ownership 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 assessed 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