DCIT, CIR-26, KOLKATA, KOLKATA vs. M/S TEWARI WAREHOUSING COMPANY, KOLKATA

आयकर अपील�य अधीकरण, �यायपीठ – “D” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “D” KOLKATA Before Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member ITA No.1316/Kol/2016 Assessment Year:2010-11 DCIT, Circle-26 M/s Tewari Warehousing Co. बनाम / Aayakar Bhawan Hide Shed Dump, Old V/s. Dakshin, 2, Gariahat Goragacha Road, Kolkata-88 Road, (South), [PAN No.AACFT 5579 K] Kolkata-68 .. अपीलाथ� /Appellant ��यथ� /Respondent Shri Arindam Bhattacherjee, Addl. CIT-DR अपीलाथ� क� ओर से/By Appellant Shri Vikash Surana, Advocate ��यथ� क� ओर से/By Respondent 31-01-2018 सुनवाई क� तार�ख/Date of Hearing 16-03-2018 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-7, Kolkata dated 14.03.2016. Assessment was framed by JCIT, Range- 53, Kolkata u/s 143(3)/144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 28.03.2013 for assessment year 2010-11. The grounds raised by the Revenue per its appeal are as under:- “1. That the Ld. CIT(A) erred in directing to assess the entire gross receipts s business income and allow deductions as per Section 28 to 43 of the IT Act when rental income of Rs.2,31,00,000/- was already included in the gross receipts. 2. That the Ld. CIT(A) erred in deleting the estimation of business profits of Rs.2,37,72,132/- made by the AO though rejection of assessee’s books of account u/s 145(3) considering the facts of the case. 3. That the Ld. CIT(A)’s order is contrary to the law and fact of the case. 4. The appellant craves leaves to, add to, alter or modify any one or all of the grounds of appeal mentioned above.”

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 2 Shri Arindam Bhattacherjee, Ld. Departmental Representative appeared on behalf of Revenue and Shri Vikash Surna, Ld. Advocate appeared on behalf of assessee. 2. At the outset, it is noticed that appeal of Revenue is barred by limitation by 3 days. Revenue has filed condonation petition supported by affidavit explaining the reasons for the delay. On query from the Bench, Ld. Counsel for the assessee has not opposed the condonation rather he conceded that delay can be condoned. In view of the reasons given in the condonation petition and concession given by Ld. Counsel for the assessee, we condone the delay and admit the appeal of Revenue. 3. The brief description about the assessee-firm is that it is partnership firm and engaged in providing warehousing, go-down, blending and packing services. The assessee is providing such services under the agreements with the big tea companies such as Tata Tea, Hindustan Unilever (HUL), Pataka Tea etc. Such activity is carried out on the land nearly 5 lakhs sq ft. taken on lease from the Kolkata Port Trust and others since 1993 by the assessee. 4. The first issue raised by the Revenue in ground no. 1 is that ld. CIT(A) erred in treating the rental of Rs. 2.31 crores as business receipts. 5. In this case the assessee has shown the gross proceed of Rs.14,19,60,663/- during the relevant period which was offered to tax as business income. However, the Assessing Officer has taken a view that out of such receipts a sum of Rs.2.31 crores is rental income on the following grounds. 1. That Contracting Tea company paid the proceeds amounting to Rs.2.31 crores after deducting the Tax Deducted at Source (TDS) u/s 194-I as evident from Form 26AS. 2. Further, A.O. referred the Apex court Judgments in the case of Shambhu Investment Pvt. Ltd vs CIT 263 ITR 143 and CIT Poddar Cements 226 ITR 625 wherein it was held that if the income is arising for the use of land and building then it should be necessarily be taxed as “Income from House Property”. 3. The A.O. also observed that assessee is not the owner of the said premises but as per the provision of section 27(iiib) of Income Tax Act, 1961 the assessee shall be deemed to be the owner of the premises.

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 3 In view of above, the AO treated the proceeds of Rs.2.31 crores as income from House Property. 6. Aggrieved assessee preferred an appeal before CIT(A). The assessee before the ld. CIT(A) submitted that it is providing complex & composite services such as packing, blending, storing, transporting along with other adequate facilities such as security, wooden pallets to keep the goods safe and under hygienic conditions to the parties. Thus, the predominant object is not limited to the rental from the parties but it encompasses to provide other services as discussed above. Thus, such services cannot be rendered without having the land and the warehouses. Thus, the income derived by it should be treated as income from business. The ld. CIT(A) after considering the submission of the assessee held that the impugned receipt of Rs.2.31crores is business income by observing as under: “3.2 I have considered the submissions made by the appellant and gone through the assessment order. The AO held godowns rents as income from pro!5~ft:y placing reliance on TDS made u/s 1941 and Hon'ble Supreme Court Judgement in the case Sambhu Investment and Poddar Cement reported in 263 ITR 143 and 226 ITR 625. The appellant explained that the appellant has not received pure rent and it is a complex commercial activities involved in storing blending and packaging. Therefore, the facts of the case relied upon by the AD are not applicable in the appellant's case. In the similar facts and circumstances Hon'ble ITAT Kolkata in the case of Dutta Properties Pvt. Ltd. held that income from warehousing activity as business income in ITA No. 973 to 979/Ko1/2012 A.Ys 1999-2000 to 2005-06 dated 01/07/2015. Hon'ble Madras High Court in the case of CIT vs. NDR Warehousing Pvt. Ltd. reported in ITR 690 held warehousing, handling and transportation as business income. In the case of the appellant, in the immediately preceding assessment year and the earlier assessment years the entire receipts were assessed as business income. During the appeal A/R of the appellant stated that in the subsequent year also the gross receipts were assessed as business income. Though Rule res judicata does not applicable to the income tax assessment, the rule of consistency does applicable. This view is supported by Hon'ble ITAT Guwahati Bench in the case of Narsinghdas Surajmal Properties (P.) Ltd v. Assistant Commissioner of Income-tax, Circle-l, Assam reported in [2015] 59 taxmann.com 172 (Guwahati - Trib.) Hon'ble ITAT in the cited decision while considering the issue Rule of consistency held as under: 5. We have heard the rival submissions and perused the materials before us. We find that the assessee had sold plots of land in the year ending on 31-12- 1982, 31-12-1983, 31-12-1984, 31-12-1986, 31-03-1989, that it had also sold plots of land during the A Ys. 2001-02, 2002-03,2003-04, 2004-05,2005-06 and 2006-07, that the AO while passing the orders for the assessment years 1982-83,1984-85 and 1983-84 had accepted the claim of the assessee that profit arising on sale of plots of land had to be assessed under the head LTCG. But, while assessing the income for the year under consideration he held that transaction has to be considered under the head income from business.

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 4 Referring to the principle of res-judicata, he stated that same was not applicable in income tax proceedings and hence he was not following the orders of earlier years. It is true that every assessment year is a separate assessment and the AO is free to decide the issue before him on merits. In our opinion, it is not full truth-rather it is other side of the coin. In the matter of Aroni Commercials Ltd. v. Dy.CIT, Hon'ble Bombay High Court has observed that though the principle of res judicata is not applicable to tax matters as each year is separate and distinct, nevertheless where facts are identical from year to year, there has to be uniformity and in treatment. Similarly, in the case of CIT v. Gopal Purohit same High Court has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. Clearly, rule or principles of consistency are equally applicable to tax assessment proceedings as the rule of res judicata. That is the reason of holding that notwithstanding the complexity of adjudication, provided for under the Act, Parliament intended, consistency to be the hallmark of tax proceedings. Rule of consistency is not new. As early as 1956 the issue was deliberated at length by the Hon'ble Bombay High Court in the case of HA. Shah & Co. v. CIT as under: ''As a general rule the principle of res judicata is not applicable to decision of Income-tax Authorities. An assessmentfor a particular year is final and conclusive between the parties only in relation to the assessment for that year and the decisions given in an assessment for an earlier year are not binding either on the assessee or the Department in a subsequent year. But this rule is subject to limitations, for there should be finality and certainty in all litigations including litigation arising out of the Income-tax Act and an earlier decision on the same question cannot be reopened if that decision is not arbitrary or perverse, if it had been arrived at after due inquiry, if no fresh facts are placed before the Tribunal giving the later decision, and if the Tribunal giving the earlier decision has taken into consideration all material evidence. A Tribunal like the Appellate Tribunal, should be extremely slow to depart from a finding given by an earlier Tribunal ..... There is also a further limitation, namely, that the effect of revising a decision in a subsequent year should not lead to injustice and the court must always be anxious to avoid injustice to the assessee. For instance, if the court is satisfied that by depriving the assessee of his rights under the later decision, in an earlier year, the assessee lost an important advantage or lost some benefit which he could have got under the Income-tax Act, then the Court may take the view that departing from the earlier decision leads to injustice or denial of justice and the Court may prevent an Income-tax Authority from doing something which would be unjust and inequitable. " Hon'ble jurisdictional High Court in the case of Dhansiram Agarwalla v. CIT had also dealt the similar issue. In that matter the assessee, following the mercantile system of accounting, was assessed in the status of an individual for the AY. 1973-74. Assessment was completed under section 143(3) of the Act, on March 31, 1976. It was found by the AO that the assessee had

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 5 deposited Rs. 1,58,400 with the Bank of India, Netaji Sub hash Road Branch, Calcutta, on 05.04. 1972, through the assessee's son, D, that the assessee stayed in Tinsukia, that on 04.04.1972 the assessee had no sufficient opening cash balance and had to borrow from other firms on that day and in such a circumstance D could not have reached Calcutta on the 5th before noon. Therefore, the amount of Rs.90,000 was treated as the assessee's income from undisclosed sources. The assessee had explained that D had travelled by air but later stated that D had travelled by car and the AO did not accept this as true. On appeal, the assessee contended that the assessment proceedings had started some years after the vent and he did not remember the mode of transport correctly. For the assessment year 1972-73, the Tribunal accepted this explanation but rejected it for the assessment year 1973-74. When the matter travelled to the Hon'ble High Court it was held that the totality of the circumstances and their combined effect were to be taken into consideration while deciding the question as to whether or not a particular fact is proved. Neither the principle of res judicata nor the rule of estoppel is applicable to the assessment proceedings, yet the rule of consistency does apply to such proceedings. Finally, it was held that the Tribunal cannot take a different view in the subsequent year when in the earlier year on the same facts it had accepted the claim made by the assessee. In our opinion, the rule of consistency requires that the view taken by the AO in the preceding years should not be disturbed, unless there was a change in the factual and legal position. Therefore, following the rule of consistency and placing reliance on the decision cited (supra) I hold that the entire gross receipts of the appellant should be assessed as business income. Accordingly, I direct the AO to assess the entire gross receipts as business income and allow the deductions as per section 28 to 43 of IT Act as per law. Ground No.3 & 5 stand disposed off accordingly.” Aggrieved by this, now Revenue is in appeal before us. 7. The ld. DR before us supported the order of A.O. On the other hand the ld. AR before us filed a paper book which running from pages 1 to 195 and submitted that the assessee has been showing income derived from the warehouse under the head of Income from Business & Profession in earlier and subsequent assessment years which was duly accepted by the Revenue. The ld. A.R. in support of his claim drew our attention on the assessment orders framed u/s 143(3) of the Act for the assessment year 2011-12, 2009-10 and 2004-05 which are placed on pages 22 to 41 of the paper book. The ld. A.R further submitted that it is providing complex services to the parties which are specified on page 44 of the paper book. Such services can be categorized as under:-

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 6 “Laydwn Opening Filling Tea in Hopper Preforming of packets Filling in packets Closing by pasting/sealing Weighments Casingin secondary bags Coding of packets Coding of secondary bags Casing in master bag / cartons Marking of mater bag / cartons Stiching / scaling / taping Strapping / restacking / weighment / loading

The ld. A.R has also filed the copy of agreement with the parties which are placed on pages 60 to 109 of the paper book. The relevant clauses of the agreement with TATA Tea Limited are reproduced below:- “4. MANUFACTURE OF THE PRODUCTS/S 4.1 Tata Tea shall supply to the Manufacturer the different varieties of tea and the packing material, for manufacture of the Products/s. the Manufacturer undertakes to manufacture the Product/s in accordance with the Specifications provided by Tata Tea from time to time, by utilizing the raw material and packaging material supplied by Tata Tea, at the Manufacturing Facility, on the terms and conditions specified under this Agreement. The said manufacturing activity shall include the following activities:- (a) blending of tea as per the Specification/s; (b) packaging of the blended tea, as per the Specification/s; (c) handling and despatching of packed blended tea as per the Specification/s; (d) anything not specified/defined in this Agreement but the same is/are relevant to the manufacture of the Product either directly or indirectly; and (e) delivery of such packaged blended tea to Tata Tea in terms of this Agreement.”

The ld. A.R relied on the order of ld. CIT(A). 8. We have heard the rival contention and perused the materials available on records. The issue involved in the present case relates to the fact that the income derived by assessee is rental income or business income. From the records placed before us we find that there is no dispute with regard to the income as discussed above was derived from the parties after deduction of TDS u/s 194I of the Act. 8.1 We also find that there is no ambiguity that assessee is providing complex/ composite services which we have mentioned in previous paragraph. It is also undisputed fact that the above income was accepted as business income by the

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 7 Revenue in earlier & subsequent years. The Parties from whom the rental income was received by the assessee during the year were same from whom certain receipts were treated as business income. Thus the Revenue has treated part of the income from such parties as rental as well as business income. However, we note that the predominant object of the assessee was to provide the services to the parties as discussed in the preceding paragraphs. Thus, the income derived from the warehouse should be treated as business income. Therefore, mere deduction u/s 194I of the Act will not change the character of income received by the parties. We also observed that there is no change in the facts and circumstances in the impugned case in comparison to the previous assessment years and the Revenue in all other years have accepted the same as business income. Therefore in our considered view the principles of consistency should be applied. In this regard we find principles laid down in the judgment of Hon’ble Supreme Court in the case of Radhasoami Satsang vs. Commissioner of Income Tax (1992) 193 ITR 0321 (SC) are directly attracted to the instant case wherein it was observed that in the absence of any material change in the facts, the Revenue should not take a different view in the other year. 8.2 We also find support from the of order of Hon’ble ITAT in the case of ITO vs Tejmal Bhai & Co. reported in 100 TTJ Rajkot 898 wherein in the identical circumstances the rental income from the warehouse was treated as business income. The relevant extract of the order is reproduced below:- “The assessee was providing storage facilities measured in square feet on specific charges for specific period to various customers. Thus, the assessee had contractual obligation for providing different areas of godowns to different persons at different time for specific period having specified charges on the basis of prevailing market rate. In addition to space in warehouse, the assessee had provided services to its customers like electricity, telephone, watch and ward, etc. As per the terms of letting out space in the warehouse to the customers, they had no right of occupancy and in the municipal records also none of these persons were occupant. Furthermore, the keys of the warehouse were with the assessee and the godowns were also insured by the assessee. Meaning thereby, the godowns were fully in control of assessee. Before the lower authorities, the assessee also produced the details of period-wise warehousing receipts, copies of warehousing bills and also details of electricity and telephone expenses, property tax details, etc. [Para 5] Merely because income is attached to immovable property, it cannot be the sole factor for assessment of such income as ‘income from house property’. What has to be seen is what was the primary object of the assessee while exploiting the property. If it is found that main intention is for letting out of property or any portion thereof, the

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 8 same must be considered as rental income or ‘income from house property’. In case it is found that the main intention is to exploit the immovable property by way of commercial activities, in that event, it must be held as ‘business income’. In the instant case, it was found that services rendered by the assessee were the result of its activities carried on continuously in an organized manner with a set purpose and with a view to earn profit. Hence, all those activities were in the nature of adventure in the nature of trade and, therefore, liable to be assessed as business income and not as income from house property. Whether a particular letting is business, has to be decided in the circumstances of each case. Each case has to be looked at from businessmen’s point of view to find out as to whether the letting was doing of a business or the exploitation of his property by the owner. A thing cannot, be by its very nature, be a commercial asset. A commercial asset is only an asset used in business and nothing else and business may be carried on with practically all things. Therefore, for ascertaining the income accruing from such asset, not only intention of the parties is to be seen but also the terms and conditions for which the asset is given for use. In the instant case, asset involved was warehouse and the commercial use was the only use which was possible and the resultant income as a natural corollary had to be assessed under the head ‘Income from business’ and not ‘Income from house property’. While deciding as to whether the assessee dealt with its property as an owner or as a businessman or a prudent man of commerce, one must see not the form which he gave to the transaction but to the substance of the matter. It will be essential to find out the user of the property and the character in which property is used. Ownership of property and leasing it out may be done as a part of business or it may be done as a land owner. Whether it is the one or the other, must necessarily depend upon the object with which the act is done. If the dominant object of the leasing out is incidental to and for the purpose of assessee’s business, income would be business income. What is to be discovered is whether property is subservient to the main business of the assessee. [Para 6] From the record, it was found in the instant case, that in the assessment year 1995-96, a revision proceeding initiated under section 263 was dropped by the Commissioner on the ground that warehousing income was business income and the partners of the assessee-firm were, therefore, eligible for remuneration on the basis of income/profit of warehouse. Furthermore, in the assessment year 1996-97, in an order passed under scrutiny assessment under section 143(3), the Assessing Officer allowed assessee’s claim for business income in respect of income generated on providing space in the warehouse. Furthermore, in the assessment year 1998-99 also, the warehouse income was accepted by the department under section 143(3) as business income. There is no dispute to the fact that strict rule of doctrine of res judicata does not apply to the proceedings under the Act, but at the same time it is equally true that unless there is a change in circumstances, the income-tax authorities will not depart from the previous decisions at their sweet will, in the absence of material circumstances or reasons for such departure. Thus, the rule of consistency which applies to the income-tax proceedings has to be followed. [Para 7] In the instant case, the department itself in the earlier years, had accepted the facts under scrutiny assessment that the ware- housing income was its business income. The Commissioner also under section 263 dropped the proceedings for the assessment year 1995-96 and agreed with the conclusion by the Assessing Officer that warehousing income was business income and, therefore, eligible for distribution of remuneration among the partners of the firm. Applying the principle of consistency, there was no merit in the action of the Assessing Officer for changing its conclusion

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 9 during the year under consideration without any change in the facts and circumstances as compared to the earlier years. Undisputedly, the assessee was deriving business income from the regular and systematic activity carried on in organized way in the field of ‘warehousing’. As per the terms of the partnership deed, one of the business to be carried on by the assessee-firm was warehousing, the assessee was providing services like electricity, telephone, watchman, staff for managing loading and unloading of goods and keeping a watch on these goods stored in the warehouse along with other services required from time-to-time by the concerned customers. Furthermore, the frequency of transactions for the hire charges received by the assessee gave ample indication and evidence that entire activity was in the nature of business activity. As per the nature of property also, it was only capable of commercial use. Therefore, the resultant income as a natural corollary was under the head ‘Income from business’ and not as the ‘Income from house property’. The balance sheet of the assessee-firm had also shown godown as ‘business asset’ and not as assets of any personal investments. Income is to be classified and taxed in the hands of recipient as per different heads of income as per provisions of section 14 irrespective of head under which the person making the payment books such expenditure/payment in its books of account or the nature of treatment given by him. Meaning thereby, nature of payment and head of income is not necessarily required to be the same in the hands of recipient of income and payer of income. In the instant case, even though the customers making payment to the assessee had booked the expenditure in their books of account under the head ‘Rental expenditure/payment’ and deducted TDS thereon under section 194-I, yet the income so received was assessable in the assessee’s hands as income from business and not as income from rent or income from house property. For deciding the nature of income, no general principle can be laid down which is applicable to all the cases. These cases have to be decided on their own merits, facts and circumstances. In each case, what is to be seen is whether the asset is being exploited commercially by letting out or whether it is being let out for the purpose of enjoying the rent. The distinction between the two is narrow and one has to depend on certain facts peculiar to each case. Thus, in the instant case, the entire activity systematically undertaken by the assessee since years together was adventure in the nature of trade and, therefore, liable to be assessed as ‘business income’ and not as ‘income from house property’. Pure and simple commercial assets like machinery, plant, tools, industrial assets and godowns having high business potential stand on a different footing from the assets like land and building. The hire charges income of such godowns has to be taxed under Part ‘D’ of Chapter IV as ‘Income from business’ rather than Income from house property. [Para 8] In the result, all the appeals of revenue were to be dismissed.”

Similarly, the case laws relied by the AO are distinguishable from the facts of the present case. In so far the judgment of Hon’ble Supreme Court in the case of Shambu Investment Pvt. Ltd. (Supra) is concern it was observed as under : “the High Court held that the prime object of the assessee under the said agreement was to let out portion of said property to various occupants by giving them additional right of using furniture and fixtures and other common facilities for which rent was being paid month by month in addition to the security free advance covering the

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 10 entire cost of the said immovable property. Thus, the income derived from the said property was an income from property and should be assessed as such.” In the above case the prime object was to let out the property but in the case before us the prime object was to provide the commercial services as discussed above. Thus no adverse inference can be drawn against the assessee based upon the above judgment. Respectfully following the same, we do not find any reason to interfere in the judgment of CIT(A) and accordingly conclude that the rental income in the aforesaid facts and circumstances should be treated as business income. Hence, the ground of appeal of revenue is dismissed. 9. Next issue raised by the Revenue in the grounds no. 2 is that ld. CIT(A) erred in deleting the addition Rs. 2,37,72,132/- made by the A.O. by estimating the profit after rejection of books of accounts of the assessee.

Aggrieved by this, Revenue is in appeal before us.

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 11 12. The ld. DR has relied on the order of A.O. whereas the ld. AR for the assessee has relied on the order of ld. CIT(A). 13. We have heard both the parties and perused the materials available on record. The issue before us relates to the amount of income calculated by the A.O @20% of the gross revenue on estimation after rejecting the books of accounts. After considering the materials on records and the order given by the Ld. CIT(A) on the issue before us, we observe that there is contradictory finding of the ld. CIT(A). On one hand the ld. CIT(A) upheld the order of the AO confirming the rejection of the books of accounts. The relevant finding of the CIT(A) is reproduced as under:- “3.0 Ground No.2 is related to the rejection of books of account and estimation of income. During the assessment proceedings the AO has called for the details and the appellant did not produce some of the details. The expenditure was debited in the P&L a/c under the head godown repairs in respect of Coal-berth and Sonarpur for a sum of Rs.17,37,358/- and Rs.7,33,358/- respectively, and the same was not supported by any vouchers or evidences. Similarly, the appellant has claimed the purchase from various parties they did not have VAT registration. In the case of CAM enterprises and NHD enterprise who have billed Rs.15,72,325/- and Rs.22,45,239/- were not found at the address. The Assessing Officer held the goodown rents received by the appellant as the head income from property since the TDS was deducted u/s. 194I and the contractual job receipts as the business income. The expenditure in respect of godown rents, repair and maintenance of the godown and business expenses were mixed up. The appellant has not furnished the separate profit and loss account bifurcating the expenditure relating to income from property and business income. Therefore the AO has rightly rejected the books of account u/s. 1145(3) and estimated the income to his best judgement. Accordingly, there is no merit in the argument of the appellant that the rejection of books of accounts was bad in law. This ground of appeal is dismissed.” Further Ld. CIT(A) directed the AO to assess the entire gross receipts as business income of the assessee and allow the deduction u/s 28 to 43 of IT Act. The relevant finding of the CIT(A) is reproduced as under : “4.0 Ground No.4 is related to the estimation of income @ 20% of the gross business receipts. During the assessment proceedings the AO held the godown rents as property income and contractual job receipts as business income. Since the income of the appellant could not be properly deduced the AO estimated 20% of gross receipts relatable to business as the taxable income. While deciding ground No.3 & 5 I have already directed the AO to assess the entire gross receipts as business income and allow the deductions as per section 28 to 43 of the IT. Act. While estimating the income @ 20% of gross receipts as business income the AO has not brought on record any comparable cases. No other material was placed on record. The appet1ant has maintained the books of accounts and no defects were noticed by the AO.

ITA No.1316/Kol/2016 A.Y 2010-11 DCIT Cir-26 Kol. Vs. M/s Tewari Warehousing Co. Page 12 Therefore, I do not find any merit in the estimation of income made by the AO and this ground of appeal is allowed.” In view of above, we find that there is ambiguity in the judgment given by the ld. CIT(A). Once the books of accounts are rejected by the AO then the profit has to be determined on estimated basis. Hence, in our considered view the impugned issue needs to be re-examined by the Ld. CIT(A) de-novo and in accordance with provision of law. Thus, the ground of appeal filed by the Revenue is allowed for statistical purposes. 14. Last ground No. 3 & 4 are general in nature and do not call for any separate adjudication. In the result, Revenue’s appeal stands allowed partly for statistical 15. purpose. Order pronounced in open court on 16/03/2018 Sd/- Sd/- (�या%यक सद'य) (लेखा सद'य) (S.S.Viswanethra Ravi) (Waseem Ahmed) Judicial Member Accountant Member *Dkp, Sr.P.S )दनांकः- 16/03/2018 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-DCIT, Circle-26, Aayakar Bhawan Dakshin, 2, Gariahat Road (South), Kolkata-68 2. ��यथ�/Respondent-M/s Tewari Warehousing Co. Hide Shed Dump, Old Goragacha Road, Kolkt-88 3. संबं,धत आयकर आयु-त / Concerned CIT 4. आयकर आयु-त- अपील / CIT (A) 5. .वभागीय �%त%न,ध, आयकर अपील�य अ,धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड2 फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary Head of Office/DDO आयकर अपील�य अ,धकरण, कोलकाता