RAMESH PRABHAKAR BACCHEWAR,,LATUR vs. INCOME-TAX OFFICER ,,

The assessee has raised the following grounds of appeal:- 1. The Assessing Officer has erred in not treating the letting out of the warehouse as business activity and in computing the income there from under the head income from house property and thereby making a addition ofRs.607988/- to income of the appellant by making disallowance of depreciation and other expenses. 2. On the facts and in the circumstances of the case, the income from letting out of the warehouse is income from business and not from the income from house property as held by the Assessing Officer and all the expenditure incurred for this activity including interest, depreciation and administrative expenses should be deducted while computing the income from this activity as claimed by the appellant.

The issue which arises in the present appeal is against assessability of income from warehousing, whether the same is to be assessed as ‘income from business’ or ‘income from house property’.

Briefly, in the facts of the case, the assessee had shown income from warehousing, transport and handling of food grains. The assessee had received warehousing rent of ₹ 25,34,400/-. The assessee claimed the said warehousing activity to be an organized activity of business and declared the income as business income. The Assessing Officer was of the view that the assessee had rented out the property as godown and hence, income is to be assessed as ‘income from house property’. The Assessing Officer taking note of the income and expenditure account of assessee, was of the view that the assessee was not carrying on any business activity and hence, assessed the said income as rental income under section 22 of the Act, subject to deduction under section 24 of the Act. In this regard, the Assessing Officer referred to several decisions and allowed expenditure as per section 24(a) of the Act and no other expenditure was allowed in the hands of assessee and income from property was re-computed.

The CIT(A) relied on the ratio laid down by the Pune Bench of Tribunal in Nutan Warehousing Co. (P.) Ltd. Vs. ITO (2007) 13 SOT 19 (Pune), wherein it was held that income received by the said assessee from warehousing activities was to be assessed as ‘income from house property’. The CIT(A) took note of the terms of agreement between the assessee and M/s. Tinna Oils & Chemicals under clause 3(i), wherein it was agreed that the Lessee would store its agricultural produce in the warehouse of assessee. The CIT(A) was of the view that the said agreement with M/s. Tinna Oils & Chemicals was a case of letting of building and no complex commercial activity was involved. Relying on the ratio laid down by the Pune Bench of Tribunal in the case of Nutan Warehousing Co. (P.) Ltd. Vs. ITO (supra), held the income from letting of warehouse to be assessable as ‘income from house property’.

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee pointed out that the Hon’ble Bombay High Court in Nutan Warehousing Co. (P.) Ltd. Vs. DCIT (2010) 326 ITR 94 (Bom) had remitted the issue back to the file of ITAT. It was further pointed out by the learned Authorized Representative for the assessee that the Tribunal in turn, decided the issue after deliberating upon the same in ITA Nos.1963 to 1968/PN/2013, relating to assessment years 2000-01 & 2002- 03 to 2006-07, ITA No.2130/PN/2013, relating to assessment year 2001-02, ITA No.361/PN/2014, relating to assessment year 2008-09, order dated 30.09.2016. Our attention was drawn to page 32, para 42 of the order, wherein the Tribunal held that lease rental received by the assessee on account of providing godown and warehousing facility for goods of all description of agricultural and allied products was to be assessed as business income.

The learned Departmental Representative for the Revenue on the other hand, strongly opposed the same and he time and again referred to the order passed by the Hon’ble High Court in the case of Nutan Warehousing Co. (P.) Ltd. Vs. DCIT (supra).

On perusal of record and after hearing both the learned Authorized Representatives, we find that the issue which arises in the present appeal is with regard to assessability of warehousing charges received by the assessee. The assessee states that it had provided space for warehousing to M/s.Tinna Oils & Chemicals and the said receipts were to be assessed as business income in the hands of assessee as it was providing warehousing facilities and was not letting out its premises. The learned Authorized Representative for the assessee further pointed out that the issue stands covered by the order of the Pune Bench of Tribunal in second round in the case of M/s. Nutan Warehousing Company Pvt. Ltd. Vs. DCIT (supra). On perusal of record it is apparent that the assessee had entered into an agreement to provide space to M/s. Tinna Oils & Chemicals for storage of its agricultural produce and allied products. The facilities provided were in the form of godown and were in line with warehousing facilities provided. Under such circumstances, the issue was elaborately considered by the Pune Bench of Tribunal vide its order dated 30.09.2016. Earlier, in the said case of M/s. Nutan Warehousing Company Pvt. Ltd., the Tribunal had decided the issue against the assessee. The matter travelled upto the Hon’ble High Court, which remitted the issue back to the file of Tribunal vide its judgment dated 18.02.2010. Consequent thereto, the Tribunal passed the order allowing the claim of assessee that facilities provided by it along with space were business activity undertaken by the assessee and lease income received by the assessee on account of letting out of its

In the result, appeal of assessee is allowed.