NARMADA GINNING & PRESSING FACTORY,KHIRKIYA vs. ACIT CIRCLE-ITARSI, BHOPAL

अपील�य अ�धकरण, इ�दौर �यायपीठ, इ�दौर

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE

BEFORE SHRI RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER

ITA No.851/Ind/2019 Assessment Year:2013-14 Narmada Ginning ACIT, Circle & Pressing Itarsi बनाम/ Factory, Khirkiya Vs. Hoshangabad (Appellant) (Respondent ) P.A. No.AADFN0046J Appellant by Shri Ashish Goyal & N.D. Patwa, ARs Respondent by Shri Amit Soli, Sr. DR Date of Hearing: 11.11.2021 Date of Pronouncement: 17 .01.2022 आदेश / O R D E R PER MANISH BORAD: The above captioned appeal at the instance of Revenue is directed against the order of Ld. Commissioner of Income Tax(Appeals)-1, (in short ‘CIT(A)’), Bhopal dated 28.04.2016 which are arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 29.03.2016 framed by ACIT-Itarsi.

M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019

The Revenue has raised following grounds of appeal in ITANo.

851/Ind/2019:

“1. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.2,80,881/- by adopting the income from warehouse as income from house property instead of business income as shown by the appellant. 2. That the appellant craves leave to add, to urge, to later or to amend any of the grounds of the appeal on or before the date of hearing. 2.

M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 rent received from warehouse at Rs.12,45,517/-. Ld. AO concluded the assessment holding that the gross receipts from warehouse operation at Rs.12,45,517/- is Income from house property and assessee is only eligible for deduction u/s 24(a) of the Act at Rs.3,73,655/- and the balance income of Rs.8,71,861/- is to be taxed as income from house property. The net effect of this action of the Ld. AO resulted into an addition of Rs.2,80,881/- (Income held to be income from house property at Rs.8,71,861/- less business income from warehouse shown by the assessee at Rs.5,90,980/-). Income assessed at Rs.13,55,070/-. 4. Aggrieved assessee preferred an appeal before the Ld. CIT(A) but failed to succeed, as Ld. CIT(A) confirmed the view taken by the Ld. AO holding that warehouse receipts are arising simply from letting out of property and there is apparently no activity incidental to running the warehouse. 5. Aggrieved assessee is now in appeal before this Tribunal. 6. Ld. counsel for the assessee vehemently argued referring to the written submissions and the paper book running from pages 1 to 38 and also submitted that the assessee entered 3

M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 into an agreement with MP Warehousing & Logistic Corporation. As per the condition enumerated in the agreement, the assessee is required to perform various other functions for running the warehouse in a proper manner. It is also submitted that in subsequent assessment years from 2014-15 to 2017-18 similar income has been offered as business income and has been duly accepted by the revenue authorities. 7. Per contra, ld. DR vehemently argued supporting the order of lower authorities.

before us. The sole issue to be examined by us is that whether the

gross receipts from M.P. Warehousing & Logistic Corporation

received by the assessee are business receipt are rental income to

be assessed as income from house property. The assessee has

shown the gross receipts of Rs.12,45,517/- as business receipts

and after claiming incidental expenses of Rs.6,54,537/- has shown

the remaining amount as profit at Rs.5,90,980/- from the operation

of the warehouse. Both the lower authorities have treated the gross

receipts as income from letting out warehouse and taxable as 4

M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 income from house property.

letting out the warehouse placed at pages 11 to 24 which is an

agreement entered into between M.P. Warehousing and Logistic

Corporation and the assessee. Ongoing through clause (3) of this

agreement we find that the assessee is required to maintain the 24

hours security arrangement, cleaning and fumigation of the

premises on regular intervals provide labour on daily wages and

also to ensure the compliance of labour Rules and is also

responsible to compensate the labourers towards any liability under

labour laws arising at the warehouse. Agreement also shows that

the assessee is required to provide the equipment for storage of

goods.

between the assessee and MP warehouse and Logistic Corporation

we find merit in the contention of the Ld. counsel for the assessee

that the alleged gross receipts are not in the nature of rental income

from letting out the property but are business receipts received for

carrying out warehouse operations as per the terms of the

agreement. 5

M/s Narmada Ginning and Pressing Factory ITA No.851/Ind/2019 11. We, therefore, under the given facts and circumstances of the

case, set aside the finding of Ld. CIT(A) and hold that both lower

authorities erred in treating the alleged receipts of Rs.12,45,517/-

as rental income. Finding of Ld. CIT(A) is reversed and the net profit

shown from operations of warehouse at Rs.5,90,980/- is directed to

be treated as business income. Thus, the addition of Rs2,80,881/-

is deleted. Ground no.1 of the assessee’s appeal is allowed and

ground no.2 is general in nature which needs no adjudication.

allowed.

Order pronounced as per Rule 34 of I.T.A.T., Rules 1963 on … 17.01.2021.

Sd/- Sd/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER

Indore; �दनांक Dated : 17/01/2022 Patel/PS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore 6