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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
आदेश / O R D E R Per Ashwani Taneja (Accountant Member):
This appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals) -30, Mumbai {(in short Ld. CIT(A)} dated 24.11.2011 for the 2 Synchem Investments Pvt assessment year 2008-09, decided against the assessment order passed by the Assessing Officer (in short ‘AO’) u/s 143(3) of the Act. The assessee has raised following grounds of appeal:
“1. The Learned Commissioner (A) ought to have appreciated that Income from Hoardings should be chargeable to tax under the Head “Business Income” and not under “other sources” in case the assessee is running a mall and whole of his income is taxable under Business Income. 2. The appellant reserves the right to add, alter or amend to the above grounds of appeal.”
During the course of hearing, arguments were made by Ms. Vasanti Patel (Ld Counsel), on behalf of the assessee and Shri Somnath Ukkal, Departmental Representative (Ld. DR), on behalf of the Revenue.
The only ground in this appeal is with regard to the action of lower authorities in making treatment of income from hoardings as assessable under the head income from “other sources” as against “business/profession”.
It has been argued by the Ld. Counsel of the assessee that during the year, assessee earned its income from running/operating mall and its income has been assessed by the AO under the head “income from business”, but the income received from promotion of hub and letting out of hoarding has been held to be “income from other sources”. It has been submitted by her that income from hoarding is very
3 Synchem Investments Pvt much part and parcel of the overall business activities of the assessee. It has been done on regular basis, and not as isolated activity, it is integral part of other regular activities of the assessee, and that in earlier also also similar income was earned which has been accepted by the department as “income from business”. In view of these circumstances, there was no reason to give different treatment to the same in this year.
On the other hand, Ld. DR has supported the orders of lower authorities and has also relied upon the judgment of Calcutta High Court in the case of Mukharjee Estate Pvt. Ltd. vs. CIT 244 ITR 1 and requested for upholding the orders of lower authorities. In response to the submission of Ld Counsel for following a consistent view every year, it was submitted by Ld DR that each year is a separate year, and therefore AO was free to take a different view in this year. However, he was not able to show any change in facts or law.
In reply Ld. Counsel has distinguished the judgment of Mukharjee Estate Pvt. Ltd. (supra) on the ground that in the said judgment, Hon’ble Court was called upon to resolve the dispute of deciding the head of income between “income from house property” and “income from other source” and in that background only, the income from hoarding was held to be “income from other sources”. The assessee, in the aforesaid case, never claimed it as part of its activities, to be assessed as “income from business”. Thus, the issue of treatment of this income as part of overall business activities of the assessee
4 Synchem Investments Pvt and accordingly its assessment as per law as “income from business”, was not there before the Hon’ble High Court, and therefore, the aforesaid decision is not applicable on the case before us, being distinguishable on facts as well as law. She has also relied upon the few judgments in support of her claim that principal of consistency should be followed, and thus, if the income has been taxed under the head business in earlier years, then the same treatment should be applied in this year also by the AO. Lastly, she submitted that there is no such concept that ‘each year is a separate year’, and the Revenue is not free to take a different view every year.
We have gone through the facts of the case as well as orders of lower authorities. It is noted by us that the AO has assessed the entire income of the assessee as ‘income from business’ as was claimed by the assessee in its return. But, only the amount received with regard to hub promotion and hoarding letting out income was categorized under the head ‘income from other sources’. Our attention was drawn upon the Return of Income, the annual accounts and assessment order passed u/s 143(3) for A.Y.2007-08, showing that similar income has been assessed by the AO as ‘income from business’. We find that in the assessment order of this year, no proper reasoning has been given by the AO, justifying as to how and why this income is not part of the business income of the assessee. No proper justification has been given by the AO to take this income out of the main stream and give it a different treatment. The AO has merely relied upon the 5 Synchem Investments Pvt judgment of Mukharjee Estate Pvt. Ltd. (supra). In our considered view, the facts of the case relied upon by the AO were different, and nature of dispute involved in the said case was also different. It has been submitted by the Ld. Counsel that location of the hoarding was on the pillars and on the walls inside the mall. These facts remain undisputed. Thus, we can hold, from the facts gathered that the assessee has derived this income as part of its systematic and organized business activities, carried out in the normal course of its business.
7.1. Thus, in view of the aforesaid facts, we find no reason under the law to give this income, a differential treatment, and put the assessee under avoidable hardships. In our considered view, this kind of litigation yields no productive results and is indeed not helpful to the Revenue in augmenting more collection of tax.
7.2. Further, it is further worth noting that similar income has been found assessable as business income by the AO himself in the assessment order passed u/s 143(3), dated 24.12.09. In this order it has been clearly mentioned by the AO that nature of the business of the assessee was, real estate development, lease of premise and letting of space for hoarding, advertisement as well as promotion. Thus, when in a particular year, the income from hoarding has been found to be ‘income from business’, then there was no reason to take a different view in another year, unless of course when there is change in some material facts or applicable law. We find
6 Synchem Investments Pvt support from the order of Hon’ble Supreme Court in the case of CIT vs. Excel Industries Ltd. 358 ITR 295. Its relevant para is reproduced herein:
“It appears from the record that in several assessment years, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further but in respect of some assessment years the matter was taken up in appeal before the Bombay High Court but without any success. That being so, the revenue cannot be allowed to flip-flop on the issue and it ought let the matter rest rather than spend the taxpayers’ money in pursuing litigation for the sake of it.”
7.3. Thus, from the above, it is clear that law does not permit the Revenue to take shifting stands every year. Ld. DR has argued that ‘each year is a separate year’, and therefore AO was well within his powers to take a different view in this year. This kind of argument is made on behalf of the Revenue, quite frequently. We find that, while making assessments, this concept has been, largely, mis-understood and mis-applied by the Revenue. If under the law, the AO is allowed to take a different view every year, depending upon his sweet will or mood swings, without there being any change in material facts or law applicable, then there would be chaos and uncertainties, all around. Sword of litigation shall keep hanging on the heads of the taxpayers. Finality of litigation would be difficult to be attained. No taxpayers or a business organization would be able to properly plan its financial affairs, because of uncertain and indeterminable tax liabilities. Such a situation can discourage voluntary tax compliance in 7 Synchem Investments Pvt the country, thus leading to lower tax collection, and therefore such a scenario would not be good for Revenue also, which can never be intention of the law. Therefore, in our considered view, each year is not a separate year, so as to enable the AO to apply different yardstick or rule every year, even while factual and legal position remain unaltered. This concept has been wrongly understood by the Revenue. Each year is separate year, only for the limited purpose for computing taxable income of an assessee taking into account facts and figures of each relevant year separately, and certainly not for changing the parameters for computing a similar income or allowing an identical claim. The rule of taxation, permeating through different years, should remain the same, as long as factual/legal position remains unchanged. The AO is not permitted under the law to change his earlier view, for increasing tax burden upon the taxpayer, without there being change in material facts or applicable law.
7.4. Thus, we allow the ground of the assessee and direct the AO to assessee the impugned income as part of ‘income from business’, as was assessed by him in AY 2007-08.
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In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 18th November, 2015.