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Income Tax Appellate Tribunal, CUTTACK ‘SMC’
Before: SHRI N.S SAINI
These are appeals filed by the assessee against separate orders of
CIT(A)-1, Bhubaneswar, both dated 10.10.2012, for the assessment years
2006-07 and 2008-09.
In Ground No.(A) of both the assessment years, the assessee has
challenged the reopening of assessment under section 147 of the I.T.Act,
1961
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At the time of hearing, ld A.R. of the assessee did not press this
ground and, hence same is dismissed as not pressed.
The common issue involved in Ground No.(B) of the appeal in both
the years under appeal is that the CIT(A) erred in holding that the rental
income earned from the property was income from house property and not
business income as claimed by the assessee.
I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. The brief facts of the case
are that the Assessing Officer observed that the assessee has earned gross
rental income of Rs.8,32,200/- in A.Y. 2006-07 and Rs.8,97,656/- in A.Y.
2008-09. He observed that the assessee owns four flats bearing Nos.A-
101, A-103, A-104 and A-105 at Nirmala Plaza, 1st floor, A-1, Forest Park,
Bhubaneswar. The said property was purchased from M/s. Utkal Builders
(P) Ltd., during the year 2001-02. He also found that the licensees will
bear the cost towards electricity, lift charges, common electricity charges,
water charges, security and building maintenance charges etc. The
Assessing Officer found that the occupants were not separately charged for
services rendered and that the prime object of the lease agreements was
to let out for rental income. Relying on the decision of Hon’ble Supreme
Court in the case of Sambhu Investment Pvt Ltd vs CIT, 263 ITR 143 (SC),
the Assessing Officer held that the rental income was to be assessed as
income from house property and not as income from business.
3 ITA Nos. 650 & 651/CT K/ 2012 Asse ssment Years: 2 00 6-0 7 & 20 08- 09
On appeal, ld CIT(A) confirmed the action of the Assessing Officer.
Before me, ld A.R. of the assessee submitted that in assessment year
2002-03, the assessee had shown the rental income from the property as
income from business and same was accepted by the department, for
which, he placed at page 4 of the paper book, copy of income return of
income. Further, he submitted that in A.Y. 2004-05 also, the assessee had
shown the rental income from the property as business income, which was
accepted by the department and has filed at page 7 of the paper book, copy
of the income tax return. He further submitted that in assessment year
2005-06 also, the assessee had shown the rental income from the property
as income from business, which was accepted by the department, for
which, he filed at page 9 of the paper book, copy of the income tax return.
He further submitted that in A.Y. 2009-10, the assessee had shown the
income from the property as business income, which was accepted by the
department and has filed copy of income tax return at page 15 of the paper
book. He further submitted that in A.Y. 2010-11, the income from property
shown as business income was accepted by the department and filed the
copy of income tax return at page 19 of the paper book. He submitted that
in an assessment made under section 143(3) for A.Y. 2011-12 order dated
10.2.2014, the Assessing Officer has accepted the income from the
property as business income, copy of which is placed at 24 of paper book.
Therefore, he submitted that though the principle of res-judicata is not
4 ITA Nos. 650 & 651/CT K/ 2012 Asse ssment Years: 2 00 6-0 7 & 20 08- 09
applicable in the income tax proceedings but consistency should be
maintained until and unless change in facts are shown by the department.
For this proposition, he relied on the decision of Hon’ble Supreme Court in
the case of Radhasoami Satsang vs CIT, 193 ITR 321 (SC), wherein, it has
been held that unless there is a material change in justifying the Revenue
to take a different view the earlier view which has been settled and
accepted of a several years should not be disturbed.
The Departmental Representative on the other hand could not
controvert the submission of the AR of the assessee.
I find in the assessment years 2002-03, 2004-05, 2005-06, 2009-
10, 2010-11 and 2011-12, the department has accepted the income from
the property in question of the assessee as business income and only in
the assessment years 2006-07 and 2008-09, the department has assessed
the income from the property under the head “income from house
property”. The Hon’ble Supreme Court in the case of Radhasoami
Satsang(supra) has held that that unless there is a material change in
justifying the Revenue to take a different view the earlier view which has
been settled and accepted of a several years should not be disturbed. Still
further, the Hon’ble Supreme Court in the case of CIT vs. Excel Industries
Limited, 358 ITR 295 (SC) reiterated the law laid down in Radhasoami
Satsang vs CIT (SUPRA) to hold that where a fundamental aspect
permeating through the different assessment years have been found as a
5 ITA Nos. 650 & 651/CT K/ 2012 Asse ssment Years: 2 00 6-0 7 & 20 08- 09
fact once way or the other, and the parties have allowed the position to be
sustained by not challenging the order, it is not allowed to change the
position in any subsequent year. Hence, respectfully following the decision
in the case of Radhasoami Satsang(supra) and Excel Industries Limited
(supra), I am of the considered view that the income from the property to
be assessed as business income and allow this ground of appeal of the
assessee.
The common Ground No.(C) in both the assessment years reads as
under:
“That without prejudice to the Ground No.A & B as stated above the CIT(A) is not correct in allowing interest on borrowed capital amounting Rs.177224 in stead of Rs.244,424/-(In A.Y. 2006-07) and Rs.5,18,571/- in A.Y. 2008-09).
The AR of the assessee did not make any submission on the above
ground of appeal. Hence, the same is dismissed for want of prosecution.
In the result, the appeals filed by the assessee are partly allowed.
Order pronounced in the open court on 01/02/2017 in the presence of parties.
Sd/- (N.S Saini) ACCOUNTANT MEMBER
Cuttack; Dated 1/02/2017
6 ITA Nos. 650 & 651/CT K/ 2012 Asse ssment Years: 2 00 6-0 7 & 20 08- 09
B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : M/s. Parija Construction Co.Pvt.Ltd., Flat No.107, Nirmala Plaza, A-1, Forest Park, Bhubaneswar. 2. The Respondent. ITO, Ward 1(3), Bhubaneswar. 3. The CIT(A)-1, Bhubaneswar 4. CIT, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE ECRETARY ITAT, Cuttack