INCOME TAX OFFICER, WARD - 3, BELGAVI vs. SHREE BHAGYALAXMI SAHAKARI SAKKARE KARKHANE NIYAMIT, BELAGAVI

(A.Y. 2013-14) ITO, Ward-3, Belagavi. vs Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit, Kuppatgiri, Khanapur, Belagavi. PAN: AAAAS 6744 C Appellant/Revenue Respondent / Assessee Assessee by : Shri Pravin Ghali, AR Revenue by : Shri Badrinath Yamaji Chavan, DR Date of hearing : 16/08/2023 Date of pronouncement : 22/08/2023 O R D E R

Per PARTHA SARATHI CHAUDHURY, JM:

2. The ld. CIT(A) also erred holding that since the identical issue was decided in favor of the appellant for the Asst Year 2014-15 by the CIT(A) vide dated 03.10.2018 hence allowed assessee’s appeal made by the then ld. CIT(A) for the Asst year 2014-15 wherein the Order was relying up on the decision of the Hon'ble Allahabad High Court in the case of CIT Vs Translam Limited as the issue before. the Hon'ble Allahabad High Court was different in the sense that the rental income will be business or not Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit in case of deriving income by exploiting commercial asset by way of leasing. However in this case the assessee had its income under the head “Income from Other Sources”, the ratio of the above decision of the Hon'ble Allahabad High Court in the case of CIT vs. Translam Limited will not apply.

3. The ld. CIT(A) also erred in not appreciating the fact that as per the Bye-laws of the assessee, letting of the properties/ assets is not at all the business of the assessee. If the business of the 'assessee is letting of properties, then it was to be assessed as Business Income as held by the Hon'ble Supreme Court in the case of M/s. Chennai Properties and Investments Ltd. vs CIT in the Civil appeal Nos. 4491 to 4994 of 2004. Hence, the income derived out of lease of sugar factory is correctly treated as 'Income from other Sources" by the Assessing Officer and has rightly denied the assessee's claim of set off of brought forward business loss against Income from Other Sources. .

Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit Tax Act, 1961 (for short, 'the Act') by denying the carry forward of earlier business loss claimed against income from other sources (lease rental income) of Rs. 6,07,72,418/-. In the instant case, the AO has treated the lease rent income as ‘income from other sources’ and thereby denied setting off of brought forward losses against the income on the ground of brought forward of business loss has to be set off of against income from same head.

4. During the first appellate proceedings, the assessee submitted that identical issue was decided in favour of the assessee for the A.Y. 2014-15 by ld. CIT(A) dated 03/10/2018. Thereafter, on perusal of the said order, ld. CIT(A) has held that since identical issue was involved in the present assessment year also and therefore, following the detailed reasoning recorded in the order of the erstwhile ld. CIT(A) in A.Y. 2014-15, he held that assessee was entitled for setting off of its brought forward business loss against income being treated as income from other source since it is attributable to the business activities of the assessee society even though the leasehold rights have been given to M/s. Laila Sugars Pvt. Ltd. Accordingly, appeal of the assessee was allowed.

Shree Bhagyalaxmi Sahakari Sakkare Karkhane Niyamit issue already decided in favour of the assessee as held by the ld.CIT(A). There were no materials/evidences placed on record by ld.DR to controvert the fact on record that the income being treated as income from other source is actually attributable to the business activities of the assessee-society. We do not find any infirmity with the findings of the ld. CIT(A) which has been passed on following the principles of consistency on the same facts and circumstances and parity of reasoning. We uphold the order of the ld. CIT(A) and dismiss the grounds of appeal raised by the Revenue.