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TMI Blog2015 (6) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue arising in the present appeal is squarely covered against the assessee in view of the order of the Hon'ble High Court in the case the assessee.[2015 (6) TMI 638 - ITAT MUMBAI] as held an overall appreciation of the evidence and explanation submitted on behalf of the assessee, we are of the view that the assessee has failed to explain and substantiate that the expenditure on staff training and salary pad to Mr. Naval Kumar was wholly and exclusively for the purpose of business of the assessee. We, therefore, confirm the orders of revenue authorities - Decided against assessee. Set off of unabsorbed depreciation - rectification of mistake u/s 154 - Assessing Officer opined that in view of section 32(2) of the Act such unabsorbed depreciation is not allowable to be set off of against the income of assessment year 2007-08 - Held that:- The decision in Mepco Industries Ltd. (2009 (11) TMI 24 - SUPREME COURT), Soora Subramanian (2009 (10) TMI 579 - MADRAS HIGH COURT) and Sri Ram Chits (Bang.) Ltd. (2013 (12) TMI 481 - ITAT HYDERABAD) held that the assessment based upon the Supreme Court decision cannot be rectified on subsequent retrospective amendment of law. Thus order of recti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2000 styled as leave and licence agreement granted licence to M/s. American Express Bank Ltd. to use the premises of which it was the lessee. The licence fee was fixed at ₹ 13,66,875/- as quarterly licence fee. The said premises along with fixtures and fittings were licensed to the party for a period of three years commencing from 01.01.2001 and expiring on 31.12.2003. The Assessee had declared the said licence fee as income from business and claimed certain expenses against it. On the other hand, the AO has show caused the assessee as to why the same should not be assessed as income from other sources. The explanation of the assessee in this regard was that under clause 53, 109, 129 and 131 of the object clause of Memorandum of Association of assessee, assessee was permitted to pursue business of taking on lease and earn income from the same. Another plea raised by the assessee was that it had taken on lease commercial assets which in turn were leased out to derive income and the said income was to be assessed as business income. Both the AO and the CIT(A) treated the said income as income from other sources as the assessee was merely subletting the property and there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence fees received by the assessee were business income. The Court is informed that this was brought to the notice of the Tribunal. The assessee submits that no distinguishing features were brought before the Tribunal by the Revenue to justify a different treatment for the assessment year in question. In these circumstances, we are of the view that the Tribunal may be requested to reconsider its decision having due regard to the circumstances which are pointed out. We, however, clarify that we have expressed no opinion on the merits and all the contentions are kept open. For the aforesaid reasons, we quash and set aside the order and remand the matter on the first question. In view of the directions of the Hon'ble High Court the ground of appeal No. 1 was fixed before the Tribunal for adjudication. 7. The learned A.R. for the assessee pointed out that the lease income earned by the assessee from year to year was being assessed as income from business and this fact was brought before the Tribunal also. However, the Tribunal held that the said income was assessable under the head income from other sources . 8. The next plea of the assessee was that in the absence of any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as income from other sources, since the assessee was not the owner of the property. The assessee had entered into lease agreement with American Express Bank in the earlier year and admittedly the rental income declared by the assessee was assessed as business income in the hands of the assessee after allowing the related business expenditure claimed. The said decision was accepted by the authorities below from assessment year 1993-94 onwards for which the assessment was completed under section 143(3) of the Act and copy of the assessment order is filed at pages 32-42 of the paper book. Similarly, for assessment year 2001-02 the assessment was completed under the head income from business in the assessment order passed under section 143(3) of the Act, which in turn is placed at pages 43 to 49 of the paper book. The assessee continues to earn income from same lease agreement as in the past and the income declared during the year under consideration was received from American Express Bank, which will also be sub-lessee in the earlier years. The Hon'ble High Court, while adjudicating the appeal of the assessee, had noted all the above said facts and also noted that there were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras and in turn let out those properties and the rental income received by it was shown as income from business, it was held that where main object of the assessee company as per its Memorandum of Association was to acquire properties and to let out those properties as well as make advances upon the security of land and building, then it was held that what we emphasis is that holding the aforesaid properties and earning income by letting out these properties is the main objective of the company . The Hon'ble Supreme Court, however, noted that in the return of income the entire income which had accrued and assessed in the hands of the assessee was from letting out of the said property and there was no other income arising to the assessee. The Hon'ble Supreme Court made reference to the ratio laid down by the Constitution Bench of the Apex Court in the case of Sultan Brothers (P) Ltd. vs. CIT [(1964) (5) SCR 807] and the ratio laid down in the case of Karanpura Development Co. Ltd. vs. CIT reported in 44 ITR 362 (SC) and observed as under: - 8. Before we refer to the Constitution Bench judgment in the case of Sultan Brothers (P) Ltd., we would be well advised to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property, it is possible to say on which side the operations fall and to what head the income is to be assigned. 13. The Apex court also noted the fact that in Sultan Brothers (P) Ltd. (supra) the Constitution Bench had clarified that merely an entry in the object clause showing a particular object would not be determinative factor to arrive at a conclusion whether the income has to be treated as income from business and such question would depend upon the circumstances of each case, i.e. whether a particular business is letting out or not. After noting down the above said decisions the Hon'ble Apex Court held that the circumstances of the case have to be considered and in view of the facts before it and its circumstances the Hon'ble Supreme Court held that letting of the properties was the business of the assessee and assessee, therefore, rightly disclosed the income under the head income from business . 14. The facts before us are similar to the facts before the Hon'ble Supreme Court in Chennai Properties Investment Ltd. As pointed out by us herein above assessee, in furtherance of its object of Memorandum of Association, had leased out the premises, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed as profit gains of business or from other sources. While coming to a particular conclusion, the Tribunal has discussed the director s report dated 26/08/2003 with respect to licence fee with American Express Bank, which came to an end on 31/03/2003 after which a new licence agreement was entered into by the assessee with British Deputy High Commission, ratio laid down in Sultan Brother Pvt. Ltd. (1964) (5) SCR 807 (SC), Karanpura Development Company Ltd. vs CIT (44 ITR 362) (SC), identical fact in the case of Chennai properties, decided by Hon ble Apex Court and by following the decision in ITA No.3033/Mum/2010 along with ITA Nos.4977/Mum/2006 decided in favour of the assessee. No contrary decision, on identical fact, was not brought to our notice, specifically by the Revenue, therefore, following the order of the Coordinate Bench that too in the case of assessee itself, we decide this issue in favour of the assessee. 2.3. The next ground pertains to disallowing the claim of expenses on account of staff recruitment/ training expenses amounting to ₹ 7,81,609/-. At the outset, the ld. counsel for the assessee fairly contended that this issue is decided against the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UK was doing the digital printing on assesses towel and such product commands good market abroad. It has been further explained by the assessee that because of getting the printing done by Max Imaging Systems Ltd., UK, cost of the towel was high and therefore to have inhouse printing Mr. Naval Kumar was sent for training abroad. The assessee has filed various correspondences between itself and overseas buyers and Max Imaging Systems Limited. These documents are at page No. 112 to 181 of the assessee s paper book. The correspondence, which is after November, 2000 when Mr. Naval Kumar was sent to USA, in our view will not help the case of the assessee. The position as it prevailed prior to Mr. Naval Kumar being sent to abroad alone have to be looked into. Documents at page No. 137 to 182 related to the period prior to Mr. Naval Kumar being sent abroad. In these correspondences, there is nothing to indicate that towels were sent abroad for printing and because of high cost of printing abroad, the assessee could not explore or do export business. Correspondences only show that towels were being sent abroad and printing was done on the same through Max Imaging Systems Ltd., UK. The pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. The Asstt. Commissioner of Income Tax Anr. [Income Tax Appeal No. 584 of 2009] decided on 12th June, 2009 where this Court affirmed the decision of the Tribunal for similar reasons. 19. The issue raised before us is similar, i.e. on account of staff recruitment and staff training expenses of ₹ 15,27,872/- incurred on Shri Naval Kumar. Following the same parity of reasoning, we uphold the order of the CIT(A) and dismiss ground No. 2 of the assessee. 2.5. In view of the order of the Tribunal, in the case of assessee itself, on identical facts/issues following the reasoning contained therein, we decide this issue against the assessee and in favour of the Revenue, thus, this ground of the assessee is dismissed. 3. Now we shall take up the appeal of the Revenue, wherein, the only ground raised pertains to set off of unabsorbed depreciation. The ld. counsel for the assessee, defended the conclusion drawn in the impugned order, whereas, the ld. DR defended the observation/conclusion made in the assessment order. 3.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee claimed set off of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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