2010 (2) TMI 407 - HC - Income Tax

Assessment- the assessee-respondent is a public sector undertaking engaged in the business of running of tourist complexes hotels/motels/resorts. It declared rental income of Rs. 1, 16, 50, 981 under the head Income from house property after claiming deduction under section 24 of the Act. Tribunal held that the assessment had to be made as income from house property. The Tribunal also allowed claim for deduction and depreciation. Held that- once a similar proposition had been accepted by the Revenue in respect of assessment year 1997-98 then it was not open to it to challenge a similar finding and deviate from its earlier stand. Thus the Tribunal is right.

Summary

Issues:
1. Assessment of rental income under the head 'Income from house property' or 'Profits and gains of business or profession.'
2. Deletion of addition on account of breakage of crockery and cutlery.
3. Entitlement to double deduction on capital assets.

Analysis:

Issue 1:
The Revenue challenged the order of the Income-tax Appellate Tribunal regarding the assessment of rental income for the assessment year 2005-06. The Tribunal had accepted the income as "Income from house property" based on previous decisions. The Tribunal's decision was upheld, citing the principle of consistency and previous judgments. The court found no error in granting deduction under section 24 as the income was derived from house property, not a question of law but a finding of fact. The court relied on precedents to rule in favor of the assessee-respondent, rejecting the Revenue's challenge.

Issue 2:
Regarding the deletion of the addition on account of breakage of crockery and cutlery, the Tribunal's decision was supported by previous judgments and the principle of consistency. The court noted that similar issues had been decided in favor of the assessee-respondent in previous cases. The court upheld the Tribunal's decision, applying the same reasoning and rejecting the Revenue's appeal.

Issue 3:
The question of entitlement to double deduction on capital assets, specifically depreciation at the specified rate and a provision claimed at 2 percent of food cost, was also addressed. The court found that the principles of consistency and previous judgments favored the assessee-respondent. The court ruled against the Revenue, concluding that the appeal did not warrant admission and consequently dismissed the appeal.

In conclusion, the court upheld the Tribunal's decision in favor of the assessee-respondent on all issues, emphasizing the importance of consistency in applying legal principles and previous judgments.