TMI Blog2013 (9) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... havir Singh, JM,JJ. For the Appellant: Shri A. S. Mondal, Sr. DR For the Respondent: Shri N. P. Jain, Advocate ORDER Per Mahavir Singh,JM. This appeal by revenue is arising out of order of CIT(A)-VIII, Kolkata in appeal No. 221/CIT(A)-VIII/Kol/09-10 dated 05.08.2011. Assessment was framed by ITO, Wd-7(2), Kolkata u/s.143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2007-08 vide his order dated 30.11.2009 2. The only issue in this appeal of revenue is against the order of CIT(A) in treating the income from licence fee and collection on account of outgoing as income from business instead of income from house property. The other grounds are consequential to this issue and revenue has raised the following four grounds: "1. That the Ld C.I.T. (Appeals)-VIII, Kolkata has erred on facts and in law in holding that the income of the assessee from licence fee and collection on account of outgoing is to be assessed under the head profits of the business instead of under the head Income from House Property. 2. That the Ld C.I.T. (Appeals)-VIII, Kolkata has erred on facts and in law in considering the receipts of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea from M/s Jabbar Haat, a Partnership Firm which were also sub-leased to different tailors. The company had made non-refundable advance of Rs.10 lakh to the said firm and also paid Rs.12,000/- as licence fee and outgoings on a regu1ar basis. In this case a1so there was no written agreement with the lessor. In the ba1ance sheet, the amount of advance given had been shown as lease hold sta1ls under head fixed assets and a1so charging depreciation @ 10% on diminishing ba1ance method. It was a1so submitted that these 20 stalls were taken on lease from M/s Jabbar Hat ( PA NO.AACFJ4192Q and assessed to tax at ACIT, Circle-56, Kolkata) on no profit no gain basis as the company a1so shown income of Rs.12,000/- as Licence fee outgoings. It was a1so submitted that the reason behind taking the said sta1ls on lease that those sta1ls were located in the area of the sta1ls constructed by the company. Secondly, to manage / regulate the market / Haat premises efficiently. The company had given tota1 of 1016 sta1ls under lease / sub-lease to different tailors and a1so received lease rent in the form of licence fee and outgoing and by way of adjustment of advances previously taken from the lessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements of and the specifications in the Films Rules. The vaults were licensed to film distributors for storage of films etc. with no right to sub-let. The assessee installed a f re alarm. It maintained regular staff and also opened railway booking office for despatch and receipt of film parcels, a canteen for the benefit of the 1icenees, the vau1t holders. It further provided telephone system for the benefit of the licensees. A monthly charge was rea1ized as licence fee from the licensees. On these facts the Supreme Court held that what the property fetched was not income derived from property but was income derived from carrying on a concern in the nature of trade. The Court ruled out computation of the income u/s 9 of the 1922 Act (corresponding to Sections 22 to 27 of the present Act). The state of facts in the present case in quintessential nature replicates that in National Storage Ltd (supra) as is mentioned in earlier paragraphs describing the multifarious and large-scale activities of the appellant as already mentioned by the appellant written submission dated 29th January, 2010. I flnd that the assessee has to maintain staff and to provide fittings and fixtures, sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any immovable property and where such intention is manifest, the conclusion has to be in favour of business character of the income immaterial that the letting of the house is involved. I also find that the decision of Mumbai Tribunal in the case of Gesco Corporation Limited Vs ACIT 31 SOT 132 (Mum) is on similar lines as that of Kolkata Tribunal. The Assessing Officer had relied on S. G. Mercantile Corporation Pvt Ltd 83 ITR 700 (SC) but in that case it has been held that the definition of business [in section 2(4) of the 1922 Act) was of wide amplitude and it could embrace within itself dealing in real property as also the activity of taking a property on lease, setting up a market thereon and letting out shops and stalls in the market. In this case the Hon'ble Apex Court has followed the decision in the case of Karanpura Development Co. Ltd. v. CIT 44 ITR 362, 377 (SC) which has been mentioned at 83 ITR page 707 and 708. It was held that ownership of property and leasing it out may be done as apart of business or it may be done as land owner. Whether it is the one or the other must necessarily depend upon the object with which the act is done. In the case of the appellant comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that the CIT(A) has considered the issue that in all earlier years assessee's income on account of licence fee and outgoings is treated as income from house property consistently since 1997-98. This fact was brought to notice before CIT(A) and even before us which is recorded in page 5 of CIT(A)'s order that "The appellant company started operating the business of Haat sometime in October, 1997 i.e. in the financial year 1997-98 and since then its income from Haat i.e. licence fee as well as receipts in respect of outgoing (i.e. maintenance) are considered as Profit and gains from Business and the same has been admitted as such by the department since then. However during the assessment year under appeal i.e. for assessment year 2007-08 for the first time the Ld. AO has assessed the said income under the head income from house property instead of Profits and gains from Business." We find that the CIT(A) has considered the decision of Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT (1992) 193 ITR 331 (SC) for the principle of consistency. CIT(A) also considered the decision of Hon'ble Supreme Court in the case of P F H Ma1l Retail Management Limited, supra, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
