TMI Blog2014 (9) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... ties, in that event it must be held as business income - it was a case of rental or commercial utilization of properties, which has been accepted, there is no reason to uphold this deviation – the order of the CIT(A) – Decided against revenue. - ITA No.655 & 656/Kol./2011 - - - Dated:- 27-6-2014 - Mahavir Singh, JM And Shamim Yahya, AM,JJ. For the Appellant : Shri D. J. Mehta, JCIT, Sr DR For the Respondents : Shri S. L. Kochar And Anil Kochar ORDER Per Shri Mahavir Singh, Judicial Member : These two appeals filed by the Revenue are arising out of different orders of ld. Commissioner of Income Tax (Appeals)-XII, Kolkata in Appeal Nos. 188/CIT(A)-XII/ACIT-12/06-07 and 598/CIT(A)-XII /Wd-12(2)/07-08 dated 17.02.2011 and 21.02.2011 for assessment years 2004-05 and 2005-06 respectively. Assessments were framed by ACIT and DCIT, Circle-XI I, Kolkata under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for the assessment year 2004-05 and 2005-06 vide his order dated 29.12.2006 and 27.12.2007. 2. The only common issue involved in both the appeals of Revenue is as regard to the order of ld. CIT(Appeals) directing the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration shall be increased by 15% from 07.06.2004 and thereafter, after every three years, the fee shall be increased. Similarly, a subsequent supplementary agreement dated 23.08.2002 was entered between assessee and M/s. Trent Limited, by virtue of which assessee is granted minimum total payment of ₹ 2,05,57,200/- per annum, which will be increased by 15% after every three years. In fact, assessee was to receive minimum guaranteed amount of ₹ 2,05,57,200/- which have been credited to the Profit Loss A/c. under the head Business Arrangement Fees . The Assessing Officer during the course of assessment proceedings also noticed that M/s. Trent Limited has deducted tax under section 194(i) of the Act treating the nature of payment as rent. Accordingly Assessing Officer assessed the income as rental income. 4. Aggrieved, assessee preferred appeal before ld. CIT(Appeals), who after considering the submissions of the assessee and observations of the Assessing Officer, treated the income as business income vide paras 6.5, 6.6, 6.7 at pages 19, 20, 21, 22, 23 24 of the appellate order, which reads as under:- 6.5. On careful consideration of the facts, I am of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that the appellant was getting fixed amount per annum which is in the nature of rent. However, he has ignored the fact that in the supplemental Agreements, though minimum guarantee commission was provided but it has also provided the commission on certain percentage of net retail sales of various products and it was also clarified that the appellant would get higher of the two. During the course of assessment proceedings, M/s. Trent Ltd. sent statement of net retail sales of various products to the AO. Since, the commission on net retail sales was less than the minimum guarantee commission, as per agreement, the appellant got the said amount of commission or business arrangement fees. Hence it cannot be said that being a fixed amount, the receipt is assessable as income from house property. The facts of judicial pronouncements relied upon by the AO are distinguishable from the facts of appellant s case. In the case of CIT vs-New India Maritime Agencies (P) Ltd.256 ITR 513 (Mad) relied upon by AO the assessee was having income from business being a maritime agent. A small portion of its premises was given on rent to other person. In that case, it was held that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into service agreements with Pentaloon Industries Ltd, and Pantaloon (Retai) India Ltd. for use of property by them to carry on the business of retailing of various products like readymade garments for men, women and children, household items, accessories, cosmetics, jewellery and other products etc. The asses see provided a number of services and facilities to the users of the premises viz. security system, providing cleaning and maintenance staff, providing adequate lighting, installation and maintenance of lifts/escalators/elevators, provision of parking space, provision of generator set, providing tiled flooring, rolling shutters, electrical connected load, air handling units, telephone and fax line and internet lines etc. In lieu the assessee had received service charges from M/s. Pantaloon. The assessee declared the receipt as assessable under the head business income. The AO accepted the stand taken by the assessee but the CIT, Kolkata-II assumed jurisdiction u/s 263 of the Act and the AO was directed to assessee the income under the head income from house property and not business income. On facts and in law it was held by the Hon ble ITAT, Kolkata that mere fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hotels Ltd. vs-CIT reported in 114 ITR 779 (Cal.). In the case of appellant company the facts are almost similar to the facts in the case of PFH Mall and Retail Management Ltd. (supra). In this case also the commission/business agreement fees received by the assessee was not only for bare letting out of the property but it was received by commercial exploitation of property by developing the same as business centre /departmental store. The exploitation of the property was attached with a host of facilities and services. Hence, in view of above facts and the principles laid down in various judicial pronouncements as discussed earlier and above, it is to be held that the AO was not justified in assessing the business arrangement fees as income from house property. He is directed to assess the commission/business arrangement fees under the head income from business and allow the expenses claimed by the appellant. The ground nos.2, 3 and 4 are al lowed . Being aggrieved Revenue came in appeal before us in both the years. 5. We have heard rival contentions, perused the material on record and gone through the facts and circumstances of the case. We have gone through the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is abundant authority reiterating that principle. Thirdly, the same principle namely, that of a setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant has not been traversed. In that case also a defendant is bound by the judgment although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken . Hon ble Supreme Court also referred to their own judgment in the case of Parashuram Pottery Works Co. Ltd. V ITO [1977] 106 ITR 1 (SC), wherein at page 10, it was stated that at the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity . Hon ble Supreme Court was of the view that the assessments are certainly quasi-judicial and observations so made in the case of Parashuram Pottery Works Co. Ltd. (supra) would apply to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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