TMI Blog2015 (9) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... shed the details before the AO vide letter dated 14-12-2010 which has not been adjudicated by the AO properly. Even the ld. CIT(A) also ignored the assessee’s claim at the appellate stage. Thus in view of the facts and circumstances of the case, the assessee’s income is treated under the head ‘income from house property’ and allow deduction u/s 24(a) of the Act. - Decided in favour of assessee. - ITA No. 484/JP/2013 - - - Dated:- 11-8-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Assessee : Shri N.S. Vyas, C.A. For The Revenue : Shri Dilip Sharma, JCIT ORDER PER T.R. Meena, AM This is an appeal filed by the assessee against the order of the ld. CIT(A)-1, Jaipur dated 25-02-2013 for the assessment year 2008-09 wherein the sole ground raised by the assessee revolves around disallowance of the claim u/s 24(a) of the I.T. Act, 1961 amounting to ₹ 5,41,326/- and ₹ 4,77,061/- against the rental income shown from Hari Mahal and Spice Court. 2.1 Brief facts of the case are that the assessee filed the return of income on 29-07-2008 declaring income of ₹ 33,55,080. The case of the assessee was scrutinized u/s 143(3) of the Act. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby agrees to pay 10% of the total turnover of the month of the restaurant as licensee fee and the same shall be paid by the 10th day of successive month. 4. That the licensor shall always be free to check cash memo s, bills, expenses vouchers and books of accounts of the licensee pertaining to the restaurant business and licensee shall provide day today sale figures to the licensor if demanded by him. The AO further held that both the cases is not fixed rather it is certain percentage of gross receipt of the lessee which implies that assessee share of receipt fluctuates with changes or fluctuation of gross receipt of the lessee. Therefore, the AO held that such income cannot be categorized as rental income, rather it should be treated as business income and hence deduction u/s 24(a) of I.T. Act would not be allowed. Moreover, the assessee is not merely letting out the property but has reserved his rights to inspect and examine the books of the licensee. Therefore, the AO asked the assessee as to why income should not be treated as business income. The assessee replied vide his letter dated 6-09-2011 which has been reproduced by the AO at page 4 of the assessment order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on properties at ₹ 1.00 lac and net addition of ₹ 9,18,387/- was made in the income of the assessee. 2.3 Being aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A) who has confirmed the addition by observing as under:- 4.5 I have carefully perused the order of the AO and the submissions of the A. R. Given the facts of the case, the case laws relied on by the A. R. are distinguished from the fact of the case of the appellant because in the case of the appellant, the hotel operating license agreement and restaurant license agreement categorically mention that the appellant was not merely obtaining rent from leasing out these properties but obtaining share of profits. Thus the license fee was not a flat rate but linked to the percentage of the gross receipts from the earning of the hotel. Similarly, in the case of running of the restaurant, it was mentioned that the licensee had to pay 10% of the total turnover of the month of restaurant. In this clause of the agreement, it was further mentioned that the licensor is free to check the cash memo, bills, expenses and vouchers and books of account of the licensee pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the AO that if the source of the income from house property is assessed as business income by the AO then the expenses incurred on account of depreciation at ₹ 16,14,391/- and other expense like on repairs, remuneration and salary, telephone, conveyance, electricity etc. should have been allowed in computing business income He further relied on decision of Hon ble Patna High Court in the case of CIT and Anr vs. Saran Holdings (P) Ltd. (2011) 58 DTR 82 wherein it was held that where the let out property is not in the possession of the a nor any business was done there and assessee has let out the same to others for rent, income has to be taxed under the head Income from house property. The ld. AR of the assessee further relied on the case of ITAT Lucknow Bench in the case of ACIT vs. Harbilas Cold Storage Food Products, (2011) 52 DTR (Trib) 107 wherein it has been held that letting out of cold storage building for warehousing/ office premises Business of running of a cold storage by assessee was discontinued in the year 1989- Alterations and additions in the cold storage buildings were carried out and various portions thereof given to different parties on rent f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Hari Singh, Drr. Sunita Shishodia, Shri Shashank Nath Singh and Shri Tirathraj Nath Singh (Licensor) and M/s. Shree Hari Mahal through Mrs. Madhu Singh W/o Shri Rajendra Singh (Licensee) vide supplement hotel operating license agreement dated 5-09-2003 made amongst them. The total receipts are shared by 4 owners of this property as mentioned above in their respective shares indicate in the supplement agreement. It is a fact that other co-owners have also disclosed their share of income in their respective returns. The AO has not verified the other co-owners income as to remaining 50% income from said property. The case relied on by the ld. AR of the assessee support assessee s claim that the claim of the assessee in past has been accepted as income from house property. There is no reason to change head of income from house property to business income. It is a trite that rule of res judicata does not apply in income-tax proceedings but the principle of consistency has to be followed while delivering justice. Further the AO had not allowed the assessee s claim of business expenses claimed during the assessment proceedings. He simply observed that the assessee has failed to subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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