TMI Blog2014 (12) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistency will apply in this case as the issue stand covered by the decision of coordinate bench in the case of M/s. Banwarilal Goel & Sons Vs. ITO [2014 (2) TMI 1337 - ITAT KOLKATA] In view of the above discussions, we uphold the grievance of the assessee and direct the Assessing Officer to treat the income in question as income from business as has been in preceding and subsequent assessment year. - Decided in favour of assessee - I.T.A No.1042/Kol/2012 - - - Dated:- 12-12-2014 - Shri Mahavir Singh, JM Shri Shamim Yahya, AM For the Appellant: Shri Rama Prasad Nag, JCIT For the Respondent: Shri Soumitra Choudhury, Advocate ORDER Per Shri Mahavir Singh, JM : This appeal by Revenue is arising out of order of CIT(A)-VIII, Kolkata in Appeal No. 321/CIT(A)-VIII/Kol/09-10 dated 20.04.2012. Assessment was framed by ITO, Ward-8(3), 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 29-12-2009. 2. The only issue in this appeal of Revenue is against the order of CIT(A) in holding that income from subletting and other services is assessable as profit and gains from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd 4D, BBD Bag, Ground Floor - 200 s.ft. space for transformer 12,000/- 1,44,000 3 Reliance Web Stone 8, BBD Bag - 1920 s.ft now known as 62, Hemanta Basu Sarani 1,15,000/- 13,80,000 4 Anglo Swiss Watch Co 58, Hemanta Basu Sarani 15,000/- 1,80,000 The Assessing Officer after considering the submissions of the assessee, assessed the same as income from house property from the following:- Sl No Name of Tenants Premise occupies Total (Rs) 1 Hutch 4E, BBD Bag, ground floor 6,00,000 2 Hutch 8, BBD Bag - 1920 s.ft. - now known as, 62 Hemanta Basu Sarani 13,80,000 3 Anglo Swiss Watch Co 58, Hemanta Basu Sarani 1,80,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. That both the lesser and lessee had entered into lease agreement with one of the tenants, which showed that the entities are not separate. 4. That in view of the facts, the income from sub-letting premises was held to be assessable as income from house property, while income from providing space for putting up transformer was held to be assessable as income from other sources. The Assessing Officer derived support from the decision Delhi High Court in the case of Smarts Pvt. Ltd. Vs. CIT (2008) 66, Taxman 53 (Delhi High Court). Now, the finding that there is no difference between the two companies, the lesser and lessee having common interest persons is not tenable in the eyes of law. Both the companies are separate entities registered with the Registrar of Companies having its independent Memorandum of Incorporation and Articles of Association and assessed to tax separately on the income earned by them. There having common directors on the companies Board did not by itself prove any colourable device, nor has the Assessing Officer bring on record any material to support his finding. Therefore, such unsupported finding cannot be sustained. Secondly, the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the commercial asset during the lease period and lease received is assessable as business income. 2. CIT vs. Premchand Jute Mills Ltd. 114 ITR 769 (Cal): Where the clauses of the lease agreement entered into by the assessee for letting out its assets indicate the intention of the lessor assessee to maintain and to ensure that the asset retain their commercial character, facilitating the resumption of commercial use of the said asset by the lessor itself, the transaction of letting out is a business activity and the income derived therefrom is assessable as business income. 3. Karanani Properties Ltd. vs. Commissioner of Income tax (1971) 82 ITR 547 (SC): The assessee company which is the owner of residential flats and shops let out by it, also provided services like purchasing current in bulk and supplying the same to tenants, provision of hot and cold water, scavenging and lift services and maintained a large staff for the provision such services from the facts found by the Tribunal it follows that the services rendered by the assessee to its tenants were the results of its activities carried on continuously in an organized manner with a set purpose and with a view to earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains of business or profession . Ld. counsel before us argued on the concept of consistency on the given facts of the case. In this case also the terms of the lease of business assets, the intention of the lessor is that the asset leased out must remain and be treated as commercial asset and there is an exploitation of the commercial asset during the lease period and lease received is assessable as business income. In view of the above facts of the case that the assessee is consistently declaring the receipt of income from sub tenants under the head, profits and gains of business or profession , we are of the view that principle of consistency will apply in this case as the issue stand covered by the decision of coordinate bench in the case of M/s. Banwarilal Goel Sons Vs. ITO in ITA No. 374/K/2009 for AY 2005-06 dated 13.02.2014, wherein it is held as under:- 6. We have heard the rival contentions, perused the material on record and gone through facts and circumstances of the case. We find that the Hon ble Calcutta High Court in the case of Shambhu Investment held that the mere fact of attachment of income to any immovable property cannot be the sole factor for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceedings. In the case of Parashuram Pottery Works Co. Ltd. it was observed that res judicata does not apply to income tax proceedings and each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year . This principle has been upheld and re-stated by Hon ble Supreme Court recently in the case of PFH Mall Retail Mangt. P. Ltd. dated 04.09.2012, wherein reiterated the Rule of Consistency and applied the same on the very issue, that is whether the income in question is to be treated as income from business or as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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