TMI Blog2019 (9) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... y them is to be treated as business income and not as income from house property. Addition u/s 68 - whether creditor was having creditworthiness to substantiate her investment in share capital/premium worth - HELD THAT:- AO accepted the claim of the assessee in A.Y. 2011-12, in respect of share capital/premium of ₹ 90,00,000/-, therefore balance claim of ₹ 1,50,00,000/- in the assessment year under consideration is also genuine, as there is no change in the facts and in the nature of amount. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration. Therefore, we note that there is no infirmity in the order passed by the ld CIT(A). We note that the id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessing officer (AO) under section 143 (3) of the Income Tax, Act 1961 (hereinafter referred to the Act ). 2. Since, these two appeals filed by the Revenue relate to the same assessee, identical and common issues are involved, therefore these have been clubbed and heard together and a consolidated order is being passed for the same of convenience and brevity. The Revenue s appeal in ITA No. 169/Gau/2018, for AY 2012-13, is taken as the lead case. 3. However, in these two appeals, the Revenue has raised multiple grounds of appeal but at the time of hearing, the main grievance of the Revenue have been confined to the following issues: i) Ground No. 1 raised by the Revenue relates action of ld CIT(A) in treating the amount of ₹ 1,15,81,078/- as income from profits and gains from business and profession instead of income from house property . ii) Ground No. 2 raised by Revenue relates to deletion of addition of ₹ 1,50,00,000/- by ld CIT(A) holding that the creditor has proved creditworthiness and identity to substantiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and to carry or business as proprietors of lands, plots,buildings etc and to let on lease or otherwise e properties therein. The second object mentioned in MOA is To acquire by purchase, lease, exchange, hire or otherwise, lands, plots, building and hereditaments of any tenure or description situated in India or abroad and any estate or interest and rights therein in particular by building, constructing, reconstructing, adapting, upholding, altering, improving, deegrating, furnishing and maintaining all kinds and types of immovable properties and providing the same on lease, rent, hire or letting out for any or all business purposes. Therefore, treating the income from letting of property on hire as 'business income' emanates not only from the Memorandum of Association of the Company but also from the nature of the activity actually carried out. We would like to draw your kind attention to relevant case law of Income-tax Officer, Wared-2, Gandhidham v. Tejmalbhai Co. [2006 ITD 399(Rajkot)] wherein the Hon'ble ITAT has held that merely because the property is immovable it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It will be so taxable even if property is held by the assessee as stock-in-trade of his business. In the case of New Delhi Hotels Ltd V ACIT (2014) 360 ITR 187 the Delhi High Court followed its own decision in the case of CIT vs Discovery Estates Pvt. Ltd/CIT vs Discovery Holding Pvt Ltd, wherein it was held in the case of rental income derived from unsold flats which were shown as stock-in trade in the books of the assessee should be assessed under the head Income from house property and not under the head Profits and gains from business and profession . There is no denying the fact that the assessee company is the owner of the property. Also, as evident from the lease agreement made by the company with all the occupants, the company is receiving rent or in other word the assessee is deriving income from this property. It is a settled position of law that when a specific head of charge is provided for income from the ownership of house property, rents or other income from the ownership of house property, cannot be brought to tax under any other head. Assessment un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income cannot be assessed under a wrong head merely because the assessee has returned it returned under a wrong head. The income received by the assessee has to be taxed under a particular head having regard to the source from which that income is derived. For determining the head of income, the character or nature of the income has to be determined. As already discussed in the foregoing paragraphs, the assessee is deriving income from the ownership of house property. Hence, this income is to be taxed under the appropriate head viz., Income from house property. In the result, the amount of ₹ 1,15,81,078/-received by the assessee as rent is brought under the head Income from house property . 7. Aggrieved, by the order of the AO, the assessee carried the matter in appeal before the learned CIT(A) who has deleted the addition made by the AO. Aggrieved, by the order of the learned CIT(A) the Revenue is in appeal before us. 8. The learned DR for the Revenue has primarily reiterated the stand taken by the AO which we have already noted in our earlier Para a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e main objects of carrying on the business of letting out its commercial properties. The assessee filed its return of income u/s. 139(1) of the Income Tax Act, 1961 on 24/09/2012 disclosing total income at Rs. NIL for the assessment year under dispute. During the course of assessment proceedings, the Ld. Assessing Officer asked the assessee to explain with reasons as to why the income disclosed under the head Business should not be treated as House Property . It was replied by the assessee that the activities of the assessee is to develop commercial establishment and let them out on hire with a host of other facilities which is in tune with its main objects and as such, the income earned there from is correctly returned under the head Business . However, the Ld. Assessing Officer was not agreed and he noticed that assessee is the absolute owner of the property and it had simply let such property out for earning of rental income, the income shall be assessed under the head House Property and not Business and accordingly, he assessed the income from rent and service charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the primary object of the assessee while exploiting the property. As in the instant case, the main intention is found to be the exploitation of the immovable property by way of commercial activities, then the resultant income must be held as business income. In the present instance, the assessee company was formed with the main object of constructing properties on its land and letting it out on lease and/ or license. The activity of the assessee is in consonance with its main objects. Further, various services and amenities are rendered by the assessee to the lessees in the premises like maintenance of sewerage lines, drains, water tank, drinking and usage water supply lines, pumps and latrines with septic tanks and regular upkeep of such building. The activities involved in providing the above facilities/amenities meet all the requirements to qualify as business operations. The assessee has taken up the venture of utilizing its assets commercially and since these activities constitute ingredients of an organized business venture and as such, the trappings of business activities are present in abundance for classifying the income of the nature derived by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere with the order of Id. C.I T.(A) in deleting the aforesaid additions. His order on this addition is, therefore upheld and the grounds of appeal of the Revenue are dismissed. 13. Ground No. 2 raised by the Revenue relates to deletion of addition of ₹ 1,50,00,000/- by holding that the creditor was having creditworthiness to substantiate her investment in share capital/premium worth of ₹ 1,50,00,000/-. 14. The Brief facts qua the issue are that in order to verify the genuineness, creditworthiness and identity of investment of ₹ 1,50,00,000/-, the AO asked the assessee to furnish relevant documents. The said amount was borrowed from Smt. Davina Mary Lyngwa. The AO noticed that neither Smt. Davina Mary Lyngwa nor the assessee produced any documentary evidence to prove that the cash belongs to Smt. Davina Mary Lyngwa and the said amount was deposited by her in the bank account. The learned AO noticed that any prudent person in the ordinary course of business would make investment to earn profit/return but in this case Smt. Davina Mary Lyngwa has claimed that she had made an investment of ₹ 2,40,00,000/- with ATC Realtors Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be ₹ 2,40,00,000/- and not ₹ 1,50,00,000/-. The addition has been made by the Ld. AO on account of Share Capital received by the Assessee from one Ms. Davina M. Lyngwa, which amount as per the impugned order is undisputedly ₹ 2,40,00,000/-. However, we note that in the assessment year 2011-12 the Department has accepted the claim of the assessee partly, that is, out of ₹ 2,40,00,000/- share capital/premium, ₹ 90,00,000/- share capital/premium, has been accepted by the Department as genuine. The Relevant para of the assessment year 2011-12 is reproduced below for ready reference: 22 The case of the assessee for the A.Y. 2012-13 was selected for scrutiny under CASS. During the course of assessment proceedings it was found from the examination of the balance sheet of the assessee, that the assessee issued and allotted 6,00,000 Nos. of shares at a premium of ₹ 2,28,00,000/- Out of the shares issued, 1,85000 Nos. of shares were issued to Smt. Davina Mary Lyngwa for an amount of ₹ 2,40,00,000/- as share application money and the entire amount was received in cash. Moreover, from the Ledger account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not adverse interference is dawn. Thus, the AO accepted the claim of the assessee in A.Y. 2011-12, in respect of share capital/premium of ₹ 90,00,000/-, therefore balance claim of ₹ 1,50,00,000/- in the assessment year under consideration is also genuine, as there is no change in the facts and in the nature of amount. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon ble Supreme Court in RadhasoamiSatsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: We are aware of the fact that, strictly speaking, res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors Private Limited an amount of ₹ 2.40 crores. 4) Cash in hand and Bank This, it would be noted from the above details of her investments, including the investments made during the above assessment year, that the said share capital subscriber, Smt. Davina Mary Lyngwa, is a person of considerable means. The fact that she had got 7 properties at various places in Meghalaya apart from Guest Houses etc. has not been disproved by the Ld AO. Apart from this, Mrs. Davina Mary Lyngwa had also confirmed her sources of income, during the course of deposition. We also note that the following facts remained uncontroverted: ( 1). That the identity of Smt. Davina Mary Lyngwa was proved beyond doubt and that the notices, summons etc. were duly served upon her at her address provided by the Assessee. ( 2). That Smt. Davina Mary Lyngwa is a woman of considerable financial strength and capacity. She has investments in many immovable properties. ( 3). That Smt. Davina Mary Lyngwa is also has a substantial annual income, most of which is being earned by her in cash. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th her, which further document was required by the Ld AO since the Ld AO had observed that no document was furnished by Smt Davina Mary Lyngwa which would prove that the money belong to her. The cash in hand is different via-a-vis balance at bank and the fact that Smt Davina Mary Lyngwa has confirmed her investment and that the Assessee had acknowledged her investment and in lieu thereof had issued shares to her, is itself a common adoption of the transaction by the transacting parties and a valid proof of payment, more-so when cash has no color. Based on these factual position, we note that ld CIT(A) has rightly deleted the addition, therefore, we confirm the order of ld CIT(A). 20. Ground No.3 raised by the Revenue in ITA No. 170/Gau/2018, relates to deletion of addition of ₹ 54120/- on account of parking fees. 21. Brief facts qua the issue are that during the assessment proceedings the AO treated 20% of parking fees on account of personal expenses and added to the total income of the assessee. On appeal, the learned CIT(A) deleted the addition by observing the following: - I have gone through the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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