TMI Blog2020 (7) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... udicata does not strictly apply to Income tax proceedings, all the same, the Hon ble Apex Court in the case of Radha Soami Satsang Vs. CIT, [ 1991 (11) TMI 2 - SUPREME COURT] as held that the revenue cannot disturb and alter issues which have already been settled in previous years if there is no change in the facts and circumstances - unable to accept the view taken by the Ld. CIT (A) and we set aside his finding on the issue and direct the Assessing Officer to treat the loss from the unit in Trump Hotel International under income from other sources . Determining the head of income for share of loss from LLCs situated in the USA - assessee had made investment in two limited liability companies in the USA - HELD THAT:- Assessee, by virtue of being the whole time employee Director in an oil exploration company, could not have made the capital outlay in the two limited liabilities company for the purpose of business and, apparently, this was only for the purpose of an investment. AO seems to have overlooked this factor and somehow failed to appreciate that in the case of outlays of this nature, it is important to determine as to whether the investment was in the realm of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 26,94,282/- from the LLCs claimed under the head other sources u/s 57 of the Act as business loss. The assessment was completed at an income of ₹ 10,25,0000/-. 2.1 Aggrieved, the assessee approach the Ld. First Appellate Authority who dismissed the assessee s appeal and now the assessee is now before this Tribunal and has challenged the order of the Ld. CIT (A) by raising the following grounds of appeal: On the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) erred in confirming the following actions of the Assessing Officer: (i) In assessing loss from hotel unit at Hotel Trump International, New York, USA under the head business loss as against loss under the head Income from other sources declared in the return; (ii) In determining share of loss from LLCs (situated in USA) under the head business as against loss under income from sources declared in the return; (iii) In denying the set off of loss suffered from Hotel Unit in USA and also loss from partnership in LLCs against salary income. All the above actions being arbitrary, erroneous and unjust the same must be quashed with directions for appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business activity. It was argued that passive disposition is contrary to the enterprise in business. The Ld. AR submitted that an important factor to determine whether a transaction is business or investment is the initial intention of the assessee while deploying funds in that particular pursuit and in this particular case, the Assessee knowing fully-well that he was the owner of only one out of 160 units and that he could not in any circumstance manage the hotel operations both due to the size of his holding in the business of hotel and his service commitments in India entailing his stay in India and his desisting from engaging in other activity, he had paid the money as for investment. It was submitted that there is nothing brought on record by the Assessing Officer to dispel that view and that the activity of the Assessee does not fall in the portal of business. It was argued that the pre-dominant fact in the subject case is that this Assessee has invested for one unit in a complex of 160 units and he has done so wholly and solely as an investment out of his own surplus funds, the Assessing Officer s action in treating the income as business is thus per se wrong. It was pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration the Assessing Officer has revised his opinion to treat such income as income from business activity which is against the principle of consistency. It was also submitted that onus was on the Revenue to prove that the income was from business activities and not from other sources. 5.0 In response, the Ld. Sr. DR appearing on behalf of the Department submitted that there is no res judicata in Income Tax Law and, therefore, the clock can be re-set to give a correct treatment to the income earned by the assessee. It was also submitted that the earlier assessments made u/s 143(3) of the Act were limited scrutiny assessments and the issues in the present appeal were not looked into at that point of time. The Ld. Sr. DR placed extensive reliance on the findings of both the lower authorities and vehemently argued that the order of the Ld. CIT (A) be upheld. 6.0 We have heard the rival submissions and have also perused the material on record and the two questions arising for consideration by us are: (i) whether the lower authorities were correct in assessing loss from a Hotel Unit at Hotel Trump International, New York (USA) under the head business loss as against lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e., whether the income was covered under income from business or profession or income from other sources. In this case, the assessee had constructed a building fully furnished and had let out the same to another person for use as a Hotel. The assessee never carried on the business of the Hotel in the premises let out and there was nothing to show that it intended to carry on the Hotel business itself. The building and the furniture and plants etc. were all let out for running the Hotel and were inseparable from each other. The Hon ble Apex Court held that the income was to be assessed as income from other sources. In the present case, it is evident from the conduct of the assessee that the assessee was not intending to run a unit in Trump Hotel International himself but rather he had purchased the unit while he was employed with an Oil Exploration Company in USA and he has given this unit for being run under the Hotel Operations and Maintenance Agreement to be run by the managing company. Thus, at no point of time has the assessee ever been engaged in running the Hotel Unit on his own. It is also evident that the control of the affairs of the assessee s unit like to whom th ..... 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