TMI Blog2023 (2) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short the Act ), dated 20.12.2016 for the assessment year 2014-15. The assessee has assailed the impugned order on the following grounds of appeal before us: 1. For that the order passed by the learned Commissioner of Income Tax (Appeals)-1, Raipur is bad in law as well as on facts. 2. The Ld. CIT(A) erred in confirming the addition of Rs.63,22,58,355/- treating the receipt from warehousing charges as income from house property instead of income from business. 3. For that the appellant craves leave to add, alter or amend any ground/s of appeal on or before hearing of the case. 2. Succinctly stated, the assessee which is a state government company engaged in the business of warehousing had e-filed its return of income for the A.Y.2014-15 on 29.09.2014, declaring an income of Rs. 4,86,61,460/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company derived income from rendering various services to the persons who store their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income under which the warehousing receipts were to be brought to tax assessed the income of the assessee at Rs. 68,09,19,820/-. 4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals), who upheld the view taken by the A.O by observing as under : 2.3 Appellant has cited provisions of section 24 of Ware Corporation Act. The perusal of the same shows that the corporation is authorized to carryout the activity of providing warehousing facility on rent. However, it does not and cannot provide for the manner in which the income from this activity has to be taxed. That the domain of the Income Tax Act, 1961. Chhattisgarh State Warehousing Corporation has been established to provide warehousing facilities to store grains and other items meant to distribution and for other purposes. The corporation has been established for this main purpose and not to undertake the business of constructing building and giving these on rent. When a particular income in this case income from letting out the warehouse is assessable under the head house property, the mere fact of appellant having business in lettering out the property by itself will not conclusively point out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing both the parties and on a perusal of the material on record, we find that the main function of the assessee Corporation are as under:- a) Acquire and build godowns and warehouse within state with previous approval of Central Warehousing Corporation; b) Run warehousing in the State, for the storage of agricultural produces, seeds, manures, fertilizers, agricultural implements and notified commodities; c) Arrange facilities for the transport of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities; d) Act as agent of the Central Warehousing Corporation or of the State Government for the purpose of the purchase, sale, storage and distribution of agricultural produce, seeds, Manures, Fertilizers agricultural implements and notified commodities; e) To carry on other functions as may be notified. However, during the years under consideration the Corporation is doing only one business of warehousing. 7. The assessee Corporation during the course of business rendered various services to persons who store their goods in the warehousing. These are as under:- a) The proper arrangements are made for transportation inside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... storing their goods. While in the ca AI) es/ rent, the landlord hand over the possession of godowns and after that those the godowns are under the lock and key of the tenant. Thus agree that there is basic difference between general rent and warehousing charges being received by the assessee. We find identical issue was considered by the Bangalore Bench of the Tribunal in Karnataka State Warehousing Corp. (supra). The matter travelled to the Hon'ble Karnataka High Court. The Hon'ble High Court, vide order dated 17th march 2014, had upheld the order of the Tribunal in holding that the warehousing rental charges received by the assessee is assessable under the head Income From Business and not from Income From House Property . Thus, in an analogical issue, there is a decision of the Hon'ble Karnataka High Court which is in favour of the assessee. We further note that the Hon'ble Supreme Court in its latest decision on this issue Chennai Properties And Investments Ltd. (supra), has considered similar issue and has also considered various other Hon'ble Supreme Court's decision on the issue including that of the Constitutional Bench judgment in the case of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pects. With this background, we first refer to the judgment of this Court in East India Housing and Land Development Trust Ltd.'s case which has been relied upon by the High Court. That was a case where the company was incorporated with the object of buying and developing landed properties and promoting and developing markets. Thus, the main objective of the company was to develop the landed properties into markets. It so happened that some shops and stalls, which were developed by it, had been rented out and income was derived from the renting of the said shops and stalls. In those facts, the question arose for consideration was: whether the rental income that is received was to be treated as income from the house property or the income from the business. This court while holding that the income shall be treated as income from the house property, rested its decision in the context of the main objective of the company and took note of the fact that letting out of the property was not the object of the company at all. The court was therefore, of the opinion that the character of that income which was from the house property had not altered because it was received by the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng line is difficult to find; but in the case of a company with its professed objects and the manner of its activities and the nature of its dealings with its property, it is possible to say on which side the operations fall and to what head the income is to be assigned. After applying the aforesaid principle to the facts, which were there before the Court, it came to the conclusion that income had to be treated as income from business and not as income from house property. We are of the opinion that the aforesaid judgment in Karanpura Development Co. Ltd.'s case squarely applies to the facts of the present case. No doubt in Sultan Brothers (P) Ltd.'s case, Constitution Bench judgment of this Court has clarified that merely an entry in the object clause showing a particular object would not be the determinative factor to arrive at an conclusion whether the income is to be treated as income from business and such a question would depend upon the circumstances of each case, viz., whether a particular business is letting or not. This is so stated in the following words: We think each case has to be looked at from a businessman's point of view to find out whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers Pvt. Ltd. (supra), the determining factors to arrive at a conclusion whether the income is to be treated under the head Income From Business is depending upon the circumstances of each case. Accordingly, in the present case, we are of the considered opinion that the income by way of storage charges received by the assessee is to be treated under the head Income From Business . This view is also supported by Hon'ble Karnataka High Court decision in the case of Karnataka Warehousing Corporation in ITA no.419 of 2013, vide order dated 17th March 2014 Hence, the issue raised by the assessee stands allowed. There 2 other issues also in these appeals which were not pressed. 8. Apart from that, we find that the aforesaid view of the Tribunal had been upheld by the Hon ble High Court of Chhattisgarh in its order passed in Tax Case (Income Tax Appeal) No. 02 to 07 of 2016, dated 04.04.2017, wherein, after considering the order of the Tribunal the Hon ble High Court had declined their indulgence dismissed the appeal of the department. Considering the aforesaid facts, we concur with the contentions of the Ld. AR that the issue involved in the present appeal is squarely covered ..... 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