TMI Blog2023 (4) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of loan extended to the said entity. The addition, as noted above, was rightly deleted by the Tribunal. Correct head of income - whether the income earned from business centre, run and managed by the respondent/assessee should have been treated as income under the head income from Business and Profession or, as held by the AO/CIT(A), as income from House Property ? - HELD THAT:- Tribunal, in our view, has correctly ruled that the business centre was being exploited by the respondent/assessee as a commercial asset. Therefore, the income from the same, as rightly concluded by the Tribunal, should have been treated by the AO/CIT(A) as business income. Consequently, the deduction of expenses as well as interest on borrowed capital would have to be allowed, in terms of Section 36(1)(iii) of the Act. - ITA 135/2023 - - - Dated:- 7-3-2023 - HON'BLE MR. JUSTICE RAJIV SHAKDHER AND HON'BLE MS. JUSTICE TARA VITASTA GANJU For the Appellant Through: Mr Sunil Agarwal, Sr Standing Counsel with Mr Utkarsh Tiwari, Adv. For the Respondent Through: None. [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J. (ORAL): CM Appl.110 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Act, 1961 [in short, Act ] by the Assessing Officer [AO] and confirmed by the Commissioner of Income Tax (Appeals) [in short, CIT(A) ] on the ground of purported failure by the assessee to establish the creditworthiness of the lender and the genuineness of the transaction. 8. It appears, that the Tribunal examined the record, and thereafter returned the finding of fact. The relevant parts of the order of the Tribunal are extracted hereafter: 8. Ground No. 6,6.1,6.1.1, 6 .1.2, 6.2 , 6.2.1, 6.2.2 and 6 .2.3 relate to addition of Rs. 7,45,81 ,575/ - made by the Ld. AO as income from undisclosed sources which have been confirmed by the Ld. CIT(A)-1. The issue has been discussed by the Ld. AO in para 4.3 of his order. The impugned addition comprised of Rs. 5 ,62,81,575/ - being unsecured loans received from Binaguri Tea Company Pvt. Ltd., Kolkata, W.B. and Rs.1,83,00,000/- being advances received from customer, M/s. Searock Developers Pvt. Ltd., Thane, Maharashtra. xxx xxx xxx 8.4 On appeal, the Ld. CIT(A)-1 discussed this issue in para 4.4 of his appellate order. The assessee submitted before the Ld. CIT(A)-1 that in respect of unsecured loan of Rs. 5 , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guri Tea Company Pvt. Ltd.: The assessee's explanation before the Ld. AO/CIT(A)-I has been that the assessee has taken an interest bearing loan of Rs. 5,50,00,000/ - from Binaguri Tea Co. Pvt. Ltd. during the previous year relevant to AY 2011-12. The assessee filed before the Ld. AO copy of account of the creditor appearing in its books, duly confirmed by the creditor, bearing PAN No.: AABCDI008P (page 93 of the Paper Book). It also filed statement of HDFC Bank account bearing No.00082000010021 (opened on 30.03.2000) of the creditor reflecting therein that the creditor company had paid a sum of Rs.5,50,00,000/-on 28.5.2010 (page 94 of Paper Book). Copy of acknowledgement of the return of income filed by the creditor on 22 .09.2011 for AY 2011-12 before ACIT, Circle-4, Kolkata showing therein tax payable Rs. 68,83,685 and paid Rs. 45,00,000/- by way of advance tax, Rs.16,47,893/ - by way of TDS and Rs.7,35,792/- by way of self assessment tax (page 95 of the Paper Book). 9.2 The Ld. AO did not consider the explanation of the assessee satisfactory. Firstly, because notice under section 133(6) issued by him was not answered by the creditor. In written submission dated 24.04. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op of the above factual matrix and the legal position, we hold that the assessee discharged its onus of proving the identity of the creditor, the capacity of the creditor to advance loan to the assessee and the genuineness of the transaction. The impugned addition does not rest on sound footing. We accordingly delete the addition of Rs.5,62,81,575/-. 10. M/s Searock Developers Pvt. Ltd.: During assessment proceedings the assessee submitted that it had received an advance of Rs. 2 crores from M/s. Searock Developers Pvt. Ltd. through RTGS in the previous year relevant to the AY 2011-12. On 09.03.2011 the assessee had refunded Rs.17,00,000/- to the creditor. For the balance amount of Rs.1,83,00,000/- the assessee submitted that due to non-cooperation by the said party the confirmation may be obtained by the Ld. AO directly from the said party and furnished the complete address of the creditor. The Ld. AO issued notice under section 133(6) of the Act to the creditor. The notice was duly served but no reply was received. The Ld. AO drew adverse inference and made the impugned addition under section 68 of the Act. [Emphasis is ours] 9. According to us, insofar as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tworthiness or the source of the credit. The assessee has placed on record Financial Account of the creditor for the year ending on 31.03.2011 (page 438-451). Profit and Loss Account shows the income of Rs.39,55,609/- in AY 2011-12 as against income of Rs.25,33,745/- of the preceding year. 10.3 Having heard the submission of the parties and on careful consideration thereof, we have reached to the conclusion that the assessee has discharged the primary onus which lay upon it. The identity of the creditor, the creditworthiness of the creditor and genuineness of the transaction have been proved by the assessee. In CIT vs. Bedi Co. Pvt. Ltd. (1998) 230 ITR 580 (SC), the Hon'ble Supreme Court held that where the explanation offered by the assessee as to the nature and source of credit is prima facie credible, it cannot be rejected on mere surmises. We, therefore, delete the impugned addition of Rs.1,83,00,000/-, Ground No, 6 and its sub-grounds are decided in favour of the assessee. [Emphasis is ours] 15. In our view, the Tribunal adopted the correct approach. Merely because the respondent/assessee had not repaid the balance amount i.e., Rs.1.83 crore, and the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a finding of fact, that the amount reflected the interest accrued which had been offered for tax in the preceding year. In the AY in issue, since the amount could not be recovered from the debtor i.e., Bell Ceramics Ltd., the respondent/assessee had written off the same. 19. In our view, the Tribunal came to the correct conclusion, based on the appreciation of the material placed before it. 20. Inter alia, the respondent/assessee not only submitted to the AO/CIT(A), the details of the amount given on loan to Bell Ceramics Ltd., as also the interest accrued from year to year, but also the TDS certificate and interest received on the amount of loan extended to the said entity. 20.1 The addition, as noted above, was rightly deleted by the Tribunal. 21. Insofar as the remaining proposed questions of law are concerned, the issue involved is: whether the income earned from business centre, run and managed by the respondent/assessee should have been treated as income under the head income from Business and Profession or, as held by the AO/CIT(A), as income from House Property . 22. In this regard, it may be relevant, once again, to note the findings of fact returned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bharathi Warehousing Corporation (2017) 392 ITR 160 (AP). 6.8.4 Likewise, it is submitted that the amount of Rs.13,43,161/- received by way of reimbursement of expenses forms part of business receipt and had the same character i.e. as income from Business Centre. 6.8.5 It is also a grievance of the assessee that while computing total income of the assessee the Ld. AO did not allow expenditure debited in the P L Account which has been allowed since inceptions. 6.9 We have given our careful thought to the rival submissions. The intention of the assessee in letting out the property is determinative of the nature of income. Whether a particular letting is business or not has to be decided on the particular circumstances of each case. Each case has to be looked at with a view to find out whether the letting was doing of a business or exploitation of his property as an owner. It is well settled that if an assessee derived any income by exploitation of its commercial assets, whether by itself or through other agencies, such income should normally be considered to be the business income of the assessee. Thus, in order to determine whether rent is assessable as income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 Business Centre receipts were taxed as Business income. Except the AYs 2010-11, 2011-12 and 2012-13 Business Centre receipts have again been taxed as Business income in assessments framed under section 143(3) for the AYs 2013-14 and 2014-15. It is thus obvious that income derived from Business Centre has been accepted by the Revenue as Business income in preceding years as well as subsequent assessment years. 6.10.3 We are aware that the principle of estoppel and res-judicata do not apply in income tax proceedings, since each assessment year is a separate unit. However, it is necessary to maintain consistency when the facts are not different. There has been judicial consensus on this issue in the interest of certainty in tax litigation. The assessee has forcefully asserted that in its case there is neither change in facts nor there is any change in the position of law. Therefore, we agree with the submissions of the assessee that in its case, it is expedient to follow the rule of consistency. xxx xxx xxx 14.2 It is submitted before us that the assessee has been claiming deduction of interest on the amount borrowed by it from M/s. Binaguri Tea Co. Pvt. Ltd. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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