TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
10. The primary contention revolves around whether the income from Bani Bhawan should be treated as "Income from Business" or "Income from House Property." The assessee has been conducting business by letting out the property on a commercial basis to various organizations for use as a Holiday Home. Historically, the income from this property was treated as business income, but from the assessment year 1993-94, the department started treating it as income from house property. The ITAT previously ruled in favor of the assessee for the assessment years 1993-94 and 1995-96, treating the income as business income.
11. The assessee provided documentary evidence, including license fee receipts and agreements with organizations, demonstrating that the property was used for commercial purposes. The licenses issued by the Magistrate, Lodging House Fund, Puri, included specific conditions for operating the property as a lodging house, indicating a business activity.
13. The assessee also provided additional services such as watch and ward, furniture, and fixtures, further supporting the business nature of the income. The Tribunal cited the decision in Sultan Bros. Pvt. Ltd. vs. CIT (1964) 51 ITR 353, emphasizing that the nature of letting should be viewed from a business perspective.
14. The revenue's contention that the assessee accepted the treatment of income as house property for the assessment year 1993-94 was unsupported by evidence. The Tribunal referenced prior decisions and orders, including the ITA No. 49/Cal/2000 for AY 1995-96, which consistently treated the income as business income.
15. The Tribunal also referred to the Allahabad High Court decision in Commissioner of Income Tax vs. Pateshwari Electrical and Associated Industries (P) Limited 282 ITR 61 (All), which supported treating rental income from property used for commercial purposes as business income.
16. The revenue failed to provide contrary evidence or demonstrate errors in the CIT's findings. The Tribunal upheld the CIT's decision, confirming that the income from Bani Bhawan constitutes business income.
Issue No. 2: Relief Granted by CIT17. The CIT granted relief to the assessee by reducing the undisclosed investment or income from Rs. 91,65,486/- to Rs. 39,44,106/-. The AO had based the undisclosed investment on documents identified as TCS-22, TCS-44, and TCS-48, adding gross profit and payments to Anuj Textiles, reaching a final figure of Rs. 91,65,486/-.
18. The CIT, after a comprehensive review of the documents and business records, determined the total turnover to be Rs. 1,00,79,633/-. The CIT enhanced the Gross Profit Ratio from 10.36% to 11.55%, adding the difference to the income of the assessee.
19. The CIT concluded that the turnover was accumulated through periodic cycling of sales and purchases, estimating that the same amount was rotated four times during the year. This resulted in an undisclosed investment of Rs. 25,19,908/-, being one-fourth of the total turnover.
20. The CIT's method of enhancing the Gross Profit Ratio and calculating the undisclosed investment was found to be reasonable and scientific. The Tribunal upheld the CIT's findings, noting no errors in the process.
21. Consequently, the Tribunal dismissed the revenue's appeal, confirming the CIT's findings and the granted relief.
Conclusion:22. The appeal of the Revenue is dismissed, and the findings of the CIT on both issues are confirmed.
Order pronounced in the open Court on September 14, 2016.
TaxTMI 
