TaxTMI 
TaxTMI 
2010 (11) TMI 567
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....cata does not apply to income-tax proceedings. 3. Any other ground that may arise or becomes incidental during the pendency of appeal." 3. Briefly stated the facts of the case are that the assessee is a partnership firm carrying on the business of transportation and deriving income from interest and letting out of warehouse etc. The assessee was carrying on in earlier years up to the year 1989, the business of running of a cold storage. Subsequent to the year 1989, the business was discontinued. Alterations and additions in the cold storage buildings were carried out and various portions thereof were given to different parties on rent for the use of warehouses as well as office purposes. Since 1990 onwards, the income which was being derived from letting out warehouses/office was being offered for tax as income under the head 'House property' as it was directly relatable to the letting out of the building on rent. The Department has all along been assessing the rental income from letting out of the building under the head 'Income from house property'. Consequently, the repair expenses which were incurred in the repair of the building from year to year as well a....
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....essee. (ii) The warehouse is leased out to business concerns, mostly companies on short term leases of 1-3 years in most cases to be used for their business warehousing needs. (iii) The building is not rented out to one party, rather, the assessee leases out different parts of the premises to different parties on lease for use as office and Godown purposes along with fittings and fixtures. (iv) The assessee has filed details of some of the parties to whom the premises have been leased out, which also prove that the said building is in fact a commercial asset and is being used for commercial purposes : (I) The agreement between Harbilas Cold Storage & Kitchen Appliances clearly states that the premises have been taken for 'office-cum-Godown purposes' and the rent payment includes 'all accommodation including the fixctures and fittings as specified'. Thus, it is seen that that the assessee has not just rented out this building, but exploited the commercial potential of the building as a godown to earn this income, which becomes explicit from the fact that the premises is leased out with complete "fixtures and fittings". (II) The l....
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....taken on lease for office-cum-godown for its warehouse by the lessee. The agreement clearly shows that the lessee has been provided "space with infrastructure" for both office and Godown. The copy of lease deed between M/s. TVS Motor Company Ltd. & Harbilas Cold Storage and Food Products clearly show that the lessee had entered into a business agreement as evident from Para 3.1 of the lease deed as reproduced hereunder "The lessee shall pay to the lessor a net sum of Rs. 5.75 per sq. ft. per month on 3000 sq. feet for warehouse space and Rs. 7 per sq. feet per month on 500 sq. feet for office space as and by way rent and Rs. l.5 per sq. feet for warehouse & Rs. 3 per sq. feet for office maintenance, upkeep, furnishing, security, generator, lights etc., for use of the leased premises amounting to Rs. 26,750 per month." Considering these facts, it is evident that the said building was not rented out solely to gain property income. The premises is basically a warehouse and was leased out in parts for use as "warehouse" which naturally, necessitated that the premises were leased out along with with fixtures and fittings, water & electricity connection, ACs, telephones, as required i....
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.....2 The A.R. for the appellant has submitted that- (i) Initially, the appellant firm was carrying on the business of running of a cold storage up to the year 1989. Since then, the business of running of cold storage was discontinued, and portion of building was given to different parties on rent for their use as warehouse as well as their offices. (ii) The income which was being received by the appellant since 1990 onwards was on account of letting out of warehouse/office which has been offered to tax as income under the head 'House property', as the same was directly relatable to letting out the building. (iii) Repair expenses which were incurred on repair & maintenance of the building from year to year as well as depreciation on the building were never claimed as expenditure. (iv) Since 1990 the assessee has used the building of the cold storage for the purpose of letting it out for godown and/or office space and all along the income therefrom has been assessed as income under the head 'House property' by the Department and there is no change in the facts and circumstances of the year. (v) In the case of Commissioner of Income-....
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.... The C&F and transportation business are under a separate agreement while the rental income is under a separate agreement." 5. The ld. CIT(A) directed the Assessing Officer to tax warehousing charges under the head 'Income from house property, and allow deduction as per section 24 of the Income-tax Act,1961 ('the Act') after verification. The relevant findings of the ld. CIT(A) are as under : "3.3 I have considered the facts of the case. From the copy of assessment order for assessment year 2004-05 dated 13-3-2006 and assessment year 2005-06, order dated 6-4-2007 passed under section 143(3) of the Income-tax Act, it is seen that the appellant has shown income from the warehouse rent and the same was offered as income under the head "House property". The Assessing Officer has accepted the same as income from house property as shown by the appellant. The facts and circumstances remain the same during the year under consideration, therefore, the Assessing Officer is not justified in taxing the same income as business income during the year under consideration. Further, as submitted by the A.R., as reproduced in para 3-2-vi above, tax has been deducted at the rates as applicable for ....
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....e and the other by the Department. In the circumstances, there is no reason to interfere with the conclusion given by the High Court and the Tribunal Judgment of the Delhi High Court in IT Appeal No. 708 of 2006, dated 17th Jan. 2007 affirmed sans reasoning. Conclusion : In the absence of any allegation or anything else to indicate that the method of accounting followed by the assessee results in under-estimation of profits/net income, it has to be accepted that the income from the sale of plots accrued to the assessee only on the date of conveyance and not at the time of execution of tripartite agreement when the assessee received consideration." 7.1 Shri Anadi Verma, ld. D.R. submitted that the doctrine of res judicata does not apply to Income-tax proceedings. He, therefore, submitted that the Assessing Officer was justified in taking a different view in the year under consideration. He further submitted that income received from warehouse in ownership of assessee is income from business. Shri Anadi Verma, ld. D.R. also relied on the decision of the Hon'ble Supreme Court in the case of Municipal Corporation of City of Thane v. Vidyut Metallics Ltd. [2007] 8 SCC 688 wherein it h....
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....that the assessments framed for the earlier years were never disturbed by the ld. CIT by exercising revisionary powers under section 263 of the Act. Shri J.J. Mehrotra, ld. Counsel for the assessee submitted that it is true that the Department has no right of appeal to the CIT(A) against any order passed by the Assessing Officer. Therefore, section 263 of the Act has been brought on the Statute to arm the CIT with the power of revising any order of the Assessing Officer where the order is erroneous and the error has resulted in prejudice to the interests of the Revenue. In the earlier years, no such step has been taken by the ld. CIT. Shri J.J. Mehrotra, ld. Counsel for the assessee submitted that the Assessing Officer has also power to re-open the assessment under section 147 of the Act. This exercise was never done by the Assessing Officer in the earlier years. Shri J.J. Mehrotra, ld. Counsel for the assessee submitted that it is an admitted fact that principle of res judicata does not apply to the income-tax proceedings, but at the same time the principles of consistency have to be followed while administering justice. Shri J.J. Mehrotra, ld. Counsel for the assessee relied on t....
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.... which has been offered to tax as income under the head "House property" as the same was directly relatable to letting out of the building. In the instant case, the assessee has filed the copies of assessment orders from assessment years 1997-98 to 2005-06, which were framed under section 143(3) of the Act by the Dy. CIT, CCI/CC-IV, Lucknow. In all of these assessments, the revenue has accepted the income received on account of letting out of warehouse/office under the head 'Income from house property'. While framing the assessment for the assessment year under consideration, the Assessing Officer has not brought on record any new facts as at why any departure from the earlier stand of the Department was required. It is relevant to state that the assessments framed for earlier years were never disturbed by the ld. CIT by exercising revisionary powers under section 263 of the Act. It is true that the revenue has no right of appeal to the ld. CIT(A) against any order passed by the Assessing Officer. Therefore, section 263 of the Act has been brought on the Statute to arm the CIT with the power of revising any order of the Assessing Officer where the order is erroneous and the error h....
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....al but for cogent reasons or on justifiable ground, the revenue has got right to depart from its earlier practice and take a different view which shall be determined upon the facts and circumstances of each case. While departing from earlier practice, the revenue cannot act mechanically without applying its mind to earlier facts and circumstances under which a view was taken by the taxman and the facts and circumstances of the assessment year in question calling to depart from earlier view. Where there is a fundamental aspect permeating through different assessment years allowed by the authorities to sustain, it would not be appropriate to change the view in subsequent year except on justifiable ground like change of circumstances or non-consideration of relevant material or statutory provisions, or failure on the part of assessing or appellate authority to exercise jurisdiction for extraneous reason or small amount of revenue involved or other justifiable ground depending on facts of each case. 62. In view of above, apart from consistency factor, from the material on record, it may be safely inferred that the assessee constructed the 'Goel Complex' exclusively as the part of its ....
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....This Court in Parashuram Pottery Works Co. Ltd. v. ITO 1977 CTR (SC) 32/[1977] 106 ITR 1 (SC) at p. 10 stated : At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. Assessments are certainly quasi-judicial and these observations equally apply. 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 aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasonings, in the absence of any material change justifying the Revenue to take a different view of the matter and, if there was no....
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.... 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 aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not at all be appropriate to allow the position to be changed in a subsequent year." 9.6 In view of the above, we hold that there is nothing on record to show as to why the Assessing Officer has taken a different view in the year under consideration and therefore, the ld. CIT(A) was justified in accepting the claim of the assessee. 10. The decisions relied upon by the ld. D.R. are not applicable to the facts of the present case. None of the decisions relied upon by the ld. D.R. is on the point that principle of consistency does not apply to income-tax proceedings. The decision of the Hon'ble Supreme Court rendered in the case of Realest Builders & Services Ltd. (supra), which is relied upon by the ld. D.R., is not applicable to the facts of the present case because in the said case there was a dispute regarding method of accounting an....