AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (5) TMI 553
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....g and accordingly the earlier order passed by the Tribunal was recalled and the case was re-fixed for hearing. Mr. M.S. Mathuria appeared on behalf of the assessee on 31-3-2009 and argued the appeal. Accordingly, vide Order dated 11th May, 2009 the ITAT, 'J' Bench, Mumbai disposed of the appeal on merits wherein the Bench observed that no business activity having been carried on by the assessee. Interest received on bank FDRs was correctly assessed to tax as "Income from other sources". Accordingly, appeal was dismissed. 3. It may be noticed that appeal was filed on 20-2-2006 but till the date of disposal of the appeal assessee did not choose to file any additional ground before the Appellate Tribunal. Assessing Officer has treated interest as well as the rent receipts as income from other sources as against the claim of the assessee that they were assessable to tax as "income from business" whereas the Appellate Tribunal has disposed-of the issue concerning the interest income only and omitted to consider the issue pertaining to the head under which rent receipts are assessable to tax. Accordingly, M.A. was moved on 20-7-2009 (M.A. 502/Mum/2009) seeking recall of the Order of the....
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....son for reopening the assessment under section 147 of the Act. It was submitted that the return was originally filed on 25-9-1999 which was processed under section 143(1) of the Act on 31-3-2000 whereas, notice was issued under section 148 of the Act on 12-9-2002 on the basis of the audit objection. Reasons set out in the notice do not spell out as to how there was escapement of income and even though return was processed under section 143(1) of the Act it cannot be reopened without justifiable reasons and in this regard reliance was placed upon the decision of Hon'ble Madras High Court in the case of Bapalal & Co. Exports v. Jt. CIT (OSD) [2007] 289 ITR 37/[2008] 170 Taxman 131. 6. Strongly objecting to the additional ground raised by the assessee, learned D.R. submitted that the appeal filed before the Appellate Tribunal was disposed of under section 254 of the Act on 11th May, 2009 and till the date of disposal of the appeal, assessee did not choose to file additional ground. The Bench, having has disposed of the appeal, can no longer exercise the jurisdiction, in the process of hearing the matter upon recall of the order for the limited purpose of disposing of ground No.1 to a....
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...., learned Counsel, appearing on behalf of the assessee, submitted that Order of the Appellate Tribunal does not get effected merely because additional ground was raised challenging the jurisdiction of the Assessing Officer in reopening the assessment and thus, disposal of such ground would not amount to reviewing the earlier order of Tribunal. 10. We have carefully considered the rival submissions and perused the record. 11. Facts necessary for the disposal of this issue are brought out in sufficient detail. It may be noticed that the appeal was originally disposed of by the Bench on 11th May, 2009 and till the date of disposal of the appeal assessee did not choose to file any additional ground. Accordingly, an order was passed under section 254 of the Act. Since appeal was no longer subsisting, if the assessee intends to challenge the jurisdiction of the Assessing Officer in reopening the assessment, atleast an application ought to have been moved before the concerned Bench seeking recall of the Order to enable the assessee to raise a fresh ground but the assessee did not choose to make any application in that regard. Based on the specific request made by the assessee, in its M.....
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....nce with law. Since return was processed originally under section 143(1) of the Act without making any enquiry or scrutiny, issuance of notice under section 148 of the Act, in the circumstances of the case, is justified. 14. Coming to the main issue urged in ground No.1, the case of the assessee is that it had earned rental income from house property in its ordinary course of carrying on business and hence receipts are assessable to tax under the head "profits and gains of business and profession". Assessing Officer held that it has to be treated as income from house property whereas the learned CIT(A) directed the Assessing Officer to tax the receipts of Rs. 2,53,120 under the head "other sources". Undisputed facts are that the assessee-firm had taken on lease an immovable property i.e., premises No.72, Block-D, Chanakya Puri, New Delhi from Miss. Jyoti d/o. late Mr. Tarachand. The same was let out to Mr. Gabore Sandi vide lease agreement dated 20h July, 1998. The period of lease is 24 months and lease rent is fixed at Rs. 60,000 per month. The two-storeyed premises appears to be meant for residential use and it was let out to an employee of International Labour Organisation. Ass....
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.... use the above said premises for the purpose of carrying out its business and not to treat the premises as its business asset. In fact the appellant was specifically prohibited from creating any sub-tenancy or any other right of similar nature as per para 13 of the lease agreement. Since the appellant was only authorised to carry out its business from the said premises and not to use the said premises for the purpose of its business, receipts, if any, from the said premises, cannot be treated as business receipts. Therefore, the same is required to be taxed as 'income from other sources'. The income from other sources of the appellant is required to be taken at Rs.2,53,120 i.e., the income of the appellant without allowing for any deduction on account of interest and salary to the partner. No deduction on account of these expenses can be allowed to the appellant while computing income from other sources. The income from house property, as computed by the A.O., is Rs. 4,05,400 is deleted and income from other sources is taken at Rs. 2,53,120." 17. Aggrieved, assessee is in appeal before us. Learned Counsel, appearing on behalf of the assessee, submitted that the Assessing Officer h....
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.... of acquiring land or buildings, developing them constructing buildings etc., Whereas, in the instant case, except the solitary case of taking on lease the impugned premises and letting out, the assessee has not carried on any other activity which in itself proves that the assessee was not engaged in the business of letting out the property. He relied upon the Order of the learned CIT(A) to submit that the clause in the lease deed indicate that the assessee is not entitled to let out the premises and was merely permitted to use the above said premises for the purpose of carrying on its business and not to treat the premises as its business asset. Under the circumstances, lease rent received by the assessee cannot be treated as business receipts. Assessee was not owning the property and hence it cannot be assessed to tax under the head "Income from house property". Since it does not fall under any of the specific heads, learned CIT(A) was justified in bringing to tax the impugned income under the head "Income from other sources". Reliance was placed upon the following decisions : (i) Baijnath Brijmohan & Sons (P.) Ltd. v. CIT [1986] 161 ITR 234 (Bom.) (ii)....