TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1509
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.... pertaining to the Assessment Year 2013-14, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 31.12.2015 under section 143(3) of the Income Tax Act, 1961 (in short 'the Act'). 4. In this appeal, the Grounds raised by the assessee reads as under :- "a) The order passed by the Ld. CIT(A) is contrary to law and liable to be quashed and/or set aside. b) The Ld. CIT(A) ought to have treated the receipt of Rs. 31,51,536/- from warehousing activities as business income and ought to have allowed the expenses relevant thereto as debited in the profit and loss account against the said receipts, and ought to have allowed consequential relief. c) The Ld. CIT(A) has erred in treating the receipts from warehousing activities as income from house property, without appreciating the facts and circumstances that the receipts arose not out of mere letting of property, but arose directly out of the regular business activities of the appellant." 5. In order to appreciate the controversy, the relevant facts are that the appellant is a company incorporated under the provisions of the Companies Act, 1956 and is, inter-alia, engaged in the business of shipping....
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....Be that as it may, on the merits of the case, the learned representative pointed out that assessee was in the business of shipping agency at Mumbai with branches at Kandla, Jamnagar and Bangalore. It is pointed out that for the purpose of carrying on shipping agency business, assessee owns a godown at Gandhidham, Kandla of nearly one lakh square feet, which it is using for the purposes of its business. The learned representative for the assessee pointed out that the importers generally require storage facility for a short period of time for the goods imported for various reasons, namely, that the delivery of goods have to be taken from customs lest they may have to incur demurrage charges; or, the importers may have to arrange for transportation of the goods imported which may involve some time after taking clearance from the customs; and/or on account of vagaries of transportation such as traffic, road conditions, climatic conditions, etc., which may require temporary godown facility at the point of import. Assessee provides a fully-equipped warehousing facility, which predominantly caters to the requirement of importers/clients. The learned representative pointed out with referen....
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....e of the issue as to whether the income is assessable as 'income from house property' or 'business income'. In the present case, the plea of the assessee is that it is maintaining godown/warehouse with the primary purpose of providing service to importers of goods to store their imported goods for a short duration. The mechanics of the operations have been explained by the assessee, which we have briefly touched upon in the earlier part of this order. It has been further pointed out that the warehousing facility is equipped to cater to the requirements of the importers/clients who may need to store their imported goods after clearance from the customs, pending their transportation to the ultimate destination of use. It is pointed out that the godown/warehousing space is made available to various parties on 'need' basis for varying periods of time. At the time of hearing, it was also emphasised that the goods stored range from perishable to non-perishable, consumer and industrial items, and for that reason, assessee ensures their safe storage. In the Paper Book, assessee has also furnished copies of sample invoices which support its plea that varying amount of space is made availabl....
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.... from godown rent under the head 'income from business', which he has not disturbed. At the time of hearing, the learned representative also referred to a written communication dated 23.09.2008 addressed to the Assessing Officer in the course of the assessment proceedings for Assessment Year 2006-07, wherein it has been categorically asserted that the receipts constitute business receipts, being a part of its business. There is no repudiation to such a specific plea set-up by the assessee and, in fact, in the assessment order, the income has been assessed as 'business income'. Similar is the situation in Assessment Year 2007-08. This clearly points out that in the instant assessment year there is a departure made by the Assessing Officer, which is impermissible unless it can be shown that there is a change of facts or a change in law. It goes without saying that in such a circumstance, the onus is on the Assessing Officer to justify the departure. We have perused the orders of the authorities below in the above background and find that there is no case being made out, as to why the departure, except by referring to the judgment of the Hon'ble Supreme Court in the case of Shambh....
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....stant fact-situation. 10. Further, in Assessment Year 2008-09, the CIT(A) has also referred to the judgment of the Hon'ble Bombay High Court in the case of CIT vs J.K. Investors (Bombay) Ltd., 248 ITR 723 (Bom.) to profess that where the rental income is earned alongwith service charges from the rented property, the same are liable to be assessed as 'income from house property'. We have carefully perused the judgment of the Hon'ble Bombay High Court in the case of J.K. Investors (Bombay) Ltd. (supra) and find that the same is totally inapplicable in deciding the controversy before us. In fact, the point which arose for consideration before the Hon'ble High Court has been culled out by the Hon'ble High Court in the following words :- "The short point which arises for consideration in this appeal is : Whether notional interest on interest-free deposit received by the assessee against letting of property could be taken into account in cases falling under section 23(1)(b) of the Income-tax Act, 1961 ? In other words, whether notional interest would form part of actual rent received or receivable under section 23(1)(b) ?" The aforesaid clearly establishes that the i....
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....ssessment in order to tax the receipts from godown rent and facilities as 'income from house property' was based on the judgment of the Hon'ble Supreme Court in the case of Shambhu Investment (P) Ltd. (supra). Quite clearly, the judgment of the Hon'ble Supreme Court is dated 21.01.2003 and it was available even at the time of the original assessment. Pertinently, in this case, when the Assessing Officer recorded the reasons to reopen the assessment for Assessment Year 2008-09, he was conscious that for Assessment Years 2006-07 and 2007-08, assessments have been completed u/s 143(3) of the Act and such income has been accepted as 'business income'. Under these circumstances, it was imperative for the Assessing Officer to record the reasons as to why such assessments were not correct, especially considering the fact that the judgment of the Hon'ble Supreme Court in the case of Shambhu Investment (P) Ltd. (supra) was all along available to the assessing authority at the time of assessments made u/s 143(3) for Assessment Years 2006-07, 2007-08 and 2008-09. There is no attempt made by the Assessing Officer to refer to any new tangible material say as to why the departure fro....