TaxTMI 
TaxTMI 
2020 (2) TMI 458
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....ing jurisdiction under section 263 of the Act to hold that the rental income from Immoveable Property owned by the Appellant Company was assessable under the head "Profits and Gains of Business or Profession" as against the rental income assessed under the head "Income from House Property". 3. That without prejudice to the aforesaid grounds of appeal, Ld. Commissioner of Income Tax erred in assuming jurisdiction under section 263 of the Act on a debatable issue as was held by Hon'ble Delhi High Court in the judgement dated 20th March, 2019 in the case of Commissioner of Income Tax vs. Sunil Lamba in ITA No. 465/2003. 4. The appellant prays leave of the Hon'ble Tribunal to add, amend, alter all or any grounds of appeal as the circumstances may warrant." 3. The facts of the case which can be stated quite shortly are as follows: The assessee company filed its return of income on 25/09/2014 at a total income of Rs. 23,89,020/- The return was selected for scrutiny through CASS. The assessment u/s. 143(3) of the Income Tax Act, 1961 (to be referred to as 'Act' hereinafter) was completed on 07/12/2016 at an assessed income of Rs. 23,89,020/-. Later on, ld. Principal Commissi....
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....d should be assessed as such. The appeal filed by revenue was upheld by Hon 'ble Supreme Court in (2003) 263 ITR 143(SC)." 5. However the ld. Pr. CIT rejected the contention of the assessee and held as follows: "4. I have carefully considered the submission made on behalf of the assessee and perused the materials available on records. It appears from the records and documents furnished on behalf of the assessee company that during F.Y 2012- 13, total credit to the Profit &Loss a/c of the assessee company which is of Rs. 2,06,94,348/- was its rental income. Similarly, in F.Y 2013-14, out of total credit to Profit & Loss a/c of the assessee, only Rs. 6,77,000/- was profit on sale of property, and rest of Rs. 2,06,94,338/- was its rental income which is about 97% of total credit to the Profit & Loss a/c. It is clear from the above that letting out of the properties was the business of the assessee. In this context, reference may be made to a later decision rendered by the Hon'ble Supreme Court in the case of M/s Chennai Properties & Investments Ltd. vs. CIT (2015) 373 ITR 673 (SC). In this case, Hon'ble Supreme Court had held the main object of the company was to let ou....
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....r the Revenue reiterated the stand taken by the ld. Pr. CIT which we have already noted in our earlier para and is not being repeated for the sake of brevity. 9. We have heard both the parties and persued the materials available on record. The solitary dispute in the assessee`s case under consideration is that whether rental income of House property is assessable under the head "Income from House Property" or under the head "Income from business or profession"? The stand of the ld PCIT is that rental income should be assessable under the head "Income from business or profession" whereas the stand of the assessee is that it should be assessable under the head ""Income from House Property". First of all, we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [200....
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....cepted that the rental income should be assessable under the head 'house property'. We note that there is no any change in facts so far assessment year 2014-15. The ld PCIT took stand for the first time in the assessment year 2014-15 (under consideration), that rental income of the assessee should be assessed under the head "Income from business or profession", which is not acceptable for the simple reason that there is no any change in facts and circumstances of the assessee company. The Department has been accepting the stand of the assessee since last three years and ld PCIT also had not exercised his jurisdiction u/s 263 of the Act in these past three Assessment Years, 2011-12, 2012-13 and 2013-14. It is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon'ble Supreme Court....
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....s for computing the income from house property are contained in Sections 22 to 27 of the Act and profits and gains of business or profession are to be computed as per the provisions contained in Sections 28 to 44AB of the Act. It is also to be borne in mind that income tax is only one Tax which is levied on the sum total of the income classified and chargeable under the various heads. It is not a collection of distinct taxes levied separately on each head of the income. 14. There may be instances where a particular income may appear to fall in more than one head. These kind of cases of overlapping have frequently arisen under the two heads with which we are concerned in the instant case as well, namely, income from the house property on the one hand and profits and gains from business on the other hand. On the facts of a particular case, income has to be either treated as income from the house property or as the business income. Tests which are to be applied for determining the real nature of income are laid down in judicial decisions, on the interpretation of the provisions of these two heads. Wherever there is an income from leasing out of premises and collecting rent, normal....
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.... are commercial assets in their very nature." 16. In view thereof, the object clause, as contained in the partnership deed, would not be the conclusive factor. Matter has to be examined on the facts of each case as held in Sultan Bros. (P) Ltd. case (supra) Even otherwise, the object clause which is contained in the partnership firm is to take the premises on rent and to sub-let. In the present case, reading of the object clause would bring out two discernible facts, which are as follows: (a) The appellant which is a partnership firm is to take the premises on rent and to sub-let those premises. Thus, the business activity is of taking the premises on rent and subletting them. In the instant case, by legal fiction contained in Section 27(iiib) of the Act, the appellant is treated as "deemed owner". (b) The aforesaid clause also mentions that partnership firm may take any other business as may be mutually agreed upon by the partners. 17. In the instant case, therefore, it is to be seen as to whether the activity in question was in the nature of business by which it could be said that income received by the appellant was to be treated as income from the business. Before us,....
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....ntire income of the appellant was through letting out of the two properties it owned and there was no other income of the assessee except the income from letting out of the said properties, which was the business of the assessee. On those facts, this Court came to the conclusion that judgment of this Court in Karanpura Development Co. Ltd. v. CIT [1962] 44 ITR 362 (SC) was applicable and the judgment of this Court in East India Housing & Land Development Trust Ltd. v. CIT [1961] 42 ITR 49 (SC) was held to be distinguishable. In the present case, we find that situation is just the reverse. The judgment in East India Housing and Land Development Trust Ltd. (supra) which would be applicable which is discussed in para 8 of Chennai Properties & Investments Ltd. case (supra) and the reproduction thereof would bring home the point we are canvassing: "8. With this background, we first refer to the judgment of this Court in East India Housing and Land Development Trust Ltd. case [East India Housing and Land Development Trust Ltd. v. CIT, [1961] 42 ITR 49 (SC)] which has been relied upon by the High Court. That was a case where the company was incorporated with the object of buying and dev....