TaxTMI 
TaxTMI 
2001 (11) TMI 215
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....tergent powder, activated carbon and trading business of compressors. We think it proper to discuss the issue on the basis of facts relating to asst. yr. 1990-91. During the assessment proceedings it has been noticed by AO that deduction under s. 32AB to the tune of Rs. 2,51,141 claimed by assessee. He further noted that the assessee's claim was supported by the report of auditor in Form 3AA as required under s. 32AB(5). On detailed examination by AO, he found that the assessee had shown service charges receipts of Rs. 11,57,220 and warehousing income of Rs. 2,20,900 under the heads "other income" and made the claim of s. 32AB on these income also treating as business income. The AO asked the assessee to explain the nature of service charges receipts and warehousing income. The assessee replied through its letter, dt. 23rd Feb., 1993, as under: "In response to your query regarding the services rendered of Rs. 11,57,220 kindly note that we have a fullfledged service possibility of providing watchman facilities, sweeping facilities, plumbing facilities and maintenance of electrical equipments, since we are fully geared to provide such facilities. For our tenants we have been provi....
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....ompany and the spare storage capacity has been utilised for storing goods of various parties. For this service the appellant has received service charges which are calculated on the basis of the tonnage of the goods stored and the period of time during which such goods have remained in the warehouse. The godowns have not been let out on monthly basis. In my view, the warehousing income is in the nature of profit of business. 4.2(b). Regarding the service charges of Rs. 11,57,220, admittedly these service charges are incidental to letting out of house property owned by the appellant company. During the year the appellant company has received rental income from such properties at Rs. 3,61,906 which has been assessed as income under the head "Income from house property". In addition to the rental income received from the tenants, the appellant company has received service charges from the same tenants for services like watch and ward, lift, plumbing, electricity, sweeping and other services for maintenance of the house property which has been let out. The service charges are recovered on monthly basis from the tenants along with the monthly rent. Providing such services cannot be s....
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....fore Revenue authorities have also been reiterated before us. He referred and relied on his submissions made before the Revenue authorities through letter dt. 24th June, 1994, to CIT(A), 25th Feb., 1993, and 26th Feb., 1993 to AO. 5.1 The alternative contention of the learned authorised representative was that if these income are not accepted as income for business, then same may be treated as income from house property. The learned authorised representative referred and relied on a number of judgments as per list placed on record. 6. On the other hand, the learned Departmental Representative controverted the submissions of the learned authorised representative and supported the order of the AO. 7. We have considered the rival submissions of parties, perused the records and gone through the decisions cited by the learned authorised representative. The facts of these cases are different than the facts of the case under appeal. The decisions cited in para I of assessee's list in paper book are related to letting out the property and furniture and in para II these decisions are related to letting out property and Income from property. In short the controversial issue under co....
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....letter, dt. 23rd March, 1993. It has been mentioned in the said letter that the assessee fully agreed to provide such facilities to their tenants and charging them on monthly basis. It has also been mentioned in the said letter that the assessee had fullfledged service possibility of providing facilities. This reply as well as other submissions and arguments of learned authorised representative is not supported by any evidence or material on which basis it can be said that such service was provided in the organised manner with sole motive to earn profit and that it was not incidental to the letting out of the properties. Further, the assessee did not maintain separate accounts of expenditure in ledger. Separate P&L a/c also has not been prepared to know the net profit from those activities. At the time of hearing before AO, the assessee simply estimated some expenses and claimed it against those receipts of service. The details of expenditure claimed by the assessee in both the years are reproduced below: Asst. yr. 1990-91 Asst. yr. 1991-92 Total % Claimed Total % Claimed Staff salary 5,41,535 50% 2,70,767 4,79,168 ....
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....sallowed benefits of s. 32AB on service charges income because this income was the income from other sources. The AO was of the view that benefit of s. 32AB only allowable on profits of business or profession. The CIT(A) confirmed the order of AO with the finding that service charges income were not the income in nature of profit of business and, therefore, such income does not qualify for deduction under s. 32AB of IT Act. The learned authorised representative reiterated his submissions and arguments before us which he had made before Revenue authorities. The important submission of the learned authorised representative was that the relief under s. 32AB is allowed on business income as per Parts II and III of the Sch. VI of Companies Act as certified and quantified by the auditor in their statutory audit report as well as in their report in prescribed form for the claim under s. 32AB. He further contended that benefit of s. 32AB is allowable on the income of service charges irrespective of its taxability either under s. 28 or under s. 56 for the purpose of income-tax. On the other hand, the learned Departmental Representative supported the order of Revenue authorities. 9.1. We ....
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....eal which is a pure question of law based on judgment of Supreme Court of India in the case of CIT vs. Ranchi Club Ltd. (2000) 164 CTR (SC) 200 : (2001) 247 ITR 209 (SC) which is directly on the point." 10.1. After having heard both the parties on the above additional ground of appeal, the AO is directed to calculate the interest under s. 234B in accordance with the provisions of the IT Act, in accordance with judgment of Hon'ble Supreme Court in CIT vs. Ranchi Club Ltd. and in accordance with the decision of Tribunal in the case of S.K. Patel Family Trust vs. Asstt. CIT (2001) 71 TTJ (Ahd) 121 as well as in accordance with latest amendments in relation to these sections after giving reasonable opportunity of hearing to the assessee. 11. In the result, the appeal of assessee [ITA No. 4488/Ahd/94] is partly allowed for statistical purposes. ITA No. 3362/Ahd/1994 for asst. yrs. 1990-91—By assessee: 12. Now, we take up appeal of assessee against the order of CIT(A), dt. 15th June, 1994, for asst. yrs. 1990-91 relating to s. 154. Since the issue is covered by the additional ground taken by the assessee in ITA No. 4488/Ahd/94, therefore, this appeal become infructuous and ....