2012 (3) TMI 82 - AT - Income Tax

Taxability of income from licence fee and parking rent - Assessee claims it as income under the head income from house property and CIT (A) held it as income from other sources assessee pleading rule of consistency - Held that - Rule of res judicata is not applicable to the income-tax proceedings except where, there are no fresh facts and perpetuation of bonafide mistake made earlier is also not permitted by law. Further, reliance of the assessee that TDS had been deducted u/s 194I, applicable to the TDS on rent is also of no help. Since nowhere section 194I provides that it is applicable only to the rental income chargeable u/s 22 of the Act. Certain types of rent are also taxable u/s 56 Income from other sources . Therefore, order of CIT (A), is upheld Decided against the assessee.

Summary

Issues Involved:
1. Classification of income from license fee and parking rent.
2. Applicability of the rule of consistency in tax treatment.
3. Determination of the correct head of income under the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Classification of Income from License Fee and Parking Rent:
The primary issue in this appeal is whether the income from license fee and parking rent should be classified under the head "income from house property" or "income from other sources". The assessee, a real estate development company, declared a total income of Rs. 82,07,161/- under "income from house property", which included various components such as rental income, signage rent, parking rent, lease rent, terrace rent, and license fees. The Assessing Officer reclassified Rs. 48,07,198/- of this income, consisting of signage rent, parking rent, terrace rent, and license fees, under "profits or gains of business". The CIT (A) further reclassified this income under "income from other sources".

2. Applicability of the Rule of Consistency in Tax Treatment:
The assessee argued for the application of the rule of consistency, stating that the income had been accepted under the head "income from house property" in previous years. However, the tribunal noted that the rule of consistency is not absolute in income-tax proceedings due to the non-applicability of the doctrine of res judicata. Each assessment year is distinct, and previous mistakes should not be perpetuated. Therefore, the tribunal did not find the rule of consistency applicable in this case.

3. Determination of the Correct Head of Income:
The tribunal examined the provisions of the Income Tax Act, specifically sections 22, 23, 24, and 56. It concluded that the income from license fees and parking rent does not fall under "income from house property" as defined by sections 22 and 23, which pertain to income from buildings or land appurtenant thereto owned by the assessee. Instead, such income is more appropriately classified under "income from other sources" as per section 56, which includes income from letting out machinery, plant, furniture, or buildings where the letting is inseparable from the letting of the said items. The tribunal also referenced the case of Mukherjee Estate P. Ltd., where the Calcutta High Court held that income from hoardings on buildings is not income from house property.

The tribunal dismissed the appeal, upholding the CIT (A)'s classification of the income from license fees and parking rent under "income from other sources".