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2020 (2) TMI 568 - AT - Income TaxCharacterisation of income - income of the assessee under the head income from other sources or business income - Revenue sharing from operation of multiplex - HELD THAT - The light of authoritative pronouncements of Hon ble Gujarat High Court as well as Hon ble Supreme Court in the case of Excel Industries 2013 (10) TMI 324 - SUPREME COURT find that there is no justifiable reason for the AO to deviate from view taken in earlier years in this year. Neither the AO nor the ld.CIT(A) has pointed out what are the changes in the facts and circumstances from the earlier years. Even otherwise if looked from angle of Revenue sharing from operation of multiplex as well as other liabilities of the assessee it would demonstrate that it was a business exploitation by the assessee and it has only given a portion of the complex for a period of ten years to PVR. Therefore its income ought to be assessed under the head business income. Allow the appeal of the assessee and set aside the finding of both the Revenue authorities. The ld.AO shall assess the income of the assessee under the head business income . - Appeal of the assessee is allowed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Classification of income: Whether the income should be treated as "business income" or "income from other sources." Issue-Wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal by the assessee was delayed by 540 days. The assessee attributed this delay to the hospitalization of Shri Prakash N. Patel, the director responsible for accounts and taxation matters, due to cardiac illness. The assessee provided medical reports and treatment cards to support this claim. The assessee argued that the delay was beyond their control and requested condonation in the interest of justice, equity, and fair play. The Revenue objected, arguing that the corporate body had adequate manpower to manage its affairs in the absence of a key person, and thus, the delay should not be condoned. The Tribunal considered the rival contentions and referred to Section 253(5) of the Income Tax Act, which allows for the condonation of delay if there is "sufficient cause." The Tribunal cited the Supreme Court's liberal interpretation of "sufficient cause" in cases such as Collector Land Acquisition Vs. Mst. Katiji & Others and N.Balakrishnan Vs. M. Krishnamurthy. The Tribunal emphasized that justice-oriented approaches should prevail over technicalities. Given the medical evidence and the potential cascading impact on subsequent assessment years, the Tribunal found the delay justified and condoned it, proceeding to decide the appeal on merit. 2. Classification of Income: The core issue was whether the income from leasing out a multiplex should be classified under "business income" or "income from other sources." The assessee, engaged in the business of film exhibition, had leased out its multiplex to M/s. PVR Ltd. and M/s. Jubilant Food Works Ltd. The Assessing Officer (AO) treated the income as "income from house property" due to the TDS deductions under section 194I, while the Commissioner of Income Tax (Appeals) [CIT(A)] classified it as "income from other sources." The assessee argued that leasing and letting on hire of entertainment facilities were part of its main business objects as per the Memorandum of Association. The assessee had consistently shown this income as business income in previous years, and the AO had accepted this classification in earlier assessments. The Tribunal considered the principle of consistency, as highlighted in the Supreme Court's decision in CIT Vs. Excel Industries Ltd., which discourages contradictory opinions on the same facts in different years. The Tribunal also examined the lease agreement and the Memorandum of Association, noting that the assessee provided comprehensive facilities and services beyond mere property rental, indicating a business operation. The Tribunal referred to the Gujarat High Court's decision in CIT Vs. Tirupati Organizers P.Ltd., where similar circumstances led to the classification of income as "business income." The Tribunal found no justifiable reason for the AO to deviate from the earlier years' classification and concluded that the income should be assessed under "business income." Conclusion: The Tribunal allowed the appeal, setting aside the findings of the Revenue authorities and directing the AO to assess the income under the head "business income." The decision emphasized the importance of consistency and a justice-oriented approach in legal interpretations. The order was pronounced on 12th February 2020 at Ahmedabad.
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