2017 (11) TMI 179 - AT - Income Tax

Income from the letting out of the cinema building - Income from commercial building named Bharat Talkies as rental income - head of income - income from house property or income from business - Held that - It is seen that apropos the building, for Assessment Years 2006-07 & 2007-08, rent received, shown as business income by the assessee, was accepted by the department and no addition was made. Facts for the year consideration have not undergone any change from those present in the said earlier years. Therefore, the observation of the CIT(A) that if in the earlier years, any decision has been taken by the Assessing Officer without considering a particular fact, the same mistake is not to continue, is not appropriate, since the facts in the year under consideration, as observed, are the same as those for the earlier years. The principle of res-judicata may not be applicable, but in the unchanged facts over the years, as accepted by the Department itself, consistency needs to be maintained. Therefore, the Assessing Officer is directed to treat the rent from the building as business income, as shown by the assessee. So far as regards the income from parking space, it is not refuted that the parking space is appertenant to the building and so, the income there-from also requires to be treated as business income. The Assessing Officer is directed accordingly. Considering the issue of disallowance of expenses claimed in the profit & loss account and disallowance of brought forward unabsorbed depreciation, the ld. CIT(A) has not given any finding on these aspects, though Grounds Nos. 6 & 7 were specifically taken before the CIT(A) by the assessee. The Assessing Officer is directed to decide these issues afresh in the light of our conclusion arrived at with regard to the treatment of the income from the letting out of the cinema building and the parking space.

Issues:
1. Assessment of income from a commercial building as rental income under the head income from house property instead of income from business.
2. Assessment of income from parking space of a commercial building as income from other sources instead of income from business.
3. Disallowance made by the Assessing Officer as claimed in the Income & Expenditure Account.
4. Not allowing set off of unabsorbed brought forward depreciation.
5. Statutory deduction from income from parking space.

Issue 1: Assessment of Rental Income:
The Assessing Officer assessed the rent of a portion of a cinema building as income from house property and rent received for parking area as income from other sources. The CIT(A) confirmed this assessment. However, the Tribunal noted that the facts and circumstances remained the same as in earlier years when the rent was accepted as business income. The Tribunal emphasized the principle of consistency and directed the Assessing Officer to treat the rent from the building as business income, as shown by the assessee.

Issue 2: Assessment of Parking Space Income:
The CIT(A) taxed the income from the parking space as income from other sources, stating that it was not used for parking vehicles of cinema visitors. However, the Tribunal directed that since the parking space was appurtenant to the building, the income from it should be treated as business income. The Assessing Officer was instructed to follow this direction.

Issue 3: Disallowance in Income & Expenditure Account:
The CIT(A) did not provide any finding on the disallowance of expenses claimed in the profit & loss account. The Tribunal directed the Assessing Officer to re-decide this issue along with the issue of unabsorbed brought forward depreciation, considering the treatment of income from letting out the cinema building and parking space.

Issue 4: Set off of Unabsorbed Depreciation:
The CIT(A) confirmed the Assessing Officer's decision of not allowing the set off of unabsorbed brought forward depreciation. However, the Tribunal did not provide a specific direction on this issue in the judgment.

Issue 5: Statutory Deduction for Parking Space Income:
The assessee claimed that statutory deduction should have been allowed from the income from the parking space. The Tribunal did not address this issue specifically in the judgment.

In conclusion, the Tribunal partly allowed the appeal, directing the Assessing Officer to treat the rental income and parking space income as business income, re-decide the disallowance of expenses and unabsorbed depreciation, and provide a reasonable opportunity for the assessee to be heard.

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