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TMI Blog2015 (7) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 20 lakhs appearing in the balance sheet cannot be treated as unexplained. The ld.CIT(A) has rightly deleted the addition so made by the AO. We find no infirmity in the impugned order of the ld.CIT(A). We uphold the same. - Decided in favour of assessee. - I.T.A Nos. 973 to 979/Kol/2012,I.T.A No. 883/Kol/2012 - - - Dated:- 1-7-2015 - Shri Mahavir Singh Shri B.P.Jain, JJ. For the Petitioner : Shri K.K Chhaparia, FCA, ld.AR For the Respondent : Shri R.P Nag, JCIT/ld.DR ORDER Shri B.P.Jain:AM These eight appeals of the assessee and revenue arise from the different orders of the ld. CIT(A), XXXIII Kolkata each dated 23-03-2012 for the assessment years 1999-2000 to 2005-06. 2. The assessee has raised as many as common grounds in all the appeals for all the assessment years under consideration. 3. Shri K.K Chhaparia, the ld. Counsel for the assessee did not press most of the grounds except common ground no.3, which is identical in all the appeals for all the assessment years under consideration. 4. Ground no.3 for the assessment year 2003-04 is reproduced herein below:- 1. For that in the facts and circumstances of the case, the ld.AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd packaging for which trade license was obtained. As the firm was not getting business in the initial years, it gave space in its godowns on rent to various parties. Thus, the assets which were let out were the commercial assets and the rent was earned to exploit them during lull in business. Several case laws were cited to support the contention that under such circumstances the income from hiring out the commercial assets is to be treated as business income. It was also informed that subsequently the appellant had carried out tea blending activity, income from which was shown in the return from A.Y 2006-07. After considering the submission, my predecessor accepted the view of the appellant. In this he was guided by the decision of Calcutta High Court in the case of CIT vs. Ajmera Industries Pvt. Ltd 103 ITR 245 (Cal). He also drew support from the decision of Delhi High Court in the case of Addl. CIT, Delhi II Vs. Rajendra Flour and Allied Industries Pvt. Ltd 128 ITR 402 in which it was held that plant and machinery was a commercial assets even before its use in own manufacturing was started. The decision of Kolkata bench of tribunal in the case of M/s. Saheli Tea Blenders ITA n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial assets either himself or even through others the income derived by him by letting out the same would more appropriately fall under the head Income from house property , as it is not factum of his business or commercial activity which bring income to him but the ownership of property. 5.3 The report of assessing officer was discussed with the authorized representative of the appellant. He reiterated the contentions made at the time of original appellate proceedings. 7. The ld.CIT(A) has disposed of the case by stating as under:- 5.4 I have considered facts of the case. The tenancy agreements signed by the appellant with various tenant have also been gone through. It is seen that in majority of cases, the agreements are for a fairly long period of tenancy. For example, agreement with M/s. Wright India Ltd, M/s. Eureka Forbes Ltd, M/s. Lalji Mehrotra. M/s. Premier Trading Co are for the tenure of six, nine, ten and eight years respectively. The terms and condition of the agreements do not state that the appellant shall provide any specialized service to the tenants. Rather, the agreements appear to be for simple letting out of property without any add on service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances like introduction of a new requirement of obtaining industrial licence, death of a key person (Managing Director) etc. So far as the decision in the case of Ajmera industries Pvt. Ltd (supra) is concerned, its ratio, in my opinion, does not assist the appellant. In that case, rent was derived from factory as well as non-factory building. The Hon ble court observed that since manufacturing had not commenced, the rent from factory could not be called business income. However, since as per finding of facts, the business was otherwise being carried out, rent from non-factory building was treated as business income. In the appellant s case, as discussed above, no business had been started at all. Also, the godowns let out were constructed to be used for carrying out process of tea blending and in that sense were akin to factory building. Thus, the ratio of the decision actually goes against the appellant. Similarly ratio of another decision of apex court in the case of Universal Plast Ltd vs. CIT 237 ITR 454 (SC) referred to by my predecessor also goes against the appellant because it stresses on the intention of the assessee while hiring out the assets and also lists period for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be assessed as income from house property, it shall be entitled for statutory deduction provided under section 24 and not various deductions claimed by the appellant against business income. Therefore, there is no need to examine admissibility of various business expense claimed by the appellant, although this issue was set aside by my predecessor to the file of the assessing officer in his order. 8. The ld. Counsel for the asessee at the outset argued that the issue relating to the income earned by the assessee i.e whether it is an income under the head Income from House Property and Profit and gains from business or profession has been decided by the ld. CIT(A) in the first round in favour of the assesee. Matter travelled to ITAT Kolkata, who remanded the matter to the ld.CIT(A) on legal issue to decide the limitation point afresh in view of the decision of the ITAT Kolkata Benches. Therefore, in the circumstances and facts of the case the issue relating to the income earned by the assessee has attained finality that the income earned by the assessee has to fall under the head from Business or Profession. Secondly, the order passed by the ld. CIT(A) in the second r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e warehouse, which was constructed on leasehold land. The ld. Counsel for the assessee further submitted that in the FY 1998-99 relevant to AY 1999-2000, the assessee firm took a loan of ₹ 20 lakhs for construction of godown/shed and total cost incurred on such construction (asbestos shed) as at 31.03.1999 which was ₹ 24,36,500/-. Reference was made to audited accounts of the firm as per enclosed Annexure D page 22-28). In the said year, it had received rent of ₹ 7,19,328/- and paid interest on loan of ₹ 3,25,048/- and other expenses. The assessee firm, M/s. Dutta Properties started exploiting the property for business purposes by letting out the same on composite rental basis. Besides this, property was not at all a dwelling unit and it could be used only for warehouse. It was constructed with asbestos sheet. Thus, it could not be technically treated as house. The assessee firm also providing other facilities like security charges, electricity charges, truck parking, place for truck drivers halt etc. There existed only one single entrance to the warehouse and keys of such entrance gate was lying in the custody of M/s. Dutta Properties. The assessee has sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the assessment order was passed after the statutory date of limitation requires detailed examination of relevant facts and if the order has been passed beyond the statutory date of limitation, the objection to the validity of assessment is a question of law and even if the assessee had not pressed it before the ld.CIT(A) for any other reason, it is our duty to take note of the objection of the assessee to the order of the ld.CIT(A) on this issue. It is also that the Revenue in its Appeal has challenged the order of the ld.CIT(A) on the ground that the ld.CIT(A) had accepted additional evidence in violation of the provisions of Rule 46A of the I. T Rules. It is also observed that the ld.CIT(A) has required the AO to examine the claim of expenses and thus he restored the issue to the AO which is not within his power u/s. 251 of the Act as amended w.e.f 1-6- 01. We, therefore, considerer it fair and reasonable to restore the issue to the file of the ld.CIT(A) with the direction that he should ascertain whether the ld.CIT has decided the complaint of the assessee in this regard. He should also consider the affidavit of the A.R discussed above and decide the issue of validity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Sultan Brothers (supra) held that in that case the appellant was not provided any service, but that was merely a case for letting out of the property. But in the present case the assessee has been providing security charges, electricity charges, truck parking, place for truck drivers halt etc. Therefore, the decision of the Hon ble SC in the case of Sultan Brothers Pvt. Ltd (supra) is also distinguishable on facts and circumstances of the case and it cannot help the revenue. Furthermore, the decisions in the cases of Sambhu Investment (P) Ltd (supra) M/s. Sultan Brothers Pvt. Ltd (supra) have been discussed in subsequent decisions in PFH Mall Retails Management Ltd Vs. ITO reported in (2008) 110 ITD 337 (Kol) where the facts are that income is attached to immovable of property, cannot be sole criterion for assessment of such income as income from house property and it is necessary to dig further to find out what are the primary objects of the assessee while exploiting property. If it is found that main intention is for simply letting out of property or any portion thereof, then income must be assessed as income from house property but if main intention is found to be explo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal filed for the for the assessment year 2003-04 is allowed and the appeals filed for the assessment years 1999-2000 to 2005-06 in ITA Nos. 973 to 979/Kol/2012 on the issues are also allowed. ITA No. 883/Kol/202 A.Y 1999-2000(by the revenue) 12. In this appeal, the revenue has raised the following grounds of appeal:- 1. That in the facts and circumstances of the case, the ld.CIT(A) has erred in deleting the addition made by the AO on account of unsecured loan of ₹ 20 lacs without the facts of the case. 2. That in the facts and circumstances of the case, the ld.CIT(A) has erred in deleting the addition made by the AO on account of unsecured loan of ₹ 20 lacs without giving opportunity to the AO as per Rule 46A of the IT Rule. 3. The appellant craves leave to add to, alter or modify any one or all of the grounds of appeal mentioned above. 13. The brief facts of the case are that the AO found that the secured loan of ₹ 20,00,000/- was shown as received on the liability side of the balance sheet. The assessee was asked to produce details and confirmation for the same. The assessee stated that the loan was obtained from four persons namely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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