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TMI Blog2017 (11) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... from house property or "income from other sources" now stands decided by the Tribunal in the assessee's own case for the assessment year 2007-08, 2008-09, wherein the Tribunal has held that income derived from property should be assessed under the head "income from house property" and consequently, all the benefit of deductions under the law should be allowed. 3. On the other hand the learned Departmental representative strongly relied upon the order of the Assessing Officer. 4. After considering the aforesaid submission and on a perusal on the impugned order as well as the material referred to before us, the brief facts as culled out from the impugned order are that the assessee-company had shown the rental income of Rs. 2,03,18,090 from the PVR Ltd. The learned Assessing Officer noted that the assessee is the owner of leasehold property situated at Narayana Industrial Area, New Delhi from which the assessee used to run a cinema hall called as "Payal Cinema" till the year 2000. The assessee entered into an agreement with M/s. Priya Village Roadshow Ltd. (PVR) called as "operation and management for refurbishment, development, management and operation of cinema". After notin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w and held that income from PVR Ltd. was actually income from other sources because the agreement dated May 18, 2000 was not a rental agreement but it was an arrangement for running cinema business as per the new emerging requirements of the business. The Assessing Officer has not brought out any new fact or evidence to support this contention and simply held that the income from PVR Ltd. was not an income from house property. 13. During the first appellate proceeding the Commissioner of Income-tax (Appeals) also considered the issue of consistency and held against the assessee by passing the impugned order. The relevant operative parts of the impugned order read as under : '2.6.2 I have considered the rival submissions on the issue of consistency. It is trite law that the principle of res judicata does not apply to Income-tax proceedings. Moreover, the Assessing Officer has reported that in the assessment/reassessments for the assessment years 2004-05, 2005-06 as well as 2008-09 the same view as taken in the impugned assessment has been taken by the Department and the reassessment for the year 2006-07 is still pending. The appellant have filed copies of the original assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), to quote (page 329 of 193 ITR) : "We are aware of the fact that strictly speaking res judicata does not apply to Income-tax proceedings. Again, each assessment year being a unit, what is decided in one year, may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning in the absence of any material change justifying the Revenue to take a different view of the matter, and if there was not change it was in support of the assesses, we do not think the question should have been, reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Officers of Health v. Hope (Valuation Officer) [1960] AC 551 ; Broken Hill Proprietary Co. Ltd. v. Municipal Council of Broken Hill [1925] All ER 675 ; [1926] AC 94 ; 95 LJPC 33 ; Turner on Res Judicata, 2nd Edn., para 219, page 193).' In the same judgment (supra), the hon'ble Supreme Court further proceeded to observe that, to quote (page 696 of 20 VST) : A decision reached in one year would be a cogent factor in the determination of a similar question in .a following year but ordinarily there is no bar against the investigation by the Income-tax Officer of the same facts on which a decision in respect of an earlier year was arrived at. The hon'ble Supreme Court further showed its agreement with the principle of law enunciated by Radhasoami Satsang (supra) (paragraph 24) Law emerges after considering various pronouncements of the hon'ble Supreme Court and other High Courts is that the principle of consistency is a rule in general but for cogent reasons or on justifiable ground, the Revenue has got right to depart from its earlier practice and take a different view which shall be determined upon the facts and circumstances of each case. While departing fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of consistency as interpreted above by the hon'ble courts, there has been no breach of this principle in the instant case either. 2.7 In view of the findings and discussion as well as the judicial pronouncement as discussed in the foregoing paragraphs, I hold that in the given circumstances of the case the consideration received by the appellant in terms of operation and management agreement date May 18, 2000 as amended on May 20, 2000 entered into with M/s. PVR Ltd. will be taxable under the 'income from other sources' rather than as 'oncome from house property' as claimed by the appellant. Ground Nos. 1 and 2 are, therefore, decided against the appellant and are dismissed. 14. From a bare reading of the above, the Commissioner of Income-tax (Appeals) held that the rule of res judicata as envisaged by section 11 of the Civil Procedure Code, 1908 has no application in the tax matters and the Revenue has got ample right to depart from its earlier practice. The Commissioner of Income-tax (Appeals) has held that the provisions of operation and management agreement dated May 18, 2000 between the assessee and PVR Ltd. never came to be examined in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook) we clearly observe that the overall risk/control of the management, operation and development of the cinema rests with PVR Ltd. and the assessee is not bearing any kind of risk under the agreement. The Departmental representative has not disputed the point that PVR Ltd. independently obtained the cinema licence, entertainment tax registration etc. in its name and started its business from August 1, 2001. From the orders of the authorities below, we also observe that this fact has not been controverted that the multi plex business is being independently operated by PVR Ltd. at its own and there is no element of joint venture, partnership or franchise with the assessee. 15. Respectfully following the judgment of the hon'ble High Court of Bombay in the case of Parekh Traders v. CIT [1984] 150 ITR 310 (Bom), we hold that income derived as rent from property must be computed under that specific head regardless of the fact that property had at one point of time been utilised by the assessee for business purposes. Such property cannot be treated as a business asset and rent thereof as income from business. In view of the above, we further observe that a distinction must be draw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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