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TMI Blog2018 (4) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ant : Shri Arindam Bhattacherjee, Addl. CIT-DR For The Respondent : Shri Vikash Surana, Advocate ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the Revenue is against the order of Commissioner of Income Tax (Appeals)-7, Kolkata dated 14.03.2016. Assessment was framed by JCIT, Range- 53, Kolkata u/s 143(3)/144 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 28.03.2013 for assessment year 2010-11. The grounds raised by the Revenue per its appeal are as under:- 1. That the Ld. CIT(A) erred in directing to assess the entire gross receipts s business income and allow deductions as per Section 28 to 43 of the IT Act when rental income of ₹ 2,31,00,000/- was already included in the gross receipts. 2. That the Ld. CIT(A) erred in deleting the estimation of business profits of ₹ 2,37,72,132/- made by the AO though rejection of assessee s books of account u/s 145(3) considering the facts of the case. 3. That the Ld. CIT(A) s order is contrary to the law and fact of the case. 4. The appellant craves leaves to, add to, alter or modify any one or all of the grounds of appeal men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred an appeal before CIT(A). The assessee before the ld. CIT(A) submitted that it is providing complex composite services such as packing, blending, storing, transporting along with other adequate facilities such as security, wooden pallets to keep the goods safe and under hygienic conditions to the parties. Thus, the predominant object is not limited to the rental from the parties but it encompasses to provide other services as discussed above. Thus, such services cannot be rendered without having the land and the warehouses. Thus, the income derived by it should be treated as income from business. The ld. CIT(A) after considering the submission of the assessee held that the impugned receipt of ₹ 2.31crores is business income by observing as under: 3.2 I have considered the submissions made by the appellant and gone through the assessment order. The AO held godowns rents as income from pro!5~ft:y placing reliance on TDS made u/s 1941 and Hon'ble Supreme Court Judgement in the case Sambhu Investment and Poddar Cement reported in 263 ITR 143 and 226 ITR 625. The appellant explained that the appellant has not received pure rent and it is a complex commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dy.CIT, Hon'ble Bombay High Court has observed that though the principle of res judicata is not applicable to tax matters as each year is separate and distinct, nevertheless where facts are identical from year to year, there has to be uniformity and in treatment. Similarly, in the case of CIT v. Gopal Purohit same High Court has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. Clearly, rule or principles of consistency are equally applicable to tax assessment proceedings as the rule of res judicata. That is the reason of holding that notwithstanding the complexity of adjudication, provided for under the Act, Parliament intended, consistency to be the hallmark of tax proceedings. Rule of consistency is not new. As early as 1956 the issue was deliberated at length by the Hon'ble Bombay High Court in the case of HA. Shah Co. v. CIT as under: As a general rule the principle of res judicata is not applicable to decision of Income-tax Authorities. An assessmentfor a particular year is final and conclusive between the parties only in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that D had travelled by car and the AO did not accept this as true. On appeal, the assessee contended that the assessment proceedings had started some years after the vent and he did not remember the mode of transport correctly. For the assessment year 1972-73, the Tribunal accepted this explanation but rejected it for the assessment year 1973-74. When the matter travelled to the Hon'ble High Court it was held that the totality of the circumstances and their combined effect were to be taken into consideration while deciding the question as to whether or not a particular fact is proved. Neither the principle of res judicata nor the rule of estoppel is applicable to the assessment proceedings, yet the rule of consistency does apply to such proceedings. Finally, it was held that the Tribunal cannot take a different view in the subsequent year when in the earlier year on the same facts it had accepted the claim made by the assessee. In our opinion, the rule of consistency requires that the view taken by the AO in the preceding years should not be disturbed, unless there was a change in the factual and legal position. Therefore, following the rule of consistency and placing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) packaging of the blended tea, as per the Specification/s; ( c) handling and despatching of packed blended tea as per the Specification/s; ( d) anything not specified/defined in this Agreement but the same is/are relevant to the manufacture of the Product either directly or indirectly; and ( e) delivery of such packaged blended tea to Tata Tea in terms of this Agreement. The ld. A.R relied on the order of ld. CIT(A). 8. We have heard the rival contention and perused the materials available on records. The issue involved in the present case relates to the fact that the income derived by assessee is rental income or business income. From the records placed before us we find that there is no dispute with regard to the income as discussed above was derived from the parties after deduction of TDS u/s 194I of the Act. 8.1 We also find that there is no ambiguity that assessee is providing complex/ composite services which we have mentioned in previous paragraph. It is also undisputed fact that the above income was accepted as business income by the Revenue in earlier subsequent years. The Parties from whom the rental income was received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons were occupant. Furthermore, the keys of the warehouse were with the assessee and the godowns were also insured by the assessee. Meaning thereby, the godowns were fully in control of assessee. Before the lower authorities, the assessee also produced the details of period-wise warehousing receipts, copies of warehousing bills and also details of electricity and telephone expenses, property tax details, etc. [Para 5] Merely because income is attached to immovable property, it cannot be the sole factor for assessment of such income as income from house property . What has to be seen is what was the primary object of the assessee while exploiting the property. If it is found that main intention is for letting out of property or any portion thereof, the same must be considered as rental income or income from house property . In case it is found that the main intention is to exploit the immovable property by way of commercial activities, in that event, it must be held as business income . In the instant case, it was found that services rendered by the assessee were the result of its activities carried on continuously in an organized manner with a set purpose and with a vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or business income in respect of income generated on providing space in the warehouse. Furthermore, in the assessment year 1998-99 also, the warehouse income was accepted by the department under section 143(3) as business income. There is no dispute to the fact that strict rule of doctrine of res judicata does not apply to the proceedings under the Act, but at the same time it is equally true that unless there is a change in circumstances, the income-tax authorities will not depart from the previous decisions at their sweet will, in the absence of material circumstances or reasons for such departure. Thus, the rule of consistency which applies to the income-tax proceedings has to be followed. [Para 7] In the instant case, the department itself in the earlier years, had accepted the facts under scrutiny assessment that the ware- housing income was its business income. The Commissioner also under section 263 dropped the proceedings for the assessment year 1995-96 and agreed with the conclusion by the Assessing Officer that warehousing income was business income and, therefore, eligible for distribution of remuneration among the partners of the firm. Applying the principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is being let out for the purpose of enjoying the rent. The distinction between the two is narrow and one has to depend on certain facts peculiar to each case. Thus, in the instant case, the entire activity systematically undertaken by the assessee since years together was adventure in the nature of trade and, therefore, liable to be assessed as business income and not as income from house property . Pure and simple commercial assets like machinery, plant, tools, industrial assets and godowns having high business potential stand on a different footing from the assets like land and building. The hire charges income of such godowns has to be taxed under Part D of Chapter IV as Income from business rather than Income from house property. [Para 8] In the result, all the appeals of revenue were to be dismissed. Similarly, the case laws relied by the AO are distinguishable from the facts of the present case. In so far the judgment of Hon ble Supreme Court in the case of Shambu Investment Pvt. Ltd. (Supra) is concern it was observed as under : the High Court held that the prime object of the assessee under the said agreement was to let out portion of said propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before us. 12. The ld. DR has relied on the order of A.O. whereas the ld. AR for the assessee has relied on the order of ld. CIT(A). 13. We have heard both the parties and perused the materials available on record. The issue before us relates to the amount of income calculated by the A.O @20% of the gross revenue on estimation after rejecting the books of accounts. After considering the materials on records and the order given by the Ld. CIT(A) on the issue before us, we observe that there is contradictory finding of the ld. CIT(A). On one hand the ld. CIT(A) upheld the order of the AO confirming the rejection of the books of accounts. The relevant finding of the CIT(A) is reproduced as under:- 3.0 Ground No.2 is related to the rejection of books of account and estimation of income. During the assessment proceedings the AO has called for the details and the appellant did not produce some of the details. The expenditure was debited in the P L a/c under the head godown repairs in respect of Coal-berth and Sonarpur for a sum of ₹ 17,37,358/- and ₹ 7,33,358/- respectively, and the same was not supported by any vouchers or evidences. Similarly, the appellant h ..... 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