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TMI Blog2019 (9) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... at the income earned by the assessee from letting out various shops/stalls in shopping malls constructed by them is to be treated as business income and not as income from house property. Addition u/s 68 - whether creditor was having creditworthiness to substantiate her investment in share capital/premium worth - HELD THAT:- AO accepted the claim of the assessee in A.Y. 2011-12, in respect of share capital/premium of ₹ 90,00,000/-, therefore balance claim of ₹ 1,50,00,000/- in the assessment year under consideration is also genuine, as there is no change in the facts and in the nature of amount. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts We are of the view that the above cited precedents on principle of consistency are squarely applicable to the assessee under consideration. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Act ). 2. Since, these two appeals filed by the Revenue relate to the same assessee, identical and common issues are involved, therefore these have been clubbed and heard together and a consolidated order is being passed for the same of convenience and brevity. The Revenue s appeal in ITA No. 169/Gau/2018, for AY 2012-13, is taken as the lead case. 3. However, in these two appeals, the Revenue has raised multiple grounds of appeal but at the time of hearing, the main grievance of the Revenue have been confined to the following issues: i) Ground No. 1 raised by the Revenue relates action of ld CIT(A) in treating the amount of ₹ 1,15,81,078/- as income from profits and gains from business and profession instead of income from house property . ii) Ground No. 2 raised by Revenue relates to deletion of addition of ₹ 1,50,00,000/- by ld CIT(A) holding that the creditor has proved creditworthiness and identity to substantiate her investment. iii) Ground No. 3 raised by the Revenue in ITA No. 170/Gau/2018 relates to the deletion of addition of ₹ 54,120/- on account of parking fees. 4. Now, we take ground No. 1 raised by the Revenue which relates to action of ld CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and maintaining all kinds and types of immovable properties and providing the same on lease, rent, hire or letting out for any or all business purposes. Therefore, treating the income from letting of property on hire as 'business income' emanates not only from the Memorandum of Association of the Company but also from the nature of the activity actually carried out. We would like to draw your kind attention to relevant case law of Income-tax Officer, Wared-2, Gandhidham v. Tejmalbhai Co. [2006 ITD 399(Rajkot)] wherein the Hon'ble ITAT has held that merely because the property is immovable it cannot be considered as income from house property and that if the main hiring is main business than it would be business income. 6. However, the ld assessing officer rejected the contention of the assessee and held as follows: The fact of the case law referred by the assessee i.e. Income-tax Officer, Wared-2, Gandhidham v. Tejmalbhai Co.[20061TD 399(Rajkot)] is as below 1. the entire godowns had not been given for exclusive possession but space had been let out as per the requirements of the parties 2. various services such as lighting, telephone, watch and ward and staff for mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is property. It is a settled position of law that when a specific head of charge is provided for income from the ownership of house property, rents or other income from the ownership of house property, cannot be brought to tax under any other head. Assessment under this head is not only proper but obligatory. In fact, the Hon'ble Supreme Court has held in the case of East India Housing and Development Trust vs. CIT 42 ITR 49 that if a company incorporated with the objects of buying and developing landed properties and promoting and developing markets, purchases some land, sets up a market therein and realizes rent from tenants of shops and stalls in the market, the income so derived must be computed for assessment purposes under the head Income from House property . It was observed by the Apex Court that: the distinct heads specified in section 6 of the Income-tax Act indicating the sources are mutually exclusive and income derived from different sources falling under specific head has to be computed for the purpose of taxation in the manner provided by the appropriate section if the income from a source-falls-within a specific head set out in section 6, the fact that it may in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lishing running of Shopping Complex cum Multiplex during the relevant financial year. The Memorandum of Association of the Company speaks one of the main objects of the company stating as follows: To purchase; sell, develop, take in exchange, or on lease, hire or otherwise acquire, whether for investment or sale, or working the same, any real or personal estate including lands, mines, business, building, factories, mill, houses, cottages, shops, depots, warehouses, machinery, plant, stock-in-trade, mineral rights, concessions, privileges; licenses, easement or interest in or with respect to any property or interest in or with respect to any property whatsoever for the purpose of the Company in consideration for a gross sum or rent or partly in one way and partly in the other or for any other consideration and to carry on business as proprietors of lands, plots, buildings, etc. and to let on lease or otherwise properties therein. The second object mentioned in MOA is as follows: To acquire by purchase, lease, exchange, hire or otherwise, lands, plots, buildings and hereditaments of any tenure or description situated in India or abroad and any estate or interest and rights therein, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides necessary service for proper upkeep of such properties in order to earn income by letting and/or leasing thereof. The assessee has disclosed the income earned from letting of its property in the sum of ₹ 1,15,81,078/- under the head Business . In course of assessment proceedings, the Ld. Assessing Officer misconstrued the provision of section 22 of the Income Tax Act, 1961 and conceived that the assessee have earned the rental income as an owner and is accordingly liable to be assessed under the head House Property . The Ld. Assessing Officer was apprised by the assessee that the income earned from letting out its property do not partake of the character of Income from House Property and had been correctly disclosed under the head Business since the assessee carried on this business in consonance with its main objects. In the present instance, the assessee has developed shopping mall on a property owned by it and let out same by providing host of services/facilities/amenities in the said mall and as such, the basic intention of the assessee was commercial exploitation of its property by developing them as shopping malls, therefore, ld Counsel claimed income derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capable of being commercially exploited for purpose of earning income, the resultant profit is assessable as income from Business . Where assessee-company had developed shopping malls/business centers on properties owned by it and had let out same to various users by providing host of services/facilities/amenities in said malls/business centers, it could be said that basic intention of assessee was commercial exploitation of its properties by developing them as shopping malls/business centers and, therefore, income derived there from was rightly assessed as business income. [PFH MALL RETAIL MANAGEMENT LTD. -VS- I.T.O. (2007) 16 SOT 83 (KOL)]. At the cost of repetition, we state that where the assessee company developed shopping malls and business centers on properties owned by it and let out same by providing host of facilities in said business centre, income derived there from was business income, as held by the Coordinate Bench of ITAT Mumbai in the case of A.C.I.T. - VS- STELLER DEVELOPER (P.) LTD. (2015) 68 SOT 34 (MUM)]. Again, where the assessee's main objects were acquiring, constructing, operating and maintaining of multiplexes, business centres, etc., income derived fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the AO, the assessee carried the matter in appeal before the learned CIT(A) who has deleted the addition made by the AO. 16. The learned DR for the Revenue submitted that the subscriber of the shares, Smt. Davina Mary Lyngwa was served a notice under section 131 of the I.T. Act, and her statements was taken on oath and she accepted that she made investment in assessee company. The ld DR pointed out that neither Smt. Davina Mary Lyngwa nor the assessee produced any documentary evidence to prove that the cash belongs to Smt. Davina Mary Lyngwa and the said amount was deposited by her in the bank account. It was the assessee s black money which was introduced by the assessee in the books of accounts in the name of Smt. Davina Mary Lyngwa, therefore addition made by AO should be sustained. 17. On the other hand, ld Counsel for the assessee submitted before us that the ld. AO has erred in treating the capital/premium receipt of ₹ 1,50,00,000/- comprising of share capital/premium as undisclosed income and added the same to the total income of the Assessee. Although, the subscriber herself accepted that she had made investments with ATC Realtors Pvt. Ltd but merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the facts and circumstances as discussed hereinabove and taking into account various details submitted by the assessee, the total income of the assessee is computed under e-Assessment proceedings as per the return income filed. 3.2 It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration on 14-10-2011 but no assessment as stipulated U/s 2(40) of the Act was made and the return of income was only processed U/s 143(1) of the Act on 20-04-2012. In view of the above, provisions of clause (b) of explanation 2 of section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment, 3.3 In this case more than four years have lapsed from the end of the assessment yer under consideration. Hence necessary sanction to issue notice U/s 148 has been obtained separately from Principal Commissioner of Income Tax-2, Guwahati, as per the provisions of section 151 of the Act. 3.4 In response to issued Notices Summons and questionnaire, assesse made their replies vide letters dated 29/10/2018 and 30/10/2018. Subsequently, Notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since she had identified herself before held AO in compliance to summons under Section 131 of the Act, issued to her. The fact that the notice under Section 133(6) of the Act calling for information from her as well as summon issued under Section 131 were well served upon her at her residential address at D/o Late Sh. F.G. Franklin, Mission Compound Road, Mawkhar, Shillong-02. Even the Ld. AO had not disputed the identify of Mrs. Davina Mary Lyngwa. Further, Mrs. Davina Mary Lyngwa had duly confirmed the investment made by her during the above assessment year in the shares of the Assessee Company and these facts have been duly acknowledged in para 6.2 of the order impugned by the Ld AO himself. Regarding the Creditworthiness/Capacity/Financial Strength of the Share capital Subscriber, Mrs. Davina Mary Lyngwa was well confirmed by her during the course of her Statement under Section 131 of the Act, wherein she had stated as under: - Q No. 7. Please furnish details of investments made by you in the F.Y 2011-12? Please explain the source. Ans: I have the following investments: I) Two Guest Houses as mentioned 2) Properties in Shillong three number, Barupani Two numbers and Tura Two nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bscriber into the bank account of the Assessee as Shillong remained unsubstantiated. ( 9). That it is a common knowledge that insofar as the companies incorporated under the Indian Companies Act are concerned, whether private limited or public limited companies, they raise their capital through shares, though the manner of raising the share capital in the private limited companies on the one hand and public limited companies on the other hand, would be different. In the case of private limited companies, normally, the shares are subscribed by family members or persons known/close to the promoters. Public limited companies, on the other hand, generally raise public issue inviting general public at large for subscription of these shares. ( 10). That it is not just comprehensible as to when the said Smt Davina Mary Lyngwa had duly confirmed the reasons, justification for making the investment as also the mode, source and availability of the cash in hand with her, which further document was required by the Ld AO since the Ld AO had observed that no document was furnished by Smt Davina Mary Lyngwa which would prove that the money belong to her. The cash in hand is different via-a-vis ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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